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STATE OF MINNESOTA

SEVENTY-NINTH SESSION - 1995

__________________

THIRTY-FIRST DAY

Saint Paul, Minnesota, Wednesday, March 29, 1995

Index to today's Journal

The House of Representatives convened at 2:30 p.m. and was called to order by Irv Anderson, Speaker of the House.

Prayer was offered by Representative Barb Vickerman, District 23A, Redwood Falls, Minnesota.

The roll was called and the following members were present:

    Abrams       Finseth      Koppendrayer Olson, M.    Solberg
    Anderson, B. Frerichs     Kraus        Onnen        Stanek
    Anderson, R. Garcia       Krinkie      Opatz        Sviggum
    Bakk         Girard       Larsen       Orenstein    Swenson, D.
    Bertram      Goodno       Leighton     Orfield      Swenson, H.
    Bettermann   Greenfield   Leppik       Osskopp      Sykora
    Bishop       Greiling     Lieder       Osthoff      Tomassoni
    Boudreau     Haas         Lindner      Ostrom       Tompkins
    Bradley      Hackbarth    Long         Otremba      Trimble
    Broecker     Harder       Lourey       Ozment       Tuma
    Brown        Hasskamp     Luther       Paulsen      Tunheim
    Carlson      Hausman      Lynch        Pawlenty     Van Dellen
    Carruthers   Holsten      Macklin      Pellow       Van Engen
    Clark        Hugoson      Mahon        Pelowski     Vickerman
    Commers      Huntley      Mares        Perlt        Wagenius
    Cooper       Jaros        Mariani      Peterson     Weaver
    Daggett      Jefferson    Marko        Pugh         Wejcman
    Dauner       Jennings     McCollum     Rhodes       Wenzel
    Davids       Johnson, A.  McElroy      Rice         Winter
    Dawkins      Johnson, R.  McGuire      Rostberg     Wolf
    Dehler       Johnson, V.  Milbert      Rukavina     Worke
    Delmont      Kahn         Molnau       Sarna        Workman
    Dempsey      Kalis        Mulder       Schumacher   Sp.Anderson,I
    Dorn         Kelley       Munger       Seagren
    Entenza      Kinkel       Murphy       Simoneau
    Erhardt      Knight       Ness         Skoglund
    Farrell      Knoblach     Olson, E.    Smith

A quorum was present.

Kelso and Rest were excused.

The Chief Clerk proceeded to read the Journal of the preceding day. Hackbarth moved that further reading of the Journal be suspended and that the Journal be approved as corrected by the Chief Clerk. The motion prevailed.

REPORTS OF CHIEF CLERK

S. F. No. 739 and H. F. No. 337, which had been referred to the Chief Clerk for comparison, were examined and found to be identical.

Otremba moved that S. F. No. 739 be substituted for H. F. No. 337 and that the House File be indefinitely postponed. The motion prevailed.

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PETITIONS AND COMMUNICATIONS

The following communications were received:

STATE OF MINNESOTA

OFFICE OF THE GOVERNOR

SAINT PAUL 55155

March 27, 1995

The Honorable Irv Anderson

Speaker of the House of Representatives

The State of Minnesota

Dear Speaker Anderson:

It is my honor to inform you that I have received, approved, signed and deposited in the Office of the Secretary of State the following House Files:

H. F. No. 125, relating to corrections; prohibiting correctional inmates from applying for name changes more than once during an inmate's confinement.

H. F. No. 435, relating to public utilities; authorizing performance-based gas purchasing regulation for gas utilities.

H. F. No. 231, relating to occupations and professions; board of medical practice; changing licensing requirements for foreign applicants; changing certain disciplinary procedures.

H. F. No. 887, relating to public administration; providing St. Paul with additional authority in regard to the teacher training institute.

H. F. No. 95, relating to highways; prohibiting headwalls in highway rights-of-way; imposing a penalty.

Warmest regards,

Arne H. Carlson

Governor

STATE OF MINNESOTA

OFFICE OF THE SECRETARY OF STATE

ST. PAUL 55155

The Honorable Irv Anderson

Speaker of the House of Representatives

The Honorable Allan H. Spear

President of the Senate

I have the honor to inform you that the following enrolled Acts of the 1995 Session of the State Legislature have been received from the Office of the Governor and are deposited in the Office of the Secretary of State for

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preservation, pursuant to the State Constitution, Article IV, Section 23:

                                        Time and
    S.F.         H.F.   Session Laws    Date ApprovedDate Filed
    No.           No.    Chapter No.             1995      1995

125 16 2:20 p.m. March 27 March 27

435 17 2:21 p.m. March 27 March 27

231 18 2:23 p.m. March 27 March 27

50 19 2:28 p.m. March 27 March 27

181 20 2:28 p.m. March 27 March 27

182 21 2:30 p.m. March 27 March 27

887 22 2:25 p.m. March 27 March 27

95 23 2:27 p.m. March 27 March 27

318 24 2:35 p.m. March 27 March 27

Sincerely,

Joan Anderson Growe

Secretary of State

REPORTS OF STANDING COMMITTEES

Kahn from the Committee on Governmental Operations to which was referred:

H. F. No. 66, A bill for an act relating to occupations and professions; establishing the board of licensed professional counseling; requiring professional counselors to be licensed; requiring rulemaking; providing penalties; appropriating money; amending Minnesota Statutes 1994, sections 116J.70, subdivision 2a; 148A.01, subdivision 5; 148B.60, subdivision 3; 214.01, subdivision 2; 214.04, subdivision 3; and 609.341, subdivision 17; proposing coding for new law in Minnesota Statutes, chapter 148B.

Reported the same back with the following amendments:

Page 4, delete lines 27 to 36 and insert:

"Subd. 4. [PRACTICE OF PROFESSIONAL COUNSELING.] (a) "Practice of professional counseling" means the application of mental health, psychological, and human development principles in order to: (1) facilitate human development and adjustment throughout the life span; (2) prevent, diagnose, and treat mental, emotional, or behavioral disorders and associated distresses which interfere with mental health; (3) conduct assessments and diagnoses for the purpose of establishing treatment goals and objectives; and (4) plan, implement, and evaluate treatment plans using counseling treatment interventions. Counseling treatment interventions shall mean the application of cognitive, affective, behavioral, and systemic counseling strategies which include principles of development, wellness, and pathology that reflect a pluralistic society. Such interventions are specifically implemented in the context of a professional counseling relationship.

(b) The practice of professional counseling includes, but is not limited to:

(1) individual and group counseling and psychotherapy;

(2) assessment;

(3) crisis intervention;

(4) diagnosis and treatment of persons with mental and emotional disorders;

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(5) guidance and consulting to facilitate growth and development, including educational and career development;

(6) utilization of functional assessment and counseling for persons requesting assistance in adjustment to a disability or handicapping condition;

(7) consulting;

(8) research; and

(9) referral.

(c) The use of specific methods, techniques, or modalities within the practice of professional counseling is restricted to professional counselors appropriately trained in the use of such methods, techniques, or modalities.

(d) The terms "diagnose" and "treat" as related to mental health interventions does not in any way imply medical diagnostic or treatment procedures."

Page 5, delete lines 1 to 24

Page 6, delete lines 10 and 11

Renumber the clauses in sequence

Page 6, line 29, delete everything after "fees" and insert "under section 16A.1285"

Page 6, line 30, delete everything before the semicolon

Page 7, line 8, before "To" insert "Individuals who meet the educational requirements and engage in the activities as set forth in sections 3 to 15 may apply for licensure as licensed professional counselors."

Page 7, line 17, after "hours" insert "or the equivalent quarter hours"

Page 7, line 22, after "completed" insert "the equivalent of" and after "months" insert "of full-time employment" and delete "2,000" and insert "4,000"

Page 7, line 24, after "board" insert "according to rule"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Health and Human Services.

The report was adopted.

Osthoff from the Committee on General Legislation, Veterans Affairs and Elections to which was referred:

H. F. No. 172, A bill for an act relating to veterans; authorizing an annual expense allowance for the veterans homes board of directors; amending Minnesota Statutes 1994, section 15A.081, subdivision 8.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1994, section 15A.081, subdivision 8, is amended to read:

Subd. 8. [EXPENSE ALLOWANCE.] Notwithstanding any law to the contrary, positions listed in subdivision 1, constitutional officers, and the commissioner of iron range resources and rehabilitation are authorized an annual expense allowance not to exceed $1,500 for necessary expenses in the normal performance of their duties for which no other reimbursement is provided. The veterans homes board of directors is also authorized an annual expense

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allowance not to exceed $1,500 for use by the agency it governs for necessary expenses of agency staff in the normal performance of their duties for which no other reimbursement is provided. The expenditures under this subdivision are subject to any laws and rules relating to budgeting, allotment and encumbrance, preaudit and postaudit. The commissioner of finance may promulgate rules to assure the proper expenditure of these funds, and to provide for reimbursement.

Sec. 2. [EFFECTIVE DATE.]

This act is effective July 1, 1995."

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Governmental Operations.

The report was adopted.

Skoglund from the Committee on Judiciary to which was referred:

H. F. No. 177, A bill for an act relating to crime; expanding the scope of the patterned sex offender sentencing law; requiring training for judges, prosecutors, peace officers, and sex offender assessors on sentencing laws applicable to repeat and patterned sex offenders; amending Minnesota Statutes 1994, sections 480.30; and 609.1352, subdivisions 1, 3, and 5; proposing coding for new law in Minnesota Statutes, chapter 388.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1994, section 243.166, is amended to read:

243.166 [REGISTRATION OF PREDATORY OFFENDERS.]

Subdivision 1. [REGISTRATION REQUIRED.] (a) A person shall register under this section if:

(1) the person was charged with or petitioned for a felony violation of or attempt to violate any of the following, and convicted of or adjudicated delinquent for that offense or of another offense arising out of the same set of circumstances:

(i) murder under section 609.185, clause (2);

(ii) kidnapping under section 609.25, involving a minor victim; or

(iii) criminal sexual conduct under section 609.342; 609.343; 609.344; or 609.345; or

(2) the person was convicted of a predatory crime as defined in section 609.1352, and the offender was sentenced as a patterned sex offender or the court found on its own motion or that of the prosecutor that the crime was part of a predatory pattern of behavior that had criminal sexual conduct as its goal; or

(3) the person was convicted of or adjudicated delinquent for violating a law of the United States similar to the offenses described in clause (1) or (2).

(b) A person also shall register under this section if:

(1) the person was convicted of or adjudicated delinquent in another state for an offense that would be a violation of a law described in paragraph (a) if committed in this state;

(2) the person enters and remains in this state for 30 days or longer; and

(3) ten years have not elapsed since the person was released from confinement or, if the person was not confined, since the person was convicted of or adjudicated delinquent for the offense that triggers registration.

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Subd. 2. [NOTICE.] When a person who is required to register under this section subdivision 1, paragraph (a), is sentenced or becomes subject to a juvenile court disposition order, the court shall tell the person of the duty to register under this section. The court shall require the person to read and sign a form stating that the duty of the person to register under this section has been explained. If a person required to register under this section subdivision 1, paragraph (a), was not notified by the court of the registration requirement at the time of sentencing or disposition, the assigned corrections agent shall notify the person of the requirements of this section.

Subd. 3. [REGISTRATION PROCEDURE.] (a) The A person required to register under subdivision 1, paragraph (a), shall register with the corrections agent as soon as the agent is assigned to the person. Instead of registering with the corrections agent, the person may choose to register with the law enforcement authority that has jurisdiction in the area where the person will reside upon release or discharge.

(b) At least five days before the person changes residence, including changing residence to another state, the person shall give written notice of the address of the new residence to the current or last assigned corrections agent or to the law enforcement authority with which the person currently is registered. An offender is deemed to change residence when the offender remains at a new address for longer than three days and evinces an intent to take up residence there. The corrections agent or law enforcement authority shall, within two business days after receipt of this information, forward it to the bureau of criminal apprehension and to the law enforcement authority that has jurisdiction in the area of the person's new residence.

(b) A person required to register under subdivision 1, paragraph (b), shall, within ten days after the duty to register arises, register with the appropriate law enforcement authority that has jurisdiction in the area of the person's new residence. The authority shall, within three days, forward the registration information to the bureau of criminal apprehension. At least five days before the person changes residence, the person shall give written notice of the address of the new residence to the bureau of criminal apprehension and to the appropriate law enforcement authority with jurisdiction in the area of the person's new residence. The person is deemed to change residence when the person remains at a new address for longer than three days and evinces an intent to take up residence there.

Subd. 4. [CONTENTS OF REGISTRATION.] (a) The registration provided to the corrections agent or law enforcement authority, must consist of a statement in writing signed by the person, giving information required by the bureau of criminal apprehension, and a fingerprint card and photograph of the person if these have not already been obtained in connection with the offense that triggers registration.

(b) Within three days, the corrections agent or law enforcement authority shall forward the statement, fingerprint card, and photograph of a person required to register under subdivision 1, paragraph (a) to the bureau of criminal apprehension. The bureau shall ascertain whether the person has registered with the law enforcement authority where the person resides. If the person has not registered with the law enforcement authority, the bureau shall send one copy to the appropriate law enforcement authority that will have jurisdiction where the person will reside on release or discharge that authority.

(c) Within three days, the law enforcement authority shall forward the statement, fingerprint card, and photograph of a person required to register under subdivision 1, paragraph (b), to the bureau of criminal apprehension.

Subd. 5. [CRIMINAL PENALTY.] A person required to register under this section who violates any of its provisions or intentionally provides false information to a corrections agent, law enforcement authority, or the bureau of criminal apprehension is guilty of a gross misdemeanor. A person convicted of or adjudicated delinquent for violating this section who previously has been convicted under this section is guilty of a felony. A violation of this section may be prosecuted either where the person resides or where the person was last assigned to a Minnesota corrections agent.

Subd. 6. [REGISTRATION PERIOD.] (a) Notwithstanding the provisions of section 609.165, subdivision 1, a person required to register under this section shall continue to comply with this section until ten years have elapsed since the person was initially assigned to a corrections agent initially registered in connection with the offense, or until the probation, supervised release, or conditional release period expires, whichever occurs later. For a person required to register under this section who is committed under section 253B.185, the ten-year registration period does not include the period of commitment.

(b) If a person required to register under this section fails to register following a change in residence, the commissioner of public safety may require the person to continue to register for an additional period of five years.

Subd. 7. [USE OF INFORMATION.] The information provided under this section is private data on individuals under section 13.01, subdivision 12. The information may be used only for law enforcement purposes.

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Subd. 8. [LAW ENFORCEMENT AUTHORITY.] For purposes of this section, a law enforcement authority means, with respect to a home rule charter or statutory city, the chief of police, and with respect to an unincorporated area, the sheriff of the county.

Subd. 9. [OFFENDERS FROM OTHER STATES.] When the state accepts an offender from another state under a reciprocal agreement under the interstate compact authorized by section 243.16 or under any authorized interstate agreement, the acceptance is conditional on the offender agreeing to register under this section when the offender is living in Minnesota.

Sec. 2. Minnesota Statutes 1994, section 480.30, is amended to read:

480.30 [JUDICIAL TRAINING.]

Subdivision 1. [CHILD ABUSE; DOMESTIC ABUSE; HARASSMENT.] The supreme court's judicial education program must include ongoing training for district court judges on child and adolescent sexual abuse, domestic abuse, harassment, stalking, and related civil and criminal court issues. The program must include information about the specific needs of victims. The program must include education on the causes of sexual abuse and family violence and culturally responsive approaches to serving victims. The program must emphasize the need for the coordination of court and legal victim advocacy services and include education on sexual abuse and domestic abuse programs and policies within law enforcement agencies and prosecuting authorities as well as the court system.

Subd. 2. [SEXUAL VIOLENCE.] The supreme court's judicial education program must include ongoing training for judges, judicial officers, court services personnel, and sex offender assessors on the specific sentencing statutes and sentencing guidelines applicable to persons convicted of sex offenses and other crimes that are sexually motivated. The training shall focus on the sentencing provisions applicable to repeat sex offenders and patterned sex offenders.

Subd. 3. [BAIL EVALUATIONS.] The supreme court's judicial education program also must include training for judges, judicial officers, and court services personnel on how to assure that their bail evaluations and decisions are racially and culturally neutral.

Sec. 3. Minnesota Statutes 1994, section 609.1352, subdivision 1, is amended to read:

Subdivision 1. [SENTENCING AUTHORITY.] (a) Notwithstanding the statutory maximum imprisonment penalty otherwise applicable to the offense, a court shall commit a person to the commissioner of corrections for a period of time that is not less than double the presumptive sentence under the sentencing guidelines and not more than the statutory maximum, or if the statutory maximum is less than double the presumptive sentence, for a period of time that is equal to the statutory maximum, 40 years if:

(1) the court is imposing an executed sentence, based on a sentencing guidelines presumptive imprisonment sentence or a dispositional departure for aggravating circumstances or a mandatory minimum sentence, on a person convicted of committing or attempting to commit a violation of section 609.342, 609.343, 609.344, or 609.345, or on a person convicted of committing or attempting to commit any other crime listed in subdivision 2 if it reasonably appears to the court that the crime was motivated by the offender's sexual impulses or was part of a predatory pattern of behavior that had criminal sexual conduct as its goal;

(2) the court finds that the offender is a danger to public safety; and

(3) the court finds that the offender needs long-term treatment or supervision beyond the presumptive term of imprisonment and supervised release. The finding must be based on a professional assessment by an examiner experienced in evaluating sex offenders that concludes that the offender is a patterned sex offender. The assessment must contain the facts upon which the conclusion is based, with reference to the offense history of the offender or the severity of the current offense, the social history of the offender, and the results of an examination of the offender's mental status unless the offender refuses to be examined. The conclusion may not be based on testing alone. A patterned sex offender is one whose criminal sexual behavior is so engrained that the risk of reoffending is great without intensive psychotherapeutic intervention or other long-term controls.

(b) The court shall consider imposing a sentence under this section whenever a person is convicted of violating section 609.342 or 609.343.

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Sec. 4. Minnesota Statutes 1994, section 609.1352, subdivision 3, is amended to read:

Subd. 3. [DANGER TO PUBLIC SAFETY.] The court shall base its finding that the offender is a danger to public safety on either any of the following factors:

(1) the crime involved an aggravating factor that would justify a durational departure from the presumptive sentence under the sentencing guidelines; or

(2) the offender previously committed or attempted to commit a predatory crime or a violation of section 609.224, including:

(i) an offense committed as a juvenile that would have been a predatory crime or a violation of section 609.224 if committed by an adult; or

(ii) a violation or attempted violation of a similar law of any other state or the United States; or

(3) the offender planned or prepared for the crime prior to its commission.

Sec. 5. Minnesota Statutes 1994, section 609.1352, subdivision 5, is amended to read:

Subd. 5. [CONDITIONAL RELEASE.] At the time of sentencing under subdivision 1, the court shall provide that after the offender has completed the sentence imposed, less any good time earned by an offender whose crime was committed before August 1, 1993, the commissioner of corrections shall place the offender on conditional release for the remainder of the statutory maximum period or for ten years, whichever is longer person's life.

The conditions of release may include successful completion of treatment and aftercare in a program approved by the commissioner, satisfaction of the release conditions specified in section 244.05, subdivision 6, and any other conditions the commissioner considers appropriate. Before the offender is released, the commissioner shall notify the sentencing court, the prosecutor in the jurisdiction where the offender was sentenced and the victim of the offender's crime, where available, of the terms of the offender's conditional release. If the offender fails to meet any condition of release, the commissioner may revoke the offender's conditional release and order that the offender serve all or a part of the remaining portion of the conditional release term in prison. The commissioner shall not dismiss the offender from supervision before the conditional release term expires for the remainder of the offender's life.

Conditional release granted under this subdivision is governed by provisions relating to supervised release, except as otherwise provided in this subdivision, section 244.04, subdivision 1, or 244.05.

Sec. 6. Minnesota Statutes 1994, section 609.746, subdivision 1, is amended to read:

Subdivision 1. [SURREPTITIOUS INTRUSION; OBSERVATION DEVICE.] (a) A person is guilty of a misdemeanor who:

(1) enters upon another's property;

(2) surreptitiously gazes, stares, or peeps in the window or any other aperture of a house or place of dwelling of another; and

(3) does so with intent to intrude upon or interfere with the privacy of a member of the household.

(b) A person is guilty of a misdemeanor who:

(1) enters upon another's property;

(2) surreptitiously installs or uses any device for observing, photographing, recording, amplifying, or broadcasting sounds or events through the window or any other aperture of a house or place of dwelling of another; and

(3) does so with intent to intrude upon or interfere with the privacy of a member of the household.

(c) A person is guilty of a misdemeanor who:

(1) surreptitiously gazes, stares, or peeps in the window or other aperture of a hotel sleeping room or tanning booth occupied by another; and

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(2) does so with intent to intrude upon or interfere with the privacy of an occupant of the hotel sleeping room or tanning booth.

(d) A person is guilty of a misdemeanor who:

(1) surreptitiously installs or uses any device for observing, photographing, recording, amplifying, or broadcasting sounds or events through the window or other aperture of a hotel sleeping room or tanning booth occupied by another; and

(2) does so with intent to intrude upon or interfere with the privacy of an occupant of the hotel sleeping room or tanning booth.

(e) A person is guilty of a gross misdemeanor if the person violates this subdivision after a previous conviction under this subdivision or section 609.749.

(d) Paragraph (b) does (f) Paragraphs (b) and (d) do not apply to law enforcement officers or corrections investigators, or to those acting under their direction, while engaged in the performance of their lawful duties.

Sec. 7. Minnesota Statutes 1994, section 617.23, is amended to read:

617.23 [INDECENT EXPOSURE; PENALTIES.]

Every (a) A person is guilty of a misdemeanor who shall:

(1) willfully and lewdly expose exposes the person's body, or the private parts thereof, in any public place, or in any place where others are present, or shall procure;

(2) procures another to expose private parts, and every person who shall be guilty of; or

(3) engages in any open or gross lewdness or lascivious behavior, or any public indecency other than hereinbefore behavior specified, shall be guilty of a misdemeanor in clause (1) or (2) or this clause.

(b) A person is guilty of a gross misdemeanor if:

(1) the person violates this section in the presence of a minor under the age of 16; or

(2) the person violates this section after having been previously convicted of violating this section, sections 609.342 to 609.3451, or a statute from another state in conformity with any of those sections.

Sec. 8. Minnesota Statutes 1994, section 628.26, is amended to read:

628.26 [LIMITATIONS.]

(a) Indictments or complaints for murder may be found or made at any time after the death of the person killed.

(b) Indictments or complaints for violation of section 609.42, subdivision 1, clause (1) or (2), shall be found or made and filed in the proper court within six years after the commission of the offense.

(c) Indictments or complaints for violation of sections 609.342 to 609.345 if the victim was under the age of 18 years at the time the offense was committed, shall be found or made and filed in the proper court within seven nine years after the commission of the offense or, if the victim failed to report the offense within this limitation period, within three years after the offense was reported to law enforcement authorities.

(d) Indictments or complaints for violation of sections 609.342 to 609.344 if the victim was 18 years old or older at the time the offense was committed, shall be found or made and filed in the proper court within seven nine years after the commission of the offense.

(e) Indictments or complaints for violation of sections 609.466 and 609.52, subdivision 2, clause (3)(c) shall be found or made and filed in the proper court within six years after the commission of the offense.

(f) Indictments or complaints for violation of section 609.52, subdivision 2, clause (3), items (a) and (b), (4), (15), or (16), 609.631, or 609.821, where the value of the property or services stolen is more than $35,000, shall be found or made and filed in the proper court within five years after the commission of the offense.

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(g) Except for violations relating to false material statements, representations or omissions, indictments or complaints for violations of section 609.671 shall be found or made and filed in the proper court within five years after the commission of the offense.

(h) Indictments or complaints for violation of sections 609.561 to 609.563, shall be found or made and filed in the proper court within five years after the commission of the offense.

(i) In all other cases, indictments or complaints shall be found or made and filed in the proper court within three years after the commission of the offense.

(j) The limitations periods contained in this section shall exclude any period of time during which the defendant was not an inhabitant of or usually resident within this state.

(k) The limitations periods contained in this section for an offense shall not include any period during which the alleged offender participated under a written agreement in a pretrial diversion program relating to that offense.

(l) The limitations periods contained in this section shall not include any period of time during which physical evidence relating to the offense was undergoing DNA analysis, as defined in section 299C.155, unless the defendant demonstrates that the prosecuting or law enforcement agency purposefully delayed the DNA analysis process in order to gain an unfair advantage.

Sec. 9. [SEX OFFENDER SENTENCING; TRAINING FOR PROSECUTORS AND PEACE OFFICERS.]

The county attorneys association, in conjunction with the attorney general's office, shall conduct a training course for prosecutors on the specific sentencing statutes and sentencing guidelines applicable to persons convicted of sex offenses and crimes that are sexually motivated. The training shall focus on the sentencing provisions applicable to repeat sex offenders and patterned sex offenders. The course may be combined with other training conducted by the county attorneys association or other groups.

Sec. 10. [EFFECTIVE DATE.]

Section 1 is effective August 1, 1995, and applies to persons who are sentenced in this state or who enter this state on or after that date. Section 1, subdivision 5, and sections 3 to 7 are effective August 1, 1995, and apply to crimes committed on or after that date. Sections 2 and 9 are effective the day following final enactment. Section 8 is effective August 1, 1995, and applies to crimes committed on or after that date, and to crimes committed before that date if the limitations period for the offense did not expire before August 1, 1995."

Delete the title and insert:

"A bill for an act relating to crime; expanding the scope of the sex offender registration law to include out-of-state offenders who reside in Minnesota longer than 30 days; permitting offenders to register with local law enforcement agencies; increasing the penalty for repeat violators of the registration law; expanding the scope of the patterned sex offender sentencing law; requiring training for judges, prosecutors, and sex offender assessors on sentencing laws applicable to repeat and patterned sex offenders; expanding the interference with privacy crime; increasing penalties for committing the crime of indecent exposure in the presence of a child under the age of 16; tolling the criminal statute of limitations while physical evidence relating to a crime is undergoing DNA analysis and lengthening it for criminal sexual conduct crimes; amending Minnesota Statutes 1994, sections 243.166; 480.30; 609.1352, subdivisions 1, 3, and 5; 609.746, subdivision 1; 617.23; and 628.26."

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Judiciary Finance.

The report was adopted.

Skoglund from the Committee on Judiciary to which was referred:

H. F. No. 181, A bill for an act relating to crime prevention; requiring notification of local authorities of the impending release of sex offenders; authorizing the release to the public of information on registered sex offenders

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under certain circumstances; clarifying law on HIV testing of convicted offenders; amending Minnesota Statutes 1994, sections 243.166, subdivision 7; and 611A.19, subdivision 1; proposing coding for new law in Minnesota Statutes, chapter 244.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"Section 1. [LEGISLATIVE FINDINGS AND PURPOSE.]

The legislature finds that if members of the public are provided adequate notice and information about a sex offender who is about to be released from custody and who will live in or near their neighborhood, the community can develop constructive plans to prepare themselves and their children for the offender's release.

Sec. 2. Minnesota Statutes 1994, section 243.166, subdivision 3, is amended to read:

Subd. 3. [REGISTRATION PROCEDURE.] (a) At least five days before release or discharge, the person shall register with the corrections agent as soon as the agent is assigned to the person law enforcement agency that has jurisdiction in the area where the person will reside upon release or discharge. If the person is under supervision, the person's corrections agent shall assist the person, if necessary, in determining the appropriate law enforcement agency with which to register.

(b) At least five days before the person changes residence, the person shall give written notice of the address of the new residence to the current or last assigned corrections agent law enforcement agency with which the person currently is registered. An offender is deemed to change residence when the offender remains at a new address for longer than three days and evinces an intent to take up residence there. The agent law enforcement agency shall, within two business days after receipt of this information, forward it to the bureau of criminal apprehension and to the law enforcement agency that has jurisdiction in the area of the offender's new residence.

Sec. 3. Minnesota Statutes 1994, section 243.166, subdivision 4, is amended to read:

Subd. 4. [CONTENTS OF REGISTRATION.] The registration provided to the corrections agent law enforcement agency must consist of a statement in writing signed by the person, giving information required by the bureau of criminal apprehension, and a fingerprint card, and photograph of the person if these have not already been obtained in connection with the offense that triggers registration taken at the time of the person's release from incarceration or, if the person was not incarcerated, at the time the person was arrested for the offense. Within three days, the corrections agent law enforcement agency shall forward the statement, fingerprint card, and photograph to the bureau of criminal apprehension. The bureau shall send one copy to the appropriate law enforcement authority that will have jurisdiction where the person will reside on release or discharge.

Sec. 4. Minnesota Statutes 1994, section 243.166, subdivision 7, is amended to read:

Subd. 7. [USE OF INFORMATION.] Except as otherwise provided in sections 244.052 and 609.1353, the information provided under this section is private data on individuals under section 13.01, subdivision 12. The information may be used only for law enforcement purposes.

Sec. 5. [244.052] [SEX OFFENDERS; NOTICE.]

Subdivision 1. [DEFINITION.] As used in this section, "sex offender" and "offender" mean a person who has been convicted of an offense for which registration under section 243.166 is required.

Subd. 2. [END-OF-SENTENCE REVIEW COMMITTEE.] (a) The commissioner of corrections shall establish an end-of-sentence review committee for the purpose of assessing, on a case-by-case basis, the public risk posed by sex offenders who are about to be released from confinement. The committee shall consist of the following members or their designees:

(1) the commissioner of corrections;

(2) the head of the state or local correctional or treatment facility where the offender is currently confined;

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(3) the chief law enforcement officer having jurisdiction in the area where the offender expects to reside upon release;

(4) a treatment professional who is trained in the assessment of sex offenders; and

(5) if the offender will be under supervision, the offender's corrections agent.

(b) At least 30 days before a sex offender is to be released from confinement, the commissioner of corrections shall convene the end-of-sentence review committee for the purpose of assessing the risk presented by the offender's release and determining the risk level to which the offender shall be assigned under paragraph (c). In assessing the risk presented by the offender, the committee shall take into account the public risk monitoring guidelines established by the department of corrections and aggravating factors such as those listed in paragraph (e).

(c) A sex offender whose history includes fewer than three aggravating factors presents a low risk to the community and may be assigned by the committee to risk level I. A sex offender whose history includes at least three aggravating factors presents an intermediate risk to the community and may be assigned by the committee to risk level II. A sex offender whose history includes at least five aggravating factors or includes both of the aggravating factors described in paragraph (e), clauses (3) and (9), presents a high risk to the community and shall be assigned by the committee to risk level III.

(d) Before the sex offender is released from confinement, the committee shall communicate its risk assessment decision, including the risk level to which the offender has been assigned, to the offender and to the law enforcement agency having jurisdiction where the offender expects to reside upon release. The committee also shall inform the offender of the availability of judicial review under subdivision 5.

(e) As used in this subdivision, "aggravating factors" includes the following factors:

(1) the offender committed the crime or previous crimes with a dangerous weapon or with the use of force;

(2) the offender has been convicted or adjudicated of or has admitted to having committed more than one sex offense;

(3) the offender failed to successfully complete offered sex offender treatment;

(4) the victim of the offender's offense was particularly vulnerable due to age or physical or mental disability;

(5) the offender was convicted of an offense an element of which involved the use of a position of authority or trust;

(6) the offender committed the offense by nurturing a relationship with a victim who was a minor or a vulnerable adult;

(7) the offender's prior offenses involved assaultive behavior over an extended period of time;

(8) the offender's offense involved multiple victims;

(9) a psychological sex offender evaluation predicts that the offender is highly likely to commit additional sex offenses in the future; and

(10) the sentencing court determined that the offender's prior offense or offenses were particularly cruel or violent.

(f) Upon the request of a law enforcement agency or a corrections agent, the commissioner may reconvene the end-of-sentence review committee for the purpose of reassessing the risk level to which an offender has been assigned under paragraph (c). In a request for a reassessment, the law enforcement agency or agent must list the facts and circumstances arising after the initial assignment under paragraph (c), which support the request for a reassessment. Upon review of the request, the end-of-sentence review committee may reassign an offender to a different risk level. If the offender is reassigned to a higher risk level, the offender has the right to seek judicial review of the committee's determination under subdivision 5.

Subd. 3. [LAW ENFORCEMENT AGENCY; DISCLOSURE OF INFORMATION TO PUBLIC.] (a) The law enforcement agency with which the sex offender must register under section 243.166 is authorized to disclose information to the public regarding the offender if the agency determines that disclosure of the information is relevant and necessary to protect the public and to counteract the offender's dangerousness. The extent of the information disclosed and the community to whom disclosure is made must relate to the level of danger posed by the offender.

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(b) The law enforcement agency shall consider the following guidelines in determining the scope of disclosure made under this subdivision:

(1) if the offender is assessed as presenting a low risk to the community, the law enforcement agency may maintain information regarding the offender within the agency and may disclose it to other law enforcement agencies. Additionally, the agency may disclose the information to any victims of or witnesses to the offender's offense of conviction;

(2) if an offender is assessed as presenting an intermediate risk to the community, the law enforcement agency also may disclose the information to appropriate school officials and neighborhood groups; and

(3) if an offender is assessed as presenting a high risk to the community, the law enforcement agency also may disclose the information to those community members and establishments to whom, in the agency's judgment, the offender may pose a direct or potential threat.

Notwithstanding the assessment of a sex offender as presenting an intermediate or high risk, a law enforcement agency shall not make the disclosures permitted by clause (2) or (3) if the offender is placed or resides in a residential facility that is licensed as a residential program, as defined in section 245A.02, subdivision 14, by the commissioner of human services under chapter 254A, or the commissioner of corrections under section 241.021, and if the facility and its staff are trained in the supervision of sex offenders.

(c) A law enforcement agency or official who decides to disclose information under this subdivision shall make a good faith effort to make the notification at least 14 days before an offender is released from confinement. If a change occurs in the release plan, this notification provision does not require an extension of the release date.

Subd. 4. [RELEVANT INFORMATION PROVIDED TO LAW ENFORCEMENT.] The department of corrections or the department of human services, in the case of a person who was committed under section 526.10 before September 1, 1994, or under section 253B.185 on or after September 1, 1994, shall, in a timely manner, provide the appropriate law enforcement agency all relevant information that the departments have concerning a sex offender who is about to be released or placed into the community, including information on aggravating factors in the offender's history.

Subd. 5. [JUDICIAL REVIEW.] (a) A sex offender assigned to level II or III under subdivision 2, paragraph (c), by an end-of-sentence review committee has the right to seek judicial review of the committee's determination. The petition for review may be filed in the district court having jurisdiction either where the offender is confined or where the offender will reside upon release. The filing of the petition shall not stay the law enforcement agency's community notification actions unless the court orders otherwise.

(b) The court shall schedule and hold a hearing on the petition in an expedited manner. The county attorney with prosecutorial jurisdiction where the offender will reside upon release shall represent the end-of-sentence review committee's decision at the hearing. The offender shall be entitled to present evidence and supporting witnesses and confront and cross-examine opposing witnesses. The county attorney has the burden of proof to show, by a preponderance of the evidence, that:

(1) the end-of-sentence review committee's risk assessment was reasonable;

(2) disclosure of information about the offender to the community is appropriate; and

(3) the notification actions proposed to be taken by the law enforcement agency are reasonably related to the level of danger presented by the offender.

Subd. 6. [IMMUNITY FROM LIABILITY.] A law enforcement agency or state agency shall not be civilly or criminally liable for disclosing or failing to disclose information as permitted by this section.

Sec. 6. [244.053] [NOTICE OF RELEASE OF CERTAIN OFFENDERS.]

Subdivision 1. [NOTICE OF IMPENDING RELEASE.] At least 30 days before the release of any inmate convicted of an offense requiring registration under section 243.166, the commissioner of corrections shall send written notice of the impending release to the sheriff of the county and the police chief of the city in which the inmate will reside or in which placement will be made in a work release program. The sheriff of the county where the offender was convicted also shall be notified of the inmate's impending release.

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Subd. 2. [ADDITIONAL NOTICE.] The same notice shall be sent to the following persons concerning a specific inmate convicted of an offense requiring registration under section 243.166:

(1) the victim of the crime for which the inmate was convicted or the victim's next of kin if the crime was a homicide, if the victim or victim's next of kin requests the notice in writing;

(2) any witnesses who testified against the inmate in any court proceedings involving the offense, if the witness requests the notice in writing; and

(3) any person specified in writing by the prosecuting attorney.

If the victim or witness is under the age of 16, the notice required by this section shall be sent to the parents or legal guardian of the child. The commissioner shall send the notices required by this provision to the last address provided to the commissioner by the requesting party. The requesting party shall furnish the commissioner with a current address. Information regarding witnesses requesting the notice, information regarding any other person specified in writing by the prosecuting attorney to receive the notice, and the notice are private data on individuals, as defined in section 13.02, subdivision 12, and are not available to the inmate.

The notice to victims provided under this subdivision does not limit the victim's right to request notice of release under section 611A.06.

Subd. 3. [NO EXTENSION OF RELEASE DATE.] The existence of the notice requirements contained in this section shall in no event require an extension of the release date.

Sec. 7. Minnesota Statutes 1994, section 609.115, is amended by adding a subdivision to read:

Subd. 10. [SEX OFFENDER RISK ASSESSMENT.] (a) If a person is convicted of an offense for which registration under section 243.166 is required, and the offender's presumptive sentence under the sentencing guidelines is a stayed sentence, the probation officer shall assess the risk presented by the offender to the community where the offender will reside while on probation and shall determine the risk level to which the offender shall be assigned under paragraph (b). In assessing the risk presented by the offender, the officer shall take into account the public risk monitoring guidelines established by the department of corrections and aggravating factors such as those listed in paragraph (d).

(b) An offender whose history includes fewer than three aggravating factors presents a low risk to the community and shall be assigned by the officer to risk level I. An offender whose history includes at least three aggravating factors presents an intermediate risk to the community and shall be assigned by the officer to risk level II. An offender whose history includes at least five aggravating factors or includes both of the aggravating factors described in paragraph (d), clauses (3) and (9), presents a high risk to the community and shall be assigned by the officer to risk level III.

(c) The officer shall include the risk assessment, including the risk level to which the offender has been assigned, in the presentence investigation report. If the offender is assigned to the intermediate or high risk level, the probation officer shall include in the report a description of the notification actions likely to be taken by the local law enforcement agency under section 609.1353.

(d) As used in this subdivision, "aggravating factors" includes the following factors:

(1) the offender committed the crime or previous crimes with a dangerous weapon or with the use of force;

(2) the offender has been convicted or adjudicated of or has admitted to having committed more than one sex offense;

(3) the offender failed to successfully complete offered sex offender treatment;

(4) the victim of the offender's offense was particularly vulnerable due to age or physical or mental disability;

(5) the offender was convicted of an offense an element of which involved the use of a position of authority or trust;

(6) the offender committed the offense by nurturing a relationship with a victim who was a minor or a vulnerable adult;

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(7) the offender's prior offenses involved assaultive behavior over an extended period of time;

(8) the offender's offense involved multiple victims;

(9) a psychological sex offender evaluation predicts that the offender is highly likely to commit additional sex offenses in the future; and

(10) the sentencing court determined that the offender's prior offense or offenses were particularly cruel or violent.

Sec. 8. [609.1353] [SENTENCING OF SEX OFFENDERS; DISCLOSURE OF INFORMATION.]

Subdivision 1. [DEFINITION.] As used in this section, "sex offender" and "offender" mean a person who has been convicted of an offense for which registration under section 243.166 is required.

Subd. 2. [RISK ASSESSMENT REVIEW.] When a court sentences a sex offender to a stayed sentence, the court shall review the risk assessment included in the presentence investigation report under section 609.115, subdivision 10, and the risk level to which the offender was assigned by the probation officer. If the risk assessment assigns the offender to level II or III, the court shall make a determination at the sentencing hearing on the following issues:

(1) whether the probation officer's risk assessment was reasonable;

(2) whether disclosure of information about the offender to the community is appropriate; and

(3) whether the notification actions proposed to be taken by the law enforcement agency are reasonably related to the level of danger presented by the offender.

The offender has the right to contest the risk assessment at the sentencing hearing by presenting evidence and witnesses in opposition to evidence contained in the risk assessment and by confronting and cross-examining opposing witnesses. The prosecuting attorney has the burden of proof to show, by a preponderance of the evidence, that the risk assessment and proposed notification actions are reasonable and appropriate.

Subd. 3. [LAW ENFORCEMENT AGENCY; DISCLOSURE OF INFORMATION TO PUBLIC.] (a) At the conclusion of the hearing under subdivision 2, the court shall notify the law enforcement agency with which the offender must register under section 243.166 of the risk level to which the offender has been assigned, as approved or modified by the court.

(b) Consistent with the court's notification under subdivision 1, the law enforcement agency is authorized to disclose information to the public regarding the offender if the agency determines that disclosure of the information is relevant and necessary to protect the public and to counteract the offender's dangerousness. The extent of the information disclosed and the community to whom disclosure is made must relate to the level of danger posed by the offender.

(c) The law enforcement agency shall consider the following guidelines in determining the scope of disclosure made under this subdivision:

(1) if an offender is assessed as presenting a low risk to the community, the law enforcement agency may maintain information regarding the offender within the agency and may disclose it to other law enforcement agencies. Additionally, the agency may disclose the information to any victims of or witnesses to the offender's offense of conviction;

(2) if an offender is assessed as presenting an intermediate risk to the community, the law enforcement agency also may disclose the information to appropriate school officials and neighborhood groups; and

(3) if an offender is assessed as presenting a high risk to the community, the law enforcement agency also may disclose the information to those community members and establishments to whom, in the agency's judgment, the offender may pose a direct or potential threat.

Subd. 4. [IMMUNITY FROM LIABILITY.] A law enforcement agency or state agency shall not be civilly or criminally liable for disclosing or failing to disclose information as permitted by this section.

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Sec. 9. Minnesota Statutes 1994, section 611A.19, subdivision 1, is amended to read:

Subdivision 1. [TESTING ON REQUEST OF VICTIM.] (a) The sentencing court may shall issue an order requiring a person convicted of a violent crime, as defined in section 609.152, or a juvenile adjudicated delinquent for violating section 609.342, 609.343, 609.344, or 609.345, to submit to testing to determine the presence of human immunodeficiency virus (HIV) antibody if:

(1) evidence exists that the broken skin or mucous membrane of the victim was exposed to or had contact with the offender's semen or blood during commission of the crime in a manner which has been demonstrated epidemiologically to transmit the HIV virus; and

(2) the victim requests the test or the prosecutor moves for the test order in camera;

(2) the victim requests the test; and

(3) evidence exists that the broken skin or mucous membrane of the victim was exposed to or had contact with the offender's semen or blood during commission of the crime in a manner which has been demonstrated epidemiologically to transmit the HIV virus.

(b) If the court grants the prosecutor's motion, the court shall order that the test be performed by an appropriate health professional who is trained to provide the counseling described in section 144.763, and that no reference to the test, the motion requesting the test, the test order, or the test results may appear in the criminal record or be maintained in any record of the court or court services.

Sec. 10. [EFFECTIVE DATE.]

Sections 1 to 8 are effective August 1, 1995, and apply to persons released or sentenced on or after that date. Section 9 is effective the day following final enactment."

Delete the title and insert:

"A bill for an act relating to crime prevention; requiring notification of local authorities of the impending release of sex offenders; authorizing the release to the public of information on registered sex offenders under certain circumstances; establishing an end-of-sentence review committee to assess risks posed by release of sex offenders; providing aggravating factors to be applied in the risk assessment decision; clarifying law on HIV testing of convicted offenders; amending Minnesota Statutes 1994, sections 243.166, subdivisions 3, 4, and 7; 609.115, by adding a subdivision; and 611A.19, subdivision 1; proposing coding for new law in Minnesota Statutes, chapters 244; and 609."

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Judiciary Finance.

The report was adopted.

Osthoff from the Committee on General Legislation, Veterans Affairs and Elections to which was referred:

H. F. No. 220, A bill for an act relating to elections; requiring certain special primaries and elections to be conducted by mail; amending Minnesota Statutes 1994, sections 204D.19, subdivisions 2 and 3; 204D.20, subdivision 1; 204D.21, subdivisions 2 and 3; 204D.22, subdivision 3; and 204D.23, subdivision 2.

Reported the same back with the following amendments:

Page 2, line 8, delete "either"

Page 2, line 9, delete "or by mail" and insert ", except that a special election occurring as a result of a vacancy occurring between the 33rd day before the state general election and the opening day of the legislative session in the odd-numbered year must be held by mail"

With the recommendation that when so amended the bill pass.

The report was adopted.

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1027

Kahn from the Committee on Governmental Operations to which was referred:

H. F. No. 307, A bill for an act relating to higher education; abolishing the higher education coordinating board and transferring some of its duties; creating a higher education services office and a higher education administrators council; amending Minnesota Statutes 1994, sections 126.663, subdivision 3; 126A.02, subdivision 2; 135A.12, subdivision 1; 135A.15, subdivision 1; 135A.153, subdivision 1; 136A.01; 136A.03; 136A.07; 136A.08; 136A.101, subdivisions 2 and 3; 136A.15, subdivisions 3 and 4; 136A.16, subdivision 1; 136A.233, subdivision 2; 136A.26, subdivisions 1 and 2; 136A.42; 136A.62, subdivision 2; 136A.69; 141.25, subdivision 8; 144.1487, subdivision 1; 144.1488, subdivisions 1 and 4; 144.1489, subdivisions 1, 3, and 4; 144.1490; 144.1491, subdivision 2; and 298.2214, subdivision 5; proposing coding for new law in Minnesota Statutes, chapters 135A; and 136A; repealing Minnesota Statutes 1994, sections 135A.052, subdivisions 2 and 3; 135A.08; 135A.09; 135A.10; 135A.11; 135A.12, subdivision 5; 136A.02; 136A.04; 136A.041; 136A.1352; 136A.1353; 136A.1354; 136A.85; 136A.86; 136A.87; 136A.88; 144.1488, subdivision 2; and 148.236.

Reported the same back with the following amendments:

Page 2, line 26, after "provost of" insert "arts, sciences and engineering at"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Ways and Means.

The report was adopted.

Murphy from the Committee on Judiciary Finance to which was referred:

H. F. No. 336, A bill for an act relating to children; providing for grants to youth intervention programs; appropriating money; amending Minnesota Statutes 1994, section 268.30, subdivision 2.

Reported the same back with the recommendation that the bill be re-referred to the Committee on Economic Development, Infrastructure and Regulation Finance without further recommendation.

The report was adopted.

Kahn from the Committee on Governmental Operations to which was referred:

H. F. No. 347, A bill for an act relating to health; creating an emergency medical services regulatory board; providing for its membership; transferring certain duties relating to emergency medical services from the commissioner of health to the board; amending Minnesota Statutes 1994, sections 62N.381, subdivisions 2, 3, and 4; 144.801, subdivisions 3 and 5; 144.802; 144.803; 144.804; 144.806; 144.807; 144.808; 144.809; 144.8091; 144.8093; 144.8095; 144C.01, subdivision 2; 144C.05, subdivision 1; 144C.07; 144C.08; 144C.09, subdivision 2; and 144C.10; proposing coding for new law as Minnesota Statutes, chapter 144D; repealing Minnesota Statutes 1994, section 144.8097.

Reported the same back with the following amendments:

Page 2, line 7, before the colon, insert ", except for the person listed in clause (14)"

Page 2, line 32, after "who" insert "resides in Minnesota and"

Page 3, line 6, delete "and"

Page 3, line 7, after "association" insert ", and the Minnesota chapter of the academy of pediatrics"

Page 3, line 17, delete "The lieutenant governor shall serve as" and insert "The governor shall designate one of the members appointed under subdivision 1 as chair of the board."

Page 3, delete line 18

Page 3, delete line 28, and insert "and other duties as assigned to the board;"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Health and Human Services.

The report was adopted.

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Johnson, R., from the Committee on Labor-Management Relations to which was referred:

H. F. No. 401, A bill for an act relating to employment; increasing the minimum wage; amending Minnesota Statutes 1994, section 177.24, subdivision 1.

Reported the same back with the recommendation that the bill pass.

The report was adopted.

Tunheim from the Committee on Transportation and Transit to which was referred:

H. F. No. 426, A bill for an act relating to traffic regulations; motor vehicles; establishing system for the notification, recording, and collection of delinquent fines for parking violations; prohibiting registration of vehicle of owner who has not paid the fine for a parking violation; prohibiting issuance of warrants for parking violations; imposing a fee; amending Minnesota Statutes 1994, sections 169.91, subdivision 3; 169.95; and 169.99, subdivision 1; proposing coding for new law in Minnesota Statutes, chapters 168; and 169.

Reported the same back with the following amendments:

Page 3, line 31, delete "to" and insert ", payable to the applicable court and collected by"

Page 4, after line 18, insert:

"Subd. 5. [EXEMPTION; LESSORS.] Notwithstanding subdivisions 1 to 4, the registrar and a deputy registrar may receive and process an application for registration of a motor vehicle owned by a motor vehicle lessor licensed under section 168.27, subdivision 2, 3, or 4, if the violation giving rise to an unpaid fine was committed by a lessee while operating the motor vehicle under a lease or rental and the lessor has complied with section 168.2701 with respect to that violation."

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Judiciary.

The report was adopted.

Osthoff from the Committee on General Legislation, Veterans Affairs and Elections to which was referred:

H. F. No. 450, A bill for an act relating to soil and water conservation district boards; providing that the office of soil and water conservation district supervisor is compatible with certain city and town offices; amending Minnesota Statutes 1994, sections 103C.315, by adding a subdivision; and 204B.06, subdivision 1.

Reported the same back with the following amendments:

Page 1, line 26, after the period, insert "This subdivision does not apply to an office located in a metropolitan county as that term is defined in section 473.121, subdivision 4."

Page 2, line 10, after "supervisor" insert "in a district located in a county that is not a metropolitan county as that term is defined in section 473.121, subdivision 4,"

With the recommendation that when so amended the bill pass and be placed on the Consent Calendar.

The report was adopted.

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1029

Carlson from the Committee on Education to which was referred:

H. F. No. 487, A bill for an act relating to higher education; bonding; exempting appropriations for Minnesota state college and university libraries from the one-third debt service requirement; amending Laws 1994, chapter 643, section 35, subdivisions 1 and 3.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"Section 1. Laws 1994, chapter 643, section 35, subdivision 1, is amended to read:

Subdivision 1. [HIGHER EDUCATION BOARDS.] The state board of technical colleges, the state board for community colleges, the state university board, or their successors shall pay one-third of the debt service on state bonds sold to finance projects authorized by this act. Appropriations for higher education asset preservation and renewal and for libraries are not subject to the one-third debt service requirement. After each sale of general obligation bonds, the commissioner of finance shall notify the state board of technical colleges, the state board for community colleges, the state university board, and the higher education board of the amounts for which each system is assessed of for each year for the life of the bonds."

Amend the title as follows:

Page 1, line 6, delete "subdivisions 1 and 3" and insert "subdivision 1"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Capital Investment.

The report was adopted.

Brown from the Committee on Environment and Natural Resources Finance to which was referred:

H. F. No. 488, A bill for an act relating to petroleum tank release cleanup fund; providing for payment for a site assessment prior to tank removal; modifying reimbursement provisions; adding requirements for tank monitoring; amending Minnesota Statutes 1994, sections 115C.02, by adding subdivisions; 115C.03, subdivision 10; 115C.09, subdivisions 2, 3, and 3b; 115C.11, subdivision 1; 115C.12; and 115C.13; proposing coding for new law in Minnesota Statutes, chapters 115C; and 116.

Reported the same back with the following amendments:

Page 1, after line 16, insert:

"Sec. 2. Minnesota Statutes 1994, section 115C.02, subdivision 11, is amended to read:

Subd. 11. [POLITICAL SUBDIVISION.] "Political subdivision" means a county, a town, or a statutory or home rule charter city, a housing and redevelopment authority, an economic development authority, or a port authority."

Page 4, after line 21, insert:

"(e) Costs incurred for change orders executed as prescribed in rules promulgated under this chapter are presumed reasonable if the costs are at or below the maximum set forth in the rules. Notwithstanding the foregoing, the board may rebut the presumption of reasonableness by showing that cost increases in the change order are above those in the original bid or are unsubstantiated and inconsistent with the process and standards required by rules promulgated under this chapter."

Page 4, line 22, delete "(e)" and insert "(f)"

Page 4, line 30, delete "(f)" and insert "(g)"

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1030

Page 5, line 11, delete "(g)" and insert "(h)"

Page 5, line 15, delete "(h) Except as provided in paragraph (k)," and insert "(i)"

Page 5, line 16, strike "shall" and insert "may"

Page 5, strike lines 20 to 23

Page 5, line 24, strike "(2)" and insert "(1)"

Page 5, line 26, strike "(3)" and insert "(2)"

Page 5, strike lines 28 to 30 and insert:

"(3) the state and federal rules and regulations applicable to the condition or operation of the tank when the noncompliance caused or failed to mitigate the release."

Page 5, line 31, delete "(i) Except as provided in paragraph (k)," and insert "(j)"

Page 5, line 32, strike "shall" and insert "may"

Page 5, line 34, delete "(h)" and insert "(i)" and strike "(4)" and insert "(3)"

Page 6, line 1, strike "likely" and insert "reasonable determination by the agency of the"

Page 6, line 8, delete "(j)" and insert "(k)"

Page 6, delete lines 25 to 34

Page 7, line 16, delete "(h)" and insert "(i)"

Page 7, after line 18, insert:

"Sec. 8. Minnesota Statutes 1994, section 115C.09, subdivision 3c, is amended to read:

Subd. 3c. [RELEASE AT REFINERIES AND TANK FACILITIES NOT ELIGIBLE FOR REIMBURSEMENT.] (a) Notwithstanding other provisions of subdivisions 1 to 3b, a reimbursement may not be made under this section for costs associated with a release:

(1) from a tank located at a petroleum refinery; or

(2) from a tank facility, including a pipeline terminal, with more than 1,000,000 gallons of total petroleum storage capacity at the tank facility.

(b) Paragraph (a), clause (2), does not apply to reimbursement for costs associated with a release from a tank facility:

(1) owned or operated by a person engaged in the business of mining iron ore or taconite;

(2) owned by a political subdivision that acquired the tank facility prior to May 23, 1989; or

(3) owned by a person:

(i) who acquired the tank facility prior to May 23, 1989;

(ii) who did not use the tank facility for the bulk storage of petroleum; and

(iii) who is not affiliated with the party who used the tank facility for the bulk storage of petroleum."

Page 9, line 35, delete "(h)" and insert "(i)"

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1031

Page 13, line 9, delete "5" and insert "6"

Page 13, line 11, delete "2" and insert "3" and delete "7" and insert "9"

Renumber the sections in sequence

Amend the title as follows:

Page 1, line 6, after the second comma, insert "subdivision 11, and"

Page 1, line 8, delete "and" and after "3b" insert ", and 3c"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Commerce, Tourism and Consumer Affairs.

The report was adopted.

Anderson, R., from the Committee on Health and Human Services to which was referred:

H. F. No. 497, A bill for an act relating to human services; changing the monthly allowance deduction for children of institutionalized patients on medical assistance; amending Minnesota Statutes 1994, section 256B.0575.

Reported the same back with the recommendation that the bill pass.

The report was adopted.

Osthoff from the Committee on General Legislation, Veterans Affairs and Elections to which was referred:

H. F. No. 532, A bill for an act relating to veterans; proposing an amendment to the Minnesota Constitution, article XIII, section 8, permitting the payment of a monetary bonus to veterans of the Persian Gulf War.

Reported the same back with the recommendation that the bill pass and be re-referred to the Committee on Rules and Legislative Administration.

The report was adopted.

Trimble from the Committee on Regulated Industries and Energy to which was referred:

H. F. No. 638, A bill for an act relating to utilities; energy; excepting cogeneration plants from the requirements of the power plant siting act; preempting local siting regulations for cogeneration plants; amending Minnesota Statutes 1994, sections 116C.52, subdivision 5; and 116C.61, subdivision 1.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"ARTICLE 1

Section 1. Minnesota Statutes 1994, section 116C.57, subdivision 1, is amended to read:

Subdivision 1. [DESIGNATION OF SITES SUITABLE FOR SPECIFIC FACILITIES; REPORTS.] (a) A utility must apply to the board in a form and manner prescribed by the board for designation of a specific site for a specific size and type of facility. The application shall contain at least two proposed sites, unless the application is for a cogeneration plant, which produces both electrical and useful thermal energy. If the application is for a cogeneration plant, the application may identify a single site if the site is in reasonable proximity to the thermal host of the

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cogeneration plant. For the purposes of this subdivision, the "thermal host" of a cogeneration plant means the facility in which the thermal energy produced by the cogeneration plant is to be utilized. The board shall determine whether the cogeneration plant is reasonably proximate to the thermal host with the understanding that the site should be adjacent to or contiguous with the site of the thermal host whenever practicable. In the event a utility proposes a site not included in the board's inventory of study areas, the utility shall specify the reasons for the proposal and shall make an evaluation of the proposed site based upon the planning policies, criteria and standards specified in the inventory.

(b) Pursuant to sections 116C.57 to 116C.60, the board shall study and evaluate any site proposed by a utility and any other site the board deems necessary which was proposed in a manner consistent with rules adopted by the board concerning the form, content, and timeliness of proposals for alternate sites. No site designation shall be made in violation of the site selection standards established in section 116C.55. The board shall indicate the reasons for any refusal and indicate changes in size or type of facility necessary to allow site designation. Within a year after the board's acceptance of a utility's application, the board shall decide in accordance with the criteria specified in section 116C.55, subdivision 2, the responsibilities, procedures and considerations specified in section 116C.57, subdivision 4, and the considerations in chapter 116D which proposed site is to be designated. The board may extend for just cause the time limitation for its decision for a period not to exceed six months. When the board designates a site, it shall issue a certificate of site compatibility to the utility with any appropriate conditions. The board shall publish a notice of its decision in the state register within 30 days of site designation. No large electric power generating plant shall be constructed except on a site designated by the board.

Sec. 2. Minnesota Statutes 1994, section 116C.57, subdivision 5a, is amended to read:

Subd. 5a. [EXEMPTION OF CERTAIN SITES.] (a) A utility or person may apply to the board in a form and manner prescribed by the board to exempt the construction at a proposed site of a proposed electric power generating plant with a capacity between 50 and 80 megawatts, or in the case of a proposed cogeneration plant, with a capacity greater than 50 megawatts, from the requirements of sections 116C.51 to 116C.69. Within 15 days of the board's receipt of an exemption application, the utility or person shall:

(1) publish a notice and description of the exemption application in a legal newspaper of general circulation in the county of the proposed site;

(2) send a copy of the exemption application by certified mail to the chief executive of counties, home rule charter and statutory cities, and organized towns within ten miles of the proposed site; and

(3) mail to each owner whose property is part of or contiguous to the proposed site a notice and description of the exemption application, together with an understandable description of the procedures the owner must follow should the owner desire to object.

(b) For the purpose of giving mailed notice under this subdivision, owners are the persons or entities shown on the tax records of the county auditor or, in a county where tax statements are mailed by the county treasurer, on the records of the county treasurer, but other appropriate records may be used to identify owners. Except for owners of tax-exempt property or property taxed on a gross earnings basis, a property owner whose name does not appear on the records of the county auditor or the county treasurer is deemed to have waived the mailed notice unless the owner has requested in writing that the county auditor or county treasurer, as the case may be, include the owner's name on the records for that purpose. The failure to give mailed notice to a property owner or defects in the notice does not invalidate the proceedings, if a good faith effort is made to comply with this subdivision.

(c) If a person who owns real property that is part of or contiguous to the proposed site or an affected political subdivision files an objection with the board within 60 days after the board receives an exemption application, the board must either deny the exemption application or conduct a public hearing to determine if the proposed electric power generating plant at the proposed site will cause any significant human or environmental impact.

(d) The board shall require environmental review under chapter 116D to assist in making its determination regarding potential significant human and environmental impact.

(e) If the board determines that the proposed plant has an electric power production capacity less than 80 megawatts, or in the case of a proposed cogeneration plant, that the plant has an electric power production capacity greater than 50 megawatts, and the proposed site will not have a significant human and environmental impact, the board may exempt the construction of the proposed plant at the proposed site from the requirements of sections 116C.51 to 116C.69 with any appropriate conditions.

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(f) If an exemption is granted, the utility or person must comply with applicable state rules, local zoning, building, and land use rules, regulations, and ordinances of any regional, county, local, and special purpose governments in which the facility is to be located.

(g) The board may, by rule, require a fee to pay costs incurred in processing exemptions. An estimated cost for processing the exemption application must be discussed with the applicant and be approved by the board when an application is received. The applicant must remit 50 percent of the approved cost within 14 days of acceptance of the application. The balance is due within 30 days after receipt of an invoice from the board. Costs in excess of those approved must be certified by the board and charged to the applicant. Certification is prima facie evidence that the costs are reasonable and necessary. All money received pursuant to this subdivision must be deposited in a special account. Money in the account is appropriated to the board to pay expenses incurred in processing the application and in the event the expenses are less than the fee paid, to refund the excess to the applicant.

ARTICLE 2

Section 1. Minnesota Statutes 1994, section 216B.243, subdivision 2, is amended to read:

Subd. 2. [CERTIFICATE REQUIRED.] No large energy facility shall be sited or constructed in Minnesota, or if already sited and constructed under an exemption granted pursuant to section 3, be allowed to operate and generate electric power, without the issuance of a certificate of need by the commission pursuant to sections 216C.05 to 216C.30 and this section and consistent with the criteria for assessment of need.

Sec. 2. Minnesota Statutes 1994, section 216B.243, subdivision 3, is amended to read:

Subd. 3. [SHOWING REQUIRED FOR CONSTRUCTION.] No proposed large energy facility shall be certified for construction unless the applicant can show that demand for electricity cannot be met more cost-effectively through energy conservation and load-management measures and unless the applicant has otherwise justified its need. In assessing need, the commission shall evaluate:

(1) the accuracy of the long-range energy demand forecasts on which the necessity for the facility is based;

(2) the effect of existing or possible energy conservation programs under sections 216C.05 to 216C.30 and this section or other federal or state legislation on long-term energy demand;

(3) the relationship of the proposed facility to overall state energy needs, as described in the most recent state energy policy and conservation report prepared under section 216C.18;

(4) promotional activities that may have given rise to the demand for this facility;

(5) socially beneficial uses of the output of this facility, including its uses to protect or enhance environmental quality;

(6) the effects of the facility in inducing future development;

(7) possible alternatives for satisfying the energy demand including but not limited to potential for increased efficiency of existing energy generation facilities;

(8) the policies, rules, and regulations of other state and federal agencies and local governments; and

(9) any feasible combination of energy conservation improvements, required under section 216B.241, that can (i) replace part or all of the energy to be provided by the proposed facility, and (ii) compete with it economically;

(10) whether adding the capacity would displace existing capacity in a utility's rate base, and if so, whether the resulting utility system would achieve lower total cost, including environmental cost as determined under section 216B.2433; and

(11) whether adding the capacity would reduce a utility's ability to achieve, in the most cost-effective manner, the renewable energy additions anticipated in its approved resource plan.

Sec. 3. [EXEMPTION FOR COGENERATION FACILITIES GREATER THAN 80 MEGAWATTS.]

(a) A person proposing to construct a cogeneration facility which will utilize as its fuel gasified petroleum coke derived as a waste by-product of the oil refining process at an oil refining facility owned by the proposer and with a net capacity, alone or in combination with other plants at a single site, of not less than 80 megawatts, nor more than

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275 megawatts, may apply to the commission for a certificate of exemption from this section. This exemption applies only to the first 275 megawatts of cogeneration for which an exemption has been applied for under this section. Once the commission has received applications from persons who create petroleum coke as a by-product of the oil-refining process at an oil-refining facility owned by that person for cogeneration facilities utilizing the petroleum coke in a gasified form as its fuel totaling a net 275 megawatts of cogeneration capacity, the commission may not grant any additional exemptions from the certificate of need process under this section or Minnesota Statutes, section 216B.243. In addition, an exemption granted under this section or Minnesota Statutes, section 216B.243, may apply only to those facilities that, in addition to the above requirements, are:

(1) a cogeneration facility or a qualifying cogeneration facility as defined in the Federal Power Act, United States Code, title 16, section 796, paragraph (18), subparagraphs (A) and (B), and the regulations promulgated under that section; or

(2) an eligible facility producing electric power as an exempt wholesale generator, as defined in the Federal Public Utility Holding Company Act, United States Code, title 15, section 79z-5a, subsection (a), paragraph (2), that is also a cogeneration facility or a qualifying cogeneration facility.

(b) The commission shall grant a certificate of exemption, within 120 days of the receipt of the application, if the commission finds:

(1) that the person proposing to construct the facility has filed with the commission, prior to the commencement of actual construction of the facility, a document signed by the owner, or agent of the owner, stating that the owner of the proposed facility waives all rights under the Federal Public Utility Regulatory Policies Act, United States Code, title 16, section 824a-3 and the regulations promulgated under that section, to require any electric utility to offer to purchase, or to purchase, electric energy or capacity from the facility. The waiver shall identify the site and the anticipated net kilowatt capacity of the facility;

(2) that the proposed cogeneration facility meets the minimum standards of efficiency for a qualifying cogeneration facility set forth under the Federal Power Act, United States Code, title 16, section 796, paragraph (18), and the regulations promulgated under that section, as the standards existed as of the date the waiver of rights under clause (1) was originally filed with the commission. These federal standards of efficiency shall be the only standards for efficiency considered in making this determination. The person proposing to construct the facility must provide to the commission such information as the commission deems necessary to make the findings required for a certificate of exemption; and

(3) that the project is in the public interest, considering solely the provisions of Minnesota Statutes, section 216B.243, subdivision 3, clauses (10) and (11). Any information relating to the facility's cost of generation must be kept confidential by the commission.

(c) A facility granted a certificate of exemption under this section may not be sold or otherwise transferred to any other person or entity unless the buyer or transferee:

(1) files with the commission a waiver of rights as described in paragraph (b), clause (1), signed by the buyer or agent of the buyer; or

(2) relinquishes the certificate of exemption and obtains a certificate of need under this section or Minnesota Statutes, section 216B.243.

(d) The owner of a facility granted a certificate of exemption under this section must relinquish the certificate of exemption and obtain a certificate of need under this section or Minnesota Statutes, section 216B.243, to continue to operate the facility if:

(1) the owner of the facility withdraws the waiver required under paragraph (b), clause (1) from the commission; or

(2) the commission finds, after a contested case action, that the facility has failed, on an average basis over 180 days of normal operation, to meet the minimum standards of efficiency for a qualifying cogeneration facility required under paragraph (b), clause (2).

(e) If the owner of a facility granted a certificate of exemption under this section is later required to obtain a certificate of need by the provisions of paragraph (d), the facility shall not thereafter generate electric power for sale until the commission grants a certificate of need for the facility, but the facility may generate electric power for its own use and may also generate power for sale on site to be used on site.

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(f) The commission may hold public hearings, and comment on any aspect or effect of any facility applying for a certificate of exemption under paragraph (a), but such hearings and comments shall be advisory only. The comments shall be delivered to the owner of the facility within 90 days after filing of the document described in paragraph (b), clause (1). The owner of the facility shall defer construction of the facility until the earlier of (1) the expiration of the 90-day period, or (2) the receipt of the comments of the commission. The owner of the facility may respond to the comments of the commission.

(g) This section and Minnesota Statutes, section 216B.243, shall not apply to any case where the commission shall determine, after being advised by the attorney general, that its application has been preempted by federal law.

ARTICLE 3

Section 1. [272.0211] [SLIDING SCALE MARKET VALUE EXCLUSION FOR ELECTRIC POWER-GENERATION EFFICIENCY.]

Subdivision 1. [EFFICIENCY DETERMINATION AND CERTIFICATION.] (a) An owner or operator of a new or existing electric power-generation facility, excluding wind energy conversion systems, may apply to the commissioner of revenue for a market value exclusion on the property as provided for in this section. This exclusion shall apply only to the market value of the attached machinery and other personal property of the facility and shall not apply to the land upon which the facility is located. The commissioner of revenue shall prescribe the forms and procedures for this application.

(b) Upon receiving the application, the commissioner of revenue shall request the commissioner of public service to make a determination of the efficiency of the applicant's electric power generation facility. The applicant shall provide the commissioner of public service with whatever information the commissioner deems necessary to make the determination. Within 30 days of the receipt of the necessary information, the commissioner of public service shall determine the efficiency of the facility and certify the findings of that determination to the commissioner of revenue every two years thereafter from the date of the original certification.

(c) In calculating the efficiency of a facility, the commissioner of public service shall use a definition of efficiency which calculates efficiency as the sum of:

(1) the useful electrical power output; plus

(2) the useful thermal energy output; plus

(3) the fuel energy of the useful chemical products; plus

(4) the useful mechanical energy output, all divided by the total energy input to the facility, including the energy directly used on site to convert a substance into the fuel used in the facility, expressed as a percentage. The commissioner shall use the high heating value for all substances in the commissioner's efficiency calculations.

Subd. 2. [SLIDING SCALE EXCLUSION.] Based upon the efficiency determination provided by the commissioner of public service as described in subdivision 1, the commissioner of revenue shall subtract ten percent of the market value of the qualifying property for each percent that the efficiency of that specific facility, as determined by the commissioner of public service, is above 42 percent. The reduction in market value shall be reflected in the market value of the facility beginning with the assessment year immediately following the determination. For a facility that has its market value assessed by the county in which the facility is located, the commissioner of revenue shall certify to the assessor of that county the percentage of the market value of the facility to be excluded.

Sec. 2. [SUNSET; STUDY.]

This act shall be repealed as of August 1, 1998, but the repeal shall not apply to any facility which has commenced actual construction prior to that date and has received a certificate of exemption under article 2, section 3. The public utilities commission shall review the actual and potential positive and negative impacts of this act, and report its findings to the legislature by January 1, 1999."

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Delete the title and insert:

"A bill for an act relating to utilities; providing for siting and construction of certain power plants for three years; amending Minnesota Statutes 1994, sections 116C.57, subdivisions 1 and 5a; and 216B.243, subdivisions 2 and 3; proposing coding for new law in Minnesota Statutes, chapter 272."

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Environment and Natural Resources.

The report was adopted.

Johnson, R., from the Committee on Labor-Management Relations to which was referred:

H. F. No. 642, A bill for an act relating to workers' compensation; modifying provisions relating to insurance, procedures and benefits; providing penalties; appropriating money; amending Minnesota Statutes 1994, sections 79.01, subdivision 1; 79.074, by adding subdivisions; 79.252, subdivisions 2, 5, and by adding subdivisions; 79.50; 79.59, subdivision 4; 79A.01, subdivision 4; 79A.02, subdivisions 1 and 2; 79A.04, subdivisions 2 and 9; 79A.15; 175.007, subdivisions 1 and 3; 176.011, subdivisions 15 and 18; 176.021, subdivisions 3 and 3a; 176.061, subdivision 10; 176.101, subdivisions 1, 2, 5, 6, and by adding a subdivision; 176.102, subdivisions 1, 2, 4, 11, and by adding a subdivision; 176.105, subdivisions 2 and 4; 176.106, subdivision 7; 176.135, subdivision 2; 176.178; 176.179; 176.221, subdivision 6a; 176.225, by adding subdivisions; 176.238, subdivision 6; 176.645, subdivision 1; 176.66, subdivision 11; 176.83, subdivisions 1, 2, and 5; and 268.08, subdivision 3; proposing coding for new law in Minnesota Statutes, chapters 79; and 79A; repealing Minnesota Statutes 1994, sections 176.011, subdivisions 25 and 26; and 176.101, subdivisions 3a, 3b, 3c, 3d, 3e, 3f, 3g, 3h, 3i, 3j, 3k, 3l, 3m, 3n, 3o, 3p, 3q, 3r, 3s, 3t, and 3u; Minnesota Rules, parts 5220.0100 to 5220.1900; 5220.2500 to 5220.2940; 5221.0100 to 5221.0700; 5221.6010 to 5221.8900; and 5223.0300 to 5223.0650.

Reported the same back with the following amendments:

Pages 11 to 13, delete section 7 and insert:

"Sec. 7. [79B.01] [DEFINITIONS.]

Subdivision 1. [SCOPE.] For the purposes of this chapter, the terms defined in this section have the meanings given them.

Subd. 2. [ACCOUNTANT.] "Accountant" means a certified public accountant who is not an employee of any member of the mutual self-insurance group and is not affiliated with any individual or organization providing services other than accounting services to the group.

Subd. 3. [ACTUARY.] "Actuary" means an individual who has attained the status of associate or fellow of the casualty actuarial society who is not an employee of any member of the mutual self-insurance group and is not affiliated with any individual or organization providing services other than actuarial services to the group.

Subd. 4. [CERTIFICATE OF DEFAULT.] "Certificate of default" means a notice issued by the commissioner of commerce based upon information received from the commissioner of labor and industry, that a mutual self-insurance group has failed to pay compensation as required by chapter 176.

Subd. 5. [COMMISSIONER.] "Commissioner" means the commissioner of commerce except where specifically stated otherwise.

Subd. 6. [COMMON CLAIMS FUND.] "Common claims fund" means the cash, cash equivalents, or investment accounts maintained by the mutual self-insurance group to pay its workers' compensation liabilities.

Subd. 7. [DEFICIT.] "Deficit" as regards the mutual group self-insurance fund means the excess of the amount necessary to fulfill all obligations under chapter 176, for all fund years that the group has been in operation over all assets of the group. For purposes of this definition, provision must be made for the estimated liability for future special compensation fund assessments on claims incurred prior to the determination of the deficit. No discounting of any liabilities of the mutual self-insurance group shall be permitted in the determination of the deficit of the group.

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Subd. 8. [DIRECTORS.] "Directors" means the board of directors of a mutual self-insurance group.

Subd. 9. [FISCAL AGENT.] "Fiscal agent" means an individual or organization appointed and under the direction of the board of directors to maintain and administer the mutual self-insurance groups' common claims fund.

Subd. 10. [FUND YEAR.] "Fund year" for mutual self-insurance groups means that period of time for purposes of determining any deficit or surplus. A separate fund year shall be designated for each calendar year in which the mutual self-insurance group operates. Premiums earned during the fund year and any claim arising within the accident year upon which the fund year is based shall be included in that fund year.

Subd. 11. [INCURRED LIABILITIES FOR THE PAYMENT OF COMPENSATION.] "Incurred liabilities for the payment of compensation" means the sum of both of the following:

(1) an estimate of future workers' compensation benefits, including medical and indemnity; and

(2) an amount determined by the commissioner to be reasonably adequate to assure the administration of claims, including legal costs, but not to exceed ten percent of future workers' compensation benefits.

Subd. 12. [INSOLVENT MUTUAL SELF-INSURER.] "Insolvent mutual self-insurer" means a mutual self-insurance group that: (1) failed to pay compensation as a result of a declaration of bankruptcy or insolvency by a court of competent jurisdiction and whose security deposit has been called by the commissioner under chapter 176; or (2) failed to pay compensation and has been issued a certificate of default by the commissioner and whose security deposit has been called by the commissioner pursuant to chapter 176.

Subd. 13. [MEMBER.] "Member" means an employer that participates in a mutual self-insurance group.

Subd. 14. [MUTUAL SELF-INSURANCE GROUP.] "Mutual self-insurance group" means a group of employers that are self-insured for workers' compensation under chapter 176 and elects to operate under this chapter rather than chapter 79A.

Subd. 15. [MUTUAL SELF-INSURANCE GROUP SECURITY FUND.] "Mutual self-insurance group security fund" means the mutual self-insurance group security fund established pursuant to this chapter.

Subd. 16. [SERVICE COMPANY.] "Service company" means a vendor of risk management services or a licensed third-party administrator pursuant to section 60A.23, subdivision 8.

Subd. 17. [SPECIAL COMPENSATION FUND ASSESSMENT.] "Special compensation fund assessment" are those sums payable as set forth in section 176.129, subdivisions 3 and 4a.

Subd. 18. [SURPLUS.] "Surplus" as regards the mutual self-insurance group fund means the excess of all group assets over the amount necessary to fulfill all obligations under chapter 176, for all fund years that the group has been in operation. For purposes of this definition, provision must be made for the estimated liability for future special compensation fund assessments on claims incurred prior to the determination of surplus. No discounting of any liabilities of the mutual self-insurance group shall be permitted in the determination of the surplus of the group.

Subd. 19. [TRUSTEES.] "Trustees" means the board of trustees of the mutual self-insurance group security fund.

Subd. 20. [WORKERS' COMPENSATION REINSURANCE ASSOCIATION; WCRA.] "Workers' compensation reinsurance association" or "WCRA" means that association governed by sections 79.34 to 79.40.

Sec. 8. [79B.02] [ELIGIBILITY REQUIREMENTS FOR MUTUAL SELF-INSURANCE GROUPS.]

Subdivision 1. [GROUP ELIGIBILITY.] A mutual self-insurance group shall consist of employers in the same industry, trade, civic, cooperative, or professional group or employers having a common geographic location or any other reasonable basis to self-insure.

Subd. 2. [MEMBERSHIP ELIGIBILITY.] A mutual self-insurance group may only admit employers who meet the eligibility requirements established by the group including financial criteria, underwriting guidelines, risk profile, and any other requirements stated in the mutual self-insurance group's bylaws or plan of operation.

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Sec. 9. [79B.03] [MUTUAL SELF-INSURANCE GROUP APPLICATION.]

Subdivision 1. [PROCEDURE.] (a) Groups proposing to become licensed as mutual self-insurance groups must complete and submit an application on a form or forms prescribed by the commissioner.

(b) The commissioner shall grant or deny the group's application to self-insure within 60 days after a complete application has been filed, provided that the time may be extended for an additional 30 days upon 15 days' prior notice to the applicant.

Subd. 2. [REQUIRED DOCUMENTS.] All applications must be accompanied by the following:

(a) A detailed business plan including names of employers that will be members of the group, the risk profile of the proposed membership, underwriting guidelines, marketing plan, minimum financial criteria for each member, and financial projections for the first year of operation. Financial projections shall include balance sheet, income statement, statement of cash flows, and any other such items as the commissioner may require.

(b) A rating plan indicating the method in which premiums are to be charged to members including manual rates to be used for each relevant payroll classification code.

(c) A schedule indicating actual or anticipated operational expenses of the mutual self-insurance group. No authority to self-insure will be granted unless at least 65 percent of total revenues from all sources for any year of the mutual self-insurance group's operation are available for the payment of its claim and assessment obligations. For purposes of this calculation, claim and assessment obligations include the cost of allocated loss expenses as well as special compensation fund and mutual self-insurance group security fund assessments but exclude the cost of unallocated loss expenses.

(d) An indemnity agreement from each member who will participate in the mutual self-insurance group, signed by an officer of each member, providing for joint and several liability for all claims and expenses of all of the members of the mutual self-insurance group arising in any fund year in which the member was a participant on a form as specified in section 79B.11.

(e) Compilation level financial statements for each member and sworn affidavit of officer of each member as to litigation and potential litigation.

(f) A copy of the mutual self-insurance group bylaws as specified in section 79B.04, subdivision 2.

(g) A statement from the accountant of the mutual self-insurance group showing that the combined net worth of all of the initial members which shall be at least equal to $1,500,000 or ten times the group's retention level with the workers' compensation reinsurance association whichever is less.

Subd. 3. [APPROVAL.] The commissioner shall approve an application for self-insurance upon a determination that all of the following conditions are met:

(1) a completed application and all required documents have been submitted to the commissioner;

(2) the financial ability of mutual self-insurance group is sufficient to fulfill all obligations that may arise under this chapter or chapter 176;

(3) the annual premium of the mutual self-insurance group to be charged to initial members is at least $300,000;

(4) no individual member's premium comprises more than 20 percent of the entire mutual self-insurance group's annual premium;

(5) the mutual self-insurance group has contracted with a service company to administer its program; and

(6) the required securities or surety bond shall be on deposit prior to the effective date of coverage for the mutual self-insurance group.

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Sec. 10. [79B.04] [MUTUAL SELF-INSURANCE GROUP OPERATING REQUIREMENTS.]

Subdivision 1. [BOARD OF DIRECTORS.] (a) A mutual self-insurance group shall elect a board of directors who shall have complete authority over and control of the assets of the mutual self-insurance group. The board of directors will also be responsible for all of the operations of the mutual self-insurance group.

(b) The composition of the board of directors shall be owners, officers, directors, partners, or employees of members of the mutual self-insurance group.

(c) The directors shall approve applications for membership in the mutual self-insurance group.

Subd. 2. [BYLAWS.] (a) The directors of each mutual self-insurance group shall cause to be adopted a set of bylaws that shall govern the operation of the group. These bylaws must specifically state the mutual self-insurance group's intention to operate under the provisions of this statute rather than the provisions of chapter 79A. All bylaws or amendments to the bylaws are subject to prior approval by the commissioner.

(b) These bylaws shall contain the following subjects:

(1) qualifications for mutual self-insurance group membership, including underwriting considerations;

(2) the method for selecting the board of directors including the directors' terms of office and the positions of chairperson, secretary, and treasurer;

(3) a requirement of active involvement and oversight by the board or committees of members appointed by the board, in the operation, risk management, member selection, and financial condition of the group;

(4) the procedure for amending the bylaws;

(5) investment of all assets of the fund;

(6) frequency and extent of loss control or safety engineering services provided to members;

(7) a schedule for payment and collection of premiums;

(8) expulsion procedures, including expulsion for nonpayment of premiums and expulsion for excessive losses;

(9) delineation of authority granted to the fiscal agent;

(10) delineation of authority granted to the service company;

(11) basis for determining rating plan and premium contributions by members, including any experience rating program, schedule rating plan, or premium discount plan;

(12) procedures for resolving disputes between members of the group, which shall not include submitting them to the commissioner; and

(13) basis for determining distribution of any surplus to the members or assessing the membership to make up any deficit.

(c) All mutual self-insurance groups shall file copies of its current bylaws with the commissioner. Any changes in the bylaws shall be filed with the commissioner at least 30 days prior to their taking effect. The commissioner reserves the right to order the mutual self-insurance group to rescind, revoke, or amend any bylaw.

Subd. 3. [ANNUAL REVIEW.] The directors shall review at least annually the following items for the purpose of determining whether these areas of concern are being adequately provided for:

(1) service company performance;

(2) loss control and safety engineering;

(3) investment policies;

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(4) collection of delinquent debts;

(5) expulsion procedures;

(6) initial member review;

(7) fiscal agent performance; and

(8) claims handling and reporting.

Subd. 4. [FINANCIAL STANDARDS.] Mutual self-insurance groups shall have and maintain:

(1) combined net worth of all of the members in an amount at least equal to $1,500,000 or ten times the group's selected retention level of the workers' compensation reinsurance association, whichever is less;

(2) sufficient assets, net worth, and liquidity in the group's common claims fund to promptly and completely meet all obligations of its members under this chapter or chapter 176.

Subd. 5. [RATES.] (a) The mutual self-insurance group shall not vary its rating practices from the rating plan most recently approved for use by the commissioner. The group shall be permitted to replace its rating plan with another upon approval by the commissioner. The group shall be allowed to change its rating plan no more than once per year.

(b) A rating plan must indicate the method in which premiums are to be charged to members including manual rates to be used for each relevant payroll classification code. The rating plan shall be reviewed by an actuary and shall include an analysis of the actuarial soundness of the plan and the effect of the plan on fund solvency and liquidity. Premium volume discounts and a schedule rating plan will be permitted if they can be shown to be actuarially sound and a description of how they will be used is included with the application.

(c) In developing its rating plan, the mutual self-insurance group shall base its plan on the Minnesota workers' compensation insurers association's manual of rules, rates, and classifications approved for use in Minnesota by the commissioner.

Subd. 6. [NEW MEMBERSHIP.] (a) The mutual self-insurance group shall file with the commissioner the name of any new employer that has been accepted in the group prior to the initiation date of membership along with the member's signed indemnity agreement and evidence the member has deposited sufficient premiums with the group as required by the mutual self-insurance group's bylaws or plan of operation. The security deposit of the group will be increased to an amount equal to 50 percent of the new member's premium.

(b) An employer must belong to the mutual self-insurance group for at least one year. If a member voluntarily terminates its membership in a group during the second or third year of membership, the mutual self-insurance group shall assess the member at least the following penalties: 25 percent of the premium due from that member for that year if termination occurs within the second year of membership, and 15 percent of the premium due from that member for that year if termination occurs within the third year. No penalty shall be required if an employer's withdrawal is due to merger, dissolution, sale of the company, or change in the type of business. Following the completion of three consecutive years of membership in the group, withdrawal from the group shall be allowed without penalty, provided that 30 days' advance written notice is given to the board of directors of the group, and the group's plan of operation or bylaws allow such withdrawal without a penalty. Any penalty assessed pursuant to this subdivision shall be paid to the common claims fund.

Subd. 7. [WITHDRAWAL OR EXPULSION.] Upon receipt of any notice of a member to withdraw or a decision by the board of directors to expel a member, the mutual self-insurance group shall give immediate notice to the commissioner. If the combined net worth or financial condition of the mutual self-insurance group members, excluding the terminating or expelled member, fails to meet the requirements specified in subdivision 4, the group shall so notify the commissioner within 15 days.

Subd. 8. [MUTUAL SELF-INSURANCE GROUP COMMON CLAIMS FUND.] (a) Each mutual self-insurance group shall establish a common claims fund.

(b) Each mutual self-insurance group shall, not less than ten days prior to the proposed effective date of the group, collect cash premiums from each member equal to not less than 20 percent of the member's annual workers'

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compensation premium to be paid into a common claims fund, maintained by the group in a designated depository. The remaining balance of the member's premium shall be paid to the group in a reasonable manner over the remainder of the year. Payments in subsequent years shall be made according to the schedule in the business plan, classifications, and rates approved for use by the commissioner.

(c) Each mutual self-insurance group shall initiate proceedings against a member when that member becomes more than 15 days delinquent in any payment of premium to the fund.

(d) There shall be no commingling of any assets of the common claims fund with the assets of any individual member or with any other account of the service company or fiscal agent unrelated to the payment of workers' compensation liabilities incurred by the group.

Subd. 9. [FISCAL AGENT.] (a) The mutual self-insurance group shall designate a fiscal agent to administer the financial affairs of the fund. The fiscal agent shall furnish a fidelity bond issued by a licensed and admitted insurer, with the mutual self-insurance group as obligee, in an amount sufficient to protect the fund against the misappropriation or misuse of any money or securities. Such fiscal agent shall not be an owner, officer, or employee of either the service company or an affiliate of the service company.

(b) All funds shall remain in the control of the mutual self-insurance group or its fiscal agent. One or more revolving funds for payment of compensation benefits due may be established for the use by the service company. The service company shall furnish a fidelity bond issued by a licensed and admitted insurer, covering its employees, with the mutual self-insurance group as obligee, in an amount sufficient to protect all money placed in such revolving fund. Should the fidelity bond of the fiscal agent also cover the money in the revolving fund, the service company shall not be required to furnish a fidelity bond.

(c) No director, fiscal agent, or service company of the mutual self-insurance group shall utilize any of the money collected as premiums for any purpose unrelated to the operation of the mutual self-insurance group. No director, fiscal agent, or service company of the mutual self-insurance group shall borrow any money from the mutual self-insurance group's fund.

Subd. 10. [JOINT AND SEVERAL LIABILITY.] Each member of a mutual self-insurance group is jointly and severally liable for the obligations incurred by any member of the same group under chapter 176 for any fund year in which the member was a participant of the mutual self-insurance group.

Subd. 11. [ANNUAL AUDIT.] The accounts and records of the common claims fund shall be audited annually. Audits shall be made by an accountant, based on generally accepted accounting principles and generally accepted auditing standards, and supported by actuarial review and opinion of future contingent liabilities. The accountant shall determine the amount of deficit or surplus of the common claims fund. All audits required by this section shall be filed with the commissioner 120 days after the close of the fiscal year of the mutual self-insurance group. The commissioner may require a special audit to be made at other times if the financial stability of the fund or the adequacy of its reserves is in question.

Subd. 12. [INVESTMENTS.] (a) Any securities purchased by the common claims fund shall be in such denominations and with dates of maturity to ensure securities may be redeemable at sufficient time and in sufficient amounts to meet the fund's current and long-term liabilities.

(b) Cash assets of the common claims fund may be invested in the following securities:

(1) direct obligations of the United States government, except mortgage-backed securities of the Government National Mortgage Association;

(2) bonds, notes, debentures, and other instruments which are obligations of agencies and instrumentalities of the United States including, but not limited to, the federal National Mortgage Association, the federal Home Loan Mortgage Corporation, the federal Home Loan Bank, the Student Loan Marketing Association, and the Farm Credit System, and their successors, but not including collateralized mortgage obligations or mortgage pass-through instruments;

(3) bonds or securities that are issued by the state of Minnesota and that are secured by the full faith and credit of the state;

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(4) certificates of deposit which are insured by the federal Deposit Insurance Corporation and are issued by a Minnesota depository institution;

(5) obligations of, or instruments unconditionally guaranteed by, Minnesota depository institutions whose long-term debt rating is at least "AA-," or "AA3," or their equivalent by at least two nationally recognized rating agencies.

Subd. 13. [ADMINISTRATION.] (a) The mutual self-insurance group shall be required to secure administrative services from a service company which maintains an office in the state of Minnesota. Services provided by the service company must at a minimum include claim handling, safety and loss control, and preparation of all required regulatory reports.

(b) The service company retained by a mutual self-insurance group to administer workers' compensation claims shall estimate the total accrued liability of the group for the payment of compensation for the mutual group's annual report to the commissioner and shall make the estimate both in good faith and with the exercise of a reasonable degree of care.

Subd. 14. [MARKETING AND COMMUNICATIONS.] A mutual self-insurance group's applications, coverage documents, quotations, and all marketing materials must prominently display information indicating that the mutual self-insurance group is a self-insured program, that members are jointly and severally liable for the obligations of the mutual self-insurance group, and that members will be assessed for any deficits created by the mutual self-insurance group.

Subd. 15. [REINSURANCE.] (a) A mutual self-insurance group must purchase specific excess coverage with the workers' compensation reinsurance association at either the mutual self-insurance group retention level of $100,000 or the lower retention level for its first three years of operation. After that time it may select the higher retention level with prior notice given to and approval of the commissioner.

(b) The commissioner may require a mutual self-insurance group to purchase aggregate excess coverage. Any reinsurance or excess coverage purchased other than that of the workers' compensation reinsurance association must be secured with an insurance company or reinsurer licensed to underwrite such coverage in Minnesota and maintains at least an "A" rating with the A.M. Best rating organization.

Subd. 16. [DISBURSEMENT OF FUND SURPLUS.] (a) One hundred percent of any surplus money for a fund year in excess of 125 percent of the amount necessary to fulfill all obligations under the workers' compensation act, chapter 176, for that fund year may be declared refundable to a member at any time. The date shall be no earlier than 18 months following the end of such fund year. The first disbursement of fund surplus may not be made prior to the completion of an operational audit by the commissioner. There can be no more than one refund made in any 12-month period. When all the claims of any one fund year have been fully paid, as certified by an actuary, 50 percent of the surplus money from that fund year may be declared refundable.

(b) The mutual self-insurance group shall give notice to the commissioner of any refund. Said notice shall be accompanied by a statement from the mutual self-insurer's certified public accountant certifying that the proposed refund is in compliance with paragraph (a).

Subd. 17. [SATISFACTION OF FUND DEFICIT.] In the event of a deficit in any fund year, such deficit shall be paid up immediately, either from surplus from a fund year other than the current fund year, or by assessment of the membership. The commissioner shall be notified within ten days of any transfer of surplus funds. The commissioner, upon finding that a deficit in a fund year has not been satisfied by a transfer of surplus from another fund year, shall order an assessment to be levied on a proportionate basis against the members of the mutual self-insurance group during that fund year sufficient to make up any deficit.

Sec. 11. [79B.05] [MUTUAL SELF-INSURANCE GROUP REPORTING REQUIREMENTS.]

Subdivision 1. [REQUIRED REPORTS.] Each mutual self-insurance group shall submit to the commissioner reports in the form and manner required in section 79A.03, subdivision 9.

Subd. 2. [OPERATIONAL AUDIT.] (a) The commissioner, prior to authorizing surplus distribution of a mutual group's first fund year or no later than after the third anniversary of the group's authority to self-insure, shall conduct an operational audit of the mutual self-insurance group's claim handling and reserve practices as well as its underwriting procedures to determine if they adhere to the group's business plan. The commissioner may select outside consultants to assist in conducting the audit. After completion of the audit, the commissioner shall either renew or revoke the mutual self-insurance group's authority to self-insure. The commissioner may also order any changes deemed necessary in the claims handling, reserving practices, or underwriting procedures of the group.

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(b) The cost of the operational audit shall be borne by the mutual self-insurance group.

(c) In the first three years of each group's operation, the commissioner shall provide increased oversight.

Subd. 3. [UNIT STATISTICAL REPORT.] Each mutual self-insurance group will annually file a unit statistical report to the Minnesota workers' compensation insurers association.

Sec. 12. [79B.06] [MUTUAL SELF-INSURANCE GROUP SECURITY DEPOSIT.]

Subdivision 1. [ANNUAL SECURING OF LIABILITY.] Each year every mutual self-insurance group shall secure future incurred liabilities for the payment of compensation and the performance of the obligations of its membership imposed under chapter 176. A new deposit must be posted within 30 days of the filing of the mutual self-insurance group's annual actuarial report with the commissioner.

Subd. 2. [MINIMUM DEPOSIT.] The minimum deposit is 110 percent of the mutual self-insurance group's future incurred liabilities for the payment of compensation as determined by an actuary. Each actuarial study shall include a projection of future losses during a one-year period until the next scheduled actuarial study, less payments anticipated to be made during that time. Deduction should be made for the total amount which is estimated to be returned to the mutual self-insurance group from any specific excess insurance coverage, aggregate excess insurance coverage, and any supplementary benefits which are estimated to be reimbursed by the special compensation fund. Supplementary benefits will not be reimbursed by the special compensation fund unless the special compensation fund assessment pursuant to section 176.129 is paid and the required reports are filed with the special compensation fund. In the case of surety bonds, bonds shall secure administrative and legal costs in addition to the liability for payment of compensation reflected on the face of the bond. In no event shall the security be less than the group's selected retention limit of the workers' compensation reinsurance association. The posting or depositing of security under this section shall release all previously posted or deposited security from any obligations under the posting or depositing and any surety bond so released shall be returned to the surety. Any other security shall be returned to the depositor or the person posting the bond.

Subd. 3. [TYPE OF ACCEPTABLE SECURITY.] The commissioner may only accept as security, and the mutual self-insurance group shall deposit as security, cash, approved government securities as set forth in section 176.181, subdivision 2, surety bonds, irrevocable letters of credit, or personal guarantees of individual owners or shareholders of group members, in any combination. Interest or dividend income or other income generated by the security shall be paid to the group or, at the group's direction, applied to the group's security requirement. The current deposit shall include within its coverage all amounts covered by terminated surety bonds. As used in this section, an irrevocable letter of credit shall be accepted only if it is clean, irrevocable, and contains an evergreen clause.

(a) "Clean" means a letter of credit that is not conditioned on the delivery of any other documents or materials.

(b) "Irrevocable" means a letter of credit that cannot be modified or revoked without the consent of the beneficiary, once the beneficiary is established.

(c) "Evergreen clause" means one which specifically states that expiration of a letter of credit will not take place without a 60-day notice by the issuer and one which allows the issuer to conduct an annual review of the account party's financial condition. If prior notice of expiration is not given by the issuer, the letter of credit is automatically extended for one year.

A clean irrevocable letter of credit shall be accepted only if it is in the form prescribed by statute and is issued by a financial institution that is authorized to engage in banking in any of the 50 states or under the laws of the United States and whose business is substantially confined to banking and supervised by the state commissioner of commerce or banking, or similar official, and which has a long-term debt rating by a recognized national rating agency of investment grade or better. If no long-term debt rating is available, the financial institution must have the equivalent investment grade financial characteristics.

Subd. 4. [CUSTODIAL ACCOUNTS.] (a) All surety bonds, irrevocable letters of credit, and documents showing issuance of any irrevocable letter of credit shall be deposited with, and, except where specified by statute, in a form approved by the commissioner. All securities shall be deposited with the state treasurer or in a custodial account with a depository institution acceptable to the commissioner. The commissioner and the state treasurer may sell or collect, in the case of default of the mutual self-insurance group, the amounts that yield sufficient funds to pay workers' compensation due under chapter 176.

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(b) All securities in physical form on deposit with the state treasurer and surety bonds on deposit shall remain in the custody of the state treasurer or the commissioner for a period of time dictated by the applicable statute of limitations provided in chapter 176. All original instruments and contracts creating and governing custodial accounts shall remain with the state treasurer or the commissioner for a period of time dictated by the applicable statute of limitations provided in chapter 176.

(c) Securities in physical form deposited with the state treasurer must bear the following assignment, which shall be signed by an officer of the mutual self-insurance group, "assigned to the state of Minnesota for the benefit of injured employees of the self-insured employer under the Minnesota workers' compensation act." Any securities held in a custodial account, whether in physical form, book entry, or other form, need not bear the assignment language. The instrument or contract creating and governing any custodial account must contain the following assignment language. "This account is assigned to the state treasurer by the mutual self-insurance group to pay compensation and perform the obligations of employers imposed under Minnesota Statutes, chapter 176. A depositor or other party has no right, title, or interest in the security deposited in the account until released by the state."

(d) Upon the commissioner sending a request to renew, request to post, or request to increase a security deposit, a perfected security interest is created in the mutual self-insurance group's assets in favor of the commissioner to the extent of any then unsecured portion of the mutual self-insurance group's incurred liabilities. The perfected security interest is transferred to any cash or securities thereafter posted by the mutual self-insurance group with the state treasurer and is released only upon either of the following:

(1) the acceptance by the commissioner of a surety bond or irrevocable letter of credit for the full amount of the incurred liabilities for the payment of compensation; or

(2) the return of cash or securities by the commissioner. The mutual self-insurance group loses all right, title, and interest in and any right to control all assets or obligations posted or left on deposit as security. In the event of a declaration of bankruptcy or insolvency by a court of competent jurisdiction, or in the event of the issuance of a certificate of default by the commissioner, the commissioner shall liquidate the deposit as provided in this chapter, and transferred to the mutual self-insurance group security fund for application to the mutual self-insurance group's incurred liability.

(e) No securities in physical form on deposit with the state treasurer or the commissioner or custodial accounts assigned to the state shall be released or exchanged without an order from the commissioner. No security can be exchanged more than once every 90 days.

(f) Any securities deposited with the state treasurer or with a custodial account assigned to the state treasurer or letters of credit or surety bonds held by the commissioner may be exchanged or replaced by the depositor with any other acceptable securities or letters of credit or surety bond of like amount so long as the market value of the securities or amount of the surety bonds or letter of credit equals or exceeds the amount of the deposit required. If securities are replaced by surety bond, the mutual self-insurance group must maintain securities on deposit in an amount sufficient to meet all outstanding workers' compensation liability arising during the period covered by the deposit of the replaced securities.

(g) The commissioner shall return on an annual basis to the mutual self-insurance group all amounts of security determined by the commissioner to be in excess of the statutory requirements for the group to self-insure, including that necessary for administrative costs, legal fees, and the payment of any future workers' compensation claims.

Sec. 13. [79B.07] [DEFAULT OF A MUTUAL SELF-INSURANCE GROUP.]

Subdivision 1. [NOTICE OF INSOLVENCY, BANKRUPTCY, OR DEFAULT.] The commissioner of labor and industry shall notify the commissioner and the mutual self-insurance group security fund if the commissioner of labor and industry has knowledge that any mutual self-insurance group has failed to pay workers' compensation benefits as required by chapter 176. If the commissioner determines that a court of competent jurisdiction has declared the mutual self-insurance group to be bankrupt or insolvent and the mutual self-insurance group has failed to pay workers' compensation as required by chapter 176 or if the commissioner issues a certificate of default against a mutual self-insurance group for failure to pay workers' compensation as required by chapter 176, then the security deposit posted by the mutual self-insurance group shall be utilized to administer and pay the mutual self-insurance group's workers' compensation obligation.

Subd. 2. [REVOCATION OF CERTIFICATE TO SELF-INSURE.] (a) The commissioner shall revoke the mutual self-insurance group's certificate to self-insure once notified of the mutual self-insurance group's bankruptcy, insolvency, or upon issuance of a certificate of default. The revocation shall be completed as soon as practicable, but no later than 30 days after the mutual self-insurance group's security has been called.

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(b) The commissioner shall also revoke a mutual self-insurance group's authority to self-insure on the following grounds:

(1) failure to comply with any lawful order of the commissioner;

(2) failure to comply with any provision of chapter 176;

(3) a deterioration of the mutual self-insurance group's financial condition affecting its ability to pay obligations in chapter 176;

(4) committing an unfair or deceptive act or practice as defined in section 72A.20; or

(5) failure to abide by the plan of operation of the workers' compensation reinsurance association.

Subd. 3. [NOTICE BY THE COMMISSIONER.] In the event of bankruptcy, insolvency, or certificate of default, the commissioner shall immediately notify by certified mail the state treasurer, the surety, the issuer of an irrevocable letter of credit, and any custodian of the security. At the time of notification, the commissioner shall also call the security and transfer and assign it to the mutual self-insurance group security fund. The commissioner shall also notify by certified mail the mutual self-insurance group's security fund and order the security fund to assume the insolvent mutual self-insurance group's obligations for which it is liable under chapter 176.

Sec. 14. [79B.08] [MUTUAL SELF-INSURANCE GROUP SECURITY FUND.]

Subdivision 1. [CREATION.] The mutual self-insurance group security fund is established as a nonprofit corporation pursuant to the Minnesota nonprofit corporation act, sections 317A.001 to 317A.909. If any provision of the Minnesota nonprofit corporation act conflicts with any provision of this chapter, the provisions of this chapter apply. Each self-insurance group that elects to be or is governed by this chapter shall participate in the mutual self-insurance group security fund. This participation is a condition of maintaining its certificate to self-insure.

Subd. 2. [BOARD OF TRUSTEES.] The security fund is governed by a board consisting of a minimum of three and a maximum of five trustees. The trustees shall be representatives of mutual self-insurance groups who shall be elected by the participants of the security fund, each group having one vote. The trustees initially elected by the participants shall serve staggered terms of either two or three years. Thereafter, trustees shall be elected to three-year terms and shall serve until their successors are elected and assume office pursuant to the bylaws of the security fund. Two additional trustees shall be appointed by the commissioner. These trustees shall serve four-year terms. One of these trustees shall serve a two-year term. Thereafter, the trustees shall be appointed to four-year terms, and shall serve until their successors are appointed and assume office according to the bylaws of the security fund. In addition to the trustees elected by the participants or appointed by the commissioner, the commissioner of labor and industry or the commissioner's designee shall be an ex officio, nonvoting member of the board of trustees. A member of the board of trustees may designate another person to act in the member's place as though the member were acting and the designee's actions shall be deemed those of the member.

Subd. 3. [BYLAWS.] The security fund shall establish bylaws and a plan of operation, subject to the prior approval of the commissioner, necessary to the purposes of this chapter and to carry out the responsibilities of the security fund. The security fund may carry out its responsibilities directly or by contract, and may purchase services and insurance and borrow funds it deems necessary for the protection of the mutual self-insurance group participants and their employees.

Subd. 4. [CONFIDENTIAL INFORMATION.] The security fund may receive private data concerning the financial condition of mutual self-insurance groups whose liabilities to pay compensation have become its responsibility and shall adopt bylaws to prevent dissemination of that information.

Subd. 5. [EMPLOYEES.] Security fund employees are not state employees and are not subject to any state civil service regulations.

Subd. 6. [ASSUMPTION OF OBLIGATIONS.] Upon order of the commissioner under section 79B.07, subdivision 3, the security fund shall assume the workers' compensation obligations of an insolvent mutual self-insurance group. The commissioner shall further order the mutual self-insurance group security fund to commence payment of these obligations within 14 days of the receipt of this notification and order.

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Subd. 7. [ACT OR OMISSIONS; PENALTIES.] Notwithstanding subdivision 6, the security fund shall not be liable for the payment of any penalties assessed for any act or omission on the part of any person other than the security fund or its appointed administrator, including, but not limited to, the penalties provided in chapter 176 unless the security fund or its appointed administrator would be subject to penalties under chapter 176 as the result of the actions of the security fund or its administrator.

Subd. 8. [PARTY IN INTEREST.] The security fund shall be a party in interest in all proceedings involving compensation claims against an insolvent mutual self-insurance group whose compensation obligations have been paid or assumed by the security fund. The security fund shall have the same rights and defenses as the insolvent mutual self-insurance group, including, but not limited to, all of the following:

(1) to appear, defend, and appeal claims;

(2) to receive notice of, investigate, adjust, compromise, settle, and pay claims; and

(3) to investigate, handle, and deny claims.

Subd. 9. [PAYMENTS TO SECURITY FUND.] Notwithstanding anything in this chapter or chapter 176 to the contrary, in the event that the mutual self-insurance group security fund assumes the obligations of any bankrupt or insolvent mutual self-insurance group pursuant to this section, then the proceeds of any surety bond, workers' compensation reinsurance association, specific excess insurance or aggregate excess insurance policy, and any special compensation fund payment or supplementary benefit reimbursements shall be paid to the mutual self-insurance group security fund instead of the bankrupt or insolvent mutual self-insurance group or its successor in interest. No special compensation fund reimbursements shall be made to the security fund unless the special compensation fund assessments under section 176.129 are paid and the required reports are made to the special compensation fund.

Subd. 10. [INSOLVENT MUTUAL SELF-INSURANCE GROUP.] The security fund shall have the right and obligation to obtain reimbursement from an insolvent mutual self-insurance group up to the amount of the mutual self-insurance group's workers' compensation obligations paid and assumed by the security fund, including reasonable administrative and legal costs. This right includes, but is not limited to, a right to claim for wages and other necessities of life advanced to claimants as subrogee of the claimants in any action to collect against the mutual self-insurance group as debtor.

Subd. 11. [SECURITY DEPOSITS.] The security fund shall have the right and obligation to obtain from the security deposit of an insolvent mutual self-insurance group the amount of the mutual self-insurance group's compensation obligations, including reasonable administrative and legal costs, paid or assumed by the security fund. Reimbursement of administrative costs, including legal costs, shall be subject to approval by a majority of the security fund's voting trustees. The security fund shall be a party in interest in any action to obtain the security deposit for the payment of compensation obligations of an insolvent mutual self-insurance group.

Subd. 12. [LEGAL ACTIONS.] The security fund shall have the right to bring an action against any person or entity to recover compensation paid and liability assumed by the security fund, including, but not limited to, any excess insurance carrier of the insolvent mutual self-insurance group and any person or entity whose negligence or breach of an obligation contributed to any underestimation of the mutual self-insurance group's accrued liability as reported to the commissioner.

Subd. 13. [PARTY IN INTEREST.] The security fund may be a party in interest in any action brought by any other person seeking damages resulting from the failure of an insolvent mutual self-insurance group to pay workers' compensation required under this subdivision.

Subd. 14. [ASSETS MAINTAINED.] The security fund shall maintain cash, readily marketable securities, or other assets, or a line of credit, approved by the commissioner, sufficient to immediately continue the payment of the compensation obligations of an insolvent mutual self-insurance group pending receipt of the security deposit, surety bond proceeds, irrevocable letter of credit, or, if necessary, assessment of the participants. The commissioner may establish the minimum amount to be maintained by, or immediately available to, the security fund for this purpose.

Subd. 15. [ASSESSMENT.] The security fund may assess each of its participants a pro rata share of the funding necessary to carry out its obligation and the purposes of this chapter. Total annual assessments in any calendar year shall be no more than ten percent of the workers' compensation benefits paid under sections 176.101 and 176.111 during the previous calendar year. The annual assessment calculation shall not include supplementary benefits paid which will be reimbursed by the special compensation fund. Funds obtained by assessments under this subdivision may only be used for the purposes of this chapter. The trustees shall certify to the commissioner the collection and receipt of all money from assessments, noting any delinquencies. The trustees shall take any action deemed appropriate to collect any delinquent assessments.

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Subd. 16. [AUDIT OF FUND.] The trustees shall annually contract for an independent certified audit of the financial activities of the fund. An annual report on the financial status of the mutual self-insurance group security fund shall be submitted to the commissioner and to each group participant.

Sec. 15. [79B.09] [LETTER OF CREDIT FORM.]

The form for the letter of credit under this chapter shall be:

Effective Date

State of Minnesota (Beneficiary)

(Address)

Dear Sirs:

By order of . . . . . . . . . (Self-Insurer) we are instructed to open a clean irrevocable Letter of Credit in your favor for United States $. . . . . . . .(Amount).

We undertake that drawings under this Letter of Credit will be honored upon presentation of your draft drawn on . . . . . . . (issuing bank), at . . . . . . . . . (address) prior to expiration date.

The Letter of Credit expires on . . . . . . . . . but will automatically extend for an additional one year if you have not received by registered mail notification of intention not to renew 60 days prior to the original expiration date and each subsequent expiration date.

Except as expressly stated herein, this undertaking is not subject to any condition or qualification. The obligation of . . . . . . (issuing bank) under this Letter of Credit shall be the individual obligation of . . . . (issuing bank), in no way contingent upon reimbursement with respect thereto.

Very truly yours,

. . . . . . . . . . . . . .(signature)

Sec. 16. [79B.10] [SURETY BOND FORM.]

The form for the surety bond under this chapter shall be:

STATE OF MINNESOTA

COMMISSIONER

SURETY BOND OF SELF-INSURER OF WORKERS' COMPENSATION IN THE MATTER OF THE CERTIFICATE OF )

)SURETY BOND

)NO. . . . . . .

)PREMIUM

)

Employer, Certificate No:. . . . .

KNOW ALL PERSONS BY THESE PRESENTS:

That . . . . . . . . . . . . . . .

(Mutual Self-Insurance Group.)

Whose address is . . . . . . . . . . . . . . . .

as Principal, and . . . . . . . . . . . . . . . .

(Surety)

a corporation organized under the laws of . . . . . . . . . . . . . and authorized to transact a general surety business in the State of Minnesota, as Surety, are held and firmly bound to the State of Minnesota in the penal sum of . . . . . . dollars ($. . . . ) for which payment we bind ourselves, our heirs, executors, administrators, successors, and assigns, jointly and severally, firmly by these presents.

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WHEREAS, in accordance with Minnesota Statutes, chapter 176, the principal elected to self-insure, and made application for, or received from the commissioner of commerce of the state of Minnesota, a certificate to self-insure, upon furnishing of proof satisfactory to the commissioner of commerce of ability to self-insure and to compensate any or all employees of said principal for injury or disability, and their dependents for death incurred or sustained by said employees pursuant to the terms, provisions, and limitations of said statute;

NOW THEREFORE, the conditions of this bond or obligation are such that if principal shall pay and furnish compensation, pursuant to the terms, provisions, and limitations of said statute to its employees for injury or disability, and to the dependents of its employees, then this bond or obligation shall be null and void; otherwise to remain in full force and effect.

FURTHERMORE, it is understood and agreed that:

1. This bond may be amended, by agreement between the parties hereto and the commissioner of commerce as to the identity of the principal herein named; and, by agreement of the parties hereto, as to the premium or rate of premium. Such amendment must be by endorsement upon, or rider to, this bond, executed by the surety and delivered to or filed with the commissioner.

2. The surety does, by these presents, undertake and agree that the obligation of this bond shall cover and extend to all past, present, existing, and potential liability of said principal, as a self-insurer, to the extent of the penal sum herein named without regard to specific injuries, date or dates of injuries, happenings, or events.

3. The penal sum of this bond may be increased or decreased, by agreement between the parties hereto and the commissioner of commerce, without impairing the obligation incurred under this bond for the overall coverage of the said principal, for all past, present, existing, and potential liability, as a self-insurer, without regard to specific injuries, date or dates of injuries, happenings, or events, to the extent, in the aggregate, of the penal sum as increased or decreased. Such amendment must be by endorsement.

4. The aggregate liability of the surety hereunder on all claims whatsoever shall not exceed the penal sum of this bond in any event.

5. This bond shall be continuous in form and shall remain in full force and effect unless terminated as follows:

(a) The obligation of this bond shall terminate upon written notice of cancellation from the surety, given by registered or certified mail to the commissioner of commerce, state of Minnesota, save and except as to all past, present, existing, and potential liability of the principal incurred, including obligations resulting from claims which are incurred but not yet reported, as a self-insurer prior to effective date of termination. This termination is effective 60 days after receipt of notice of cancellation by the commissioner of commerce, state of Minnesota.

(b) This bond shall also terminate upon the revocation of the certificate to self-insure, save and except as to all past, present, existing, and potential liability of the principal incurred, including obligations resulting from claims which are incurred, but not yet reported, as a self-insurer prior to effective date of termination. The principal and the surety, herein named, shall be immediately notified in writing by said commissioner, in the event of such revocation.

6. Where the principal posts with the commissioner of commerce, state of Minnesota, or the state treasurer, state of Minnesota, a replacement security deposit, in the form of a surety bond, irrevocable letter of credit, cash, securities, or any combination thereof, in the full amount as may be required by the commissioner of commerce, state of Minnesota, to secure all incurred liabilities for the payment of compensation of said principal under Minnesota Statutes, chapter 176, the surety is released from obligations under the surety bond upon the date of acceptance by the commissioner of commerce, state of Minnesota, of said replacement security deposit.

7. If the said principal shall suspend payment of workers' compensation benefits or shall become insolvent or a receiver shall be appointed for its business, or the commissioner of commerce, state of Minnesota, issues a certificate of default, the undersigned surety will become liable for the workers' compensation obligations of the principal on the date benefits are suspended. The surety shall begin payments within 14 days under paragraph 8, or 30 days under paragraph 10, after receipt of written notification by certified mail from the commissioner of commerce, state of Minnesota, to begin payments under the terms of this bond.

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8. If the surety exercises its option to administer claims, it shall pay benefits due to the principal's injured workers within 14 days of the receipt of the notification by the commissioner of commerce, state of Minnesota, pursuant to paragraph 7, without a formal award of a compensation judge, the commissioner of labor and industry, any intermediate appellate court, or the Minnesota supreme court and such payment will be a charge against the penal sum of the bond. Administrative and legal costs incurred by the surety in discharging its obligations and payment of the principal's obligations for administration and legal expenses under Minnesota Statutes, chapters 79B and 176, shall also be a charge against the penal sum of the bond; however, the total amount of this surety bond set aside for the payment of said administrative and legal expenses shall be limited to a maximum ten percent of the total penal sum of the bond unless otherwise authorized by the security fund.

9. If any part or provision of this bond shall be declared unenforceable or held to be invalid by a court of proper jurisdiction, such determination shall not affect the validity or enforceability of the other provisions or parts of this bond.

10. If the surety does not give notice to the security fund and the commissioner of commerce, state of Minnesota, within two business days of receipt of written notification from the commissioner of commerce, state of Minnesota, pursuant to paragraph 7, to exercise its option to administer claims pursuant to paragraph 8, then the self-insurer's security fund will assume the payments of the workers' compensation obligations of the principal pursuant to Minnesota Statutes, chapter 176. The surety shall pay, within 30 days of the receipt of the notification by the commissioner of commerce, state of Minnesota, pursuant to paragraph 7, to the self-insurer's security fund as an initial deposit an amount equal to ten percent of the penal sum of the bond, and shall thereafter, upon notification from the security fund that the balance of the initial deposit had fallen to one percent of the penal sum of the bond, remit to the security fund an amount equal to the payments made by the security fund in the three calendar months immediately preceding said notification. All such payments will be a charge against the penal sum of the bond.

11. Disputes concerning the posting, renewal, termination, exoneration, or return of all or any portion of the principal's security deposit or any liability arising out of the posting or failure to post security, or the adequacy of the security or the reasonableness of administrative costs, including legal costs, arising between or among a surety, the issuer of an agreement of assumption and guarantee of workers' compensation liabilities, the issuer of a Letter of Credit, any custodian of the security deposit, the principal, or the self-insurer's security fund shall be resolved by the commissioner of commerce under Minnesota Statutes, chapters 79B and 176.

12. Written notification to the surety required by this bond shall be sent to:

. . . . . . . . . . . . . . . . . . . . . . . . . .

Name of Surety

. . . . . . . . . . . . . . . . . . . . . . . . . .

To the attention of Person or Position

. . . . . . . . . . . . . . . . . . . . . . . . . .

Address

. . . . . . . . . . . . . . . . . . . . . . . . . .

City, State, Zip

Written notification to the principal required by this bond shall be sent to:

. . . . . . . . . . . . . . . . . . . . . . . . . .

Name of Principal

. . . . . . . . . . . . . . . . . . . . . . . . . .

To the attention of Person or Position

. . . . . . . . . . . . . . . . . . . . . . . . . .

Address

. . . . . . . . . . . . . . . . . . . . . . . . . .

City, State, Zip

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13. This bond is executed by the surety to comply with Minnesota Statutes, chapter 176, and said bond shall be subject to all terms and provisions thereof.

. . . . . . . . . . . . . . . . . . . . . . . . . .

Name of Surety

. . . . . . . . . . . . . . . . . . . . . . . . . .

Address

. . . . . . . . . . . . . . . . . . . . . . . . . .

City, State, Zip

THIS bond is executed under an unrevoked appointment or power of attorney.

I certify (or declare) under penalty of perjury under the laws of the state of Minnesota that the foregoing is true and correct.

Date:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Signature of Attorney-In-Fact

. . . . . . . . . . . . . . . . . . . . . . . . . .

Printed or Typed Name of

Attorney-In-Fact

A copy of the transcript or record of the unrevoked appointment, power of attorney, bylaws, or other instrument, duly certified by the proper authority and attested by the seal of the insurer entitling or authorizing the person who executed the bond to do so for and in behalf of the insurer, must be filed in the office of the commissioner of commerce or must be included with this bond for such filing.

Sec. 17. [79B.11] [INDEMNITY AGREEMENT FORM.]

INDEMNITY AGREEMENT

1. Whereas, (name of company) has agreed to be and has been accepted as a member of (name of mutual self-insurance group).

2. Whereas, (name of company) has agreed to be bound by all of the provisions of the Minnesota workers' compensation act and all rules promulgated thereunder.

3. Whereas, that (name of company) has agreed to be bound by bylaws or plan of operation and all amendments thereto of (name of mutual self-insurance group).

4. Whereas, that (name of company) has agreed to be jointly and severally liable for all claims and expenses of all the members of (name of mutual self-insurance group) arising in any fund year in which (name of company) is a member of the group. Provided that if (name of company) is not a member for the full year, it shall be only liable for a pro rata share of that liability.

IN WITNESS WHEREOF, the (name of company) and (name of mutual self-insurance group) have caused this indemnity agreement to be executed by its authorized agreement to be executed by its authorized officers:

Mutual Self-Insurance Group Name Company Name

By: . . . . . . . . . . . . . . . . . . . . . . . .By: . . . . . . . . . . . . . . . . . . . . . . . .

date: . . . . . . . . . . . . . . . . . . . . . . .date: . . . . . . . . . . . . . . . . . . . . . . .

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Sec. 18. [79B.12] [OPEN MEETING; ADMINISTRATIVE PROCEDURE ACT.]

The mutual self-insurance group security fund and its board of trustees shall not be subject to:

(1) the open meeting law;

(2) the open appointments law;

(3) the data privacy law; and

(4) except where specifically set forth, the administrative procedure act.

Sec. 19. [79B.13] [RULES.]

The commissioner may adopt, amend, and repeal rules reasonably necessary to carry out the purposes of this chapter. This authorization includes, but is not limited to, the adoption of rules to do all of the following:

(1) except as otherwise specifically provided by statute, specifying what constitutes ability to self-insure and to pay any compensation which may become due under chapter 176;

(2) specifying what constitutes a failure or inability to fulfill an insolvent mutual self-insurance group's obligations under this chapter;

(3) interpreting and defining the terms used in this chapter;

(4) establishing procedures and standards for hearing and determinations and providing for those determinations to be appealed;

(5) except where otherwise specifically provided by statute, specifying the standards, forms, and content of agreements, forms, and reports between parties who have obligations pursuant to this chapter;

(6) providing for the combinations and relative liabilities of security deposits, assumptions, and guarantees used under this chapter; and

(7) disclosing otherwise private data concerning mutual self-insurers to courts or mutual self-insurance group security funds and specifying appropriate safeguards for that information.

Sec. 20. [79B.14] [GOVERNING LAW.]

If there is any inconsistency among any rule or statute and law, chapter 79B shall govern."

Page 14, line 5, delete "pools" and insert "mutual groups"

Page 14, line 11, delete "shall have" and insert "has"

Page 14, delete section 9

Page 15, delete section 11

Page 15, line 35, delete "11" and insert "22"

Page 18, after line 23, insert:

"Sec. 7. Minnesota Statutes 1994, section 79.34, subdivision 2, is amended to read:

Subd. 2. [LOSSES; RETENTION LIMITS.] The reinsurance association shall provide and each member shall accept indemnification for 100 percent of the amount of ultimate loss sustained in each loss occurrence relating to one or more claims arising out of a single compensable event, including aggregate losses related to a single event or occurrence which constitutes a single loss occurrence, under chapter 176 on and after October 1, 1979, in excess of

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$300,000 or $100,000 a low, a high, or a super retention limit, at the option of the member. In case of occupational disease causing disablement on and after October 1, 1979, each person suffering disablement due to occupational disease is considered to be involved in a separate loss occurrence. The lower retention limit shall be increased to the nearest $10,000, on January 1, 1982 and on each January 1 thereafter by the percentage increase in the statewide average weekly wage, as determined in accordance with section 176.011, subdivision 20. On January 1, 1982 and on each January 1 thereafter, the higher retention limit shall be increased by the amount necessary to retain a $200,000 difference between the two retention limits. On January 1, 1995, the lower retention limit is $250,000, which shall also be known as the 1995 base retention limit. On each January 1 thereafter, the cumulative annual percentage changes in the statewide average weekly wage after October 1, 1994, as determined in accordance with section 176.011, subdivision 20, shall first be multiplied by the 1995 base retention limit, the result of which shall then be added to the 1995 base retention limit. The resulting figure shall be rounded to the nearest $10,000, yielding the low retention limit for that year, provided that the low retention limit shall not be reduced in any year. The high retention limit shall be two times the low retention limit and shall be adjusted when the low retention limit is adjusted. The super retention limit shall be four times the low retention limit and shall be adjusted when the low retention limit is adjusted. Ultimate loss as used in this section means the actual loss amount which a member is obligated to pay and which is paid by the member for workers' compensation benefits payable under chapter 176 and shall not include claim expenses, assessments, damages or penalties. For losses incurred on or after January 1, 1979, any amounts paid by a member pursuant to sections 176.183, 176.221, 176.225, and 176.82 shall not be included in ultimate loss and shall not be indemnified by the reinsurance association. A loss is incurred by the reinsurance association on the date on which the accident or other compensable event giving rise to the loss occurs, and a member is liable for a loss up to its retention limit in effect at the time that the loss was incurred, except that members which are determined by the reinsurance association to be controlled by or under common control with another member, and which are liable for claims from one or more employees entitled to compensation for a single compensable event, including aggregate losses relating to a single loss occurrence, may aggregate their losses and obtain indemnification from the reinsurance association for the aggregate losses in excess of the higher highest retention limit selected by any of the members in effect at the time the loss was incurred. Each member is liable for payment of its ultimate loss and shall be entitled to indemnification from the reinsurance association for the ultimate loss in excess of the member's retention limit in effect at the time of the loss occurrence.

A member that chooses the higher high or super retention limit shall retain the liability for all losses below the higher chosen retention limit itself and shall not transfer the liability to any other entity or reinsure or otherwise contract for reimbursement or indemnification for losses below its retention limit, except in the following cases: (a) when the reinsurance or contract is with another member which, directly or indirectly, through one or more intermediaries, control or are controlled by or are under common control with the member; (b) when the reinsurance or contract provides for reimbursement or indemnification of a member if and only if the total of all claims which the member pays or incurs, but which are not reimbursable or subject to indemnification by the reinsurance association for a given period of time, exceeds a dollar value or percentage of premium written or earned and stated in the reinsurance agreement or contract; (c) when the reinsurance or contract is a pooling arrangement with other insurers where liability of the member to pay claims pursuant to chapter 176 is incidental to participation in the pool and not as a result of providing workers' compensation insurance to employers on a direct basis under chapter 176; (d) when the reinsurance or contract is limited to all the claims of a specific insured of a member which are reimbursed or indemnified by a reinsurer which, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the insured of the member so long as any subsequent contract or reinsurance of the reinsurer relating to the claims of the insured of a member is not inconsistent with the bases of exception provided under clauses (a), (b) and (c); or (e) when the reinsurance or contract is limited to all claims of a specific self-insurer member which are reimbursed or indemnified by a reinsurer which, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the self-insurer member so long as any subsequent contract or reinsurance of the reinsurer relating to the claims of the self-insurer member are not inconsistent with the bases for exception provided under clauses (a), (b) and (c).

Whenever it appears to the commissioner of labor and industry that any member that chooses the higher high or super retention limit has participated in the transfer of liability to any other entity or reinsured or otherwise contracted for reimbursement or indemnification of losses below its retention limit in a manner inconsistent with the bases for exception provided under clauses (a), (b), (c), (d), and (e), the commissioner may, after giving notice and an opportunity to be heard, order the member to pay to the state of Minnesota an amount not to exceed twice the difference between the reinsurance premium for the higher and lower high or super retention limit, as appropriate, and the low retention limit applicable to the member for each year in which the prohibited reinsurance or contract was in effect. Any member subject to this penalty provision shall continue to be bound by its selection of the higher high or super retention limit for purposes of membership in the reinsurance association.

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Sec. 8. Minnesota Statutes 1994, section 79.35, is amended to read:

79.35 [DUTIES; RESPONSIBILITIES; POWERS.]

The reinsurance association shall do the following on behalf of its members:

(a) Assume 100 percent of the liability as provided in section 79.34;

(b) Establish procedures by which members shall promptly report to the reinsurance association each claim which, on the basis of the injury sustained, may reasonably be anticipated to involve liability to the reinsurance association if the member is held liable under chapter 176. Solely for the purpose of reporting claims, the member shall in all instances consider itself legally liable for the injury. The member shall advise the reinsurance association of subsequent developments likely to materially affect the interest of the reinsurance association in the claim;

(c) Maintain relevant loss and expense data relative to all liabilities of the reinsurance association and require each member to furnish statistics in connection with liabilities of the reinsurance association at the times and in the form and detail as may be required by the plan of operation;

(d) Calculate and charge to members a total premium sufficient to cover the expected liability which the reinsurance association will incur in excess of the higher retention limit but less than the prefunded limit, together with incurred or estimated to be incurred operating and administrative expenses for the period to which this premium applies and actual claim payments to be made by members, during the period to which this premium applies, for claims in excess of the prefunded limit in effect at the time the loss was incurred. Each member shall be charged a premium established by the board as sufficient to cover the reinsurance association's incurred liabilities and expenses between the member's selected retention limit and the prefunded limit. The prefunded limit shall be $2,500,000 on and after October 1, 1979, provided that the prefunded limit shall be increased on January 1, 1983 and on each January 1 thereafter by the percentage increase in the statewide average weekly wage, to the nearest $100,000, as determined in accordance with section 176.011, subdivision 20 times the lower retention limit established in section 79.34, subdivision 2. Each member shall be charged a proportion of the total premium calculated for its selected retention limit in an amount equal to its proportion of the exposure base of all members during the period to which the reinsurance association premium will apply. The exposure base shall be determined by the board and is subject to the approval of the commissioner of labor and industry. In determining the exposure base, the board shall consider, among other things, equity, administrative convenience, records maintained by members, amenability to audit, and degree of risk refinement. Each member exercising the lower retention option shall also be charged a premium established by the board as sufficient to cover incurred or estimated to be incurred claims for the liability the reinsurance association is likely to incur between the lower and higher retention limits for the period to which the premium applies. Each member shall also be charged a premium determined by the board to equitably distribute excess or deficient premiums from previous periods including any excess or deficient premiums resulting from a retroactive change in the prefunded limit. The premiums charged to members shall not be unfairly discriminatory as defined in section 79.074. All premiums shall be approved by the commissioner of labor and industry;

(e) Require and accept the payment of premiums from members of the reinsurance association;

(f) Receive and distribute all sums required by the operation of the reinsurance association;

(g) Establish procedures for reviewing claims procedures and practices of members of the reinsurance association. If the claims procedures or practices of a member are considered inadequate to properly service the liabilities of the reinsurance association, the reinsurance association may undertake, or may contract with another person, including another member, to adjust or assist in the adjustment of claims which create a potential liability to the association. The reinsurance association may charge the cost of the adjustment under this paragraph to the member, except that any penalties or interest incurred under sections 176.183, 176.221, 176.225, and 176.82 as a result of actions by the reinsurance association after it has undertaken adjustment of the claim shall not be charged to the member but shall be included in the ultimate loss and listed as a separate item; and

(h) Provide each member of the reinsurance association with an annual report of the operations of the reinsurance association in a form the board of directors may specify."

Page 32, line 30, delete "28" and insert "6 and 9 to 30"

Page 32, line 31, after the period, insert "Section 7 is effective January 1, 1996."

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Page 40, after line 16, insert:

"Sec. 7. [176.043] [INDEPENDENT CONTRACTORS.]

Subdivision 1. [GENERAL RULE; ARE EMPLOYEES.] Except as provided in subdivision 2, every independent contractor doing commercial or residential building construction or improvements in the public or private sector is, for the purpose of this chapter, an employee of any employer under this chapter for whom the independent contractor is performing service in the course of the trade, business, profession, or occupation of that employer at the time of the injury.

Subd. 2. [EXCEPTION.] An independent contractor is not an employee of an employer for whom the independent contractor performs work or services if the independent contractor meets all of the following conditions:

(1) maintains a separate business with the independent contractor's own office, equipment, materials, and other facilities;

(2) holds or has applied for a federal employer identification number;

(3) operates under contracts to perform specific services or work for specific amounts of money and under which the independent contractor controls the means of performing the services or work;

(4) incurs the main expenses related to the service or work that the independent contractor performs under contract;

(5) is responsible for the satisfactory completion of work or services that the independent contractor contracts to perform and is liable for a failure to complete the work or service;

(6) receives compensation for work or service performed under a contract on a commission or per-job or competitive bid basis and not on any other basis;

(7) may realize a profit or suffer a loss under contracts to perform work or service;

(8) has continuing or recurring business liabilities or obligations; and

(9) the success or failure of the independent contractor's business depends on the relationship of business receipts to expenditures."

Page 45, line 10, before "gainful" insert "suitable" and delete "with the date of injury employer"

Page 45, delete lines 34 to 36

Page 46, delete lines 1 and 2

Page 46, after line 24, insert:

"(e) [SUITABLE GAINFUL EMPLOYMENT.] "Suitable gainful employment" means employment that is reasonably attainable and offers an opportunity to restore the injured employee as soon as possible and as nearly as possible to employment that produces an economic status as close as possible to that which the employee would have enjoyed without the disability. Consideration must be given to the employee's former employment and the employee's qualifications, including, but not limited to, the employee's age, education, previous work history, interests, and skills."

Page 54, after line 6, insert:

"Sec. 22. Minnesota Statutes 1994, section 176.135, subdivision 1, is amended to read:

Subdivision 1. [MEDICAL, PSYCHOLOGICAL, CHIROPRACTIC, PODIATRIC, OPTOMETRIC, SURGICAL, HOSPITAL.] (a) The employer shall furnish any medical, psychological, chiropractic, podiatric, surgical and hospital treatment, including nursing, medicines, medical, chiropractic, podiatric, optometric, and surgical supplies, crutches and apparatus, including artificial members, or, at the option of the employee, if the employer has not filed notice as hereinafter provided, Christian Science treatment in lieu of medical treatment, chiropractic medicine and medical supplies, as may reasonably be required at the time of the injury and any time thereafter to cure and relieve from the effects of the injury. This treatment shall include treatments necessary to physical rehabilitation.

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(b) The employer shall pay for the reasonable value of nursing services provided by a member of the employee's family in cases of permanent total disability.

(c) Exposure to rabies is an injury and an employer shall furnish preventative treatment to employees exposed to rabies.

(d) The employer shall furnish replacement or repair for artificial members, glasses, or spectacles, artificial eyes, podiatric orthotics, dental bridge work, dentures or artificial teeth, hearing aids, canes, crutches, or wheel chairs damaged by reason of an injury arising out of and in the course of the employment. For the purpose of this paragraph, "injury" includes damage wholly or in part to an artificial member. In case of the employer's inability or refusal seasonably to provide the items required to be provided under this paragraph, the employer is liable for the reasonable expense incurred by or on behalf of the employee in providing the same, including costs of copies of any medical records or medical reports that are in existence, obtained from health care providers, and that directly relate to the items for which payment is sought under this chapter, limited to the charges allowed by subdivision 7, and attorney fees incurred by the employee. Attorney's fees shall be determined on an hourly basis according to the criteria in section 176.081, subdivision 5.

(e) Both the commissioner and the compensation judges have authority to make determinations under this section in accordance with sections 176.106 and 176.305.

(f) An employer may require that the treatment and supplies required to be provided by an employer by this section be received in whole or in part from a managed care plan certified under section 176.1351 except as otherwise provided by that section."

Page 54, line 9, before "OR" insert "OPTOMETRISTS,"

Page 54, line 11, before "or" insert "optometrist,"

Page 54, line 17, before "or" insert "optometrists,"

Page 54, after line 21, insert:

"Sec. 24. Minnesota Statutes 1994, section 176.1351, subdivision 6, is amended to read:

Subd. 6. [RULES.] The commissioner may adopt emergency or permanent rules necessary to implement this section. Notwithstanding any rule to the contrary, a managed care organization may provide workers' compensation health care services at a cost below that required in Minnesota Rules, part 5218.0600, if the lower fees are equal to the fees charged to the employer for treatment of nonoccupational injuries and illnesses under the employer's group health plan."

Page 55, after line 35, insert:

"Sec. 27. Minnesota Statutes 1994, section 176.191, subdivision 1, is amended to read:

Subdivision 1. [ORDER; EMPLOYER PAYMENT.] Where compensation benefits are payable under this chapter, and a dispute exists between two or more employers or two or more insurers as to which is liable for payment, the commissioner, compensation judge, or court of appeals upon appeal shall direct, unless action is taken under subdivision 2, that one or more of the employers or insurers the employer or insurer at the employee's most recent employment make payment of the benefits pending a determination of liability. A temporary order may be issued under this subdivision whether or not the employers or insurers agree employer or insurer agrees to pay under the order.

When liability has been determined, the party held liable for the benefits shall be ordered to reimburse any other party for payments which the latter has made, including interest at the rate of 12 percent a year. The claimant shall also be awarded a reasonable attorney fee, to be paid by the party held liable for the benefits.

An order directing payment of benefits pending a determination of liability may not be used as evidence before a compensation judge, the workers' compensation court of appeals, or court in which the dispute is pending."

Pages 63 and 64, delete section 35

Page 64, after line 14, insert:

"Sec. 41. [REPEALER.]

Laws 1990, chapter 521, section 4, is repealed."

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1056

Page 64, delete line 21, and insert "Sections 3 to 13, 18 to 20, 26, 28 to 31, 34, 38, and 40 are"

Page 64, line 23, delete "29" and insert "33"

Page 64, line 24, after the period, insert "Section 41 is effective the day following final enactment."

Page 69, after line 3, insert:

"ARTICLE 5

COLLECTIVE BARGAINING AGREEMENTS

Section 1. [176.1812] [COLLECTIVE BARGAINING AGREEMENTS.]

Subdivision 1. [REQUIREMENTS.] Upon appropriate filing, the commissioner, compensation judge, workers' compensation court of appeals, and courts shall recognize as valid and binding a provision in a collective bargaining agreement between a qualified employer or qualified groups of employers engaged in construction, construction maintenance, and related activities and the certified and exclusive representative of its employees to establish certain obligations and procedures relating to workers' compensation. For purposes of this section, "qualified employer" means any self-insured employer, any employer, through itself or any affiliate as defined in section 60D.15, subdivision 2, who is responsible for the first $100,000 or more of any claim, or a private employer developing or projecting an annual workers' compensation premium, in Minnesota, of $250,000 or more. For purposes of this section, a "qualified group of employers" means a group of private employers engaged in workers' compensation group self-insurance complying with section 79A.03, subdivision 6, which develops or projects annual workers' compensation insurance premiums of $2,000,000 or more. This agreement must be limited to, but need not include, all of the following:

(a) an alternative dispute resolution system to supplement, modify, or replace the procedural or dispute resolution provisions of this chapter. The system may include mediation, arbitration, or other dispute resolution proceedings, the results of which may be final and binding upon the parties. A system of arbitration shall provide that the decision of the arbiter is subject to review either by the workers' compensation court of appeals in the same manner as an award or order of a compensation judge or, in lieu of review by the workers' compensation court of appeals, by the office of administrative hearings, by the district court, by the Minnesota court of appeals, or by the supreme court in the same manner as the workers' compensation court of appeals and may provide that any arbiter's award disapproved by a court be referred back to the arbiter for reconsideration and possible modification;

(b) an agreed list of providers of medical treatment that may be the exclusive source of all medical and related treatment provided under this chapter which need not be certified under section 176.1351;

(c) the use of a limited list of impartial physicians to conduct independent medical examinations;

(d) the creation of a light duty, modified job, or return to work program;

(e) the use of a limited list of individuals and companies for the establishment of vocational rehabilitation or retraining programs which list is not subject to the requirements of section 176.102;

(f) the establishment of safety committees and safety procedures; or

(g) the adoption of a 24-hour health care coverage plan if a 24-hour plan pilot project is authorized by law, according to the terms and conditions authorized by that law.

Subd. 2. [FILING AND REVIEW.] A copy of the agreement and the approximate number of employees who will be covered under it must be filed with the commissioner. Within 21 days of receipt of an agreement, the commissioner shall review the agreement for compliance with this section and the benefit provisions of this chapter and notify the parties of any additional information required or any recommended modification that would bring the agreement into compliance. Upon receipt of any requested information or modification, the commissioner must notify the parties within 21 days whether the agreement is in compliance with this section and the benefit provisions of this chapter.

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1057

In order for any agreement to remain in effect, it must provide for a timely and accurate method of reporting to the commissioner necessary information regarding service cost and utilization to enable the commissioner to annually report to the legislature. The information provided to the commissioner must include aggregate data on the:

(1) person hours and payroll covered by agreements filed;

(2) number of claims filed;

(3) average cost per claim;

(4) number of litigated claims, including the number of claims submitted to arbitration, the workers' compensation court of appeals, the office of administrative hearings, the district court, the Minnesota court of appeals or the supreme court;

(5) number of contested claims resolved prior to arbitration;

(6) projected incurred costs and actual costs of claims;

(7) employer's safety history;

(8) number of workers participating in vocational rehabilitation; and

(9) number of workers participating in light-duty programs.

Subd. 3. [REFUSAL TO RECOGNIZE.] A person aggrieved by the commissioner's decision concerning an agreement may request in writing, within 30 days of the date the notice is issued, the initiation of a contested case proceeding under chapter 14. The request to initiate a contested case must be received by the department by the 30th day after the commissioner's decision. An appeal from the commissioner's final decision and order may be taken to the workers' compensation court of appeals pursuant to sections 176.421 and 176.442.

Subd. 4. [VOID AGREEMENTS.] Nothing in this section shall allow any agreement that diminishes an employee's entitlement to benefits as otherwise set forth in this chapter. For the purposes of this section, the procedural rights and dispute resolution agreements under subdivision 1, paragraphs (a) to (g), are not agreements which diminish an employee's entitlement to benefits. Any agreement that diminishes an employee's entitlement to benefits as set forth in this chapter is null and void.

Subd. 5. [NOTICE TO INSURANCE CARRIER.] If the employer is insured under this chapter, the collective bargaining agreement provision shall not be recognized by the commissioner, compensation judge, workers' compensation court of appeals, and other courts unless the employer has given notice to the employer's insurance carrier, in the manner provided in the insurance contract, of intent to enter into an agreement with its employees as provided in this section.

Subd. 6. [PILOT PROGRAM.] The commissioner shall establish a pilot program ending July 1, 2000, in which up to ten private employers not engaged in construction, construction maintenance, and related activities shall be authorized to enter into valid agreements under this section with their employees. The agreements shall be recognized and enforced as provided by this section. Private employers shall participate in the pilot program through collectively bargained agreements with the certified and exclusive representatives of their employees and without regard to the dollar insurance premium limitations in subdivision 1.

ARTICLE 6

DISABILITY BENEFITS

Section 1. Minnesota Statutes 1994, section 176.021, subdivision 7, is amended to read:

Subd. 7. [PUBLIC OFFICER.] If an employee who is a public officer of the state or governmental subdivision continues to receive the compensation of office during a period when receiving benefits under the workers' compensation law for temporary total or temporary partial disability or permanent total disability and the compensation of office exceeds $100 a year, the amount of that compensation attributable to the period for which benefits under the workers' compensation law are paid shall must be deducted from such benefits. If an employee

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covered by the Minnesota state retirement system receives total and permanent disability benefits pursuant to section 352.113 or disability benefits pursuant to sections under section 352.95 and, 352B.10, 353.33, 353.656, 353C.08, or 422A.18, the amount of disability benefits shall be deducted from workers' compensation benefits otherwise payable. If an employee covered by the teachers retirement fund or a teachers retirement fund in a city of the first class receives total and permanent disability benefits pursuant to under section 354.48, 354A.36, or under the respective association articles and bylaws the amount of disability benefits must be deducted from workers' compensation benefits otherwise payable. Notwithstanding the provisions of section 176.132, a deduction under this subdivision does not entitle an employee to supplemental benefits under section 176.132.

Sec. 2. Minnesota Statutes 1994, section 353.33, subdivision 5, is amended to read:

Subd. 5. [BENEFITS PAID UNDER WORKERS' COMPENSATION LAW.] Disability benefits paid shall be coordinated with any amounts received or receivable under workers' compensation law, such as temporary total, permanent total, temporary partial, permanent partial, or economic recovery compensation benefits, in either periodic or lump sum payments from the employer under applicable workers' compensation laws, after deduction of amount of attorney fees, authorized under applicable workers' compensation laws, paid by a disabilitant. If the total of the single life annuity actuarial equivalent disability benefit and the workers' compensation benefit exceeds: (1) the salary the disabled member received as of the date of the disability or (2) the salary currently payable for the same employment position or an employment position substantially similar to the one the person held as of the date of the disability, whichever is greater, the disability benefit must be reduced to that amount which, when added to the workers' compensation benefits, does not exceed the greater of the salaries described in clauses (1) and (2). Disability benefits must not be reduced by any periodic or lump sum amounts received or receivable under workers' compensation laws. A disabilitant who is eligible to receive a disability benefit after June 30, 1995, whose disability benefit amount was reduced prior to July 1, 1995, as a result of the receipt of workers' compensation benefits, must have the disability benefit payment amount restored, as of July 1, 1995, and calculated under subdivision 3. A disabilitant is not entitled to retroactive payment of the reduction amounts applied to disability benefits before July 1, 1995, because of receipt of workers' compensation benefits.

A disability benefit overpayment made before July 1, 1995, because a reduction had not been made for receipt of workers' compensation benefits, must be collected by the association. The overpaid amounts may be obtained through the reduction by the association of disability benefits or annuity payments made after June 30, 1995, until the overpayment is fully recovered.

Sec. 3. Minnesota Statutes 1994, section 353.33, subdivision 7, is amended to read:

Subd. 7. [PARTIAL REEMPLOYMENT.] If, following a work or non-work-related injury or illness, A disabled person resumes a gainful occupation from which earnings are less than the salary at the date of disability or the salary currently paid for similar positions, at the date of disability increased by the same increase in the United States' average wages as used by social security in calculating average indexed monthly earnings, the board shall continue the disability benefit in an amount that, when the normal disability is added to the earnings and workers' compensation benefit, does not exceed the salary at the date of disability or the salary currently paid for similar positions, at the date of disability increased by the same increase in the United States' average wages as used by social security in calculating average indexed monthly earnings, whichever is higher, provided the disability benefit does not exceed the disability benefit originally allowed, plus any postretirement adjustments payable after December 31, 1988, in accordance with section 11A.18, subdivision 10. No deductions for the retirement fund may be taken from the salary of a disabled person who is receiving a disability benefit as provided in this subdivision.

Sec. 4. Minnesota Statutes 1994, section 353.656, subdivision 2, is amended to read:

Subd. 2. [BENEFITS PAID UNDER WORKERS' COMPENSATION LAW.] If a member, as described in subdivision 1, is injured under circumstances which entitle the member to receive benefits under the workers' compensation law, the member shall receive the same benefits as provided in subdivision 1, with disability benefits paid reimbursed and future benefits reduced by all periodic or lump sum amounts paid to the member under the workers' compensation law, after deduction of amount of attorney fees, authorized under applicable workers' compensation laws, paid by a disabilitant if the total of the single life annuity actuarial equivalent disability benefit and the workers' compensation benefit exceeds: (1) the salary the disabled member received as of the date of the disability or (2) the salary currently payable for the same employment position or an employment position substantially similar to the one the person held as of the date of the disability, whichever is greater. The disability benefit must be reduced to that amount which, when added to the workers' compensation benefits, does not exceed the greater of the salaries described in clauses (1) and (2). Disability benefits must not be reduced by any periodic or lump sum amounts received or receivable

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under workers' compensation laws. A disabilitant who is eligible to receive a disability benefit after June 30, 1995, whose disability benefit amount was reduced before July 1, 1995, as a result of the receipt of workers' compensation benefits, must have the disability benefit payment amount restored, as of July 1, 1995, and calculated under subdivision 1 or 3. A disabilitant is not entitled to retroactive payment of the reduction amounts applied to disability benefits before July 1, 1995, because of receipt of workers' compensation benefits.

A disability benefit overpayment made before July 1, 1995, because a reduction had not been made for receipt of workers' compensation benefits must be collected by the association. The overpaid amounts may be obtained through the reduction by the association of disability benefits or annuity payments made after June 30, 1995, until the overpayment is fully recovered.

Sec. 5. Minnesota Statutes 1994, section 353.656, subdivision 4, is amended to read:

Subd. 4. [LIMITATION ON DISABILITY BENEFIT PAYMENTS.] (a) No member is entitled to receive a disability benefit payment when there remains to the member's credit unused annual leave or sick leave or under any other circumstances when, during the period of disability, there has been no impairment of the person's salary as a police officer or a firefighter, whichever applies.

(b) If a disabled member resumes a gainful occupation with earnings less than, which when added to the normal disability benefit exceed the disabilitant reemployment earnings limit, the amount of the disability benefit must be reduced as provided in this paragraph. The disabilitant reemployment earnings limit is the greater of:

(1) the salary earned at the date of disability; or

(2) 125 percent of the salary currently paid by the employing governmental subdivision for similar positions earned at the date of disability increased by the same increase in the United States' average wages used by social security in calculating average indexed monthly earnings.

The disability benefit must be reduced by one dollar for each three dollars by which the total amount of the current disability benefit, any workers' compensation benefits, and actual earnings exceed the greater disabilitant reemployment earnings limit. In no event may the disability benefit as adjusted under this subdivision exceed the disability benefit originally allowed.

Sec. 6. Minnesota Statutes 1994, section 353C.08, subdivision 6, is amended to read:

Subd. 6. [RESUMPTION OF EMPLOYMENT.] Should a disabled employee resume a gainful occupation from which earnings are less than salary received at the date of disability or the salary currently paid for similar positions, or should the employee be entitled to receive workers' compensation benefits received at the date of disability increased by the same increase in the United States' average wages as used by social security in calculating average indexed monthly earnings, the disability benefit must be continued in an amount that, when added to such earnings and workers' compensation benefits, does not exceed the salary received at the date of disability or the salary currently payable for the same employment position or an employment position substantially similar to the one the person held as of the date of the disability increased by the same increase in the United States' average wages as used by social security in calculating average indexed monthly earnings, whichever is greater.

Sec. 7. Minnesota Statutes 1994, section 422A.18, subdivision 3, is amended to read:

Subd. 3. Payment of any disability allowance authorized by sections 422A.01 to 422A.25, shall commence three months after date of application provided that the applicant has not been restored to duty. Such payment shall be retroactive to date of application and shall continue throughout the full period of the disability subject to the same optional selections as are provided for service allowances; provided that when a disability beneficiary shall have attained the minimum age for retirement on a service allowance the disability allowance shall be discontinued only as provided by the terms of the option selected. Any employee eligible for a disability allowance who is also entitled to an allowance under a workers' compensation act and/or resumes a gainful occupation shall be entitled to receive during the period of such compensation only that portion of the retirement allowance provided by this act which when added to such additional compensation does not exceed the salary of the employee at the time of disability.

Sec. 8. [EFFECTIVE DATE.]

Sections 1 to 7 are effective July 1, 1995."

Renumber the sections in sequence and correct internal references

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Amend the title as follows:

Page 1, line 7, after "subdivisions;" insert "79.34, subdivision 2; 79.35;"

Page 1, lines 11 and 12, delete "3 and 3a;" and insert "3, 3a, and 7;"

Page 1, line 16, delete "subdivision" and insert "subdivisions 1 and" and after "2;" insert "176.1351, subdivision 6;" and after "176.179;" insert "176.191, subdivision 1;"

Page 1, line 20, delete "and" and after "3;" insert "353.33, subdivisions 5 and 7; 353.656, subdivisions 2 and 4; 353C.08, subdivision 6; and 422A.18, subdivision 3; proposing coding for new law as Minnesota Statutes, chapter 79B;"

Page 1, line 21, delete "79A;" and insert "176;"

Page 1, line 25, after "3u;" insert "Laws 1990, chapter 521, section 4;"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Financial Institutions and Insurance.

The report was adopted.

Osthoff from the Committee on General Legislation, Veterans Affairs and Elections to which was referred:

H. F. No. 667, A bill for an act relating to elections; campaign finance; changing the treatment of spending limits and public subsidy in certain cases; amending Minnesota Statutes 1994, section 10A.25, subdivision 10.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1994, section 10A.25, subdivision 10, is amended to read:

Subd. 10. [EFFECT OF OPPONENT'S AGREEMENT CONDUCT.] (a) The expenditure limits imposed by this section apply only to candidates whose major political party opponents agree to be bound by the limits and who themselves agree to be bound by the limits as a condition of receiving a public subsidy for their campaigns.

(b) A candidate who agrees to be bound by the limits and receives a public subsidy, who has an opponent who:

(1) is a candidate of a major political party; and (2) does not agree to be bound by the limits but is otherwise eligible to receive a public subsidy:

(i) is no longer bound by the limits, including those in section 10A.324, subdivision 1, paragraph (c);

(ii) is eligible to receive a public subsidy; and

(iii) also receives, or shares equally with any other candidate who agrees to be bound by limits, the opponent's share of the general account public subsidy under section 10A.31.

For purposes of this subdivision, "otherwise eligible to receive a public subsidy" means that a candidate meets the requirements of sections 10A.31, 10A.315, 10A.321, and 10A.322, but does not mean that the candidate has filed an affidavit of matching funds under section 10A.323.

(a) A candidate who has agreed to be bound by the expenditure limits imposed by this section as a condition of receiving a public subsidy for the candidate's campaign is released from the expenditure limits and is eligible to receive a public subsidy if the candidate has an opponent who by ten days before the primary has received contributions in an amount equal to or has made or become obligated to make expenditures in an amount equal to ten percent or more of the expenditure limit for candidates for that office under subdivision 2, who does not agree to be bound by the limits.

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(b) Thereafter, within 24 hours after a candidate who has not agreed to be bound by limits or the candidate's principal campaign committee has received contributions, spent, or become obligated to spend an amount equal to 50 percent or more of the expenditure limit for candidates for that office under subdivision 2, on the candidate's campaign, the candidate or candidate's principal campaign committee must file written notice with the board and provide written notice to any other candidate for the office. The notice must state only that the candidate or candidate's principal campaign committee has received contributions, made, or become obligated to make campaign expenditures in an amount equal to or greater than 50 percent of the expenditure limit for the office sought by the candidate. Upon receipt of the notice any other candidate for the office is no longer bound by expenditure limits and is eligible to receive the public subsidy."

With the recommendation that when so amended the bill pass.

The report was adopted.

Kahn from the Committee on Governmental Operations to which was referred:

H. F. No. 672, A bill for an act relating to the environment; implementing the transfer of solid waste management duties of the metropolitan council to the office of environmental assistance; providing for the management of waste; providing penalties; amending Minnesota Statutes 1992, section 115A.33, as reenacted; Minnesota Statutes 1994, sections 115.071, subdivision 1; 115A.03, by adding a subdivision; 115A.055; 115A.07, subdivision 3; 115A.072, subdivisions 1, 3, and 4; 115A.12; 115A.14, subdivision 4; 115A.15, subdivision 9; 115A.191, subdivisions 1 and 2; 115A.32; 115A.411; 115A.42; 115A.45; 115A.46, subdivisions 1 and 5; 115A.47, by adding a subdivision; 115A.55, by adding a subdivision; 115A.5501, subdivisions 2, 3, and 4; 115A.5502; 115A.551, subdivisions 2a, 4, 5, 6, and 7; 115A.554; 115A.557, subdivisions 3 and 4; 115A.558; 115A.63, subdivision 3; 115A.84, subdivision 3; 115A.86, subdivision 2; 115A.919, subdivision 3; 115A.921, subdivision 1; 115A.923, subdivision 1; 115A.9302, subdivisions 1 and 2; 115A.951, subdivision 4; 115A.965, subdivision 1; 115A.97, subdivisions 5 and 6; 115A.981, subdivision 3; 116.07, subdivisions 4j and 10; 116.072; 400.16; 400.161; 473.149, subdivisions 1, 2d, 2e, 3, 4, and 6; 473.151; 473.516, subdivision 2; 473.801, subdivision 1, and by adding subdivisions; 473.8011; 473.803, subdivisions 1, 1c, 2, 2a, 3, 4, and 5; 473.804; 473.811, subdivisions 1, 4a, 5, 5c, 7, and 8; 473.813, subdivision 2; 473.823, subdivisions 3, 5, and 6; 473.843, subdivision 1, and by adding a subdivision; 473.844, subdivisions 1a and 4; 473.8441, subdivisions 2, 4, and 5; 473.845, subdivision 4; 473.846; and 473.848; Laws 1994, chapter 628, article 3, section 209; proposing coding for new law in Minnesota Statutes, chapter 480; repealing Minnesota Statutes 1994, sections 115A.81, subdivision 3; 115A.90, subdivision 3; 116.94; 383D.71, subdivision 2; 473.149, subdivisions 2, 2a, 2c, 2f, and 5; 473.181, subdivision 4; and 473.803, subdivisions 1b and 1e.

Reported the same back with the following amendments:

Page 3, line 22, delete "46 and 47" and insert "44 and 45"

Page 4, line 32, delete "115A.465" and insert "473.848"

Pages 7 to 11, delete section 8

Page 16, line 31, delete "115A.465;"

Page 22, after line 26, insert:

"Sec. 25. Minnesota Statutes 1994, section 116.07, subdivision 4a, is amended to read:

Subd. 4a. [PERMITS.] The pollution control agency may issue, continue in effect or deny permits, under such conditions as it may prescribe for the prevention of pollution, for the emission of air contaminants, or for the installation or operation of any emission facility, air contaminant treatment facility, treatment facility, potential air contaminant storage facility, or storage facility, or any part thereof, or for the sources or emissions of noise pollution.

The pollution control agency may also issue, continue in effect or deny permits, under such conditions as it may prescribe for the prevention of pollution, for the storage, collection, transportation, processing, or disposal of waste, or for the installation or operation of any system or facility, or any part thereof, related to the storage, collection,

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transportation, processing, or disposal of waste. Prior to the issuance, reissuance, or approval of a permit for a disposal facility as defined in section 115A.03, subdivision 10, the commissioner must request the local zoning authority for the area in which the disposal facility is proposed to be located, or is located, to determine:

(1) whether the facility conforms to the authority's comprehensive land use plan;

(2) whether significant topographical changes are proposed; and

(3) whether such topographical changes will adversely affect adjacent land uses.

Based on this determination, the local zoning authority shall approve or disapprove the issuance, reissuance, or approval of the permit. If the local zoning authority does not give its approval, the commissioner may not issue, reissue, or approve the permit. If the commissioner does not receive this approval within 30 days, the local zoning authority shall be deemed to have given its approval and the commissioner may issue, reissue, or approve the permit.

The pollution control agency may revoke or modify any permit issued under this subdivision and section 116.081 whenever it is necessary, in the opinion of the agency, to prevent or abate pollution."

Pages 22 to 26, delete sections 26 and 27

Page 37, line 4, before the comma, insert "under subdivision 3"

Page 37, line 7, delete "In revising" and strike "the plan"

Page 37, line 8, delete "the director" and strike "shall"

Page 37, line 14, delete the new language and strike the period

Page 40, line 15, delete "paragraphs" and insert "the rulemaking provisions of chapter 14 and"

Page 40, line 16, delete the new language and strike the comma

Delete page 40, line 21, to page 41, line 36

Page 42, line 1, delete "(g)" and insert "(b)"

Page 44, line 36, to page 45, line 1, reinstate the stricken language

Page 49, line 19, delete "31 to 43" and insert "29 to 41"

Page 49, delete lines 22 to 26

Page 50, line 2, delete everything after the second comma and insert "25, 29 to 32, 34, 35, 37, and 48, paragraph (a),"

Page 50, line 4, delete "9" and insert "8"

Page 50, line 5, delete "44" and insert "42"

Page 63, after line 13, insert:

"Sec. 24. Minnesota Statutes 1994, section 116.07, subdivision 4j, is amended to read:

Subd. 4j. [PERMITS; SOLID WASTE FACILITIES.] (a) The agency may not issue a permit for new or additional capacity for a mixed municipal solid waste resource recovery or disposal facility as defined in section 115A.03 unless each county using or projected in the permit to use the facility has in place a solid waste management plan approved under section 115A.46 or 473.803 and amended as required by section 115A.96, subdivision 6. The agency shall issue the permit only if the capacity of the facility is consistent with the needs for resource recovery or disposal capacity identified in the approved plan or plans. Consistency must be determined by the metropolitan council office of environmental assistance for counties in the metropolitan area and by the agency for counties outside the metropolitan area. Plans approved before January 1, 1990, need not be revised if the capacity sought in the permit is consistent with the approved plan or plans.

(b) The agency shall require as part of the permit application for a waste incineration facility identification of preliminary plans for ash management and ash leachate treatment or ash utilization. The permit issued by the agency must include requirements for ash management and ash leachate treatment.

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(c) Within 30 days of receipt by the agency of a permit application for a solid waste facility, the commissioner shall notify the applicant in writing whether the application is complete and if not, what items are needed to make it complete, and shall give an estimate of the time it will take to process the application. Within 180 days of receipt of a completed application, the agency shall approve, disapprove, or delay decision on the application, with reasons for the delay, in writing."

Page 80, after line 13, insert:

"Sec. 51. Minnesota Statutes 1994, section 473.848, subdivision 2, is amended to read:

Subd. 2. [COUNTY CERTIFICATION; COUNCIL OFFICE APPROVAL.] (a) By April 1 of each year, each county shall submit an annual certification report to the council office detailing:

(1) the quantity of waste generated in the county that was not processed prior to transfer to a disposal facility during the year preceding the report;

(2) the reasons the waste was not processed;

(3) a strategy for development of techniques to ensure processing of waste including a specific timeline for implementation of those techniques; and

(4) any progress made by the county in reducing the amount of unprocessed waste.

The report shall be included in the county report required by section 473.803, subdivision 3.

(b) The council office shall approve a county's certification report if it determines that the county is reducing and will continue to reduce the amount of unprocessed waste, based on the report and the county's progress in development and implementation of techniques to reduce the amount of unprocessed waste transferred to disposal facilities. If the council office does not approve a county's report, it shall negotiate with the county to develop and implement specific techniques to reduce unprocessed waste. If the council office does not approve two or more consecutive reports from any one county, the council office shall develop specific reduction techniques that are designed for the particular needs of the county. The county shall implement those techniques by specific dates to be determined by the council office.

Sec. 52. Minnesota Statutes 1994, section 473.848, subdivision 4, is amended to read:

Subd. 4. [COUNCIL OFFICE REPORT.] The council office shall include, as part of its report to the legislative commission on waste management required under section 473.149, an accounting of the quantity of unprocessed waste transferred to disposal facilities, the reasons the waste was not processed, a strategy for reducing the amount of unprocessed waste, and progress made by counties to reduce the amount of unprocessed waste. The council office may adopt standards for determining when waste is unprocessible and procedures for expediting certification and reporting of unprocessed waste."

Page 80, line 15, delete "24 to 49" and insert "25 to 52"

Page 80, line 27, delete "50 and 52" and insert "53 and 55"

Renumber the sections in sequence

Amend the title as follows:

Page 1, line 24, before "4j" insert "4a and" and delete "and 10"

Page 1, line 33, before the third semicolon, insert ", subdivisions 2 and 4"

With the recommendation that when so amended the bill pass.

The report was adopted.

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Osthoff from the Committee on General Legislation, Veterans Affairs and Elections to which was referred:

H. F. No. 698, A bill for an act relating to veterans; eliminating certain duties of the board of directors of the Minnesota veterans homes; authorizing expansion of the dementia unit at the veterans home in Silver Bay; amending Minnesota Statutes 1994, sections 198.003, subdivision 1; and 198.35, by adding a subdivision.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1994, section 193.142, subdivision 1, is amended to read:

Subdivision 1. [CORPORATION CREATED; OFFICERS.] For the purpose of constructing armories as provided by section 193.141, there shall be created a corporation to be known as the "Minnesota state armory building commission." The members and governing body of such corporation shall be the adjutant general and not less than two officers of the line of the national guard of the state above the grade of lieutenant colonel major, to be selected and appointed by the adjutant general. The adjutant general shall be chair of such commission. Such commission shall elect a secretary and a treasurer from the members thereof other than the adjutant general. The treasurer of the corporation shall give a security bond to the corporation in such sum as the corporation may determine, conditioned in like manner to the bonds of treasurers of public bodies, to be approved and filed as the corporation may determine.

Sec. 2. Minnesota Statutes 1994, section 193.142, subdivision 2, is amended to read:

Subd. 2. [FILING; OFFICERS; MEMBERS; VACANCY.] Upon the filing with the secretary of state of a certificate by the adjutant general naming the persons authorized to compose such commission and corporation, and declaring them to be constituted a commission and corporation hereunder, such persons shall forthwith become and be such commission and corporation without further proceeding. In case of a vacancy in the membership of such commission and corporation, the remaining members, provided there are not less than two, shall have power to act and to elect such temporary officers of the commission as may be necessary during the existence of the vacancy. In case at any time there shall not be at least two qualified officers of the national guard in addition to the adjutant general eligible to serve as members of such commission, the adjutant general may appoint a member or members of such commission from the lieutenant colonels of the line of the national guard of the state, so as to provide not more than two members of such commission in addition to the adjutant general. The membership of the members last so appointed shall automatically terminate upon the appointment and qualification of an officer of the national guard eligible under subdivision 1, to serve as a member of such commission, provided the total membership be not thereby reduced to less than three including the adjutant general. In case of a vacancy in the office of the adjutant general, or in case of the incapacity of the adjutant general to act as a member and chair of such commission, the officer who is appointed or authorized according to law to exercise the powers of the adjutant general for the time being, shall during the existence of such vacancy or incapacity act as a member and chair of such commission and have all the powers and duties herein vested in or imposed upon the adjutant general as a member and chair of such commission. The adjutant general shall certify to the secretary of state all changes in the membership of the commission, but failure to do so shall not affect the authority of any new member of the commission or the validity of any act of the commission after the accession of a new member.

Sec. 3. Minnesota Statutes 1994, section 193.142, subdivision 3, is amended to read:

Subd. 3. [TRUSTEE IN CERTAIN CASES.] In case at any time all or all but one of the line officers of the national guard who are members of the commission or who are eligible to serve as such are in active service outside the state, or where for any other reason there are not at least two qualified line officers of the national guard available within the state to serve as members of the commission, the adjutant general, or in case of incapacity or of a vacancy in that office, the officer who is appointed or authorized according to law to exercise the powers of the adjutant general for the time being, shall become trustee of the commission and shall have all the powers and perform all the duties of the commission and its officers so long as such conditions exist. Upon the occurrence of such conditions the officer becoming trustee shall file with the Secretary of State a certificate reciting the circumstances and declaring that that officer assumes office as such trustee, and thereupon shall be deemed to have qualified as such, with all the authority hereby conferred. Any change in such office shall be likewise certified by the officers succeeding as trustee. Upon the termination of such conditions, the adjutant general or an authorized substitute shall certify the circumstances in like manner, with the names of the officers then authorized by law to compose the commission, and thereupon such officers shall constitute the commission, and the authority of the trustee shall terminate.

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Sec. 4. Minnesota Statutes 1994, section 193.143, is amended to read:

193.143 [STATE ARMORY BUILDING COMMISSION, POWERS.]

Such corporation, subject to the conditions and limitations prescribed in sections 193.141 to 193.149, shall possess all the powers of a body corporate necessary and convenient to accomplish the objectives and perform the duties prescribed by sections 193.141 to 193.149, including the following, which shall not be construed as a limitation upon the general powers hereby conferred:

(1) To acquire by lease, purchase, gift, or condemnation proceedings all necessary right, title, and interest in and to the lands required for a site for a new armory and all other real or personal property required for the purposes contemplated by the military code and to hold and dispose of the same, subject to the conditions and limitations herein prescribed; provided that any such real or personal property or interest therein may be so acquired or accepted subject to any condition which may be imposed thereon by the grantor or donor and agreed to by such corporation not inconsistent with the proper use of such property by the state for armory or military purposes as herein provided.

(2) To exercise the right of eminent domain in the manner provided by chapter 117, for the purpose of acquiring any property which such corporation is herein authorized to acquire by condemnation; provided, that the corporation may take possession of any such property so to be acquired at any time after the filing of the petition describing the same in condemnation proceedings; provided further, that this shall not preclude the corporation from abandoning the condemnation of any such property in any case where possession thereof has not been taken.

(3) To construct and equip new armories as authorized herein; to pay therefor out of the funds obtained as hereinafter provided and to hold, manage, and dispose of such armory, equipment, and site as hereinafter provided. The total amount of bonds issued on account of such armories shall not exceed the amount of the cost thereof; provided also, that the total bonded indebtedness of the commission shall not at any time exceed the aggregate sum of $7,000,000.

(4) To sue and be sued.

(5) To contract and be contracted with in any matter connected with any purpose or activity within the powers of such corporations as herein specified; provided, that no officer or member of such corporation shall be personally interested, directly or indirectly, in any contract in which such corporation is interested.

(6) To employ any and all professional and nonprofessional services and all agents, employees, workers, and servants necessary and proper for the purposes and activities of such corporation as authorized or contemplated herein and to pay for the same out of any portion of the income of the corporation available for such purposes or activities. The officers and members of such corporation shall not receive any compensation therefrom, but may receive their reasonable and necessary expenses incurred in connection with the performance of their duties; provided however, that whenever the duties of any member of the commission require full time and attention the commission may compensate the member therefor at such rates as it may determine.

(7) To borrow money and issue bonds for the purposes and in the manner and within the limitations herein specified, and to pledge any and all property and income of such corporation acquired or received as herein provided to secure the payment of such bonds, subject to the provisions and limitations herein prescribed, and to redeem any such bonds if so provided therein or in the mortgage or trust deed accompanying the same.

(8) To use for the following purposes any available money received by such corporation from any source as herein provided in excess of those required for the payment of the cost of such armory and for the payment of any bonds issued by the corporation and interest thereon according to the terms of such bonds or of any mortgage or trust deed accompanying the same:

(a) To pay the necessary incidental expenses of carrying on the business and activities of the corporation as herein authorized;

(b) To pay the cost of operating, maintaining, repairing, and improving such new armories;

(c) If any further excess moneys remain, to purchase upon the open market at or above or below the face or par value thereof any bonds issued by the corporation as herein authorized; provided, that any bonds so purchased shall thereupon be canceled.

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(9) To adopt and use a corporate seal.

(10) To adopt all needful bylaws and rules for the conduct of business and affairs of such corporation and for the management and use of all armories while under the ownership and control of such corporation as herein provided, not inconsistent with the use of such armory for armory or military purposes.

(11) Such corporation shall issue no stock.

(12) No officer or member of such corporation shall have any personal share or interest in any funds or property of the corporation or be subject to any personal liability by reason of any liability of the corporation.

(13) The Minnesota state armory building commission created under section 193.142 shall keep all money and credits received by it as a single fund, to be designated as the "Minnesota state armory building commission fund," with separate accounts for each armory; and the commission may make transfers of money from funds appertaining to any armory under its control for use for any other such armory; provided such transfers shall be made only from money on hand, from time to time, in excess of the amounts required to meet payments of interest or principal on bonds or other obligations appertaining to the armory to which such funds pertain and only when necessary to pay expenses of construction, operation, maintenance and debt service of such other armory; provided further, no such transfer of any money paid for the support of any armory by the municipality in which such armory is situated shall be made by the commission.

(14) The corporation created under section 193.142 may designate one or more state or national banks as depositories of its funds, and may provide, upon such conditions as the corporation may determine, that the treasurer of the corporation shall be exempt from personal liability for loss of funds deposited in any such depository due to the insolvency or other acts or omissions of such depository.

(15) The governor is empowered to apply for grants of money, equipment, and materials which may be made available to the states by the federal government for leasing, building, and equipping armories for the use of the military forces of the state which are reserve components of the armed forces of the United States, whenever the governor is satisfied that the conditions under which such grants are offered by the federal government, are for the best interests of the state and are not inconsistent with the laws of the state relating to armories, and to accept such grants in the name of the state. The Minnesota state armory building commission is designated as the agency of the state to receive such grants and to use them for armory purposes as prescribed in this chapter, and by federal laws, and regulations not inconsistent therewith.

Sec. 5. Minnesota Statutes 1994, section 193.144, subdivision 1, is amended to read:

Subdivision 1. [AUTHORITY TO PROVIDE SITE.] Any county or municipality as defined in section 471.345, subdivision 1, desiring to construct a new armory may provide a site therefor as hereinafter provided.

Sec. 6. Minnesota Statutes 1994, section 193.144, subdivision 2, is amended to read:

Subd. 2. [ACQUISITION OF SITE; CONVEYANCE TO CORPORATION.] If such county or municipality as defined in section 471.345, subdivision 1, shall desire to have a new armory constructed, such county or municipality may secure by purchase, gift, or condemnation, and may convey to such corporation, a site for such new armory approved as suitable therefor by the adjutant general. In case such site or any part thereof or interest therein is owned or controlled by the board of park commissioners of such county or municipality or by any other governmental agency therein except the state or county or municipality, such board or other agency may convey the same by way of gift or sale to such corporation without charge.

Sec. 7. Minnesota Statutes 1994, section 193.144, subdivision 6, is amended to read:

Subd. 6. [DISPOSAL OF UNUSED SITE.] In case any land acquired for armory site purposes hereunder has been donated to such corporation by such county or municipality or by other governmental agency except the state, and in case such land or any part thereof shall thereafter not be used for armory purposes for a continuous period of more than ten years, not including the period of any war or other emergency in which the armed forces of the state may be engaged, the title to such unused land or part thereof shall thereupon pass, revert and be vested in such county, municipality or other governmental agency which donated the same, subject to any encumbrances that may have been lawfully placed thereon by such corporation or otherwise the county or municipality may provide written notice to the adjutant general and, if the property is not used for armory purposes within one year from the notice, the adjutant general shall reconvey the property to the donor county or municipality.

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Sec. 8. Minnesota Statutes 1994, section 193.145, subdivision 2, is amended to read:

Subd. 2. [TAX LEVY.] A county or municipality, as defined in section 471.345, subdivision 1, in which an armory has been constructed or is to be constructed hereunder may by resolution of its governing body irrevocably provide for levying and collecting annually for a specified period, not exceeding 40 years, a tax on the taxable property in the county or municipality.

The proceeds of the levy shall be paid to the corporation for the purposes herein prescribed. The county or municipality may make the levies and payments and bind itself thereto by resolution of its governing body. The provisions of the resolution may be made conditional upon the giving of an agreement by the adjutant general as authorized in subdivision 4. The obligations of the county or municipality to levy, collect, and pay over the taxes shall not be deemed to constitute an indebtedness of the county or municipality within the meaning of any provision of law or of its charter limiting its total or net indebtedness, and such taxes may be levied and collected without regard to any charter provision limiting the amount or rate of taxes which such county or municipality is otherwise authorized to levy.

Sec. 9. Minnesota Statutes 1994, section 193.145, subdivision 4, is amended to read:

Subd. 4. [PAYMENTS BY ADJUTANT GENERAL.] In addition to the payments by the state under subdivision 3, The adjutant general is hereby authorized to pay to such corporation, out of any moneys which may from time to time be appropriated to and for the military department and not appropriated or set apart for any other specific purpose, the sum of not less than $3,000 per year for each unit of the national guard quartered in such armory when only one such unit is so quartered, and the sum of not less than $2,000 per year for each additional unit when more than one such unit is so quartered, and may bind the office of the adjutant general, both currently and in the future, by agreement to such corporation to make such payments in a specific amount or amounts out of such appropriations for a period of not more than 40 years.

Sec. 10. Minnesota Statutes 1994, section 193.145, subdivision 5, is amended to read:

Subd. 5. [LEASE TO STATE.] Upon completion of each new armory such corporation shall lease the same to the state through the adjutant general, until such armory and site shall be conveyed to the state as hereinafter provided. Such lease shall be made upon such terms and conditions as shall secure to the state the full and complete use of such armory, for armory and military purposes so far as may be required for the headquarters, organizations, and units of the national guard stationed in such municipality, and upon such other terms and conditions not inconsistent therewith as may be agreed upon; provided, that, except for such use of such property for armory and military purposes which will be secured to the state as aforesaid, such lease shall be subject to any encumbrance placed upon the property to secure the payment of any bonds issued as herein provided. No further consideration for such lease shall be required than the payments to be made by the state as provided by subdivisions 3 and subdivision 4. Otherwise, and so far as it is not inconsistent with the terms and conditions of such lease to the state and so far as will not interfere with the use by the state of such property for armory or military purposes, such corporation may lease, rent, or otherwise make use of such new armory building or any part thereof for such purposes and upon such terms as such corporation may deem proper, and may use the rents and profits therefrom for the purposes herein provided.

Sec. 11. Minnesota Statutes 1994, section 193.148, is amended to read:

193.148 [CONVEYANCE TO STATE.]

When payment has been made of all indebtedness incurred by such corporation incident to the procurement, erection, equipment, and operation of any armory built under the provisions of sections 193.141 to 193.149, including the payment in full of the principal and interest of all bonds issued by such corporation to cover the cost of such armory or the full repayment of any commission funds expended for the construction of such armory, such corporation shall transfer and convey such armory building and the site thereof to the state of Minnesota, for military purposes, to be administered as are other state-owned armories.

Any unencumbered balance then held by the commission accruing to such armory shall be paid over to the adjutant general retained to be applied to the future maintenance, repair, and equipment of such armory, as provided for in section 193.29 armories.

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Sec. 12. Minnesota Statutes 1994, section 198.003, subdivision 1, is amended to read:

Subdivision 1. [POLICY; RULES; REPORT.] It is the duty of the board and The board has the power to:

(1) shall determine policy and, subject to chapter 14, adopt, amend, and repeal rules for the governance of the homes, and to adopt emergency rules necessary to implement this chapter. With respect to residents' administrative appeal time periods that are not established by statute, the board may create by rule reasonable time periods within which a resident must appeal an administrative determination to the next administrative level. If the determination is not appealed within the time set by rule, the determination becomes final;

(2) report quarterly to the governor on the management, operations, and quality of care provided at the homes; and

(3). The board shall take other action as provided by law.

Emergency rules adopted under this section are not effective after December 31, 1989.

Sec. 13. Minnesota Statutes 1994, section 198.003, subdivision 3, is amended to read:

Subd. 3. [USE OF FACILITIES CAMPUS.] The board may allow veterans organizations or public or private social service, educational, or rehabilitation agencies or organizations and their clients to use surplus facilities space on a home's campus, staff, and other resources of the board and may require the participating agencies or organizations to pay for that use.

Sec. 14. Minnesota Statutes 1994, section 198.003, subdivision 4, is amended to read:

Subd. 4. [VETERANS HOMES RESOURCES ACCOUNT.] Money received by the board under subdivision 3 must be deposited in the state treasury and credited to a veterans homes resources account in the special revenue fund. Money in the account is appropriated to the board to operate, maintain, and repair facilities make repairs at the campus used under subdivision 3, and to pay including payment of associated legal fees and expenses.

Sec. 15. Minnesota Statutes 1994, section 198.35, is amended by adding a subdivision to read:

Subd. 3. [DEMENTIA UNIT.] The board of directors of the state veterans homes shall undertake a study to determine the need for expansion of the dementia unit at the state veterans home in Silver Bay, and shall report the results of the study to the legislature no later than January 1, 1996. The study shall include a determination of the costs of constructing, equipping, and staffing the expansion of that unit."

Delete the title and insert the following:

"A bill for an act relating to veterans; the military; eliminating certain duties of the board of directors of the Minnesota veterans homes; authorizing a study of the needs for expansion of the dementia unit at the Silver Bay veterans home; providing greater flexibility in appointment of members of the armory building commission; authorizing the state armory building commission to use funds for construction; clarifying which municipalities may provide sites for armories; changing provisions for disposal of unused armory sites; clarifying authority for levying taxes for armory construction; clarifying the authority for conveyance of armories to the state; clarifying authority for use of funds from surplus facilities of the veterans homes board; amending Minnesota Statutes 1994, section 193.142, subdivisions 1, 2, and 3; 193.143; 193.144, subdivisions 1, 2, and 6; 193.145, subdivisions 2, 4, and 5; 193.148; 198.003, subdivisions 1, 3, and 4; and 198.35, by adding a subdivision."

With the recommendation that when so amended the bill pass.

The report was adopted.

Brown from the Committee on Environment and Natural Resources Finance to which was referred:

H. F. No. 723, A bill for an act relating to game and fish; establishing a special license for youthful deer hunters; sale of deer licenses after season opens; extending authority to take does; increasing the pelting fee; eliminating the family hunting license; amending Minnesota Statutes 1994, sections 97A.475, subdivision 2; 97A.485, subdivision 9; 97A.535, subdivision 1; 97B.301, subdivision 6; and 97B.311; and Minnesota Rules, part 6234.2800; repealing Minnesota Statutes 1994, section 97B.301, subdivision 5.

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Reported the same back with the following amendments:

Page 3, line 26, delete "take" and insert "tag"

Page 3, line 27, delete "take" and insert "tag"

Page 3, line 29, after the period, insert "A license to hunt in the muzzle-loader season must be purchased before the opening day of the muzzle-loader season."

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Ways and Means.

The report was adopted.

Kahn from the Committee on Governmental Operations to which was referred:

H. F. No. 830, A bill for an act relating to state government; revising procedures used for adoption and review of administrative rules; amending Minnesota Statutes 1994, sections 14.04; 14.05, subdivision 1; 14.12; 14.38, subdivisions 1, 7, 8, and 9; 14.46, subdivisions 1, 3, and by adding a subdivision; 14.47, subdivisions 1, 2, and 6; 14.50; 14.51; 17.84; and 84.027, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapters 3; and 14; repealing Minnesota Statutes 1994, sections 3.842; 3.843; 3.844; 3.845; 3.846; 14.03, subdivision 3; 14.05, subdivisions 2 and 3; 14.06; 14.08; 14.09; 14.10; 14.11; 14.115; 14.131; 14.1311; 14.14; 14.15; 14.16; 14.18, subdivision 1; 14.19; 14.20; 14.22; 14.225; 14.23; 14.235; 14.24; 14.25; 14.26; 14.27; 14.28; 14.29; 14.30; 14.305; 14.31; 14.32; 14.33; 14.34; 14.35; 14.36; 14.365; 14.38, subdivisions 4, 5, and 6; and 17.83.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"Section 1. Minnesota Statutes 1994, section 3.842, subdivision 2, is amended to read:

Subd. 2. [JURISDICTION.] The jurisdiction of the commission includes all rules as defined in section 14.02, subdivision 4. The commission also has jurisdiction of rules which are filed with the secretary of state in accordance with section sections 14.38, subdivisions 5, 6, 7, 8, 9, and 11 or were filed with the secretary of state in accordance with the provisions of section 14.38, subdivisions 5 to 9, which were in effect on the date the rules were filed; and 14.386.

The commission may periodically review statutory exemptions to the rulemaking provisions of this chapter.

Sec. 2. Minnesota Statutes 1994, section 3.842, is amended by adding a subdivision to read:

Subd. 4a. [OBJECTIONS TO RULES.] (a) The legislative commission to review administrative rules may object to all or some portion of a rule because the commission considers it to be beyond the procedural or substantive authority delegated to the adopting agency. A standing committee of the house of representatives or the senate with jurisdiction over the subject matter of the rule may object to all or some portion of a rule for any reason.

(b) The commission or committee must file an objection in the office of the secretary of state. The filed objection must contain a concise statement of the commission's or committee's reasons for its action.

(c) The secretary of state shall affix to each objection a certification of the date and time of its filing and as soon as practicable shall transmit a certified copy of it to the agency issuing the rule in question and the revisor of statutes. The secretary of state shall also maintain a permanent register open to public inspection of all objections by the commission or a standing committee.

(d) The legislative commission to review administrative rules or the standing committee objecting to the rule shall publish an objection filed pursuant to this section in the next issue of the State Register. The revisor of statutes shall indicate its existence adjacent to the rule in question when that rule is published in Minnesota Rules.

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(e) Within 14 days after receiving a copy of the filed objection, the issuing agency shall respond in writing to the commission or objecting committee. After receipt of the response, the commission or objecting committee may withdraw or modify its objection.

(f) After the filing of an objection by the commission or a standing committee that is not subsequently withdrawn, if the validity of the rule is challenged in a judicial proceeding on a ground the court may consider under otherwise applicable standards of judicial review which is the same as the ground for the commission or committee objection, the burden is upon the agency to establish that the rule is not invalid on that ground.

(g) The failure of the commission or a committee to object to a rule is not an implied legislative authorization of its procedural or substantive validity.

Sec. 3. Minnesota Statutes 1994, section 3.842, subdivision 5, is amended to read:

Subd. 5. [BIENNIAL ANNUAL REPORT.] The commission shall make a biennial file an annual report to with the legislature and governor of its activities and include its recommendations to promote adequate and proper rules and public understanding of the rules.

Sec. 4. Minnesota Statutes 1994, section 3.842, is amended by adding a subdivision to read:

Subd. 8. [EXEMPT RULES.] By January 15 of each odd-numbered year, the commission shall report to the legislature on rules that are specifically exempted from chapter 14 by other law. The commission shall recommend repealing any exemption that it believes is no longer justified.

Sec. 5. [3.9215] [STANDING COMMITTEE; OBJECTIONS TO ADMINISTRATIVE RULES.]

A standing committee of the house of representatives or the senate having jurisdiction over the subject matter of an agency rule may object to the rule under section 3.842, subdivision 4a.

Sec. 6. [4.038] [RULE REVIEW BY GOVERNOR.]

Subdivision 1. [SUSPENSION OF ADOPTED RULES.] The governor may suspend all or a severable portion of a previously adopted rule of an agency by publishing notice of the suspension in the State Register. The notice must include the reasons for the suspension. The inadequacy of the statement of reasons is not grounds for a judicial challenge of the suspension. This authority applies only to the extent that the agency itself would have authority, through rulemaking, to take such action. If the governor suspends a rule or portion of a rule under this section, the governor shall place before the next regular session of the legislature a bill to repeal the suspended rule or portion of the rule. If the bill is not enacted in that year's regular session: (1) the rule or portion of the rule is effective again upon adjournment of the session, unless the agency has repealed it; and (2) the same governor may not veto the same rule or the same portion of the rule again.

Subd. 2. [TERMINATION OF RULE PROCEEDINGS.] The governor may summarily terminate any pending rulemaking proceeding by an executive order to that effect, stating in the order the reasons for the action. The executive order must be filed in the office of the secretary of state, which shall promptly forward a certified copy to the agency and the revisor of statutes. An executive order terminating a rulemaking proceeding becomes effective on the date it is filed and must be published in the next issue of the State Register.

Subd. 3. [EXCLUSION.] The governor's authority in this section does not apply to an adopted rule or a pending rule of the public utilities commission, the ethical practices board, the Minnesota municipal board, the capitol area architectural and planning board, the tax court, the board of pardons, the state board of investment, or a constitutional officer.

Sec. 7. Minnesota Statutes 1994, section 14.03, subdivision 3, is amended to read:

Subd. 3. [RULEMAKING PROCEDURES.] The definition of a rule in section 14.02, subdivision 4, does not include:

(1) rules concerning only the internal management of the agency or other agencies that do not directly and substantially affect the rights of or procedures available to any segment of the public;

(2) rules of the commissioner of corrections relating to the placement and supervision of inmates serving a supervised release term, the internal management of institutions under the commissioner's control, and rules adopted under section 609.105 governing the inmates of those institutions;

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(2) a rule that establishes criteria or guidelines to be used by the staff of an agency in performing audits, investigations, or inspections, settling commercial disputes, negotiating commercial arrangements, or in the defense, prosecution, or settlement of cases;

(3) a rule that only establishes specific prices to be charged for particular goods or services sold by an agency;

(4) a rule concerning only the physical servicing, maintenance, or care of agency owned or operated facilities or property;

(5) a rule relating only to the use of a particular facility or property owned, operated, or maintained by the state or any of its subdivisions, if the substance of the rule is adequately indicated by means of signs or signals to persons who use the facility or property;

(6) a rule concerning only inmates of a correctional or detention facility, students enrolled in a state educational institution, or patients admitted to a hospital, if adopted by that facility, institution, or hospital;

(7) an agency budget;

(8) the terms of a collective bargaining agreement;

(3) (9) rules relating to weight limitations on the use of highways when the substance of the rules is indicated to the public by means of signs;

(4) (10) opinions of the attorney general;

(5) (11) the systems architecture plan and long-range plan of the state education management information system provided by section 121.931;

(6) (12) the data element dictionary and the annual data acquisition calendar of the department of education to the extent provided by section 121.932;

(7) (13) the occupational safety and health standards provided in section 182.655;

(8) (14) revenue notices and tax information bulletins of the commissioner of revenue; or

(9) (15) uniform conveyancing forms adopted by the commissioner of commerce under section 507.09.

Sec. 8. Minnesota Statutes 1994, section 14.04, is amended to read:

14.04 [AGENCY ORGANIZATION; GUIDEBOOK.]

To assist interested persons dealing with it, each agency shall, in a manner prescribed by the commissioner of administration, prepare a description of its organization, stating the process whereby general course and method of its operations and where and how the public may obtain information or make submissions or requests. The commissioner of administration shall publish these descriptions at least once every four years commencing in 1981 in a guidebook of state agencies. Notice of the publication of the guidebook shall be published in the State Register and given in newsletters, newspapers, or other publications, or through other means of communication.

Sec. 9. Minnesota Statutes 1994, section 14.05, subdivision 1, is amended to read:

Subdivision 1. [AUTHORITY TO ADOPT ORIGINAL RULES RESTRICTED.] Each agency shall adopt, amend, suspend, or repeal its rules in accordance with the procedures specified in sections 14.001 to 14.69 this chapter, and only pursuant to authority delegated by law and in full compliance with its duties and obligations. If a law authorizing rules is repealed, the rules adopted pursuant to that law are automatically repealed on the effective date of the law's repeal unless there is another law authorizing the rules. Except as provided in section 14.06, sections 14.001 to 14.69 shall not be authority for an agency to adopt, amend, suspend, or repeal rules.

Sec. 10. Minnesota Statutes 1994, section 14.05, subdivision 2, is amended to read:

Subd. 2. [AUTHORITY TO MODIFY PROPOSED RULE.] (a) An agency may modify a proposed rule in accordance with the procedures of the administrative procedure act. However, an agency may not modify a proposed rule so that it is substantially different from the proposed rule in the notice of intent to adopt rules proposed rule adoption.

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(b) A modification does not make a proposed rule substantially different if:

(1) the differences are within the scope of the matter announced in the notice of intent to adopt or notice of hearing and are in character with the issues raised in that notice;

(2) the differences are a logical outgrowth of the contents of the notice of intent to adopt or notice of hearing and the comments submitted in response to the notice; and

(3) the notice of intent to adopt or notice of hearing provided fair warning that the outcome of that rulemaking proceeding could be the rule in question.

(c) In determining whether the notice of intent to adopt or notice of hearing provided fair warning that the outcome of that rulemaking proceeding could be the rule in question the following factors must be considered:

(1) the extent to which persons who will be affected by the rule should have understood that the rulemaking proceeding on which it is based could affect their interests;

(2) the extent to which the subject matter of the rule or issues determined by the rule are different from the subject matter or issues contained in the notice of intent to adopt or notice of hearing; and

(3) the extent to which the effects of the rule differ from the effects of the proposed rule contained in the notice of intent to adopt or notice of hearing.

Sec. 11. Minnesota Statutes 1994, section 14.05, is amended by adding a subdivision to read:

Subd. 5. [REVIEW AND REPEAL OF RULES.] By December 1 of each year, an agency shall submit a list of all the rules of the agency that are obsolete and should be repealed to the governor, the legislative commission to review administrative rules, the house and senate standing committees with jurisdiction, and the revisor of statutes. The list must also include an explanation of why the rule is obsolete and the agency's timetable for repeal.

Sec. 12. Minnesota Statutes 1994, section 14.06, is amended to read:

14.06 [REQUIRED RULES.]

(a) Each agency shall adopt rules, in the form prescribed by the revisor of statutes, setting forth the nature and requirements of all formal and informal procedures related to the administration of official agency duties to the extent that those procedures directly affect the rights of or procedures available to the public.

(b) Upon request of any person, each agency shall, as soon as feasible and to the extent practicable, adopt rules to supersede principles of law or policy lawfully declared by the agency as the basis for its decisions in particular cases it intends to rely on as precedents in future cases. This paragraph applies only to the extent that the agency has authority, other than under this paragraph, to adopt rules on the subject matter of the principles declared in the particular cases.

Sec. 13. Minnesota Statutes 1994, section 14.08, is amended to read:

14.08 [REVISOR OF STATUTES APPROVAL OF RULE FORM.]

(a) Two copies of a rule adopted pursuant to the provisions of section 14.26 or 14.32 shall be submitted by the agency to the attorney general. The attorney general shall send one copy of the rule to the revisor on the same day as it is submitted by the agency under section 14.26 or 14.32. Within five days after receipt of the rule, excluding weekends and holidays, the revisor shall either return the rule with a certificate of approval of the form of the rule to the attorney general or notify the attorney general and the agency that the form of the rule will not be approved.

If the attorney general disapproves a rule, the agency may modify it and the agency shall submit two copies of the modified rule to the attorney general who shall send a copy to the revisor for approval as to form as described in this paragraph.

(b) One copy of a rule to be adopted after a public hearing under section 14.173 shall be submitted by the agency to the revisor for approval of the form of the rule. Within five working days after receipt of the rule, the revisor shall either return the rule with a certificate of approval to the agency or notify the agency that the form of the rule will not be approved.

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(c) If the revisor refuses to approve the form of the rule, the revisor's notice shall revise the rule so it is in the correct form.

(d) The attorney general shall assess an agency for the attorney general's actual cost of processing rules under this section. The agency shall pay the attorney general's assessments using the procedures of section 8.15. Each agency shall include in its budget money to pay the attorney general's assessments. Receipts from the assessment must be deposited in the state treasury and credited to the general fund.

Sec. 14. Minnesota Statutes 1994, section 14.09, is amended to read:

14.09 [PETITION FOR ADOPTION OF RULE.]

Any interested person may petition an agency requesting the adoption, suspension, amendment or repeal of any a rule. The petition shall be specific as to what action is requested and the need for the action. Upon receiving a petition an agency shall have 60 days in which to make a specific and detailed reply in writing as to its planned disposition of the request. If the agency states its intention to hold a public hearing on the subject of the request, it shall proceed according to sections 14.05 to 14.36.:

(1) deny the petition in writing, stating its reasons;

(2) initiate rulemaking proceedings under this chapter; or

(3) if otherwise lawful, adopt a rule.

The attorney general shall prescribe by rule the form for all petitions under this section and may prescribe further procedures for their submission, consideration, and disposition.

Sec. 15. [14.101] [ADVICE ON POSSIBLE RULES BEFORE NOTICE OF PROPOSED RULE ADOPTION.]

(a) In addition to seeking information by other methods, an agency, at least 60 days before publication of a notice of proposed rule adoption under section 14.141, shall solicit comments from the public on a subject matter of possible rulemaking under active consideration within the agency by causing notice of possible rulemaking to be published in the State Register. This notice must be published no later than 60 days after the effective date of a law granting new or additional rulemaking authority to an agency. The notice must include a description of the subject matter of the proposal, including the possible rule's purpose and motivation; the types of groups and individuals likely to be affected; cite the statutory authority for the proposed rule; and indicate where, when, and how persons may comment on the proposal and how drafts of any proposal may be obtained from the agency. If the agency intends to form an advisory task force on the matter, the notice must include a list of the persons or associations the agency intends to invite to serve on the task force, an indication of when the agency intends to form the task force, and when the agency expects the task force to complete its work. The agency must publish as part of this notice the names of all persons or associations who have agreed to be on such a task force at the time the notice is submitted to the State Register for publication. Within three days after publication of the notice in the State Register, the agency shall mail a copy of the notice to each person on the list established under section 14.141, subdivision 1.

(b) In addition to publishing notice in the State Register, the agency must make reasonable efforts, to the extent this can be done in a cost-effective manner, to notify classes of people who probably will be affected by the proposed rule by giving notice of its intention in newsletters, newspapers, or other publications, or through other means of communication. The insufficiency of the additional notice under this paragraph is not grounds for invalidating the rule.

Sec. 16. Minnesota Statutes 1994, section 14.12, is amended to read:

14.12 [DEADLINE TO PUBLISH NOTICE REPORT ON DELAY IN ADOPTION.]

The agency shall, within 180 days after the effective date of a law requiring rules to be promulgated, unless otherwise specified by law, publish an appropriate notice of intent to adopt a rule in accordance with sections 14.05 to 14.36. If an agency has not given this notice, it shall report to the legislative commission to review administrative rules, other appropriate committees of the legislature, and the governor its failure to do so, and the reasons for that failure. If an agency has not finally adopted a rule within 12 months of the effective date of a law requiring rules to

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be adopted, the agency must report to the legislative commission to review administrative rules, the appropriate policy committees of the legislature, and the governor. The report must include:

(1) the current status of the proposed rules;

(2) a summary of procedural requirements that have prevented the agency from finally adopting the rules;

(3) a discussion of unresolved policy issues in dispute between the agency and persons interested in the rules;

(4) the text of proposed legislation, if any is needed, that would give the agency further policy guidance needed to complete rulemaking or that would make changes in statute necessary to implement the affected law in accordance with legislative intent without rulemaking.

Sec. 17. Minnesota Statutes 1994, section 14.131, is amended to read:

14.131 [STATEMENT OF NEED AND REASONABLENESS.]

Before At the time the agency orders the publication of a rulemaking publishes notice required by section 14.14, subdivision 1a of rule adoption under section 14.141, the agency must prepare, review, and make available for public review a statement of the need for and reasonableness of the proposed rule and a fiscal note if required by section 3.982. The statement of need and reasonableness must be prepared under rules adopted by the chief administrative law judge. include a citation to the statutory authority to adopt the rule. The statement must also: (1) summarize the need and reasons for the proposed rule; and (2) describe the classes of people who probably will be affected by the proposed rule. The agency must make this statement available for review at the agency's office and shall provide a copy of the statement on request. The insufficiency or inaccuracy of this statement is not grounds for invalidating the rule if the agency has made a good faith effort to comply with this paragraph.

The agency shall send a copy of the statement of need and reasonableness to the legislative commission to review administrative rules when it becomes available for public review.

Sec. 18. Minnesota Statutes 1994, section 14.1311, is amended to read:

14.1311 [NOTICE TO COMMITTEES FOR FEES FIXED BY RULE.]

Before an agency submits a notice of hearing rule adoption to the State Register on proposed rules that establish or adjust fees, the agency shall comply with section 16A.128 16A.1285, subdivision 2a 4.

Sec. 19. [14.141] [NOTICE OF PROPOSED RULE ADOPTION.]

Subdivision 1. [LIST OF PERSONS REGISTERED TO RECEIVE NOTICE.] Each agency shall maintain a list of all persons who have registered with the agency for the purpose of receiving notice of proposed rule adoptions.

Subd. 2. [TIMING AND CONTENT.] (a) At least 30 days before the adoption of a rule an agency shall publish notice of its contemplated action in the State Register. The notice of proposed rule adoption must include:

(1) a short explanation of the purpose of the proposed rule and a notice that the statement of need and reasonableness prepared under section 14.131 is available from the agency;

(2) the specific legal authority authorizing the proposed rule;

(3) subject to subdivision 7, the text of the proposed rule;

(4) where, when, and how persons may present their views on the proposed rule;

(5) where, when, and how persons may demand an oral proceeding on the proposed rule if the notice does not already provide for one; and

(6) an explanation of how a regulatory analysis may be requested under section 14.171.

(b) In addition to publishing notice in the State Register, the agency must make reasonable efforts, to the extent this can be done in a cost-effective manner, to notify classes of people who probably will be affected by the proposed rule. The insufficiency of the additional notice under this paragraph is not grounds for invalidating the rule if the agency has made a good faith effort to comply with this paragraph.

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Subd. 3. [FORM APPROVAL OF RULE.] Before publishing notice of proposed rule adoption in the State Register, the agency shall submit the proposed rule to the revisor of statutes for approval of form.

Subd. 4. [DUAL NOTICE.] The notice of proposed rule adoption may give notice of an oral proceeding, and of the agency's intention to cancel the oral proceeding if an oral proceeding is not required. The agency may not schedule the oral proceeding earlier than ten days after the end of the comment period under section 14.142, subdivision 1.

Subd. 5. [EXTENSION OF ORAL PROCEEDING DEADLINE.] The notice of proposed rule adoption must state that if a regulatory analysis has not been done and is later required, another notice may be published extending the deadline for requesting an oral proceeding, rescheduling any previously scheduled oral hearing, or extending the deadline for presenting views to the agency.

Subd. 6. [REQUIRED MAILING.] Within three days after its publication in the State Register, the agency shall mail a copy of the notice of proposed rule adoption to each person on the list established under subdivision 1, and to any other person who has made a timely request to the agency for a mailed copy of the notice. An agency may not charge persons for the mailed copies.

Subd. 7. [OMISSION OF RULE TEXT.] (a) The governor may authorize an agency to omit from the notice of proposed rule adoption the text of any proposed rule, the publication of which would be unduly cumbersome, expensive, or otherwise inexpedient if:

(1) knowledge of the rule is likely to be important to only a small class of persons;

(2) the notice of proposed rule adoption states that a free copy of the entire rule is available upon request to the agency; and

(3) the notice of proposed rule adoption states in detail the specific subject matter of the omitted rule, cites the statutory authority for the proposed rule, and details the proposed rule's purpose and motivation.

(b) An agency may incorporate text by reference as permitted by section 14.07.

Sec. 20. [14.142] [PUBLIC PARTICIPATION.]

Subdivision 1. [COMMENT PERIOD.] For at least 30 days after publication of the notice of proposed rule adoption, an agency shall afford persons the opportunity to submit in writing, argument, data, and views on the proposed rule.

Subd. 2. [ORAL PROCEEDINGS.] (a) An agency shall schedule an oral proceeding on a proposed rule if, within 30 days after the published notice of proposed rule adoption, a written request for an oral proceeding is submitted to the agency by the legislative commission to review administrative rules, a standing committee of the house of representatives or the senate with jurisdiction over the subject matter of the rule, the governor, a political subdivision, or 15 persons. At that proceeding, persons may present oral argument, data, and views on the proposed rule. To be counted as one of 15 persons requesting an oral proceeding, a written request must include the requester's name and address.

(b) An oral proceeding on a proposed rule, if required, may not be held earlier than 30 days after notice of its location and time is published in the State Register.

(c) If requested by the agency, the governor, 50 persons or 15 corporations, partnerships, or associations submitting a written request to the agency, a standing committee of the house of representatives or the senate with jurisdiction over the subject matter of the rule, or the legislative commission to review administrative rules, a neutral presiding officer assigned by the chief administrative law judge shall preside at the oral proceeding. Otherwise, the agency, a member of the agency, or another presiding officer designated by the agency shall preside at a required oral proceeding on a proposed rule. If the agency does not preside, the presiding official shall prepare a memorandum for consideration by the agency summarizing the contents of the presentations made at the oral proceeding. A presiding officer assigned by the chief administrative law judge shall prepare a report that includes findings, conclusions, and recommendations on the degree to which the proposed rule: (1) complies with constitutional provisions; (2) is within the statutory authority of the agency; and (3) has been adopted in compliance with statutory rulemaking procedures. The report must include an evaluation of the agency's additional efforts, as required under section 14.141, subdivision 2, paragraph (b), to notify persons who might be affected by the proposed rule. Oral proceedings must be open to the public and be recorded by stenographic or other means.

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(d) Upon request, the agency shall provide the names of persons who have made written requests for an opportunity to make oral presentations on the proposed rule, where those requests may be inspected, and where and when oral presentations may be made.

Subd. 3. [WITHDRAWAL OF HEARING REQUESTS.] If an oral proceeding would have been required because of requests under subdivision 2, paragraph (a), the agency has taken action that may have caused requests for the oral proceeding to be withdrawn, and requests that required the oral hearing have been withdrawn, the agency must give written notice of that fact to all persons who have requested the oral proceeding. The notice must explain why the request is being withdrawn, and must include a description of any action the agency has taken or will take that affected or may have affected the decision to withdraw the request. The notice and any written comments received by the agency is part of the rulemaking record.

Sec. 21. [14.171] [REGULATORY ANALYSIS.]

Subdivision 1. [GENERAL REQUIREMENT.] An agency shall issue a regulatory analysis of a proposed rule if, within 30 days after the published notice of proposed rule adoption, a written request for the analysis is filed with the agency by the legislative commission to review administrative rules, a standing committee of the house of representatives or the senate with jurisdiction over the subject matter of the rule, the governor, a political subdivision, or 150 persons or 15 corporations, partnerships, or associations signing the request. To be counted as one of 150 persons or 15 corporations, partnerships, or associations requesting a regulatory analysis, a written request must include the requester's name and address.

Subd. 2. [CONTENTS.] Except to the extent that the written request expressly waives one or more of the following, the regulatory analysis must contain:

(1) a description of the classes of persons who probably will be affected by the proposed rule, including classes that will bear the costs of the proposed rule and classes that will benefit from the proposed rule;

(2) the probable costs to the classes of people, including political subdivisions, who probably will be affected by the proposed rule and to the state for implementation and enforcement of the proposed rule and any anticipated effect on state revenues;

(3) a determination of whether there are less costly methods or less intrusive methods for achieving the purpose of the proposed rule; and

(4) a description of any alternative methods for achieving the purpose of the proposed rule that were seriously considered by the agency, the reasons why they were rejected in favor of the proposed rule, and an explanation of the agency's determination that the balance between the net benefits and net costs under the proposed rule is better for society than under alternative methods that the agency rejected.

Subd. 3. [AVAILABILITY OF SUMMARY.] A concise summary of the regulatory analysis must be available to the public at least ten days before the earliest of:

(1) the end of the period during which persons may make written submissions on the proposed rule;

(2) the end of the period during which an oral proceeding may be requested; or

(3) the date of any required oral proceeding on the proposed rule.

Subd. 4. [NOTICE OF RESCHEDULING.] If the period for written submissions, the period for requesting an oral proceeding, or the date of the oral proceeding must be rescheduled in order to make the regulatory analysis available at the times requested by subdivision 3, the agency must publish notice to that effect in the State Register and mail notice as required under section 14.141, subdivision 6. This notice is subject to all the public participation requirements contained in section 14.142.

Subd. 5. [EFFECT OF GOOD FAITH COMPLIANCE.] If the agency has made a good faith effort to comply with the requirements of this section, the rule may not be invalidated on the grounds that the contents of the regulatory analysis are insufficient or inaccurate.

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Sec. 22. [14.172] [CONCISE EXPLANATORY STATEMENT.]

Subdivision 1. [TIMING AND CONTENT.] At the time it adopts a rule, an agency shall issue a concise explanatory statement containing:

(1) an indication of any change between the text of the proposed rule contained in the published notice of proposed rule adoption and the text of the rule as finally adopted, with the reasons for any change; and

(2) its principal factual, legal, and policy reasons for adopting the entire set of rules, as opposed to each individual rule or provision, under consideration, including a statement of how the agency has responded to major areas of comments on the proposed rule.

The insufficiency or inaccuracy of the statement of how the agency has responded to major areas of comments under this subdivision is not grounds for invalidating the rule if the agency has made a good faith effort to comply with this subdivision.

Subd. 2. [LIMIT ON REASONS.] Only the reasons contained in the concise explanatory statement may be used by any party as justification for the adoption of the rule in any proceeding in which its validity is at issue.

Sec. 23. [14.173] [ADOPTION AND FILING OF RULES.]

Subdivision 1. [GENERAL REQUIREMENT.] (a) An agency may not adopt a rule until the period for making written submissions and oral presentations has expired.

(b) Before the adoption of a rule, an agency shall consider the written submissions, presentations made at oral proceedings, any memorandum summarizing oral proceedings, and any regulatory analysis, provided for by this chapter.

(c) Within the scope of its delegated authority, an agency may use its own experience, technical competence, specialized knowledge, and judgment in the adoption of a rule.

(d) Before adoption of a rule, an agency shall submit the rule to the revisor of statutes for approval of form under section 14.08.

Subd. 2. [FILING.] An agency shall file in the office of the secretary of state each rule it adopts. The filing must be done as soon after adoption of the rule as is practicable. At the time of filing, each rule adopted must have attached to it the explanatory statement required by section 14.172. The secretary of state shall affix to each rule and statement a certification of the time and date of filing and keep a permanent register open to public inspection of all filed rules and attached explanatory statements. In filing a rule, each agency shall use a standard form prescribed by the secretary of state.

The secretary of state shall transmit to the revisor of statutes and to the legislative commission to review administrative rules a certified copy of each filed rule as soon after its filing as is practicable.

Sec. 24. Minnesota Statutes 1994, section 14.18, subdivision 1, is amended to read:

Subdivision 1. [GENERALLY.] A rule is effective after it has been subjected to all requirements described in sections 14.131 to 14.20 14.173 and five working days after the later of:

(1) the notice of adoption is published in the State Register; or

(2) its filing in the office of the secretary of state

unless a later date is required by law or specified in the rule. If the rule adopted is the same as the proposed rule, publication may be made by publishing notice in the State Register that the rule has been adopted as proposed and by citing the prior publication. If the rule adopted differs from the proposed rule, the portions of the adopted rule which differ from the proposed rule shall be included in the notice of adoption together with a citation to the prior State Register publication of the remainder of the proposed rule. The nature of the modifications must be clear to a reasonable person when the notice of adoption is considered together with the State Register publication of the proposed rule, except that modifications may also be made which comply with the form requirements of section 14.07, subdivision 7.

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If the agency omitted from the notice of proposed rule adoption the text of the proposed rule, as permitted by section 14.141, subdivision 7, paragraph (a), the governor may provide that the notice of the adopted rule need not include the text of any changes from the proposed rule. However, the notice of adoption must state in detail the substance of the changes made from the proposed rule, and must state that a free copy of that portion of the adopted rule that was the subject of the rulemaking proceeding, not including any material adopted by reference as permitted by section 14.07, is available upon request to the agency.

Sec. 25. Minnesota Statutes 1994, section 14.365, is amended to read:

14.365 [OFFICIAL RULEMAKING RECORD.]

The agency shall maintain the official rulemaking record for every rule adopted pursuant to sections 14.05 to 14.36 under this chapter. The record and materials incorporated by reference shall be available for public inspection. Upon judicial review, the record required by this section constitutes the official and exclusive agency rulemaking record with respect to agency action on or judicial review of the a rule. Except as provided in section 14.172, subdivision 2, or otherwise required by a provision of law, the agency rulemaking record need not constitute the exclusive basis for agency action on that rule or for judicial review of it. This section does not constitute authority to introduce evidence in a court proceeding that is not relevant to one of the grounds in section 14.45 upon which a court may declare a rule invalid. The record shall contain:

(1) copies of all publications in the State Register pertaining to the rule;

(2) copies of any portions of the agency's public rulemaking docket containing entries relating to the rule or the proceeding upon which the rule is based;

(3) all written petitions, requests, submissions, or comments received by the agency, the administrative law judge, or the attorney general pertaining to the rule and all other materials considered by the agency in connection with the formulation, proposal, or adoption of the rule or the proceeding upon which the rule is based;

(3) (4) the statement of need and reasonableness for the rule, if any;

(4) (5) the concise explanatory statement;

(6) any regulatory analysis prepared;

(7) the official transcript of the hearing if one was held oral presentations made in the proceeding upon which the rule is based, or the tape recording or stenographic record of the hearing those presentations, if a transcript was not prepared, and any memorandum prepared by a presiding official summarizing the contents of those presentations;

(5) the report of the administrative law judge, if any;

(6) the rule in the form last submitted to the administrative law judge or first submitted to the attorney general;

(7) the attorney general's written statement of required modifications and of approval or disapproval, if any;

(8) any documents required by applicable rules of the office of administrative hearings or of the attorney general;

(9) the agency's order adopting the rule;

(10) (8) all petitions for exceptions to, amendments of, or repeal or suspension of, the rule;

(9) a copy of any objection to the rule filed by the legislative commission to review administrative rules or a standing committee pursuant to section 3.842, subdivision 4a, and the agency's response;

(10) a copy of any filed executive order with respect to the rule;

(11) the revisor's certificate approving the form of the rule; and

(11) (12) a copy of the adopted rule as filed with the secretary of state.

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Sec. 26. [14.366] [PUBLIC RULEMAKING DOCKET.]

(a) Each agency shall maintain a current, public rulemaking docket.

(b) The rulemaking docket must contain a listing of the precise subject matter of each possible proposed rule currently under active consideration within the agency for proposal, the name and address of agency personnel with whom persons may communicate with respect to the matter, and an indication of its present status within the agency.

(c) The rulemaking docket must list each pending rulemaking proceeding. A rulemaking proceeding is pending from the time it is begun, by publication of the notice of solicitation, the notice of intent to adopt, or notice of hearing, to the time it is terminated, by publication of a notice of withdrawal or the rule becoming effective. For each rulemaking proceeding, the docket must indicate:

(1) the subject matter of the proposed rule;

(2) a citation to all published notices relating to the proceeding;

(3) where written comments on the proposed rule may be inspected;

(4) the time during which written comments may be made;

(5) the names of persons who have made written requests for a public hearing, where those requests may be inspected, and where and when the hearing will be held;

(6) the current status of the proposed rule and any agency determinations with respect to the rule;

(7) any known timetable for agency decisions or other action in the proceeding;

(8) the date of the rule's adoption;

(9) the date the rule was filed with the secretary of state; and

(10) when the rule will become effective.

Sec. 27. [14.375] [INTERPRETATIONS.]

An agency interpretation of a statute or rule it is responsible for enforcing or administering is not invalid solely because the interpretation was not adopted as a rule. This section does not authorize an agency to impose requirements that are not contained in a statute or rule, either on its face or determined by accepted means of construction, without following statutory rulemaking procedures.

Sec. 28. [14.376] [RULES NOT ADOPTED ACCORDING TO ACT.]

Subdivision 1. [INVALIDITY OF CERTAIN RULES.] A rule adopted after a rulemaking proceeding commenced after June 30, 1995, is invalid unless adopted in substantial compliance with this chapter. However, inadvertent failure to mail a notice of proposed rule adoption to any person as required by section 14.141, subdivision 6, does not invalidate a rule.

Subd. 2. [LIMITATIONS ON ACTIONS.] An action to contest the validity of a rule on the grounds of its noncompliance with any provision of this chapter must be commenced within two years after the effective date of the rule.

Sec. 29. [14.386] [GOOD CAUSE EXEMPTION.]

If an agency for good cause finds that the rulemaking provisions of this chapter are unnecessary, impracticable, or contrary to the public interest when adopting, amending, or repealing a rule to:

(1) address a serious and immediate threat to the public health, safety, or welfare;

(2) comply with a court order or a requirement in federal law in a manner that does not allow for compliance with sections 14.131 to 14.173;

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(3) incorporates specific changes set forth in applicable statutes when no interpretation of law is required; or

(4) make changes that do not alter the sense, meaning, or effect of a rule,

the agency may adopt, amend, or repeal the rule upon satisfying the requirements of section 14.38, subdivision 7. The agency shall incorporate its findings and a brief statement of its supporting reasons in its order adopting, amending, or repealing the rule.

Rules adopted, amended, or repealed under clauses (1) and (2) are effective for a period of two years from the date of publication of the rule in the State Register.

Rules adopted, amended, or repealed under clause (3) or (4) are effective upon publication in the State Register.

Sec. 30. Minnesota Statutes 1994, section 14.38, subdivision 1, is amended to read:

Subdivision 1. [ORIGINAL RULES.] Every rule adopted under authority delegated by law, regardless of whether it might be known as a substantive, procedural, or interpretive rule, which is filed in the office of the secretary of state as provided in sections 14.05 to 14.36 shall have the force and effect of law five working days after the later of: (1) its filing in the office of the secretary of state; or (2) its notice of adoption is published in the State Register, unless a different date is required by statute or a later date is specified in the rule. The secretary of state shall keep a permanent record of rules filed with that office open to public inspection.

Sec. 31. Minnesota Statutes 1994, section 14.38, subdivision 7, is amended to read:

Subd. 7. [PROCEDURE FOR EXEMPT AGENCIES AND EXEMPT RULES.] The subdivision 5 and 6 rules have Subdivisions 7 to 9 apply to agency rules that are specifically exempted from chapter 14 by other law. Subdivisions 7 and 8 apply to rules adopted under section 14.386. Subdivisions 7 to 9 do not apply to rules or agencies listed in section 14.03. A rule has the force and effect of law if:

(1) the revisor of statutes approves the form of the rules by certificate;

(2) two copies of the rules with the revisor's certificate are filed in the office of the secretary of state; and,

(3) a copy is published in the State Register.

Sec. 32. Minnesota Statutes 1994, section 14.38, subdivision 8, is amended to read:

Subd. 8. [EFFECTIVE DATE OF EXEMPT AGENCY RULES AND EXEMPT RULES.] The rules become A rule subject to subdivisions 7 to 9 becomes effective five working days after publication in the State Register. The secretary of state shall forward one copy of each rule to the revisor of statutes. Rules filed in accordance with subdivisions 5 7 to 9, as they were in effect on the date the rules were filed, shall be included in Minnesota Rules.

Sec. 33. Minnesota Statutes 1994, section 14.38, subdivision 9, is amended to read:

Subd. 9. [STATUS OF FUTURE EXEMPTIONS.] Any law exempting an agency or rule from sections 14.001 to 14.69 chapter 14 shall not be construed as preventing an agency from complying with subdivisions 5 7 to 9, unless the law specifically provides to the contrary.

Sec. 34. [14.435] [LEGISLATIVE COMMISSION AND COMMITTEE STANDING.]

The legislative commission to review administrative rules or a standing committee of the legislature that has oversight responsibility for an agency may petition for judicial review of a rule of that agency or intervene in litigation arising from rulemaking action of that agency.

Sec. 35. Minnesota Statutes 1994, section 14.46, subdivision 1, is amended to read:

Subdivision 1. [CONTENTS.] The commissioner of administration shall publish a State Register containing all notices for hearings concerning proposed adoption of rules, giving time, place and purpose of the hearing and, except as provided in section 14.141, subdivision 7, the full text of the action being proposed. Further, the register shall contain all rules, amendments, suspensions, or repeals thereof, pursuant to the provisions of this chapter. The

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commissioner shall further publish any executive order issued by the governor which shall become effective 15 days after publication except as provided in section 4.035, subdivision 2. The commissioner shall further publish any official notices in the register which a state agency requests to be published. Such notices shall include, but shall not be limited to, the date on which a new agency becomes operational, the assumption of a new function by an existing state agency, or the appointment of commissioners. The commissioner may prescribe the form, excluding the form of the rules, and manner in which agencies submit any material for publication in the State Register and may withhold publication of any material not submitted according to the form or procedures prescribed.

The commissioner of administration may organize and distribute the contents of the register according to such categories as will provide economic publication and distribution and will offer easy access to information by any interested party.

Sec. 36. Minnesota Statutes 1994, section 14.46, subdivision 3, is amended to read:

Subd. 3. [SUBMISSION OF ITEMS FOR PUBLICATION.] Any state agency which desires to publish a notice of hearing, rule or change thereof proposed rule adoption or of an adopted rule shall submit a copy of the entire document material to be published, including dates when adopted, and filed with the secretary of state, to the commissioner of administration in addition to any other copies which may be required to be filed with the commissioner by other law.

The revisor of statutes shall provide assistance to the commissioner if requested. Alternatively, the commissioner may designate a contract compositor to whom the assistance is to be supplied. The assistance, in either case, shall consist of furnishing a machine readable computer tape, or similar services, for rules which are available in the revisor's computer data base and for which a written copy has been submitted by an agency to the commissioner for publication in the State Register.

Sec. 37. Minnesota Statutes 1994, section 14.46, is amended by adding a subdivision to read:

Subd. 4a. [ELECTRONIC ACCESS TO INFORMATION.] (a) To the extent practicable, the commissioner of administration shall make information in the State Register available electronically at the time of publication in the State Register. The commissioner may charge a fee for information that is made available electronically. The commissioner shall work with the revisor of statutes and other legislative officials to coordinate electronic provision of information related to rulemaking with electronic provision of legislative information.

(b) Each agency is encouraged to make other information that the agency produces relating to proposed rules, such as statements of need and reasonableness, available electronically.

Sec. 38. Minnesota Statutes 1994, section 14.47, subdivision 1, is amended to read:

Subdivision 1. [PLAN OF PUBLICATION AND SUPPLEMENTATION.] The revisor of statutes shall:

(1) formulate a plan for the compilation of all permanent agency rules and, to the extent practicable, emergency agency rules, adopted pursuant to the administrative procedure act or filed pursuant to the provisions of section 14.38, subdivisions 5 to 9 which were in effect at the time the rules were filed or subdivision 11, including their order, classification, arrangement, form, and indexing, and any appropriate tables, annotations, cross references, citations to applicable statutes, explanatory notes, and other appropriate material to facilitate use of the rules by the public, and for the compilation's composition, printing, binding and distribution;

(2) publish the compilation of permanent agency rules and, if practicable, emergency rules, adopted pursuant to the administrative procedure act or filed pursuant to the provisions of section 14.38, subdivisions 5 to 9 which were in effect at the time the rules were filed or subdivision 11, which shall be called "Minnesota Rules";

(3) periodically either publish a supplement or a new compilation, which includes all rules adopted since the last supplement or compilation was published and removes rules incorporated in prior compilations or supplements which are no longer effective;

(4) include in Minnesota Rules a consolidated list of publications and other documents incorporated by reference into the rules after June 30, 1981, and found conveniently available by the revisor under section 14.07, subdivision 4, indicating where the publications or documents are conveniently available to the public; and

(5) copyright any compilations and or supplements in the name of the state of Minnesota.

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Sec. 39. Minnesota Statutes 1994, section 14.47, subdivision 2, is amended to read:

Subd. 2. [RESTRICTIONS ON COMPILATION.] The revisor of statutes shall not:

(1) alter the sense, meaning, or effect of any rule in the course of compiling or publishing it;

(2) aid an agency in the preparation of any statement concerning the need for or reasonableness of a rule except as provided by section 14.07, subdivision 6; and

(3) act as legal counsel for an agency before an administrative law judge a presiding officer except as provided by section 14.07, subdivision 6.

Sec. 40. Minnesota Statutes 1994, section 14.47, subdivision 6, is amended to read:

Subd. 6. [OMISSION OF TEXT.] (a) For purposes of any compilation or publication of the rules, the revisor, unless the attorney general objects, may omit any extraneous descriptive or informative text which is not an operative portion of the rule. The revisor may also omit effective date provisions, statements that a rule is repealed, prefaces, appendices, guidelines, organizational descriptions, explanations of federal or state law, and similar material. The revisor shall consult with the agency, the attorney general, and the legislative commission to review administrative rules, and with the chief administrative law judge before omitting any text from publication.

(b) For the purposes of any compilation or publication of the rules, the revisor, unless the attorney general objects, may omit any rules that, by their own terms, are no longer effective or have been repealed directly by the agency, repealed by the legislature, or declared unconstitutional or otherwise void by a court of last resort. The revisor shall not remove a rule which is suspended and not fully repealed, but shall, if practicable, note the fact of suspension in Minnesota Rules. The revisor shall consult the agency involved, the attorney general, the chief administrative law judge, and the legislative commission to review administrative rules before omitting a rule from publication.

Sec. 41. Minnesota Statutes 1994, section 14.50, is amended to read:

14.50 [HEARINGS BEFORE ADMINISTRATIVE LAW JUDGE.]

All hearings of state agencies required to be conducted under this chapter other than rulemaking oral proceedings conducted by an agency or an officer designated by the agency, shall be conducted by an administrative law judge assigned by the chief administrative law judge. All hearings required to be conducted under chapter 176 shall be conducted by a compensation judge assigned by the chief administrative law judge. In assigning administrative law judges or compensation judges to conduct such hearings, the chief administrative law judge shall attempt to utilize personnel having expertise in the subject to be dealt with in the hearing. Only administrative law judges learned in the law shall be assigned to contested case hearings. Only compensation judges shall be assigned to workers' compensation matters. It shall be the duty of the administrative law judge to: (1) advise an agency as to the location at which and time during which a hearing should be held so as to allow for participation by all affected interests, provided that this authority does not apply to rulemaking oral proceedings; (2) conduct only hearings for which proper notice has been given; (3) see to it that all hearings are conducted in a fair and impartial manner. Except in the case of rulemaking oral proceedings and workers' compensation hearings involving claims for compensation it shall also be the duty of the administrative law judge to make a report on each proposed agency action in which the administrative law judge functioned in an official capacity, stating findings of fact and conclusions and recommendations, taking notice of the degree to which the agency has (i) documented its statutory authority to take the proposed action, and (ii) fulfilled all relevant substantive and procedural requirements of law or rule, and (iii) in rulemaking proceedings, demonstrated the need for and reasonableness of its proposed action with an affirmative presentation of facts.

Sec. 42. Minnesota Statutes 1994, section 14.51, is amended to read:

14.51 [PROCEDURAL RULES FOR HEARINGS.]

The chief administrative law judge shall adopt rules to govern the procedural conduct of all hearings, relating to both rule adoption, amendment, suspension or repeal hearings, contested case hearings, and workers' compensation hearings, and to govern the conduct of voluntary mediation sessions for rulemaking and contested cases other than those within the jurisdiction of the bureau of mediation services. Temporary rulemaking authority is granted to the chief administrative law judge for the purpose of implementing Laws 1981, chapter 346, sections 2 to 6, 103 to 122,

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127 to 135, and 141. The procedural rules for hearings shall be binding upon all agencies and shall supersede any other agency procedural rules with which they may be in conflict. The procedural rules for hearings shall include in addition to normal procedural matters provisions relating to recessing and reconvening new hearings when the proposed final rule of an agency is substantially different from that which was proposed at the public hearing. The procedural rules shall establish a procedure whereby the proposed final rule of an agency shall be reviewed by the chief administrative law judge to determine whether or not a new hearing is required because of substantial changes or failure of the agency to meet the requirements of sections 14.131 to 14.18. Upon the chief administrative law judge's own initiative or upon written request of an interested party, the chief administrative law judge may issue a subpoena for the attendance of a witness or the production of books, papers, records or other documents as are material to the matter being heard. The subpoenas shall be enforceable through the district court in the district in which the subpoena is issued.

Sec. 43. Minnesota Statutes 1994, section 17.84, is amended to read:

17.84 [DUTIES OF THE COMMISSIONER.]

Within 30 days of the receipt of the notices notice provided in section 17.82 or 17.83, the commissioner shall review the agency's proposed action, shall negotiate with the agency, and shall recommend to the agency in writing the implementation either of the action as proposed or an alternative. In making recommendations, the commissioner shall follow the statement of policy contained in section 17.80. If the proposed agency action is the adoption of a rule, the recommendation of the commissioner shall be made a part of the record in the rule hearing. If the agency receives no response from the commissioner within 30 days, it shall be deemed a recommendation that the agency take the action as proposed.

Sec. 44. Minnesota Statutes 1994, section 84.027, is amended by adding a subdivision to read:

Subd. 13. [GAME AND FISH RULES.] (a) The commissioner of natural resources may adopt rules under this subdivision that are authorized under:

(1) chapters 97A, 97B, and 97C to set open seasons and areas, to close seasons and areas, to select hunters for areas, to provide for tagging and registration of game, to prohibit or allow taking of wild animals to protect a species, and to prohibit or allow importation, transportation, or possession of a wild animal; and

(2) sections 84.093, 84.14, 84.15, and 84.152 to set seasons for harvesting wild ginseng roots and wild rice and to restrict or prohibit harvesting in designated areas.

Clause (2) does not limit or supersede the commissioner's authority to establish opening dates, days, and hours of the wild rice harvesting season under section 84.14, subdivision 3.

(b) If conditions exist that do not allow the commissioner to comply with chapter 14, the commissioner may adopt a rule under this subdivision by publishing notice in the State Register and filing a copy of the rules with the secretary of state and with the legislative commission to review administrative rules.

(c) Rules adopted under paragraph (b) are effective upon publishing in the State Register and may be effective up to seven days before publishing and filing under paragraph (b) if:

(1) the commissioner of natural resources determines that an emergency exists; and

(2) for a rule that affects more than three counties the commissioner publishes the rule once in a legal newspaper published in Minneapolis, St. Paul, and Duluth, or for a rule that affects three or fewer counties the commissioner publishes the rule once in a legal newspaper in each of the affected counties.

(d) Except as provided in paragraph (e), a rule published under paragraph (c), clause (2), may not be effective earlier than seven days after publication.

(e) A rule published under paragraph (c), clause (2), may be effective the day the rule is published if the commissioner gives notice and holds a public hearing on the rule within 15 days before publication.

(f) The commissioner shall attempt to notify persons or groups of persons affected by rules adopted under paragraphs (b) and (c) by public announcements, posting, and other appropriate means as determined by the commissioner.

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Sec. 45. [REVISOR INSTRUCTION.]

The revisor of statutes shall place a bill before the legislature during the 1996 regular session which changes statutory references to chapter 14 or any sections of that chapter to the appropriate references to this act.

Sec. 46. [REPEALER.]

(a) Minnesota Statutes 1994, sections 3.842, subdivision 4; 3.844; 3.845; and 3.846, are repealed.

(b) Minnesota Statutes 1994, sections 14.05, subdivisions 2 and 3; 14.06; 14.10; 14.11; 14.115; 14.38, subdivisions 4, 5, and 6; and 17.83, are repealed.

(c) Minnesota Statutes 1994, sections 14.14; 14.15; 14.16; 14.19; and 14.20, are repealed.

(d) Minnesota Statutes 1994, sections 14.22; 14.225; 14.23; 14.235; 14.24; 14.25; 14.26; 14.27; and 14.28, are repealed.

(e) Minnesota Statutes 1994, sections 14.29; 14.30; 14.305; 14.31; 14.32; 14.33; 14.34; 14.35; and 14.36, are repealed.

Sec. 47. [EFFECTIVE DATE.]

Sections 1 to 46 are effective July 1, 1996. Notwithstanding Minnesota Statutes, section 14.376, rules for which a notice of intent to adopt was published before July 1, 1996, are valid if adopted in compliance with laws in effect at the time of publication of the notice of intent to adopt rules. However, the power of the governor to suspend rules applies to rules adopted before or after the effective date of sections 1 to 46."

Delete the title and insert:

"A bill for an act relating to state government; revising procedures used for adoption and review of administrative rules; amending Minnesota Statutes 1994, sections 3.842, subdivisions 2, 5, and by adding subdivisions; 14.03, subdivision 3; 14.04; 14.05, subdivisions 1, 2, and by adding a subdivision; 14.06; 14.08; 14.09; 14.12; 14.131; 14.1311; 14.18, subdivision 1; 14.365; 14.38, subdivisions 1, 7, 8, and 9; 14.46, subdivisions 1, 3, and by adding a subdivision; 14.47, subdivisions 1, 2, and 6; 14.50; 14.51; 17.84; and 84.027, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapters 3; 4; and 14; repealing Minnesota Statutes 1994, sections 3.842, subdivision 4; 3.844; 3.845; 3.846; 14.05, subdivisions 2 and 3; 14.06; 14.10; 14.11; 14.115; 14.14; 14.15; 14.16; 14.19; 14.20; 14.22; 14.225; 14.23; 14.235; 14.24; 14.25; 14.26; 14.27; 14.28; 14.29; 14.30; 14.305; 14.31; 14.32; 14.33; 14.34; 14.35; 14.36; 14.38, subdivisions 4, 5, and 6; and 17.83."

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Ways and Means.

The report was adopted.

Osthoff from the Committee on General Legislation, Veterans Affairs and Elections to which was referred:

H. F. No. 853, A bill for an act relating to the military; exempting the national guard and the department of military affairs from certain prohibitions concerning weapons; amending Minnesota Statutes 1994, section 609.66, subdivision 2.

Reported the same back with the recommendation that the bill pass and be re-referred to the Committee on Judiciary.

The report was adopted.

Olson, E., from the Committee on Ethics to which was referred:

H. F. No. 856, A bill for an act relating to ethics in government; extending the enforcement authority of the ethical practices board to cover gifts to local officials; making advisory opinions public data; authorizing civil penalties; clarifying certain definitions; clarifying and authorizing exceptions to the ban on gifts; appropriating money; amending Minnesota Statutes 1994, sections 10A.01, subdivision 28; 10A.02, subdivision 12; 10A.071, subdivisions 1 and 3; 10A.34; and 471.895, subdivisions 1 and 3.

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Reported the same back with the following amendments:

Page 1, delete lines 25 to 28, and insert:

"Principal does not include the officers, employees, or members of an association that is a principal, except for those individuals defined as lobbyists in subdivision 11, or those individuals who directly supervise the activities of a lobbyist or those officers, employees, or members of the association when their acts are done on behalf of the association."

Page 3, line 3, delete everything after "means"

Page 3, delete line 4, and insert "the spouse or former spouse of an individual and the individual's siblings and lineal ascendants and descendants, by marriage, birth, or adoption, including stepchildren, stepgrandchildren, and stepgreatgrandchildren, even if not living under one roof."

Page 3, line 10, delete everything after "(d)"

Page 3, delete lines 11 and 12

Page 3, line 13, delete "(e)"

Page 3, line 33, delete "anything that does not exceed" and insert "food or a nonalcoholic beverage not exceeding" and after "in" insert "total"

Page 3, line 34, after "given" insert a comma and strike "reception, meal, or"

Page 3, line 35, reinstate the stricken "away from the" and before "by" insert "offices of the governmental entity in which the recipient official holds office,"

Page 4, line 2, delete "to participate" and insert "and necessary for participation"

Page 4, line 3, after the semicolon, insert "or"

Page 4, delete lines 4 to 6

Page 4, line 7, delete "(10)" and insert "(9)"

Page 4, line 14, delete "or to assist" and insert ", for the purpose of assisting"

Page 4, line 17, before the period, insert ", provided, however, that the tickets or passes may not be given directly or indirectly to any elected official of state, city, or county government"

Page 4, line 23, after "organization" insert "or a statewide or multistate organization of governmental units or public officials qualifying under section 501(c)(3) of the Internal Revenue Code of 1986"

Page 5, line 16, delete "$1,000" and insert "$100 for the first offense and up to $500 for any subsequent offense"

Page 5, delete line 21, and insert:

"(b) "Family" and "gift" has have the"

Page 5, line 31, strike "or appointed" and after the second "official" insert "or chief administrative officer"

Page 5, line 32, after "county" insert ", school district,"

Page 5, lines 33 to 36, delete the new language

Page 6, delete line 1

Page 6, line 18, delete "anything that does not exceed" and insert "food or a nonalcoholic beverage not exceeding" and after "in" insert "total"

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Page 6, line 19, after "given" insert a comma and strike "reception, meal, or"

Page 6, line 20, reinstate "away from the" and before "by" insert "offices of the governmental entity in which the recipient official holds office,"

Page 6, line 23, delete "to participate" and insert "and necessary for participation"

Page 6, line 24, after the semicolon, insert "or"

Page 6, delete lines 25 and 26

Page 6, line 27, delete "(10)" and insert "(9)"

Page 6, line 34, delete "or to assist" and insert ", for the purpose of assisting"

Page 7, line 1, before the period, insert ", provided, however, that the tickets or passes may not be given directly or indirectly to any elected official of state, city, or county government"

Page 7, line 8, after "organization" insert "or a statewide or multistate organization of governmental units or public officials qualifying under section 501(c)(3) of the Internal Revenue Code of 1986"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Economic Development, Infrastructure and Regulation Finance.

The report was adopted.

Wenzel from the Committee on Agriculture to which was referred:

H. F. No. 895, A bill for an act relating to tax increment financing; exempting districts established for purpose of constructing or expanding an agricultural processing facility from certain aid reductions; amending Minnesota Statutes 1994, section 273.1399, by adding a subdivision.

Reported the same back with the following amendments:

Page 1, line 18, delete "and" and insert:

"(3) the district is located outside of the seven-county metropolitan area, as defined in section 473.121;

(4) the tax increment financing plan was approved by a resolution of the county board;

(5) the total amount of increment for the district does not exceed $1,500,000; and"

Page 1, line 19, delete "(3)" and insert "(6)"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Taxes.

The report was adopted.

Osthoff from the Committee on General Legislation, Veterans Affairs and Elections to which was referred:

H. F. No. 1001, A bill for an act relating to state government finance; appropriating money for a women in military service memorial.

Reported the same back with the recommendation that the bill pass and be re-referred to the Committee on Governmental Operations.

The report was adopted.

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Murphy from the Committee on Judiciary Finance to which was referred:

H. F. No. 1027, A bill for an act relating to the environment; establishing an environmental legal assistance pilot project; appropriating money.

Reported the same back with the recommendation that the bill be re-referred to the Committee on Governmental Operations without further recommendation.

The report was adopted.

Osthoff from the Committee on General Legislation, Veterans Affairs and Elections to which was referred:

H. F. No. 1045, A bill for an act relating to veterans; appropriating money for assistance in making certain claims.

Reported the same back with the following amendments:

Page 1, line 13, after the period, insert "This appropriation may not be used for membership recruitment."

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Governmental Operations.

The report was adopted.

Tunheim from the Committee on Transportation and Transit to which was referred:

H. F. No. 1065, A bill for an act relating to St. Louis county; modifying certain accounting and expenditure requirements for road and bridge fund tax money derived from unorganized townships; proposing coding for new law in Minnesota Statutes, chapter 383C.

Reported the same back with the recommendation that the bill pass.

The report was adopted.

Anderson, R., from the Committee on Health and Human Services to which was referred:

H. F. No. 1077, A bill for an act relating to health; MinnesotaCare; establishing requirements for integrated service networks; modifying requirements for health plan companies; establishing the standard health coverage; delaying the regulated all-payer option; modifying universal coverage and insurance reform provisions; revising the research and data initiatives; expanding eligibility for the MinnesotaCare program; establishing prescription drug coverage for low-income Medicare beneficiaries; extending the health care commission and regional coordinating boards; making technical changes; reducing tax deductions for the voluntarily insured; providing penalties; appropriating money; amending Minnesota Statutes 1994, sections 13.99, by adding a subdivision; 60A.02, subdivision 1a; 60B.02; 60B.03, subdivision 2; 60G.01, subdivisions 2, 4, and 5; 62A.10, subdivisions 1 and 2; 62A.65, subdivisions 5 and 8; 62D.02, subdivision 8; 62D.042, subdivision 2; 62D.11, subdivision 1; 62E.141; 62H.04; 62H.08; 62J.017; 62J.04, subdivision 3; 62J.05, subdivisions 2 and 9; 62J.06; 62J.09, subdivisions 1, 2, 6, 8, and by adding a subdivision; 62J.17, subdivision 4a; 62J.212; 62J.37; 62J.38; 62J.40; 62J.41, subdivision 1; 62J.48; 62J.55; 62L.02, subdivisions 11, 16, 24, and 26; 62L.03, subdivisions 3, 4, and 5; 62L.09, subdivision 1; 62L.12, subdivision 2; 62N.02, by adding subdivisions; 62N.04; 62N.10, by adding a subdivision; 62N.11, subdivision 1; 62N.13; 62N.14, subdivision 3; 62P.03; 62P.05, by adding a subdivision; 62P.07, subdivision 4; 62P.31; 62Q.01, subdivisions 2, 3, and by adding subdivisions; 62Q.03, subdivisions 1, 6, 7, 8, 9, 10, and by adding subdivisions; 62Q.07, subdivisions 1 and 2; 62Q.09, subdivision 3; 62Q.11, subdivision 2; 62Q.165; 62Q.17, subdivisions 2, 6, 8, and by adding a subdivision; 62Q.18; 62Q.19; 62Q.25; 136A.1355, subdivisions 3 and 5; 136A.1356, subdivisions 3 and 4; 144.1464, subdivisions 2, 3, and 4; 144.147, subdivision 1; 144.1484, subdivision 1; 144.1486, subdivision 4; 144.1489, subdivision 3; 151.48; 214.16, subdivisions 2 and 3; 256.9354, subdivisions 1, 4, 5, and by adding a subdivision; 256.9357, subdivisions 1, 2, and 3; 256.9358, by adding a subdivision; 256B.057, subdivision 3; 270.101, subdivision 1; 290.01, subdivision 19a; 295.50, subdivisions 3, 4, and 10a; 295.53, subdivisions 1,

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3, and 4; 295.55, subdivision 4; and 295.57; Laws 1990, chapter 591, article 4, section 9; Laws 1994, chapter 625, article 5, section 10, subdivision 2; proposing coding for new law in Minnesota Statutes, chapters 62J; 62L; 62N; 62Q; and 295; repealing Minnesota Statutes 1994, sections 62J.045; 62J.07, subdivision 4; 62J.09, subdivision 1a; 62J.19; 62J.30; 62J.31; 62J.32; 62J.33; 62J.34; 62J.35; 62J.41, subdivisions 3 and 4; 62J.44; 62J.45; 62J.65; 62L.08, subdivision 7a; 62Q.03, subdivisions 2, 3, 4, 5, and 11; 62Q.21; and 62Q.27; Laws 1993, chapter 247, article 1, sections 12, 13, 14, 15, 18, and 19; Minnesota Rules, part 4685.1700, subpart 1, item D.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"ARTICLE 1

INTEGRATED SERVICE NETWORKS

Section 1. Minnesota Statutes 1994, section 60B.02, is amended to read:

60B.02 [PERSONS COVERED.]

The proceedings authorized by sections 60B.01 to 60B.61 may be applied to:

(1) All insurers who are doing, or have done, an insurance business in this state, and against whom claims arising from that business may exist now or in the future;

(2) All insurers who purport to do an insurance business in this state;

(3) All insurers who have insureds resident in this state;

(4) All other persons organized or in the process of organizing with the intent to do an insurance business in this state; and

(5) All nonprofit service plan corporations incorporated or operating under the nonprofit health service plan corporation act, any health plan incorporated under chapter 317A, all fraternal benefit societies operating under chapter 64B, except those associations enumerated in section 64B.38, all assessment benefit associations operating under chapter 63, all township mutual or other companies operating under chapter 67A, and all reciprocals or interinsurance exchanges operating under chapter 71A, and all integrated service networks operating under chapter 62N.

Sec. 2. Minnesota Statutes 1994, section 60B.03, subdivision 2, is amended to read:

Subd. 2. [COMMISSIONER.] "Commissioner" means the commissioner of commerce of the state of Minnesota and, in that commissioner's absence or disability, a deputy or other person duly designated to act in that commissioner's place. In the context of rehabilitation or liquidation of a health maintenance organization or integrated service network, "commissioner" means the commissioner of health of the state of Minnesota and, in that commissioner's absence or disability, a deputy or other person duly designated to act in that commissioner's place.

Sec. 3. Minnesota Statutes 1994, section 60G.01, subdivision 2, is amended to read:

Subd. 2. [COMMISSIONER.] "Commissioner" means the commissioner of commerce, except that "commissioner" means the commissioner of health for administrative supervision of health maintenance organizations and integrated service networks.

Sec. 4. Minnesota Statutes 1994, section 60G.01, subdivision 4, is amended to read:

Subd. 4. [DEPARTMENT.] "Department" means the department of commerce, except that "department" means the department of health for administrative supervision of health maintenance organizations and integrated service networks.

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Sec. 5. Minnesota Statutes 1994, section 60G.01, subdivision 5, is amended to read:

Subd. 5. [INSURER.] "Insurer" means and includes every person engaged as indemnitor, surety, or contractor in the business of entering into contracts of insurance or of annuities as limited to:

(1) any insurer who is doing an insurer business, or has transacted insurance in this state, and against whom claims arising from that transaction may exist now or in the future;

(2) any fraternal benefit society which is subject to chapter 64B;

(3) nonprofit health service plan corporations subject to chapter 62C;

(4) cooperative life and casualty companies subject to sections 61A.39 to 61A.52; and

(5) health maintenance organizations regulated under chapter 62D; and

(6) integrated service networks regulated under chapter 62N.

Sec. 6. Minnesota Statutes 1994, section 62N.02, is amended by adding a subdivision to read:

Subd. 4b. [CREDENTIALING.] "Credentialing" means the process of collecting, verifying, and reviewing evidence that relates to a health care professional's qualifications to practice the health care profession as a provider within a specific integrated service network.

Sec. 7. Minnesota Statutes 1994, section 62N.02, is amended by adding a subdivision to read:

Subd. 4c. [CREDENTIALING STANDARDS.] An integrated service network may set credentialing standards for providers. A network may recredential providers on a recurring basis. If a network sets credentialing standards, the network must provide a written description of those standards upon request. An integrated service network may participate in a centralized credentialing program and must provide a written description of that program upon request.

Sec. 8. Minnesota Statutes 1994, section 62N.04, is amended to read:

62N.04 [REGULATION.]

Integrated service networks are under the supervision of the commissioner, who shall enforce this chapter, and the requirements of chapter 62Q as they apply to these networks. The commissioner has, with respect to this chapter and chapter 62Q, all enforcement and rulemaking powers available to the commissioner under section 62D.17.

Sec. 9. [62N.071] [DEFINITIONS.]

Subdivision 1. [APPLICABILITY.] The definitions in this section apply to sections 62N.071 to 62N.078. Unless otherwise specified, terms used in those sections have the meanings required to be used in preparation of the National Association of Insurance Commissioners (NAIC) annual statement blanks for health maintenance organizations.

Subd. 2. [ADMITTED ASSETS.] "Admitted assets" means admitted assets as defined under section 62D.044, including the deposit required under section 62N.074.

Subd. 3. [NET WORTH.] "Net worth" means admitted assets minus liabilities.

Subd. 4. [LIABILITIES.] "Liabilities" means a network's debts and other obligations, including estimates of the network's reported and unreported claims incurred for covered services and supplies provided to enrollees by outside providers. Liabilities do not include those obligations that are subordinated in the same manner as preferred ownership claims under section 60B.44, subdivision 10, including promissory notes subordinated to all other liabilities of the integrated service network.

Subd. 5. [UNCOVERED EXPENDITURES.] "Uncovered expenditures" means the charges for health care services and supplies that are covered by an integrated service network for which an enrollee would also be liable if the network becomes insolvent. Uncovered expenditures includes charges for covered health care services and supplies received by enrollees from providers that are not employed by, under contract with, or otherwise affiliated with the network. Uncovered expenditures does not include amounts that enrollees do not have to pay due to the obligations being guaranteed, insured, or assumed by a person other than the network.

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Subd. 6. [WORKING CAPITAL.] "Working capital" means current assets minus current liabilities.

Sec. 10. [62N.072] [NET WORTH REQUIREMENT.]

Subdivision 1. [INITIAL REQUIREMENT.] An integrated service network must, at time of licensure, have a minimum net worth of the greater of:

(1) $1,500,000; or

(2) 8-1/3 percent of the sum of all expenses expected to be incurred in the first full year of operation, less 90 percent of the expected reinsurance premiums for that period.

Subd. 2. [ONGOING REQUIREMENT.] After a network's initial year of operation, the network must maintain net worth of no less than $1,000,000.

Sec. 11. [62N.074] [DEPOSIT REQUIREMENT.]

Subdivision 1. [INITIAL DEPOSIT.] An integrated service network shall deposit with the commissioner, at time of licensure, a deposit consisting of cash and direct U.S. Treasury obligations in the total amount of not less than $300,000.

Subd. 2. [CUSTODIAL ACCOUNT.] The deposit must be held in a custodial or other controlled account under a written account agreement acceptable to the commissioner.

Subd. 3. [ONGOING DEPOSIT.] After the initial year of operation, the required amount of the deposit is the greater of

(1) $300,000; or

(2) 33-1/3 percent of the network's uncovered expenditures incurred in the previous calendar year.

Subd. 4. [USE OF DEPOSIT.] (a) In the event of any delinquency proceeding as defined in section 60B.03, the required minimum deposit shall be applied first to pay for or reimburse the commissioner for expenses incurred by the commissioner in performing the commissioner's duties in connection with the insolvency, including any legal, actuarial or accounting fees. The balance of the required minimum deposit, if any, shall be used to reimburse enrollees for uncovered expenditures, on a pro rata basis.

(b) If a deposit exceeds the required minimum deposit, the excess shall be applied first to uncovered expenditures and the balance, if any, to the commissioner's expenses.

(c) The deposit is not subject to garnishment or levy under any circumstances.

Subd. 5. [ACTUAL DEPOSIT REQUIRED.] The deposit must be in the form specified in subdivision 1; a guarantee or letter of credit are not acceptable, in whole or in part, as substitutes.

Sec. 12. [62N.075] [WORKING CAPITAL.]

Subdivision 1. [REQUIREMENT.] An integrated service network must maintain a positive working capital at all times.

Subd. 2. [NOTICE REQUIRED.] If an integrated service network's working capital is no longer positive, or is likely to soon become no longer positive, the network shall immediately notify the commissioner.

Subd. 3. [PLAN OF CORRECTION.] If an integrated service network's working capital is no longer positive, the network shall promptly submit to the commissioner a written proposed plan of correction. The commissioner shall promptly approve, approve as modified, or reject the proposed plan. If a plan of correction has been approved by the commissioner, the network shall comply with it and shall cooperate fully with any activities the commissioner undertakes to monitor the network's compliance.

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Subd. 4. [ACTION BY COMMISSIONER.] The commissioner may take any action permitted to the commissioner that the commissioner deems necessary or appropriate to protect the network or its enrollees if:

(1) the network fails to propose an approved plan of correction promptly;

(2) the network fails to comply with an approved plan of correction; or

(3) the commissioner determines that a deficiency in working capital cannot be corrected within a reasonable time.

Subd. 5. [OTHER REMEDIES.] This section does not limit the commissioner's power to use at any time other remedies available to the commissioner.

Sec. 13. [62N.076] [INVESTMENT RESTRICTIONS.]

Subdivision 1. [INVESTMENT POLICY.] An integrated service network shall have a written investment policy to govern investment of the network's assets. The written policy must be reviewed and approved annually by the network's board of directors.

Subd. 2. [APPROVAL; INVESTMENTS.] A network shall not make loans or investments, unless authorized by its board of directors, or ratified by the board no later than the next regular board meeting.

Subd. 3. [PERMITTED INVESTMENT.] An integrated service network shall make investments only in securities or property designated by law as permitted for domestic life insurance companies; this restriction includes compliance with percentage limitations that apply to domestic life insurance companies. A network may, however, invest in real estate for the convenience and accommodation of its operations in excess of the percentage permitted for a domestic life insurance company, but not to exceed 25 percent of its total admitted assets.

Subd. 4. [CONFLICTS OF INTEREST.] An integrated service network shall not make loans to any of its directors or principal officers or make loans to or investments in any organization in which a director or principal officer has an interest.

Subd. 5. [PROOF OF COMPLIANCE.] An integrated service network shall annually file with the commissioner proof of compliance with this section in a form and on a date prescribed by the commissioner.

Sec. 14. [62N.077] [USE OF GUARANTEES.]

Subdivision 1. [GUARANTEE PERMITTED.] An integrated service network may, with the consent of the commissioner, satisfy up to 50 percent of its minimum net worth requirement by means of a guarantee provided by another organization.

Subd. 2. [SECURITY FOR GUARANTEE.] (a) If the guaranteeing organization is regulated for solvency by the commissioner of commerce or health, the guarantee must be treated as a liability for purposes of solvency regulation of the guaranteeing organization. If the guaranteeing organization becomes insolvent, a claim by the network on the guarantee must be at least of equal priority with claims of enrollees or other policy holders of the insolvent guaranteeing organization.

(b) If the guaranteeing organization is not regulated for solvency by the commissioner of commerce or health, the organization must maintain assets acceptable to the commissioner, with a market value at least equal to the amount of the guarantee, in a custodial or other controlled account on terms acceptable to the commissioner of health. This paragraph applies to a political subdivision of the state that serves as a guaranteeing organization.

Sec. 15. [62N.078] [FINANCIAL REPORTING AND EXAMINATION.]

Subdivision 1. [FINANCIAL STATEMENTS.] An integrated service network shall file with the commissioner, annually on April 1, an audited financial statement. The financial statement must include the National Association of Insurance Commissioners (NAIC) annual statement blanks for health maintenance organizations, prepared in accordance with the NAIC annual statement instructions, and using the methods prescribed in the NAIC's accounting practices and procedures manual for health maintenance organizations. The financial statement must also include any other form or information prescribed by the commissioner.

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Subd. 2. [QUARTERLY STATEMENTS.] An integrated service network shall file with the commissioner quarterly financial statements for the first three quarters of each year, on a date and form and in a manner prescribed by the commissioner.

Subd. 3. [OTHER INFORMATION.] An integrated service network shall comply promptly and fully with requests by the commissioner for other information that the commissioner deems necessary to monitor or assess the network's financial solvency.

Subd. 4. [FINANCIAL EXAMINATION.] The commissioner shall conduct a complete financial examination of each integrated service network at least once every three years, and more frequently if the commissioner deems it necessary. The examinations must be conducted according to the standards provided in the NAIC examiners handbook.

Sec. 16. Minnesota Statutes 1994, section 62N.10, is amended by adding a subdivision to read:

Subd. 7. [DATA SUBMISSION.] As a condition of licensure, an integrated service network shall comply fully with section 62J.38.

Sec. 17. Minnesota Statutes 1994, section 62N.11, subdivision 1, is amended to read:

Subdivision 1. [APPLICABILITY.] Every integrated service network enrollee residing in this state is entitled to evidence of coverage or contract. The integrated service network or its designated representative shall issue the evidence of coverage or contract. The commissioner shall adopt rules specifying the requirements for contracts and evidence of coverage. "Evidence of coverage" means evidence that an enrollee is covered by a group contract issued to the group. The evidence of coverage must contain a description of provider locations, a list of the types of providers available, and information about the types of allied and midlevel practitioners and pharmacists that are available.

Sec. 18. Minnesota Statutes 1994, section 62N.13, is amended to read:

62N.13 [ENROLLEE COMPLAINT SYSTEM.]

Every integrated service network must establish and maintain an enrollee complaint system, including an impartial arbitration provision as required under section 62Q.105, to provide reasonable procedures for the resolution of written complaints initiated by enrollees concerning the provision of health care services. The integrated service network must inform enrollees that they may choose to use an alternative dispute resolution process. If an enrollee chooses to use an alternative dispute resolution process, the network must participate. The commissioner shall adopt rules specifying requirements relating to enrollee complaints.

Sec. 19. Minnesota Statutes 1994, section 62N.14, subdivision 3, is amended to read:

Subd. 3. [ENROLLEE MEMBERSHIP CARDS.] Integrated service networks shall issue enrollee membership cards to each enrollee of the integrated service network. The enrollee card shall contain, at minimum, the following information:

(1) the telephone number of the integrated service network's office of consumer services;

(2) the address, telephone number, and a brief description of the state's office of consumer information clearinghouse; and

(3) the telephone number of the department of health or local ombudsperson.

The membership cards shall also conform to the requirements set forth in section 62J.60.

Sec. 20. [62N.15] [PROVIDER REQUIREMENTS.]

Subdivision 1. [SERVICES.] An integrated service network may operate as a staff model as defined in section 295.50, subdivision 12b, or may contract with providers or provider organizations for the provision of services.

Subd. 2. [LOCATION.] (a) An integrated service network must ensure that primary care providers are located at adequate locations within the service area of the network. In determining what are adequate locations, the integrated service network may consider the practice and referral patterns in each community served throughout the service area.

(b) Urgent and emergency care providers must be located within a distance of 30 miles or a travel time of 30 minutes from every enrollee.

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Subd. 3. [NUMBERS.] An integrated service network must provide a sufficient number of providers to meet the projected needs of its enrollees, including special needs and high-risk enrollees, for all covered health care services.

Subd. 4. [TYPES.] An integrated service network must determine what types of providers are needed to deliver all appropriate and necessary health services to their enrollees. In determining which types of providers are necessary, networks shall encourage the use of allied and midlevel practitioners and pharmacists within their respective scopes of practice.

Subd. 5. [CAPACITY.] An integrated service network shall monitor the capacity of the network to provide services to enrollees and take steps to increase capacity when parts of the network are not able to meet enrollee needs.

Subd. 6. [ACCESS.] (a) An integrated service network shall make available and accessible all covered health care services on a 24-hour per day, seven days per week basis. This requirement may be fulfilled through the use of:

(1) regularly scheduled appointments;

(2) after-hour clinics;

(3) use of a 24-hour answering service;

(4) backup coverage by another participating physician; or

(5) referrals to urgent care centers and to hospital emergency care.

(b) An integrated service network shall arrange for covered health care services, including referrals to specialty physicians, to be accessible to enrollees on a timely basis in accordance with medically appropriate guidelines. An integrated service network shall have appointment scheduling guidelines based on the type of health care service.

Subd. 7. [CONTINUITY.] (a) An integrated service network shall provide continuing care for enrollees in the event of contract termination between the integrated service network and any of its contracted providers or in the event of site closings involving a provider with more than one location of service.

(b) An integrated service network shall provide a written disclosure of the process by which continuity of care will be provided to all enrollees.

Subd. 8. [REVIEW.] The commissioner shall review each network's compliance with subdivisions 1 to 7. If the commissioner determines that a network is not meeting the requirements of this section, the commissioner may order the network to submit a plan of corrective action, and may order the network to comply with the provisions of that plan, as amended by the commissioner.

Sec. 21. [62N.17] [OUT-OF-NETWORK SERVICES.]

(a) An integrated service network shall provide coverage for all emergency services provided outside the network, when the care is immediately necessary or believed to be necessary to preserve life, prevent impairment of bodily functions, or to prevent placing the physical or mental health of the enrollee in jeopardy.

(b) An integrated service network shall include in marketing materials a description of all limitations of coverage for out-of-network services, including when enrollees reside or travel outside the network's service area.

Sec. 22. [62N.18] [QUALITY IMPROVEMENT.]

Subdivision 1. [INTERNAL MEASURES.] Every integrated service network shall establish and maintain an internal quality improvement process. A network shall disclose these processes to enrollees, and to the commissioner upon request.

Subd. 2. [ENROLLEE SURVEYS.] Every integrated service network shall regularly survey enrollee satisfaction with network performance and quality of care, and shall make survey results available to enrollees and potential enrollees. Integrated service networks shall also submit survey results to the information clearinghouse.

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Subd. 3. [QUALITY IMPROVEMENT WORKPLANS.] (a) An integrated service network shall submit annual quality improvement workplans to the commissioner. A workplan must:

(1) identify the four most common enrollee complaints related to service delivery and the four most common enrollee complaints related to administration;

(2) identify the specific measures that the network plans to take to address each of these complaint areas;

(3) provide an assessment of how these complaints affect health care outcomes; and

(4) identify the mechanisms that the network will use to communicate and implement the changes needed to address each of these complaints identified in clause (1).

(b) An integrated service network shall disclose in marketing materials the complaints identified in paragraph (a), and measures that will be taken by the network to address these complaints.

Sec. 23. [62N.40] [CHEMICAL DEPENDENCY SERVICES.]

Each community integrated service network and integrated service network regulated under this chapter must ensure that chemically dependent individuals have access to cost-effective treatment options that address the specific needs of individuals. These include, but are not limited to, the need for: treatment that takes into account severity of illness and comorbidities; provision of a continuum of care from primary inpatient to outpatient care, aftercare, and long-term care; the safety of the individual's domestic and community environment; gender appropriate and culturally appropriate programs; and access to appropriate social services.

ARTICLE 2

MODIFICATIONS OF REQUIREMENTS FOR HEALTH PLAN COMPANIES

Section 1. Minnesota Statutes 1994, section 62D.11, subdivision 1, is amended to read:

Subdivision 1. [ENROLLEE COMPLAINT SYSTEM.] Every health maintenance organization shall establish and maintain a complaint system including an impartial arbitration provision, as required under section 62Q.105 to provide reasonable procedures for the resolution of written complaints initiated by enrollees concerning the provision of health care services. "Provision of health services" includes, but is not limited to, questions of the scope of coverage, quality of care, and administrative operations. Arbitration shall be subject to chapter 572, except (a) in the event that an enrollee elects to litigate a complaint prior to submission to arbitration, and (b) no medical malpractice damage claim shall be subject to arbitration unless agreed to by both parties subsequent to the event giving rise to the claim. The health maintenance organization must inform enrollees that they may choose to use an alternative dispute resolution process. If an enrollee chooses to use an alternative dispute resolution process, the health maintenance organization must participate.

Sec. 2. Minnesota Statutes 1994, section 62Q.01, subdivision 2, is amended to read:

Subd. 2. [COMMISSIONER.] "Commissioner" means the commissioner of health for purposes of regulating health maintenance organizations, community integrated service networks, and integrated service networks, or the commissioner of commerce for purposes of regulating all other health plan companies. For all other purposes, "commissioner" means the commissioner of health.

Sec. 3. Minnesota Statutes 1994, section 62Q.01, is amended by adding a subdivision to read:

Subd. 2a. [ENROLLEE.] "Enrollee" means a natural person covered by a health plan and includes an insured, policyholder, subscriber, contract holder, member, covered person, or certificate holder.

Sec. 4. Minnesota Statutes 1994, section 62Q.01, subdivision 3, is amended to read:

Subd. 3. [HEALTH PLAN.] "Health plan" means a health plan as defined in section 62A.011 or; a policy, contract, or certificate issued by a community integrated service network; or an integrated service network; or an all-payer insurer as defined in section 62P.02.

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Sec. 5. Minnesota Statutes 1994, section 62Q.01, is amended by adding a subdivision to read:

Subd. 5. [MANAGED CARE ORGANIZATION.] "Managed care organization" means: (1) a health maintenance organization operating under chapter 62D; (2) a community integrated service network as defined under section 62N.02, subdivision 4a; (3) an integrated service network as defined under section 62N.02, subdivision 8; or (4) an insurance company licensed under chapter 60A, nonprofit health service plan corporation operating under chapter 62C, fraternal benefit society operating under chapter 64B, or any other health plan company, to the extent that it covers health care services delivered to Minnesota residents through a preferred provider organization or a network of selected providers.

Sec. 6. Minnesota Statutes 1994, section 62Q.01, is amended by adding a subdivision to read:

Subd. 6. [MEDICARE-RELATED COVERAGE.] "Medicare-related coverage" means a policy, contract, or certificate issued as a supplement to Medicare, regulated under sections 62A.31 to 62A.44, including Medicare select coverage; policies, contracts, or certificates that supplement Medicare issued by health maintenance organizations; or policies, contracts, or certificates governed by section 1833 (known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA" or "risk" contracts) of the federal Social Security Act, United States Code, title 42, section 1395, et seq., as amended.

Sec. 7. [62Q.02] [APPLICABILITY OF CHAPTER.]

(a) This chapter applies only to health plans, as defined in section 62Q.01, and not to other types of insurance issued or renewed by health plan companies, unless otherwise specified.

(b) This chapter applies to a health plan company only with respect to health plans, as defined in section 62Q.01, issued or renewed by the health plan company, unless otherwise specified.

(c) If a health plan company issues or renews health plans in other states, this chapter applies only to health plans issued or renewed in this state, or to cover a resident of the state, unless otherwise specified.

Sec. 8. Minnesota Statutes 1994, section 62Q.03, subdivision 1, is amended to read:

Subdivision 1. [PURPOSE.] Risk adjustment is a vital element of the state's strategy for achieving a more equitable, efficient system of health care delivery and financing for all state residents. The purpose of risk adjustment is to reduce the effects of risk selection on health insurance premiums by making monetary transfers from health plan companies that insure lower risk populations to health plan companies that insure higher risk populations. Risk adjustment is needed to: achieve a more equitable, efficient system of health care financing; remove current disincentives in the health care system to insure and serve provide adequate access for high risk and special needs populations; promote fair competition among health plan companies on the basis of their ability to efficiently and effectively provide services rather than on the health risk status of those in a given insurance pool; and help assure maintain the viability of all health plan companies, including community integrated service networks by protecting them from the financial effects of enrolling a disproportionate number of high risk individuals. It is the commitment of the state to develop and implement a risk adjustment system by July 1, 1997, and to continue to improve and refine risk adjustment over time. The process for designing and implementing risk adjustment shall be open, explicit, utilize resources and expertise from both the private and public sectors, and include at least the representation described in subdivision 4. The process shall take into account the formative nature of risk adjustment as an emerging science, and shall develop and implement risk adjustment to allow continual modifications, expansions, and refinements over time. The process shall have at least two stages, as described in subdivisions 2 and 3. The risk adjustment system shall:

(1) possess a reasonable level of accuracy and administrative feasibility, be adaptable to changes as methods improve, incorporate safeguards against fraud and manipulation, and shall neither reward inefficiency nor penalize for verifiable improvements in health status;

(2) require participation by all health plan companies providing coverage in the individual, small group, and Medicare supplement markets;

(3) address unequal distribution of risk between health plan companies, but shall not address the financing of public programs or subsidies for low-income people; and

(4) be developed and implemented by the risk adjustment association with joint oversight by the commissioners of health and commerce.

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Sec. 9. Minnesota Statutes 1994, section 62Q.03, is amended by adding a subdivision to read:

Subd. 5a. [PUBLIC PROGRAMS.] The risk adjustment system must be developed for state-run public programs, including medical assistance, general assistance medical care, and MinnesotaCare. The commissioners of health and human services shall convene a work group to discuss and recommend any special features of the public program risk adjustment system. The system must be developed in accordance with the general risk adjustment methodologies described in this section, and may include additional demographic factors in addition to age and sex, different targeted conditions, or different payment amounts for conditions. The risk adjustment system for public programs must attempt to reflect the special needs related to poverty, cultural or language barriers, and other needs of some segments of the public program population. The commissioner of health shall work with the risk adjustment association to ensure coordination between the risk adjustment systems for the public and private sectors. The date for final implementation and the final methods for risk adjustment in public programs shall be determined by the commissioner of human services, and shall be in compliance with state and federal requirements for the Medicaid program.

Sec. 10. Minnesota Statutes 1994, section 62Q.03, is amended by adding a subdivision to read:

Subd. 5b. [MEDICARE SUPPLEMENT MARKET.] A risk adjustment system must be developed for the Medicare supplement market. The Medicare supplement risk adjustment system may involve only a demographic component.

Sec. 11. Minnesota Statutes 1994, section 62Q.03, subdivision 6, is amended to read:

Subd. 6. [CREATION OF RISK ADJUSTMENT ASSOCIATION.] The Minnesota risk adjustment association is created on July 1, 1994, and may operate as a nonprofit unincorporated association. The risk adjustment association is subject to the open meeting law.

Sec. 12. Minnesota Statutes 1994, section 62Q.03, subdivision 7, is amended to read:

Subd. 7. [PURPOSE OF ASSOCIATION.] The association is established to carry out the purposes of subdivision 1, as further elaborated on by the implementation report described in subdivision 5 and by legislation enacted in 1995 or subsequently established to develop and implement a private sector risk adjustment system.

Subject to state oversight set forth in subdivision 10, the association shall:

(1) develop and implement comprehensive risk adjustment systems for individual, small group, and Medicare Supplement markets consistent with the provisions of this chapter;

(2) submit a plan for the development of the risk adjustment system and identify appropriate implementation dates consistent with the rating and underwriting restrictions of each market to the commissioners of health and commerce by November 5, 1995;

(3) develop a combination of a demographic risk adjustment system and payments for targeted conditions;

(4) test an ambulatory care groups (ACGs) and diagnostic cost groups (DCGs) system, and recommend whether such a methodology should be adopted;

(5) fund the development and testing of the risk adjustment system;

(6) recommend market conduct guidelines; and

(7) develop a plan for assessing members for the costs of administering the risk adjustment system.

Sec. 13. Minnesota Statutes 1994, section 62Q.03, subdivision 8, is amended to read:

Subd. 8. [GOVERNANCE.] (a) The association shall be governed by an interim 19-member board as follows: one provider member appointed by the Minnesota Hospital Association; one provider member appointed by the Minnesota Medical Association; one provider member appointed by the governor; three members appointed by the Minnesota Council of HMOs to include an HMO with at least 50 percent of total membership enrolled through a public program; three members appointed by Blue Cross and Blue Shield of Minnesota, to include a member from a Blue Cross and Blue Shield of Minnesota affiliated health plan with fewer than 50,000 enrollees and located outside

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the Minneapolis-St. Paul metropolitan area; two members appointed by the Insurance Federation of Minnesota; one member appointed by the Minnesota Association of Counties; and three public members appointed by the governor, to include at least one representative of a public program. The commissioners of health, commerce, human services, and employee relations shall be nonvoting ex officio members.

(b) The board may elect officers and establish committees as necessary.

(c) A majority of the members of the board constitutes a quorum for the transaction of business.

(d) Approval by a majority of the board members present is required for any action of the board.

(e) Interim board members shall be appointed by July 1, 1994, and shall serve until a new board is elected according to the plan of operation developed by the association.

(f) A member may designate a representative to act as a member of the interim board in the member's absence.

Sec. 14. Minnesota Statutes 1994, section 62Q.03, is amended by adding a subdivision to read:

Subd. 8a. [PLAN OF OPERATION.] The board shall submit a proposed plan of operation by August 15, 1995, to the commissioners of health and commerce for review. The plan of operation shall be subject to approval by the commissioners of health and commerce, after consultation with the members of the association, representatives of the public, and other affected individuals and organizations. If the commissioners disapprove all or any part of the proposed plan of operation, the directors shall within 15 days submit for review an appropriate revised plan of operation. If a revised plan is not submitted within 15 days, the commissioners shall promulgate a plan of operation. The plan of operation approved or promulgated by the commissioners shall become effective and operational under order of the commissioners.

Amendments to the plan of operation may be made by the commissioners or by the directors of the association, subject to the approval of the commissioners.

Sec. 15. Minnesota Statutes 1994, section 62Q.03, subdivision 9, is amended to read:

Subd. 9. [DATA COLLECTION AND DATA PRIVACY.] The board of the association shall consider antitrust implications and establish procedures to assure that pricing and other competitive information is appropriately shared among competitors in the health care market or members of the board. Any information shared shall be distributed only for the purposes of administering or developing any of the tasks identified in subdivisions 2 and 4. In developing these procedures, the board of the association may consider the identification of a state agency or other appropriate third party to receive information of a confidential or competitive nature. To maintain protection from antitrust law, the association members shall not have access to unaggregated data on individuals or health plan companies. The association shall develop, as a part of the plan of operation, procedures for ensuring that data is collected by a state agency or other appropriate entity. The commissioners of health and commerce must have access to all data collected by the association for the purposes of risk adjustment. Data on individuals obtained by the commissioner for the purposes of risk adjustment development, testing, and operation are designated as private data. Data not on individuals which is obtained by the commissioner for the purposes of development, testing, and operation of risk adjustment are designated as nonpublic data. Nothing in this section is intended to prohibit the preparation of summary data under section 13.05, subdivision 7. The association, state agencies, and any contractors having access to this data shall maintain it in accordance with this classification.

Sec. 16. Minnesota Statutes 1994, section 62Q.03, subdivision 10, is amended to read:

Subd. 10. [SUPERVISION STATE OVERSIGHT OF RISK ADJUSTMENT ACTIVITIES.] The association's activities shall be supervised by the commissioners of health and commerce. The commissioners shall provide specific oversight functions during the development and implementation phases of the risk adjustment system as follows:

(1) the commissioners shall review and approve the association's plan for testing risk adjustment methods, the methods to be used, and any changes to those methods;

(2) the commissioners must have the right to attend and participate in all meetings of the association and its work groups or committees;

(3) the commissioners shall approve any consultants or administrators used by the association;

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(4) the commissioners shall review and approve the association's plan of operation; and

(5) the commissioners shall approve the plan for the risk adjustment system described in subdivision 7, clause (2).

Sec. 17. Minnesota Statutes 1994, section 62Q.03, is amended by adding a subdivision to read:

Subd. 12. [PARTICIPATION BY ALL HEALTH PLAN COMPANIES.] Upon its implementation, all health plan companies, as a condition of licensure, must participate in the risk adjustment system to be implemented under this section.

Sec. 18. Minnesota Statutes 1994, section 62Q.07, subdivision 1, is amended to read:

Subdivision 1. [ACTION PLANS REQUIRED.] (a) To increase public awareness and accountability of health plan companies, all health plan companies that issue or renew a health plan, as defined in section 62Q.01, must annually file with the applicable commissioner an action plan that satisfies the requirements of this section beginning July 1, 1994, as a condition of doing business in Minnesota. For purposes of this subdivision, "health plan" includes the coverages described in section 62A.011, subdivision 3, clause (10). Each health plan company must also file its action plan with the information clearinghouse. Action plans are required solely to provide information to consumers, purchasers, and the larger community as a first step toward greater accountability of health plan companies. The sole function of the commissioner in relation to the action plans is to ensure that each health plan company files a complete action plan, that the action plan is truthful and not misleading, and that the action plan is reviewed by appropriate community agencies.

(b) If a commissioner responsible for regulating a health plan company required to file an action plan under this section has reason to believe an action plan is false or misleading, the commissioner may conduct an investigation to determine whether the action plan is truthful and not misleading, and may require the health plan company to submit any information that the commissioner reasonably deems necessary to complete the investigation. If the commissioner determines that an action plan is false or misleading, the commissioner may require the health plan company to file an amended plan or may take any action authorized under chapter 72A.

Sec. 19. Minnesota Statutes 1994, section 62Q.07, subdivision 2, is amended to read:

Subd. 2. [CONTENTS OF ACTION PLANS.] (a) An action plan must include a detailed description of all of the health plan company's methods and procedures, standards, qualifications, criteria, and credentialing requirements for designating the providers who are eligible to participate in the health plan company's provider network, including any limitations on the numbers of providers to be included in the network. This description must be updated by the health plan company and filed with the applicable agency on a quarterly basis.

(b) An action plan must include the number of full-time equivalent physicians, by specialty, nonphysician providers, and allied health providers used to provide services. The action plan must also describe how the health plan company intends to encourage the use of nonphysician providers, midlevel practitioners, and allied health professionals, through at least consumer education, physician education, and referral and advisement systems. The annual action plan must also include data that is broken down by type of provider, reflecting actual utilization of midlevel practitioners and allied professionals by enrollees of the health plan company during the previous year. Until July 1, 1995, a health plan company may use estimates if actual data is not available. For purposes of this paragraph, "provider" has the meaning given in section 62J.03, subdivision 8.

(c) An action plan must include a description of the health plan company's policy on determining the number and the type of providers that are necessary to deliver cost-effective health care to its enrollees. The action plan must also include the health plan company's strategy, including provider recruitment and retention activities, for ensuring that sufficient providers are available to its enrollees.

(d) An action plan must include a description of actions taken or planned by the health plan company to ensure that information from report cards, outcome studies, and complaints is used internally to improve quality of the services provided by the health plan company.

(e) An action plan must include a detailed description of the health plan company's policies and procedures for enrolling and serving high risk and special needs populations. This description must also include the barriers that are present for the high risk and special needs population and how the health plan company is addressing these barriers in order to provide greater access to these populations. "High risk and special needs populations" includes,

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but is not limited to, recipients of medical assistance, general assistance medical care, and MinnesotaCare; persons with chronic conditions or disabilities; individuals within certain racial, cultural, and ethnic communities; individuals and families with low income; adolescents; the elderly; individuals with limited or no English language proficiency; persons with high-cost preexisting conditions; homeless persons; chemically dependent persons; persons with serious and persistent mental illness and; children with severe emotional disturbance; and persons who are at high risk of requiring treatment. The action plan must also reflect actual utilization of providers by enrollees defined by this section as high risk or special needs populations during the previous year. For purposes of this paragraph, "provider" has the meaning given in section 62J.03, subdivision 8.

(f) An action plan must include a general description of any action the health plan company has taken and those it intends to take to offer health coverage options to rural communities and other communities not currently served by the health plan company.

(g) A health plan company other than a large managed care plan company may satisfy any of the requirements of the action plan in paragraphs (a) to (f) by stating that it has no policies, procedures, practices, or requirements, either written or unwritten, or formal or informal, and has undertaken no activities or plans on the issues required to be addressed in the action plan, provided that the statement is truthful and not misleading. For purposes of this paragraph, "large managed care plan company" means a health maintenance organization, integrated service network, or other health plan company that employs or contracts with health care providers, that has more than 50,000 enrollees in this state. If a health plan company employs or contracts with providers for some of its health plans and does not do so for other health plans that it offers, the health plan company is a large managed care plan company if it has more than 50,000 enrollees in this state in health plans for which it does employ or contract with providers.

Sec. 20. Minnesota Statutes 1994, section 62Q.09, subdivision 3, is amended to read:

Subd. 3. [ENFORCEMENT.] Either The commissioner commissioners of health or and commerce shall each periodically review contracts among health care providing entities and health plan companies to determine compliance with this section, with respect to health plan companies that the commissioners respectively regulate. Any provider may submit a contract to the relevant commissioner for review if the provider believes this section has been violated. Any provision of a contract found by the relevant commissioner to violate this section is null and void, and the relevant commissioner may seek assess civil penalties against the health plan company in an amount not to exceed $25,000 for each such contract, using the enforcement procedures otherwise available to the commissioner involved.

Sec. 21. [62Q.105] [COMPLAINT RESOLUTION.]

Subdivision 1. [ESTABLISHMENT.] Each health plan company shall establish and make available to enrollees, by July 1, 1997, an informal complaint resolution process that meets the requirements of this section. A health plan company must make reasonable efforts to resolve enrollee complaints, and must inform complainants in writing of the company's decision within 30 days of receiving the complaint. The complaint resolution process must maintain the anonymity of the complainant.

Subd. 2. [MEDICALLY URGENT COMPLAINTS.] Health plan companies shall make reasonable efforts to resolve medically urgent enrollee complaints within 72 hours of receiving the complaint.

Subd. 3. [APPEALS PROCESS.] Health plan companies shall establish and make available to enrollees an impartial appeals process, independent of the health plan company. If a decision by a health plan company regarding a complaint is partially or wholly adverse to the complainant, the health plan company shall advise the complainant of the right to appeal through the impartial appeals process or to the commissioner.

Subd. 4. [ALTERNATIVE DISPUTE RESOLUTION.] Health plan companies shall make available to enrollees an alternative dispute resolution process, and shall participate in alternative dispute resolution at the request of an enrollee, as required under section 62Q.11.

Subd. 5. [DISPUTE RESOLUTION BY COMMISSIONER.] A complainant may at any time submit a complaint to the appropriate commissioner, who may either independently investigate the complaint or refer it to the health plan company for further review. After investigating a complaint, or reviewing a company's decision, the appropriate commissioner may order a remedy as authorized under section 62N.04, chapters 45, 60A, or 62D.

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Subd. 6. [REQUIREMENTS FOR MANAGED CARE ORGANIZATIONS.] Each managed care organization shall submit all complaints to its quality review board or quality review organization for evaluation and possible action. The complaint resolution process for managed care organizations must clearly indicate the entity responsible for resolving complaints made by enrollees against hospitals, other health care facilities, and health care providers, that are owned by or under contract with the managed care organization.

Subd. 7. [RECORD KEEPING.] Health plan companies shall maintain records of all enrollee complaints and their resolutions. These records must be retained for five years, and must be made available to the appropriate commissioner upon request.

Subd. 8. [REPORTING.] Each health plan company shall submit to the appropriate commissioner, as part of the company's annual filing, data on the number and type of complaints that are not resolved within 30 days. A health plan company shall also make this information available to the public upon request.

Subd. 9. [NOTICE TO ENROLLEES.] Health plan companies shall provide a clear and complete description of their complaint resolution procedures to enrollees as part of their evidence of coverage or contract. The description must specifically inform enrollees:

(1) how to file a complaint with the health plan company;

(2) how to request an impartial appeal;

(3) that they have the right to request the use of alternative methods of dispute resolution; and

(4) that they have the right to litigate.

Sec. 22. Minnesota Statutes 1994, section 62Q.11, is amended to read:

62Q.11 [ALTERNATIVE DISPUTE RESOLUTION.]

Subdivision 1. [ESTABLISHED.] The commissioners of health and commerce shall make alternative dispute resolution processes available to encourage early settlement of disputes in order to avoid the time and cost associated with litigation and other formal adversarial hearings. For purposes of this section, "alternative dispute resolution" means the use of negotiation, mediation, arbitration, mediation-arbitration, neutral fact finding, and minitrials. These processes shall be nonbinding unless otherwise agreed to by all parties to the dispute.

Subd. 2. [REQUIREMENTS.] (a) If an enrollee, health care provider, or applicant for network provider status chooses to use a an alternative dispute resolution process prior to the filing of a formal claim or of a lawsuit, the health plan company must participate.

(b) If an enrollee, health care provider, or applicant for network provider status chooses to use a an alternative dispute resolution process after the filing of a lawsuit, the health plan company must participate in dispute resolution, including, but not limited to, alternative dispute resolution under rule 114 of the Minnesota general rules of practice.

(c) The commissioners of health and commerce shall inform and educate health plan companies' enrollees about alternative dispute resolution and its benefits, and shall establish appropriate cost-sharing requirements for parties taking part in alternative dispute resolution.

(d) A health plan company may encourage but not require an enrollee to submit a complaint to alternative dispute resolution.

Sec. 23. Minnesota Statutes 1994, section 62Q.19, is amended to read:

62Q.19 [ESSENTIAL COMMUNITY PROVIDERS.]

Subdivision 1. [DESIGNATION.] The commissioner shall designate essential community providers. The criteria for essential community provider designation shall be the following:

(1) a demonstrated ability to integrate applicable supportive and stabilizing services with medical care for uninsured persons and high-risk and special needs populations as defined in section 62Q.07, subdivision 2, paragraph (e), underserved, and other special needs populations; and

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(2) a commitment to serve low-income and underserved populations by meeting the following requirements:

(i) has nonprofit status in accordance with chapter 317A;

(ii) has tax exempt status in accordance with the Internal Revenue Service Code, section 501(c)(3);

(iii) charges for services on a sliding fee schedule based on current poverty income guidelines; and

(iv) does not restrict access or services because of a client's financial limitation; or

(3) status as a local government unit as defined in section 62D.02, subdivision 11, or community health board as defined in chapter 145A.

Prior to designation, the commissioner shall publish the names of all applicants in the State Register. The public shall have 30 days from the date of publication to submit written comments to the commissioner on the application. No designation shall be made by the commissioner until the 30-day period has expired.

The commissioner may designate an eligible provider as an essential community provider for all the services offered by that provider or for specific services designated by the commissioner.

For the purpose of this subdivision, supportive and stabilizing services include at a minimum, transportation, child care, cultural, and linguistic services where appropriate.

Subd. 2. [APPLICATION.] (a) Any provider may apply to the commissioner for designation as an essential community provider by submitting an application form developed by the commissioner. Applications will be accepted within two years after the effective date of the rules adopted by the commissioner to implement this section.

(b) Each application submitted must be accompanied by an application fee in an amount determined by the commissioner but the fee shall be no more than what is needed to cover the administrative costs of processing the application.

(c) The name, address, contact person, and the date by which the agency's decision is expected to be made shall be classified as public data under section 13.41. All other information contained in the application form shall be classified as private data under section 13.41 until the application has been approved, approved as modified, or denied by the commissioner. Once the decision has been made, all information shall be classified as public data unless the applicant designates and the commissioner determines that the information contains trade secret information.

Subd 2a. [DEFINITION OF HEALTH PLAN COMPANY.] For purposes of this section, "health plan company" means a health plan company as defined in section 62Q.01 with more than 50,000 enrollees.

Subd. 3. [HEALTH PLAN COMPANY AFFILIATION.] A health plan company must offer a provider contract to any designated essential community provider located within the area served by the health plan company. A health plan company shall not restrict enrollee access to the services designated to be provided by the essential community provider for the population that the essential community provider is certified to serve. A health plan company may also make other providers available to this same population for these services. A health plan company may require an essential community provider to meet all data requirements, utilization review, and quality assurance requirements on the same basis as other health plan providers.

Subd. 4. [ESSENTIAL COMMUNITY PROVIDER RESPONSIBILITIES.] Essential community providers must agree to serve enrollees of all health plan companies operating in the area that in which the essential community provider is certified to serve located.

Subd. 5. [CONTRACT PAYMENT RATES.] An essential community provider and a health plan company may negotiate the payment rate for covered services provided by the essential community provider. This rate must be competitive with rates paid to other health plan providers the same rate per unit of service as is paid to other health plan providers for the same or similar services.

Subd. 5a. [DIRECT ACCESS.] Enrollees that fall within the definition of high risk and special needs populations shall have direct access to a designated essential community provider for all covered services that are designated by the commissioner to be provided by the essential community provider. For purposes of this section, "high risk and special needs population" has the meaning given in section 62Q.07, subdivision 2, paragraph (e).

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Subd. 5b. [COOPERATION.] Each health plan company and essential community provider shall cooperate to facilitate the use of the essential community provider by the high risk and special needs populations. This includes cooperation on the submission and processing of claims, sharing of all pertinent records and data, including performance indicators and specific outcomes data, and the use of all dispute resolution methods as defined in section 62Q.11, subdivision 1.

Subd. 5c. [ENFORCEMENT.] For any violation of this section or any rule applicable to an essential community provider, the commissioner may suspend, modify, or revoke an essential community provider designation. The commissioner may also use the enforcement authority specified in section 62D.17.

Subd. 6. [TERMINATION.] The designation as an essential community provider is terminated terminates five years after it is granted, and. Once the designation terminates, the former essential community provider has no rights or privileges beyond those of any other health care provider. The commissioner shall make a recommendation to the legislature on whether an essential community provider designation should be longer than five years.

Subd. 7. [RECOMMENDATIONS AND RULEMAKING ON ESSENTIAL COMMUNITY PROVIDERS.] (a) As part of the implementation plan due January 1, 1995, the commissioner shall present proposed rules and any necessary recommendations for legislation for defining essential community providers, using the criteria established under subdivision 1, and defining the relationship between essential community providers and health plan companies.

(b) By January 1, 1996, the commissioner shall adopt rules for establishing essential community providers and for governing their relationship with health plan companies. The commissioner shall also identify and address any conflict of interest issues regarding essential community provider designation for local governments.

Sec. 24. [62Q.22] [STANDARD HEALTH COVERAGE.]

Subdivision 1. [APPLICATION.] Effective July 1, 1997, all health plan companies shall offer, sell, issue, or renew the standard health coverage and two or more of the five cost-sharing options established under this section, sections 62Q.23, 62Q.231, and 62Q.24. In addition to other products offered by health plan companies, supplemental coverage options may be offered under section 62Q.25.

Subd. 2. [GENERAL DESCRIPTION.] The standard health coverage must contain all appropriate and necessary health care services. For purposes of this section, "appropriate and necessary care" includes health care services, supplies, and equipment, which are required for prevention, diagnosis, or treatment of an illness, injury, or health condition. Appropriate and necessary care must:

(1) be appropriate in terms of type, level, setting, and duration to the enrollee's mental and physical condition;

(2) be cost effective in the context of either short-term or long-term health outcomes;

(3) be consistent with accepted principles of professional practice and practice parameters of the health care community in Minnesota;

(4) help assess, establish, improve, restore, maintain, or prevent deterioration of the enrollee's physical or mental condition; or

(5) prevent the reasonable likelihood of the onset of a health problem or detect an incipient problem.

Subd. 3. [COVERAGE.] The standard health coverage must include, at a minimum, all comprehensive health maintenance services provided by health maintenance organizations under section 62D.02, subdivision 7, and Minnesota Rules, part 4685.0100, subpart 5, and all services required to be provided by health maintenance organizations in chapters 62A and 62D. The standard health coverage must be further defined by the standard exclusions developed under section 62Q.231, subdivision 1, and the cost-sharing options provided in section 62Q.24.

Subd. 4. [DEFINING STANDARD COVERAGE.] The commissioners of health and commerce may further define the standard coverage required under this section. If the commissioners choose to further define this coverage, the commissioners shall publish the proposed definition of standard coverage in the State Register and allow a public comment period of at least 60 days prior to the publication of the final definition of standard coverage. The Minnesota health care commission shall provide comments to the commissioners of health and commerce on the proposed definition within 60 days of publication. Each regional coordinating board shall convene a public hearing

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and provide summary comments to the commissioners within 60 days of publication. The commissioners of health and commerce shall publish the final definition of standard coverage in the state register by January 31, 1996. The definition of standard coverage shall become effective July 1, 1997, and shall apply to all policies and contracts issued or renewed after that date unless the legislature affirmatively acts to prevent the definition of standard coverage from taking effect. Development of this definition of standard coverage is not subject to chapter 14 or to administrative appeal.

Subd. 5. [CHEMICAL DEPENDENCY.] All health plan companies shall use the assessment criteria in Minnesota Rules, parts 9530.6600 to 9530.6660, when assessing and placing enrollees for chemical dependency treatment.

Sec. 25. [62Q.231] [STANDARD EXCLUSIONS.]

Subdivision 1. [DEVELOPMENT.] The commissioners of health, human services, commerce, and employee relations shall jointly develop the standard exclusions to be used by all health plan companies. The commissioners may convene technical experts to advise them in developing the standard exclusions.

Subd. 2. [PUBLICATION.] The commissioner of health shall publish the proposed standard exclusions in the State Register and allow a public comment period of at least 60 days prior to publication of the final standard exclusions. The Minnesota health care commission shall provide comments to the commissioners of health, human services, commerce, and employee relations on the proposed standard exclusions within 60 days of publication. Each regional coordinating board shall convene a public hearing and provide summary comments to the commissioners of health, human services, commerce, and employee relations on the proposed standard exclusions within 60 days of publication. The commissioners of health, human services, commerce, and employee relations shall review all comments received. The commissioner of health shall publish the final standard exclusions in the State Register by January 31, 1996. The standard exclusions shall become effective on July 1, 1997, and shall apply to all policies and contracts issued or renewed on or after that date unless the legislature affirmatively acts to prevent the standard exclusions from taking effect.

Subd. 3. [EXEMPTION.] Development of the standard exclusions is not subject to chapter 14 or to administrative appeal.

Sec. 26. [62Q.24] [COST-SHARING OPTIONS.]

Subdivision 1. [GENERAL.] (a) Health plan companies shall offer the standard health coverage under two or more of the five cost-sharing options allowed by this section.

(b) All out-of-area emergency and urgent care services are subject to the same cost-sharing options as in-network emergency and urgent care services. Urgent care cost-sharing must apply to out-of-network emergency room services that could have been delivered at an urgent care facility had one been available through the health plan company. Cost-sharing for emergency room services must not apply when those services result in a hospital admission.

(c) No coverage for organ transplants shall be provided if received out-of-network, and the amounts paid do not count toward the deductible and out-of-pocket limits.

(d) No cost-sharing shall be applied to child health supervision services, child primary care services delivered in outpatient settings, and prenatal care services. For purposes of this section, "child health supervision services" means pediatric preventive services, appropriate immunizations, developmental assessments, and laboratory services appropriate to the age of the child from birth to age 18 as defined by the standards of child health care issued by the American Academy of Pediatrics. "Prenatal care services" means the comprehensive package of medical and psychological support provided throughout the pregnancy, including risk assessment, serial surveillance, prenatal education, and use of specialized skills and technology, when needed, as defined by Standards for Obstetric-Gynecologic Services issued by the American College of Obstetricians and Gynecologists.

Subd. 2. [COINSURANCE COST-SHARING; OPTION ONE.] Cost-sharing option one limits the calendar year deductible amount per person to $2,000, including both in- and out-of-network services, except as otherwise provided in subdivision 1, with the health plan company paying 80 percent and the enrollee paying 20 percent coinsurance, unless otherwise provided in this subdivision. The out-of-pocket limit is $5,000 per person per calendar year not to exceed a total of $10,000 per family per calendar year, including both in- and out-of-network services, except as otherwise provided in subdivision 1. Services are subject to the following copayment and coinsurance requirements:

(1) there is a $10 copayment for:

(i) age and risk appropriate routine examinations over age 18;

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(ii) health education and counseling;

(iii) vision and hearing exams; and

(iv) mental health and chemical dependency assessment or diagnosis; and

(2) out-of-network services are subject to 40 percent coinsurance or twice the applicable in-network copayment, whichever is greater.

Subd. 3. [COINSURANCE COST-SHARING; OPTION TWO.] Cost-sharing option two is the same as coinsurance cost-sharing option one, except that there is no cost sharing for age and risk appropriate routine examinations over the age 18, adult screening, and postnatal care.

Subd. 4. [COINSURANCE COST-SHARING; OPTION THREE.] Coinsurance cost-sharing option three limits the calendar year deductible amount per person to $1,000, including both in- and out-of-network services, with health plan companies paying 80 percent and the enrollee paying 20 percent coinsurance, unless otherwise provided in this subdivision. The out-of-pocket limit is $3,000 per person per calendar year, not to exceed a total of $5,000 per family per calendar year, including both in- and out-of-network services. Services are subject to the following coinsurance requirements:

(1) no cost sharing for the services listed in subdivision 3; and

(2) out-of-nework services are subject to 40 percent coinsurance or twice the applicable in-network copayment, whichever is greater.

Subd. 5. [COPAYMENT COST-SHARING; OPTION FOUR.] Cost-sharing option four limits the calendar year deductible amount per person to $500 for out-of-network services only, and otherwise provides 100 percent coverage, unless otherwise provided in this subdivision. The out-of-pocket limit is $750 per person per calendar year, not to exceed a total of $2,250 per family per calendar year, including both in- and out-of-network services. Services are subject to the following copayment and coinsurance requirements:

(1) a $5 per day copayment for day treatment and partial hospitalization for chemical dependency and mental health services;

(2) a $10 copayment for health professional office visits and physician's office surgery;

(3) a $12 copayment for pharmaceuticals and disposable medical supplies. Health plan companies may lower the copayment for generic brand pharmaceuticals;

(4) a $20 copayment for urgent care visits;

(5) a $30 per week copayment for nutritional products for metabolic disorders;

(6) a $75 copayment for emergency room care where there is no hospital admission;

(7) a $100 copayment per admission for medical services, inpatient hospital services, inpatient chemical dependency care (hospital and residential), and inpatient mental health care (hospital and residential);

(8) out-of-network services are subject to 20 percent coinsurance or twice the applicable in-network copayment, whichever is greater; and

(9) no cost sharing for services listed in subdivision 3.

Subd. 6. [COPAYMENT COST-SHARING; OPTION FIVE.] Cost-sharing option five shall limit the calendar year deductible amount to $300 per person for out-of-network services only, and otherwise provide 100 percent coverage, unless otherwise provided in this subdivision. The out-of-pocket limit is $500 per person per calendar year, not to exceed a total of $1,500 per family per calendar year, including both in-network and out-of-network services. Services are subject to the following copayment and coinsurance requirements:

(1) an $8 copayment for pharmaceuticals and disposable medical supplies. Health plan companies may reduce the copayment for generic brand pharmaceuticals;

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(2) a $15 copayment for urgent care visits;

(3) a $30 per week copayment for nutritional products for metabolic disorders;

(4) a $35 copayment for emergency room care where there is no hospital admission;

(5) out-of-network services are subject to 20 percent coinsurance or twice the applicable in-network copayment, whichever is greater; and

(6) no cost sharing for services listed in subdivision 3.

Subd. 7. [LIMITATION ON COPAYMENTS.] Where a copayment is assessed for an office visit in cost-sharing options four and five, any additional services pertaining to and provided at the same office visit are not subject to additional copayments.

Sec. 27. Minnesota Statutes 1994, section 62Q.25, is amended to read:

62Q.25 [SUPPLEMENTAL COVERAGE.]

Health plan companies may choose to offer separate supplemental coverage for services not covered under the universal benefits set standard health coverage, including separate coverage for dental services. Health plan companies may offer any Medicare supplement, Medicare select, or other Medicare-related product otherwise permitted for any type of health plan company in this state. Each Medicare-related product may be offered only in full compliance with the requirements in chapters 62A, 62D, and 62E that apply to that category of product. Health plan companies offering supplemental coverage shall distinguish the cost of the standard health coverage from the cost of each supplemental coverage policy offered when either soliciting enrollment of or seeking payment from enrollees.

Sec. 28. [62Q.26] [POINT-OF-SERVICE OPTION.]

Subdivision 1. [DEFINITION.] For purposes for this section, "point-of-service product" means a health plan, as defined in section 62A.011, under which the health plan company will reimburse any appropriately licensed or registered provider for providing any covered services to an enrollee, without regard to whether the provider belongs to a particular network and without regard to whether the enrollee was referred to the provider by another provider. For purposes of this definition, a health plan offered by a health plan company is a point-of-service product only if it includes comprehensive supplemental benefits in compliance with section 62D.05, subdivision 6, and Minnesota Rules, part 4685.1955.

Subd. 2. [REQUIRED POINT-OF-SERVICE OPTION.] Each health plan company operating in the individual, small group, or large group market shall offer at least one point-of-service product as one of the cost sharing options required under section 62Q.24.

Subd. 3. [RATE APPROVAL.] The premium rates for each point-of-service product must be submitted for approval to the commissioner of health or the commissioner of commerce, as applicable. The applicable commissioner shall approve premium rates that are actuarially justified. Cost sharing requirements must meet the out-of-network service requirements that are required under the applicable cost sharing option.

Subd. 4. [POINT-OF-SERVICE OPTION FOR DENTAL PLANS.] (a) This subdivision applies to health plan companies, as defined in section 62Q.01, offering separate coverage for dental benefits that requires enrollees to receive their dental care services from a provider in a particular network, as part of a health plan as defined in section 62A.011 or as part of health coverage described in section 62A.011, subdivision 3, clause 6.

(b) Each health plan company described in paragraph (a) shall offer enrollees a point-of-service option for dental coverage. The point-of-service option must allow enrollees to receive dental care treatment from providers outside of the plan's network. A health plan company offering dental benefits may charge an additional premium or apply different cost-sharing requirements to enrollees who choose the point-of-service option. Cost-sharing requirements cannot exceed the cost-sharing requirements of enrollees who receive their dental care from within the plan's network by more than ten percent. Premium rates and cost-sharing requirements for point-of-service options for dental care must be submitted for approval to the commissioner of health or the commissioner of commerce, as applicable.

Subd. 5. [EXEMPTION.] This section applies only to health plan companies with more than 50,000 enrollees.

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Sec. 29. [SINGLE ENTRY POINT FOR COMPLAINTS.]

The commissioner of health shall study the feasibility of establishing a single entry point within the health department for consumer complaints about the quality and cost of health care services, whether these services are delivered by individual providers, health care facilities, or health plan companies. The commissioner shall present recommendations to the legislature by February 1, 1996.

Sec. 30. [CHEMICAL DEPENDENCY STANDARDS AND INCENTIVES.]

Subdivision 1. [STANDARDS.] As part of the department of human service's household survey of chemical dependency needs in Minnesota, the commissioner of human services shall develop utilization standards pertaining to the number of chemical dependency treatment inpatient and outpatient referrals per 1,000 enrollees and lengths of stay that are needed for the state to address chemical dependency treatment needs.

Subd. 2. [INCENTIVES SYSTEM.] The commissioners of human services and health shall develop recommendations for a financial or other incentive system to provide an incentive for health plan companies to meet the standards developed in subdivision 1. The commissioners shall recommend the standards and incentives system to the legislature by January 15, 1997.

Sec. 31. [REPEALER; HMO ARBITRATION RULES.]

Minnesota Rules, part 4685.1700, subpart 1, item D, is repealed.

Sec. 32. [REPEALER.]

Minnesota Statutes 1994, sections 62Q.03, subdivisions 2, 3, 4, 5, and 11; 62Q.21; and 62Q.27, are repealed.

Sec. 33. [EFFECTIVE DATE.]

Sections 1 and 29 are effective January 1, 1996.

ARTICLE 3

REGULATED ALL-PAYER OPTION

Section 1. Minnesota Statutes 1994, section 62J.017, is amended to read:

62J.017 [IMPLEMENTATION TIMETABLE.]

The state seeks to complete the restructuring of the health care delivery and financing system by July 1, 1997. The restructured system will have two options: (1) integrated service networks, which will be accountable for meeting state cost containment, quality, and access standards; or (2) a uniform set of price and utilization controls for all health care services for Minnesota residents not provided through an integrated service network. Both systems will operate under the state's growth limits and will be structured to promote competition in the health care marketplace. Beginning July 1, 1994, measures will be taken to increase the public accountability of existing health plan companies, to promote the development of small, community-based integrated service networks, and to reduce administrative costs by standardizing third-party billing forms and procedures and utilization review requirements. Voluntary formation of other integrated service networks will begin after rules have been adopted, but not before July 1, 1996. Statutes and rules for the entire restructured health care financing and delivery system must be enacted or adopted by January 1, 1996, and a phase-in of the all-payer reimbursement system must begin on that date. By July 1, 1997, all health coverage must be regulated under integrated service network or community integrated service network law pursuant to chapter 62N or all-payer law pursuant to chapter 62P.

Sec. 2. Minnesota Statutes 1994, section 62J.04, subdivision 1a, is amended to read:

Subd. 1a. [ADJUSTED GROWTH LIMITS AND ENFORCEMENT.] (a) The commissioner shall publish the final adjusted growth limit in the State Register by January 31 of the year that the expenditure limit is to be in effect. The adjusted limit must reflect the actual regional consumer price index for urban consumers for the previous calendar year, and may deviate from the previously published projected growth limits to reflect differences between the actual regional consumer price index for urban consumers and the projected Consumer Price Index for urban consumers.

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The commissioner shall report to the legislature by February 15 of each year on the implementation of growth limits. This annual report shall describe the differences between the projected increase in health care expenditures, the actual expenditures based on data collected, and the impact and validity of growth limits within the overall health care reform strategy.

(b) The commissioner, in consultation with the Minnesota health care commission, shall research and include in the annual report required in paragraph (a) for 1996, recommendations regarding the implementation of growth limits for health plan companies and providers. The commissioner shall:

(1) consider both spending and revenue approaches and report on the implementation of the interim limits as defined in sections 62J.041 and 62J.042;

(2) make recommendations regarding the enforcement mechanism and consider mechanisms to adjust future growth limits as well as mechanisms to establish financial penalties for noncompliance;

(3) address the feasibility of systemwide limits imposed on all integrated service networks; and

(4) make recommendations on the most effective way to implement growth limits on the fee-for-service system in the absence of a regulated all-payer system.

(c) The commissioner shall enforce limits on growth in spending and revenues for integrated service networks and for the regulated all-payer option health plan companies and revenues for providers. If the commissioner determines that artificial inflation or padding of costs or prices has occurred in anticipation of the implementation of growth limits, the commissioner may adjust the base year spending totals or growth limits or take other action to reverse the effect of the artificial inflation or padding.

(c) (d) The commissioner shall impose and enforce overall limits on growth in revenues and spending for integrated service networks health plan companies, with adjustments for changes in enrollment, benefits, severity, and risks. If an integrated service network a health plan company exceeds the growth limits, the commissioner may reduce future limits on growth in aggregate premium revenues for that integrated service network by up to the amount overspent. If the integrated service network system exceeds a systemwide spending limit, the commissioner may reduce future limits on growth in premium revenues for the integrated service network system by up to the amount overspent impose financial penalties up to the amount exceeding the applicable growth limit.

(d) The commissioner shall set prices, utilization controls, and other requirements for the regulated all-payer option to ensure that the overall costs of this system, after adjusting for changes in population, severity, and risk, do not exceed the growth limits. If growth limits for a calendar year are exceeded, the commissioner may reduce reimbursement rates or otherwise recoup amounts exceeding the limit for all or part of the next calendar year. To the extent possible, the commissioner may reduce reimbursement rates or otherwise recoup amounts over the limit from individual providers who exceed the growth limits.

(e) The commissioner, in consultation with the Minnesota health care commission, shall research and make recommendations to the legislature regarding the implementation of growth limits for integrated service networks and the regulated all-payer option. The commissioner must consider both spending and revenue approaches and will report on the implementation of the interim limits as defined in sections 62P.04 and 62P.05. The commissioner must examine and make recommendations on the use of annual update factors based on volume performance standards as a mechanism for achieving controls on spending in the all-payer option. The commissioner must make recommendations regarding the enforcement mechanism and must consider mechanisms to adjust future growth limits as well as mechanisms to establish financial penalties for noncompliance. The commissioner must also address the feasibility of systemwide limits imposed on all integrated service networks.

(f) The commissioner shall report to the legislative commission on health care access by December 1, 1994, on trends in aggregate spending and premium revenue for health plan companies. The commissioner shall use data submitted under section 62P.04 and other available data to complete this report.

Sec. 3. Minnesota Statutes 1994, section 62J.09, subdivision 1a, is amended to read:

Subd. 1a. [DUTIES RELATED TO COST CONTAINMENT.] (a) [ ALLOCATION OF REGIONAL SPENDING LIMITS.] Regional coordinating boards may advise the commissioner regarding allocation of annual regional limits on the rate of growth for providers in the regulated all-payer option in order to:

(1) achieve communitywide and regional public health goals consistent with those established by the commissioner; and

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(2) promote access to and equitable reimbursement of preventive and primary care providers.

(b) [TECHNICAL ASSISTANCE.] Regional coordinating boards, in cooperation with the commissioner, shall provide technical assistance to parties interested in establishing or operating a community integrated service network or integrated service network within the region. This assistance must complement assistance provided by the commissioner under section 62N.23.

Sec. 4. Minnesota Statutes 1994, section 62J.152, subdivision 5, is amended to read:

Subd. 5. [USE OF TECHNOLOGY EVALUATION.] (a) The final report on the technology evaluation and the commission's comments and recommendations may be used:

(1) by the commissioner in retrospective and prospective review of major expenditures;

(2) by integrated service networks and other group purchasers and by employers, in making coverage, contracting, purchasing, and reimbursement decisions;

(3) by government programs and regulators of the regulated all-payer option, in making coverage, contracting, purchasing, and reimbursement decisions;

(4) by the commissioner and other organizations in the development of practice parameters;

(5) (4) by health care providers in making decisions about adding or replacing technology and the appropriate use of technology;

(6) (5) by consumers in making decisions about treatment;

(7) (6) by medical device manufacturers in developing and marketing new technologies; and

(8) (7) as otherwise needed by health care providers, health care plans, consumers, and purchasers.

(b) At the request of the commissioner, the health care commission, in consultation with the health technology advisory committee, shall submit specific recommendations relating to technologies that have been evaluated under this section for purposes of retrospective and prospective review of major expenditures and coverage, contracting, purchasing, and reimbursement decisions affecting state programs and the all-payer option.

Sec. 5. Minnesota Statutes 1994, section 62Q.01, subdivision 3, is amended to read:

Subd. 3. [HEALTH PLAN.] "Health plan" means a health plan as defined in section 62A.011 or a policy, contract, or certificate issued by a community integrated service network; an integrated service network; or an all-payer insurer as defined in section 62P.02 a health carrier as defined under section 62A.011, subdivision 2.

Sec. 6. Minnesota Statutes 1994, section 62Q.01, subdivision 4, is amended to read:

Subd. 4. [HEALTH PLAN COMPANY.] "Health plan company" means:

(1) a health carrier as defined under section 62A.011, subdivision 2;

(2) an integrated service network as defined under section 62N.02, subdivision 8; or

(3) an all-payer insurer as defined under section 62P.02; or

(4) a community integrated service network as defined under section 62N.02, subdivision 4a.

Sec. 7. Minnesota Statutes 1994, section 62Q.30, is amended to read:

62Q.30 [EXPEDITED FACT FINDING AND DISPUTE RESOLUTION PROCESS.]

The commissioner shall establish an expedited fact finding and dispute resolution process to assist enrollees of integrated service networks and all-payer insurers health plan companies with contested treatment, coverage, and

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service issues to be in effect July 1, 1997. The commissioner may order an integrated service network or an all-payer insurer a health plan company to provide or pay for a service that is within the universal standard benefits set health coverage. If the disputed issue relates to whether a service is appropriate and necessary, the commissioner shall issue an order only after consulting with appropriate experts knowledgeable, trained, and practicing in the area in dispute, reviewing pertinent literature, and considering the availability of satisfactory alternatives. The commissioner shall take steps including but not limited to fining, suspending, or revoking the license of an integrated service network or an all-payer insurer a health plan company that is the subject of repeated orders by the commissioner that suggests a pattern of inappropriate underutilization.

Sec. 8. Minnesota Statutes 1994, section 62Q.41, is amended to read:

62Q.41 [ANNUAL IMPLEMENTATION REPORT.]

The commissioner of health, in consultation with the Minnesota health care commission, shall develop an annual implementation report to be submitted to the legislature each year beginning January 1, 1995, describing the progress and status of rule development and implementation of the integrated service network system and the regulated all-payer option, and providing recommendations for legislative changes that the commissioner determines may be needed.

Sec. 9. Laws 1994, chapter 625, article 5, section 5, subdivision 1, is amended to read:

Sec. 5. [RECODIFICATION AND HEALTH PLAN COMPANY REGULATORY REFORM.]

Subdivision 1. [PROPOSED LEGISLATION.] The commissioners of health and commerce, in consultation with the Minnesota health care commission and the legislative commission on health care access, shall draft proposed legislation to recodify, simplify, and standardize all statutes, rules, regulatory requirements, and procedures relating to health plan companies. The recodification and regulatory reform must become effective simultaneously with the full implementation of the integrated service network system and the regulated all-payer option on July 1, 1997. The commissioners of health and commerce shall submit to the legislature by January 1, 1996, a report on the recodification and regulatory reform with proposed legislation.

Sec. 10. [INSTRUCTION TO REVISOR; RECODIFICATION OF INTERIM LIMITS.]

The revisor of statutes shall recode Minnesota Statutes, section 62P.04, as amended, as section 62J.041, and shall recode section 62P.05, as amended, as section 62J.042.

Sec. 11. [REPEALER.]

Minnesota Statutes 1994, sections 62J.152, subdivision 6; 62P.01; 62P.02; 62P.03; 62P.07; 62P.09; 62P.11; 62P.13; 62P.15; 62P.17; 62P.19; 62P.21; 62P.23; 62P.25; 62P.27; 62P.29; 62P.31; and 62P.33, are repealed.

ARTICLE 4

UNIVERSAL COVERAGE

Section 1. Minnesota Statutes 1994, section 62Q.165, is amended to read:

62Q.165 [UNIVERSAL COVERAGE.]

It is the commitment of the state to achieve universal health coverage for all Minnesotans by July 1, 1997. In order to achieve this commitment, the following goals must be met:

(1) every Minnesotan shall have health coverage and shall contribute to the costs of coverage based on ability to pay;

(2) no Minnesotan shall be denied coverage or forced to pay more because of health status;

(3) quality health care services must be accessible to all Minnesotans;

(4) all health care purchasers must be placed on an equal footing in the health care marketplace; and

(5) a comprehensive and affordable health plan must be available to all Minnesotans.

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Universal coverage is achieved when every Minnesotan has access to the full range of health care services, including preventive and primary care, and pays into the system according to that person's ability. For purposes of proceeding with further insurance reforms under section 62Q.18, universal coverage is achieved when fewer than four percent of the state's population does not have health coverage.

Sec. 2. [62Q.166] [PENALTY FOR CERTAIN UNINSURED PERSONS.]

Subdivision 1. [DEFINITIONS.] (a) For the purposes of this section, the following terms have the meanings given.

(b) "Commissioner" means the commissioner of revenue.

(c) "Gross annual income" has the meaning given in subtitle A, subchapter B, of the Internal Revenue Code of 1986, as amended through December 31, 1994.

(d) "Uninsured" means the failure to have in effect for a minimum of one day in any month qualifying coverage as defined in section 62L.02, subdivision 24. Coverage through a health plan company must be at least a qualified plan as defined in section 62E.02, subdivision 4.

(e) "Household unit" means a Minnesota resident subject to taxation under chapter 290 and all dependents claimed on the resident's federal income tax return for the reporting year. For purposes of this paragraph, married spouses and any dependents they claim are a household unit if they file a joint federal tax return or file separate returns but reside together.

(f) "Reporting year" means the 12-month period for which income is reported for purposes of chapter 290.

(g) "Filing year" means the 12-month period following the reporting year.

Subd. 2. [ESTABLISHMENT OF PENALTY.] (a) Effective for reporting years beginning after December 31, 1996, a penalty shall be imposed on all household units with gross annual income for the reporting year greater than 400 percent of the federal poverty guideline for a family of that size, for each month in which one or more members of the household unit are uninsured while residing in Minnesota. The penalty is the loss of all or part of a household unit's standard or itemized deductions under sections 63(c) and 63(d) of the Internal Revenue Code allowed in calculating state personal income tax liability under chapter 290. The maximum penalty under this section is $2,000 for a household unit comprised of one individual and $5,000 for all other household units.

(b) The penalty for each month in which any member of the household unit is uninsured shall be equal to the household unit's total standard or itemized deductions allowed under sections 63(c) and 63(d) of the Internal Revenue Code divided by the product of 12 times the number of persons in the household unit. The total penalty shall be equal to the monthly penalty multiplied by the total number of months each member of the household unit is uninsured.

(c) The federal poverty guideline used to establish gross annual income under paragraph (a) shall be the guideline applicable to a family of the household's size in effect on January 1 of the reporting year.

(d) Proof of health insurance coverage shall occur upon filing of the Minnesota income tax return. The commissioner shall incorporate a section into the tax form that asks for the name of each household unit member, health plan company or other source of coverage, enrollee identification number, and number of months each member of the household unit was uninsured while residing in Minnesota.

Subd. 3. [HOUSEHOLD UNIT DUTIES.] (a) Each household unit shall report to the commissioner no later than April 15 of the filing year the information required in subdivision 2, paragraph (d), as part of filing the Minnesota income tax return.

(b) If the number of total months in which household unit members were uninsured is greater than zero, the household unit shall also:

(1) report gross household unit income for the reporting year;

(2) calculate the amount of the monthly penalty;

(3) multiply the total number of months each household unit member was uninsured during the reporting year while residing in Minnesota by the amount of the monthly penalty to determine the annual household unit penalty; and

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(4) add the amount of the total penalty for the household unit to federal taxable income for purposes of calculating state personal income tax liability under chapter 290.

Subd. 4. [ENFORCEMENT; PENALTIES.] For the purpose of enforcing this section, the commissioner has all powers granted under chapter 289A for administration and collection of income taxes. The penalties for failure to pay income taxes under chapter 289A shall apply to failure to pay a penalty payment under this section.

Subd. 5. [USE OF INCREASED TAX REVENUE.] State revenue attributable to the penalties assessed under this section shall be deposited in the health care access fund. Up to five percent of the revenue attributable to the penalty may be used by the commissioner of revenue to administer this section.

Sec. 3. Minnesota Statutes 1994, section 62Q.18, is amended to read:

62Q.18 [UNIVERSAL COVERAGE; INSURANCE REFORMS.]

Subdivision 1. [DEFINITION.] For purposes of this section,

(1) "continuous coverage" has the meaning given in section 62L.02;

(2) "guaranteed issue" means:

(i) for individual health plans, that a health plan company shall not decline an application by an individual for any individual health plan offered by that health plan company, including coverage for a dependent of the individual to whom the health plan has been or would be issued; and

(ii) for group health plans, that a health plan company shall not decline an application by a group for any group health plan offered by that health plan company and shall not decline to cover under the group health plan any person eligible for coverage under the group's eligibility requirements, including persons who become eligible after initial issuance of the group health plan;

(3) "qualifying coverage" has the meaning given in section 62L.02; and

(4) "underwriting restrictions" has the meaning given in section 62L.03, subdivision 4.

Subd. 2. [INDIVIDUAL MANDATE.] Effective July 1, 1997, each Minnesota resident shall obtain and maintain qualifying coverage.

Subd. 3. [GUARANTEED ISSUE.] (a) Effective July 1, 1997, Upon the attainment of universal coverage as defined in section 62Q.165, each health plan company shall offer, sell, issue, or renew each of its individual health plan forms on a guaranteed issue basis to any Minnesota resident.

(b) Effective July 1, 1997, Upon the attainment of universal coverage as defined in section 62Q.165, each health plan company shall offer, sell, issue, or renew each of its group health plan forms to any employer that has its principal place of business in this state on a guaranteed issue basis, provided that the guaranteed issue requirement does not apply to employees, dependents, or other persons to be covered, who are not residents of this state.

Subd. 4. [UNDERWRITING RESTRICTIONS LIMITED.] Effective July 1, 1997, Upon the attainment of universal coverage as defined in section 62Q.165, no health plan company shall offer, sell, issue, or renew a health plan that has underwriting restrictions that apply to a Minnesota resident, except as expressly permitted under this section.

Subd. 5. [PREEXISTING CONDITION LIMITATIONS.] Effective July 1, 1997, Upon the attainment of universal coverage as defined in section 62Q.165, no health plan company shall offer, sell, issue, or renew a health plan that contains a preexisting condition limitation or exclusion or exclusionary rider that applies to a Minnesota resident, except a limitation which is no longer than 12 months and applies only to a person who has not maintained continuous coverage. An unexpired preexisting condition limitation from previous qualifying coverage may be carried over to new coverage under a health plan, if the unexpired condition is one permitted under this section. A Minnesota resident who has not maintained continuous coverage may be subjected to a new 12-month preexisting condition limitation after each break in continuous coverage.

Subd. 6. [LIMITS ON PREMIUM RATE VARIATIONS.] (a) Effective July 1, 1995 1997, the premium rate variations permitted under sections 62A.65 and 62L.08 become:

(1), for factors other than age and geography, 12.5 become 15 percent of the index rate; and

(2) for age, 25 percent of the index rate.

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(b) Effective July 1, 1996 1998, the premium variations permitted under sections 62A.65 and 62L.08 become:

(1), for factors other than age and geography, become 7.5 percent of the index rate; and

(2) for age, 15 percent of the index rate.

(c) Effective July 1, 1997 1999, no health plan company shall offer, sell, issue, or renew a health plan, that is subject to section 62A.65 or 62L.08, for which the premium rate varies between covered persons on the basis of any factor other than:

(1) for individual health plans, differences in benefits or benefit design, and for group health plans, actuarially valid differences in benefits or benefit design;

(2) the number of persons to be covered by the health plan;

(3) actuarially valid differences in expected costs between adults and children;

(4) healthy lifestyle discounts authorized by statute; and

(5) for individual health plans, geographic variations permitted under section 62A.65, and for group health plans, geographic variations permitted under section 62L.08; and

(6) for individual health plans, age variations permitted under section 62A.65, and for group health plans, age variations permitted under section 62L.08.

(d) All premium rate variations permitted under paragraph (c) are subject to the approval of the commissioner that regulates the health plan company.

(e) Notwithstanding paragraphs (a), (b), and (c), no health plan company shall renew any individual or group health plan, except in compliance with this paragraph. No premium rate for any policy holder or contract holder shall increase or decrease upon renewal, as a result of this subdivision, by more than 15 percent per year. The increase or decrease described in this paragraph is in addition to any premium increase or decrease caused by legally permissible factors other than this subdivision. If a premium increase or decrease is constrained by this paragraph, the health plan company may implement the remaining portion of the increase or decrease at the time of subsequent annual renewals, but never to exceed 15 percent per year for paragraphs (a), (b), and (c) combined.

Subd. 7. [PORTABILITY OF COVERAGE.] (a) Effective July 1, 1997, Upon the attainment of universal coverage as defined in section 62Q.165, no health plan company shall offer, sell, issue, or renew any group or individual health plan that does not provide for guaranteed issue, with full credit for previous qualifying coverage against any preexisting condition limitation that would otherwise apply under subdivision 5. No health plan shall be subject to any other type of underwriting restriction.

(b) Effective July 1, 1995, Upon the attainment of universal coverage as defined in section 62Q.165, no health plan company shall offer, sell, issue, or renew any group or individual health plan that does not, with respect to individuals who maintain continuous coverage and whose immediately preceding qualifying coverage is a health plan issued by medical assistance under chapter 256B, general assistance medical care under chapter 256D, or the MinnesotaCare program established under section 256.9352,

(1) make coverage available on a guaranteed issue basis; and

(2) give full credit for previous continuous coverage against any applicable preexisting condition limitation or exclusion.

(c) Paragraph (b) applies to individuals whose immediately preceding qualifying coverage is medical assistance under chapter 256B, general assistance medical care under chapter 256D, or the MinnesotaCare program established under section 256.9352, only if the individual has disenrolled from the public program or will disenroll upon issuance of the new coverage. Paragraph (b) does not apply if the public program uses or will use public funds to pay the premiums for an individual who remains or will remain enrolled in the public program. No public funds may be used to purchase private coverage available under this paragraph. This paragraph does not prohibit public payment of premiums to continue private sector coverage originally obtained prior to enrollment in the public program, where otherwise permitted by state or federal law. Portability coverage under this paragraph is subject to the provisions of section 62A.65, subdivision 5, clause (b).

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(d) Effective July 1, 1994, no health plan company shall offer, sell, issue, or renew any group health plan that does not, with respect to individuals who maintain continuous coverage and who qualify under the group's eligibility requirements:

(1) make coverage available on a guaranteed issue basis; and

(2) give full credit for previous continuous coverage against any applicable preexisting condition limitation or preexisting condition exclusion.

To the extent that this paragraph subdivision conflicts with chapter 62L, with respect to small employers as defined in section 62L.02, chapter 62L governs, regardless of whether the group sponsor is a small employer as defined in section 62L.02, except that for group health plans issued to groups that are not small employers, this subdivision's requirement that the individual have maintained continuous coverage applies. An individual who has maintained continuous coverage, but would be considered a late entrant under chapter 62L, may be treated as a late entrant in the same manner under this subdivision as permitted under chapter 62L.

Subd. 8. [COMPREHENSIVE HEALTH ASSOCIATION.] Effective July 1, 1997, Upon the attainment of universal coverage as defined in section 62Q.165, the comprehensive health association created in section 62E.10 shall not accept new applicants for enrollment, except for Medicare-related coverage described in section 62E.12 and for coverage described in section 62E.18.

Subd. 9. [CONTINGENCY; FUTURE LEGISLATION.] This section, except for subdivision subdivisions 1, 6, and 7, paragraphs (b), (c), and paragraph (d), is not intended to be implemented effective prior to legislation enacted to achieve specifically determining that the objectives of section 62Q.165 and Laws 1994, chapter 625, article 6, sections 5, 6, and 7. Subdivision 6 is not effective until an effective date is specified in 1995 legislation regarding the percentage of the state's population without health coverage have been accomplished.

Subd. 10. [REPORTS ON HEALTH CARE ACCESS.] (a) The health care commission shall annually report to the legislature regarding the extent to which the state is making progress toward the goal of universal coverage described in section 62Q.165. The report must advise the legislature regarding possible additional steps in insurance reform that would be helpful in progressing toward universal coverage. The commission shall consider further initiatives involving purchasing pools, narrowing of premium variations, guaranteed issue, portability requirements, preexisting condition limitations, and other provisions that provide greater opportunities to obtain affordable health coverage. The annual report must be submitted no later than January 15 of each year, in compliance with section 3.195.

(b) The health care commission shall also monitor federal efforts to remove barriers to expanding access at the state level, and shall recommend to the legislature and the governor, as part of the annual report required under paragraph (a), any steps toward achieving universal coverage that become feasible with the removal of these barriers.

(c) The annual report required under paragraph (a), due January 15, 1998, must include an evaluation of the loss of personal exemptions required in section 62Q.166 and an assessment of any additional steps that may be necessary to achieve universal coverage as defined in section 62Q.165.

Sec. 4. Minnesota Statutes 1994, section 290.01, subdivision 19a, is amended to read:

Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For individuals, estates, and trusts, there shall be added to federal taxable income:

(1)(i) interest income on obligations of any state other than Minnesota or a political or governmental subdivision, municipality, or governmental agency or instrumentality of any state other than Minnesota exempt from federal income taxes under the Internal Revenue Code or any other federal statute, and

(ii) exempt-interest dividends as defined in section 852(b)(5) of the Internal Revenue Code, except the portion of the exempt-interest dividends derived from interest income on obligations of the state of Minnesota or its political or governmental subdivisions, municipalities, governmental agencies or instrumentalities, but only if the portion of the exempt-interest dividends from such Minnesota sources paid to all shareholders represents 95 percent or more of the exempt-interest dividends that are paid by the regulated investment company as defined in section 851(a) of the Internal Revenue Code, or the fund of the regulated investment company as defined in section 851(h) of the Internal Revenue Code, making the payment; and

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(iii) for the purposes of items (i) and (ii), interest on obligations of an Indian tribal government described in section 7871(c) of the Internal Revenue Code shall be treated as interest income on obligations of the state in which the tribe is located;

(2) the amount of income taxes paid or accrued within the taxable year under this chapter and income taxes paid to any other state or to any province or territory of Canada, to the extent allowed as a deduction under section 63(d) of the Internal Revenue Code, but the addition may not be more than the amount by which the itemized deductions as allowed under section 63(d) of the Internal Revenue Code exceeds the amount of the standard deduction as defined in section 63(c) of the Internal Revenue Code. For the purpose of this paragraph, the disallowance of itemized deductions under section 68 of the Internal Revenue Code of 1986, income tax is the last itemized deduction disallowed;

(3) the capital gain amount of a lump sum distribution to which the special tax under section 1122(h)(3)(B)(ii) of the Tax Reform Act of 1986, Public Law Number 99-514, applies; and

(4) the amount of income taxes paid or accrued within the taxable year under this chapter and income taxes paid to any other state or any province or territory of Canada, to the extent allowed as a deduction in determining federal adjusted gross income. For the purpose of this paragraph, income taxes do not include the taxes imposed by sections 290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; and

(5) the amount of any penalty assessed under section 62Q.166.

ARTICLE 5

MINNESOTACARE PROGRAM AND

PRESCRIPTION DRUG COVERAGE FOR

LOW-INCOME MEDICARE BENEFICIARIES

Section 1. Minnesota Statutes 1994, section 256.9353, subdivision 1, is amended to read:

Subdivision 1. [COVERED HEALTH SERVICES.] "Covered health services" means the health services reimbursed under chapter 256B, with the exception of inpatient hospital services, special education services, private duty nursing services, adult dental care services other than preventive services, orthodontic services, medical transportation services, personal care assistant and case management services, hospice care services, nursing home or intermediate care facilities services, inpatient mental health services, and chemical dependency services. Outpatient mental health services covered under the MinnesotaCare program are limited to diagnostic assessments, psychological testing, explanation of findings, medication management by a physician, day treatment, partial hospitalization, and individual, family, and group psychotherapy. Abortion services are covered under MinnesotaCare only if the condition in section 256B.0625, subdivision 16, paragraph (a), is met. Covered health services shall be expanded as provided in this section.

Sec. 2. Minnesota Statutes 1994, section 256.9354, subdivision 1, is amended to read:

Subdivision 1. [CHILDREN; EXPANSION AND CONTINUATION OF ELIGIBILITY.] (a) [CHILDREN.] Prior to October 1, 1992, "eligible persons" means children who are one year of age or older but less than 18 years of age who have gross family incomes that are equal to or less than 150 185 percent of the federal poverty guidelines and who are not eligible for medical assistance without a spenddown under chapter 256B and who are not otherwise insured for the covered services. The period of eligibility extends from the first day of the month in which the child's first birthday occurs to the last day of the month in which the child becomes 18 years old.

(b) [EXPANSION OF ELIGIBILITY.] Eligibility for MinnesotaCare shall be expanded as provided in subdivisions 2 to 5, except children who meet the criteria in this subdivision shall continue to be enrolled pursuant to this subdivision. The enrollment requirements in this paragraph apply to enrollment under subdivisions 1 to 5. Parents who enroll in the MinnesotaCare program must also enroll their children and dependent siblings, if the children and their dependent siblings are eligible. Children and dependent siblings may be enrolled separately without enrollment by parents. However, if one parent in the household enrolls, both parents must enroll, unless other insurance is available. If one child from a family is enrolled, all children must be enrolled, unless other insurance is available. If one spouse in a household enrolls, the other spouse in the household must also enroll, unless other insurance is available. Families cannot choose to enroll only certain uninsured members. For purposes of this section, a "dependent sibling" means an unmarried child who is a full-time student under the age of 25 years who is financially dependent upon a parent. Proof of school enrollment will be required.

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(c) [CONTINUATION OF ELIGIBILITY.] Individuals who initially enroll in the MinnesotaCare program under the eligibility criteria in subdivisions 2 to 5 remain eligible for the MinnesotaCare program, regardless of age, place of residence, or the presence or absence of children in the same household, as long as all other eligibility criteria are met and residence in Minnesota and continuous enrollment in the MinnesotaCare program or medical assistance are maintained. In order for either parent or either spouse in a household to remain enrolled, both must remain enrolled, unless other insurance is available.

Sec. 3. Minnesota Statutes 1994, section 256.9354, subdivision 4, is amended to read:

Subd. 4. [FAMILIES WITH CHILDREN; ELIGIBILITY BASED ON PERCENTAGE OF INCOME PAID FOR HEALTH COVERAGE.] Beginning January 1, 1993, "eligible persons" means children, parents, and dependent siblings residing in the same household who are not eligible for medical assistance without a spenddown under chapter 256B. Children who meet the criteria in subdivision subdivisions 1 or 4a shall continue to be enrolled pursuant to subdivision 1 those subdivisions. Persons who are eligible under this subdivision or subdivision 2, 3, or 5 must pay a premium as determined under sections 256.9357 and 256.9358, and children eligible under subdivision 1 must pay the premium required under section 256.9356, subdivision 1. Individuals and families whose income is greater than the limits established under section 256.9358 may not enroll in MinnesotaCare.

Sec. 4. Minnesota Statutes 1994, section 256.9354, is amended by adding a subdivision to read:

Subd. 4a. [CHILDREN WITH LOWER INCOMES.] Beginning July 1, 1993, the definition of "eligible persons" is expanded to include children who are one year of age or older but less than 18 years of age who have gross family incomes that are equal to or less than 150 percent of the federal poverty guidelines and who are not eligible for medical assistance without a spenddown under chapter 256B and who are not otherwise insured for the covered services. The period of eligibility extends from the first day of the month in which the child's first birthday occurs to the last day of the month in which the child becomes 18 years old. The commissioner shall exclude all earned income of dependent children who:

(1) are full-time or part-time students;

(2) are employed for less than 37.5 hours per week; and

(3) earn less than $10,000 a year in total from all sources of employment, when calculating gross family incomes for applicants who would otherwise be eligible under this subdivision.

Sec. 5. Minnesota Statutes 1994, section 256.9354, subdivision 5, is amended to read:

Subd. 5. [ADDITION OF SINGLE ADULTS AND HOUSEHOLDS WITH NO CHILDREN.] (a) Beginning October 1, 1994, the definition of "eligible persons" shall is expanded to include all individuals and households with no children who have gross family incomes that are equal to or less than 125 percent of the federal poverty guidelines and who are not eligible for medical assistance without a spenddown under chapter 256B.

(b) Beginning October 1, 1995, "eligible persons" means all individuals and families who are not eligible for medical assistance without a spenddown under chapter 256B. If the federal Health Care Financing Administration approves the section 1115 MinnesotaCare health care reform waiver request submitted by the commissioner, and federal financial participation is made available for MinnesotaCare enrollees in families with children, beginning July 1, 1995, or on the day federal financial participation for MinnesotaCare enrollees in families with children is made available, whichever is later, the definition of "eligible persons" is expanded to include all individuals and households with no children who have gross family incomes that are equal or less than 150 percent of the federal poverty guidelines and who are not eligible for medical assistance without a spenddown under chapter 256B. If the MinnesotaCare health care reform waiver request is not approved, or is approved in part without federal financial participation being made available for all MinnesotaCare enrollees in families with children, eligibility for individuals and households shall be determined as provided in paragraph (a).

(c) All eligible persons under paragraphs (a) and (b) are eligible for coverage through the MinnesotaCare program but must pay a premium as determined under sections 256.9357 and 256.9358. Individuals and families whose income is greater than the limits established under section 256.9358 may not enroll in the MinnesotaCare program.

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Sec. 6. Minnesota Statutes 1994, section 256.9357, subdivision 1, is amended to read:

Subdivision 1. [GENERAL REQUIREMENTS.] Families and individuals are eligible for subsidized premium payments based on a sliding scale under section 256.9358 only if the family or individual meets the requirements in subdivisions 2 and 3. Families and individuals who enroll on or after October 1, 1992, are eligible for subsidized premium payments based on a sliding scale under section 256.9358 only if the family or individual meets the requirements in subdivisions 2 and 3. Children already enrolled in the children's health plan as of September 30, 1992, eligible under section 256.9354, subdivision 1, paragraph (a), children who enroll in the MinnesotaCare program after September 30, 1992, pursuant to Laws 1992, chapter 549, article 4, section 17, and children who enroll under section 256.9354, subdivision 4a, are eligible for subsidized premium payments without meeting these requirements, as long as they maintain continuous coverage in the MinnesotaCare plan or medical assistance.

Families and individuals who initially enrolled in MinnesotaCare under section 256.9354, and whose income increases above the limits established in section 256.9358, may continue enrollment and pay the full cost of coverage.

Sec. 7. Minnesota Statutes 1994, section 256.9357, subdivision 2, is amended to read:

Subd. 2. [MUST NOT HAVE ACCESS TO EMPLOYER-SUBSIDIZED COVERAGE.] (a) To be eligible for subsidized premium payments based on a sliding scale, a family or individual must not have access to subsidized health coverage through an employer, and must not have had access to subsidized health coverage through an employer for the 18 months prior to application for subsidized coverage under the MinnesotaCare program. The requirement that the family or individual must not have had access to employer-subsidized coverage during the previous 18 months does not apply if: (1) employer-subsidized coverage was lost due to the death of an employee or divorce; (2) employer-subsidized coverage was lost because an individual became ineligible for coverage as a child or dependent; or (3) employer-subsidized coverage was lost for reasons that would not disqualify the individual for unemployment benefits under section 268.09 and the family or individual has not had access to employer-subsidized coverage since the layoff loss of coverage. If employer-subsidized coverage was lost for reasons that disqualify an individual for unemployment benefits under section 268.09, children of that individual are exempt from the requirement of no access to employer subsidized coverage for the 18 months prior to application, as long as the children have not had access to employer subsidized coverage since the disqualifying event. The requirement that the family or individual must not have had access to employer-subsidized coverage during the previous 18 months does apply if employer-subsidized coverage is lost due to an employer terminating health care coverage as an employee benefit.

(b) For purposes of this requirement, subsidized health coverage means health coverage for which the employer pays at least 50 percent of the cost of coverage for the employee, excluding dependent coverage, or a higher percentage as specified by the commissioner. Children are eligible for employer-subsidized coverage through either parent, including the noncustodial parent. The commissioner must treat employer contributions to Internal Revenue Code Section 125 plans as qualified employer subsidies toward the cost of health coverage for employees for purposes of this subdivision.

Sec. 8. Minnesota Statutes 1994, section 256.9357, subdivision 3, is amended to read:

Subd. 3. [PERIOD UNINSURED.] To be eligible for subsidized premium payments based on a sliding scale, families and individuals initially enrolled in the MinnesotaCare program under section 256.9354, subdivisions 4 and 5, must have had no health coverage for at least four months prior to application. The commissioner may change this eligibility criterion for sliding scale premiums without complying with rulemaking requirements in order to remain within the limits of available appropriations. The requirement of at least four months of no health coverage prior to application for the MinnesotaCare program does not apply to:

(1) families, children, and individuals who want to apply for the MinnesotaCare program upon termination from the medical assistance program, general assistance medical care program, or coverage under a regional demonstration project for the uninsured funded under section 256B.73, the Hennepin county assured care program, or the Group Health, Inc., community health plan. This subdivision does not apply to;

(2) families and individuals initially enrolled under sections section 256.9354, subdivisions 1, paragraph (a), and 2, or to;

(3) children enrolled pursuant to Laws 1992, chapter 549, article 4, section 17.; or

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(4) individuals currently serving or who have served in the military reserves, and dependents of these individuals, if these individuals: (i) reapply for MinnesotaCare coverage after a period of active military service during which they had been covered by the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); (ii) were covered under MinnesotaCare immediately prior to obtaining coverage under CHAMPUS; and (iii) have maintained continuous coverage.

Sec. 9. Minnesota Statutes 1994, section 256.9358, is amended by adding a subdivision to read:

Subd. 7. [MINIMUM PREMIUM PAYMENT.] Beginning with premium payments due on or after July 1, 1995, the commissioner shall require all MinnesotaCare enrollees to pay a minimum premium of $4 per month.

Sec. 10. Minnesota Statutes 1994, section 256.9363, is amended by adding a subdivision to read:

Subd. 3a. [EXEMPTION FROM ENROLLMENT IN MANAGED CARE.] (a) For purposes of this subdivision, "health care facility" means an Indian health service hospital and health care facility, and satellite clinic, that is located on the Red Lake Band of Chippewa Indian Reservation and serves American Indian people.

(b) Persons enrolled in the MinnesotaCare, medical assistance, or general assistance medical care program living on the Red Lake Chippewa Indian Reservation, and using a health care facility as defined in paragraph (a), shall be exempt from enrollment in managed care plans. The commissioner shall continue to reimburse the health care facility under the MinnesotaCare program on a cost-basis.

Sec. 11. Minnesota Statutes 1994, section 256B.057, subdivision 3, is amended to read:

Subd. 3. [QUALIFIED MEDICARE BENEFICIARIES.] A person who is entitled to Part A Medicare benefits, whose income is equal to or less than 85 150 percent of the federal poverty guidelines, and whose assets are no more than twice the asset limit used to determine eligibility for the supplemental security income program, is eligible for medical assistance reimbursement of Part A and Part B premiums, Part A and Part B coinsurance and deductibles, and cost-effective premiums for enrollment with a health maintenance organization or a competitive medical plan under section 1876 of the Social Security Act, and prescription drugs. The income limit shall be increased to 90 percent of the federal poverty guidelines on January 1, 1990; and to 100 percent on January 1, 1991. Reimbursement of the Medicare coinsurance and deductibles, when added to the amount paid by Medicare, must not exceed the total rate the provider would have received for the same service or services if the person were a medical assistance recipient with Medicare coverage. Increases in benefits under Title II of the Social Security Act shall not be counted as income for purposes of this subdivision until the first day of the second full month following publication of the change in the federal poverty guidelines. The coverage of drugs shall be in accordance with section 256B.0625, subdivision 13, except that a copayment of $3 shall be required for each prescription filled. Medical assistance payment for prescription drugs for persons eligible under this subdivision shall be reduced by $3 to account for the copayment.

Sec. 12. Minnesota Statutes 1994, section 256B.69, is amended by adding a subdivision to read:

Subd. 4a. [EXEMPTION FROM PARTICIPATION.] (a) For purposes of this subdivision, "health care facility" means an Indian health service hospital and health care facility, and satellite clinic, that is located on the Red Lake Band of Chippewa Indian Reservation and serves American Indian people.

(b) Persons living on the Red Lake Chippewa Indian Reservation and using a health care facility as defined in paragraph (a) shall be exempt from participating in the prepaid medical assistance demonstration project. The commissioner shall continue to reimburse the health care facility under medical assistance on a cost-basis.

Sec. 13. Minnesota Statutes 1994, section 256D.03, is amended by adding a subdivision to read:

Subd. 4a. [EXEMPTION FROM ENROLLMENT.] (a) For purposes of this subdivision, "health care facility" means an Indian health service hospital and health care facility, and satellite clinic, that is located on the Red Lake Band of Chippewa Indian Reservation and primarily serves American Indian people.

(b) Persons living on the Red Lake Chippewa Indian Reservation and using a health care facility as defined in paragraph (a) shall be exempt from enrollment in a prepaid health plan under general assistance medical care. The commissioner shall continue to reimburse the health care facility under general assistance medical care on a cost-basis.

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Sec. 14. [EFFECTIVE DATE.]

The amendments to section 11 (section 256B.057, subdivision 3) shall be effective only if federal approval is obtained and a notice of approval is published in the State Register. The effective date shall be July 1, 1996, or the first of the month occurring 90 days after the receipt of written federal approval, whichever is later.

ARTICLE 6

INSURANCE REFORM

Section 1. Minnesota Statutes 1994, section 60A.02, subdivision 1a, is amended to read:

Subd. 1a. [ASSOCIATION OR ASSOCIATIONS.] (a) "Association" or "associations" means an organized body of people who have some interest in common and that has at the onset a minimum of 100 persons; is organized and maintained in good faith for purposes other than that of obtaining insurance; and has a constitution and bylaws which provide that: (1) the association or associations hold regular meetings not less frequently than annually to further purposes of the members; (2) except for credit unions, the association or associations collect dues or solicit contributions from members; (3) the members have voting privileges and representation on the governing board and committees, which provide the members with control of the association including the purchase and administration of insurance products offered to members; and (4) the members are not, within the first 30 days of membership, directly solicited, offered, or sold an insurance policy if the policy is available as an association benefit.

(b) An association may apply to the commissioner for a waiver of the 30-day waiting period to that association. The commissioner may grant the waiver upon a finding of all of the following: (1) the association is in full compliance with this subdivision; (2) sanctions have not been imposed against the association as a result of significant disciplinary action by the commissioner; and (3) at least 80 percent of the association's income comes from dues, contributions, or sources other than income from the sale of insurance.

(c) For purposes of health plan and accident and health insurance regulation, a multiple employer trust is deemed to be an association. "Multiple employer trust" means a trust organized for the benefit of two or more employers for the purpose of providing health plan and accident and health insurance coverage to employees and dependents.

Sec. 2. Minnesota Statutes 1994, section 62A.10, subdivision 1, is amended to read:

Subdivision 1. [REQUIREMENTS.] Group accident and health insurance is hereby declared to be that form of accident and health insurance covering not less than two employees nor less than ten members, and which may include the employee's or member's dependents, consisting of husband, wife, children, and actual dependents residing in the household, written under a master policy issued to any governmental corporation, unit, agency, or department thereof, or to any corporation, copartnership, individual, employer, or to a purchasing pool as described in section 62Q.17, to any association as defined by section 60A.02, subdivision 1a, or to a multiple employer trust, or to the trustee of a fund, established or adopted by two or more employers or maintained for the benefit of members of an association, where officers, members, employees, or classes or divisions thereof, may be insured for their individual benefit.

Any insurer authorized to write accident and health insurance in this state shall have power to issue group accident and health policies.

Sec. 3. Minnesota Statutes 1994, section 62A.10, subdivision 2, is amended to read:

Subd. 2. [POLICY FORMS.] No policy or certificate of group accident and health insurance may be issued or delivered in this state unless the same has been approved by the commissioner in accordance with section 62A.02, subdivisions 1 to 6. These forms shall contain the standard provisions relating and applicable to health and accident insurance and shall conform with the other requirements of law relating to the contents and terms of policies of accident and sickness insurance in so far as they may be applicable to group accident and health insurance, and also the following provisions:

(1) [ENTIRE CONTRACT.] A provision that the policy and the application of the employer, trustee, or executive officer or trustee of any association, and the individual applications, if any, of the employees or members insured, shall constitute the entire contract between the parties, and that all statements made by the employer, trustee, or any executive officer or trustee in behalf of the group to be insured, shall, in the absence of fraud, be deemed representations and not warranties, and that no such statement shall be used in defense to a claim under the policy, unless it is contained in the written application;

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(2) [MASTER POLICY-CERTIFICATES.] A provision that the insurer will issue a master policy to the employer, trustee, or to the executive officer or trustee of the association; and the insurer shall also issue to the employer, trustee, or to the executive officer or trustee of the association, for delivery to the employee or member who is insured under the policy, an individual certificate setting forth a statement as to the insurance protection to which the employee or member is entitled and to whom payable, together with a statement as to when and where the master policy, or a copy thereof, may be seen for inspection by the individual insured; this individual certificate may contain the names of, and insure the dependents of, the employee or member, as provided for herein;

(3) [NEW INSUREDS.] A provision that to the group or class thereof originally insured may be added, from time to time, all new employees of the employer or members of the association eligible to and applying for insurance in that group or class and covered or to be covered by the master policy.

Sec. 4. Minnesota Statutes 1994, section 62A.65, subdivision 5, is amended to read:

Subd. 5. [PORTABILITY OF COVERAGE.] (a) No individual health plan may be offered, sold, issued, or with respect to children age 18 or under renewed, to a Minnesota resident that contains a preexisting condition limitation or, preexisting condition exclusion, or exclusionary rider, unless the limitation or exclusion is permitted under this subdivision, provided that, except for children age 18 or under, underwriting restrictions may be retained on individual contracts that are issued without evidence of insurability as a replacement for prior individual coverage that was sold before May 17, 1993. The individual may be subjected to an 18-month preexisting condition limitation, unless the individual has maintained continuous coverage as defined in section 62L.02. The individual must not be subjected to an exclusionary rider. An individual who has maintained continuous coverage may be subjected to a one-time preexisting condition limitation of up to 12 months, with credit for time covered under qualifying coverage as defined in section 62L.02, at the time that the individual first is covered under an individual health plan by any health carrier. Credit must be given for all qualifying coverage with respect to all preexisting conditions, regardless of whether the conditions were preexisting with respect to any previous qualifying coverage. The individual must not be subjected to an exclusionary rider. Thereafter, the individual must not be subject to any preexisting condition limitation or, preexisting condition exclusion, or exclusionary rider under an individual health plan by any health carrier, except an unexpired portion of a limitation under prior coverage, so long as the individual maintains continuous coverage as defined in section 62L.02.

(b) A health carrier must offer an individual health plan to any individual previously covered under a group health plan issued by that health carrier, regardless of the size of the group, so long as the individual maintained continuous coverage as defined in section 62L.02. The offer must not be subject to underwriting, except as permitted under this paragraph. A health plan issued under this paragraph must be a qualified plan as defined in section 62E.02 and must not contain any preexisting condition limitation or, preexisting condition exclusion, or exclusionary rider, except for any unexpired limitation or exclusion under the previous coverage. The individual health plan must cover pregnancy on the same basis as any other covered illness under the individual health plan. The initial premium rate for the individual health plan must comply with subdivision 3. The premium rate upon renewal must comply with subdivision 2. In no event shall the premium rate exceed 90 percent of the premium charged for comparable individual coverage by the Minnesota comprehensive health association, and the premium rate must be less than that amount if necessary to otherwise comply with this section. An individual health plan offered under this paragraph to a person satisfies the health carrier's obligation to offer conversion coverage under section 62E.16, with respect to that person. Coverage issued under this paragraph must provide that it cannot be canceled or nonrenewed as a result of the health carrier's subsequent decision to leave the individual, small employer, or other group market. Section 72A.20, subdivision 28, applies to this paragraph.

Sec. 5. Minnesota Statutes 1994, section 62A.65, subdivision 8, is amended to read:

Subd. 8. [CESSATION OF INDIVIDUAL BUSINESS.] Notwithstanding the provisions of subdivisions 1 to 7, a health carrier may elect to cease doing business in the individual health plan market in this state if it complies with the requirements of this subdivision. For purposes of this section, "cease doing business" means to discontinue issuing new individual health plans and to refuse to renew all of the health carrier's existing individual health plans issued in this state whose terms permit refusal to renew under the circumstances specified in this subdivision. This subdivision does not permit cancellation of an individual health plan, unless the terms of the health plan permit cancellation under the circumstances specified in this subdivision. A health carrier electing to cease doing business in the individual health plan market in this state shall notify the commissioner 180 days prior to the effective date of the cessation. The cessation of business does not include the failure of a health carrier to offer or issue new business in the individual health plan market or continue an existing product line in that market, provided that a health carrier does not terminate, cancel, or fail to renew its current individual health plan business or other product

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lines. A health carrier electing to cease doing business in the individual health plan market shall provide 120 days' written notice to each policyholder covered by a an individual health plan issued by the health carrier. A health carrier that ceases to write new business in the individual health plan market shall continue to be governed by this section with respect to continuing individual health plan business conducted by the health carrier. A health carrier that ceases to do business in the individual health plan market after July 1, 1994, is prohibited from writing new business in the individual health plan market in this state for a period of five years from the date of notice to the commissioner. This subdivision applies to any health maintenance organization that ceases to do business in the individual health plan market in one service area with respect to that service area only. Nothing in this subdivision prohibits an affiliated health maintenance organization from continuing to do business in the individual health plan market in that same service area. The right to cancel or refuse to renew an individual health plan under this subdivision does not apply to individual health plans originally issued prior to July 1, 1993, on a guaranteed renewable basis that does not permit refusal to renew under the circumstances specified in this subdivision.

Sec. 6. Minnesota Statutes 1994, section 62D.02, subdivision 8, is amended to read:

Subd. 8. "Health maintenance contract" means any contract whereby a health maintenance organization agrees to provide comprehensive health maintenance services to enrollees, provided that the contract may contain reasonable enrollee copayment provisions. Copayment and deductible provisions in group contracts shall not discriminate on the basis of age, sex, race, length of enrollment in the plan, or economic status; and during every open enrollment period in which all offered health benefit plans, including those subject to the jurisdiction of the commissioners of commerce or health, fully participate without any underwriting restrictions, copayment and deductible provisions shall not discriminate on the basis of preexisting health status. In no event shall the sum of the annual copayment copayments and deductible exceed the maximum out-of-pocket expenses allowable for a number three qualified insurance policy plan under section 62E.06, nor shall that sum exceed $5,000 per family. The annual deductible must not exceed $1,000 per person. The annual deductible must not apply to preventive health services as described in Minnesota Rules, part 4685.0801, subpart 8. Where sections 62D.01 to 62D.30 permit a health maintenance organization to contain reasonable copayment provisions for preexisting health status, these provisions may vary with respect to length of enrollment in the plan. Any contract may provide for health care services in addition to those set forth in subdivision 7.

Sec. 7. Minnesota Statutes 1994, section 62D.042, subdivision 2, is amended to read:

Subd. 2. [BEGINNING ORGANIZATIONS.] (a) Beginning organizations shall maintain net worth of at least 8-1/3 percent of the sum of all expenses expected to be incurred in the 12 months following the date the certificate of authority is granted, or $1,500,000, whichever is greater.

(b) After the first full calendar year of operation, organizations shall maintain net worth of at least 8-1/3 percent and at most 16-2/3 percent of the sum of all expenses incurred during the most recent calendar year, but in no case shall net worth fall below $1,000,000.

(c) Notwithstanding paragraphs (a) and (b), any health maintenance organization owned by a political subdivision of this state, which has a higher than average percentage of enrollees who are enrolled in medical assistance or general assistance medical care, may exceed the maximum net worth limits provided in paragraphs (a) and (b), with the advance approval of the commissioner.

Sec. 8. Minnesota Statutes 1994, section 62E.141, is amended to read:

62E.141 [INCLUSION IN EMPLOYER-SPONSORED PLAN.]

No employee, or dependent of an employee, of an employer that offers a health plan, under which the employee or dependent is eligible for coverage, is eligible to enroll, or continue to be enrolled, in the comprehensive health association, except for enrollment or continued enrollment necessary to cover conditions that are subject to an unexpired preexisting condition limitation or, preexisting condition exclusion, or exclusionary rider under the employer's health plan. This section does not apply to persons enrolled in the comprehensive health association as of June 30, 1993. With respect to persons eligible to enroll in the health plan of an employer that has more than 29 current employees, as defined in section 62L.02, this section does not apply to persons enrolled in the comprehensive health association as of December 31, 1994.

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Sec. 9. Minnesota Statutes 1994, section 62H.04, is amended to read:

62H.04 [COMPLIANCE WITH OTHER LAWS.]

A joint self-insurance plan is subject to the requirements of chapters 62A, and 62E, and 62L, and sections 72A.17 to 72A.32 unless otherwise specifically exempt. A joint self-insurance plan must not offer less than a number two qualified plan or its actuarial equivalent.

Sec. 10. Minnesota Statutes 1994, section 62H.08, is amended to read:

62H.08 [EXEMPTION.]

A homogenous joint employer plan providing group health benefits, which was in existence prior to March 1, 1983, and which is associated with, or organized or sponsored by, an association exempt from taxation under United States Code, title 26, section 501(c)(6), and controlled by a board of trustees a majority of whom are members of the association, is exempt from the requirements of sections 62H.01 to 62H.08 and 471.617, subdivisions 1 to 3, and the insurance laws of this state, except that the association must comply with the provisions of chapter 62L with respect to any members that are small employers.

Sec. 11. Minnesota Statutes 1994, section 62L.02, subdivision 11, is amended to read:

Subd. 11. [DEPENDENT.] "Dependent" means an eligible employee's spouse, unmarried child who is under the age of 19 years, unmarried child under the age of 25 years who is a full-time student as defined in section 62A.301, dependent child of any age who is handicapped and who meets the eligibility criteria in section 62A.14, subdivision 2, or any other person whom state or federal law requires to be treated as a dependent for purposes of health plans. For the purpose of this definition, a child may include includes a child for whom the employee or the employee's spouse has been appointed legal guardian.

Sec. 12. Minnesota Statutes 1994, section 62L.02, subdivision 16, is amended to read:

Subd. 16. [HEALTH CARRIER.] "Health carrier" means an insurance company licensed under chapter 60A to offer, sell, or issue a policy of accident and sickness insurance as defined in section 62A.01; a health service plan corporation licensed under chapter 62C; a health maintenance organization licensed under chapter 62D; a fraternal benefit society operating under chapter 64B; a joint self-insurance employee health plan operating under chapter 62H; and a multiple employer welfare arrangement, as defined in United States Code, title 29, section 1002(40), as amended. For purposes of sections 62L.01 to 62L.12, but not for purposes of sections 62L.13 to 62L.22, "health carrier" includes; or a community integrated service network or integrated service network licensed under chapter 62N. Any use of this definition in another chapter by reference does not include a community integrated service network or integrated service network, unless otherwise specified. For the purpose of this chapter, companies that are affiliated companies or that are eligible to file a consolidated tax return must be treated as one health carrier, except that any insurance company or health service plan corporation that is an affiliate of a health maintenance organization located in Minnesota, or any health maintenance organization located in Minnesota that is an affiliate of an insurance company or health service plan corporation, or any health maintenance organization that is an affiliate of another health maintenance organization in Minnesota, may treat the health maintenance organization as a separate health carrier.

Sec. 13. Minnesota Statutes 1994, section 62L.02, subdivision 24, is amended to read:

Subd. 24. [QUALIFYING COVERAGE.] "Qualifying coverage" means health benefits or health coverage provided under:

(1) a health plan, as defined in this section;

(2) Medicare;

(3) medical assistance under chapter 256B;

(4) general assistance medical care under chapter 256D;

(5) MCHA;

(6) a self-insured health plan;

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(7) the MinnesotaCare program established under section 256.9352, when the plan includes inpatient hospital services as provided in section 256.9353;

(8) a plan provided under section 43A.316, 43A.317, or 471.617; or

(9) the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); or

(10) a plan similar to any of the above plans provided in this state or in another state as determined by the commissioner.

Sec. 14. Minnesota Statutes 1994, section 62L.02, subdivision 26, is amended to read:

Subd. 26. [SMALL EMPLOYER.] (a) "Small employer" means a person, firm, corporation, partnership, association, or other entity actively engaged in business, including a political subdivision of the state, that, on at least 50 percent of its working days during the preceding 12 months, employed no fewer than two nor more than 29, or after June 30, 1995, more than 49, current employees, the majority of whom were employed in this state. If an employer has only two eligible employees and one is the spouse, child, sibling, parent, or grandparent of the other, the employer must be a Minnesota domiciled employer and have paid social security or self-employment tax on behalf of both eligible employees. If an employer has only one eligible employee who has not waived coverage, the sale of a health plan to or for that eligible employee is not a sale to a small employer and is not subject to this chapter and may be treated as the sale of an individual health plan. A small employer plan may be offered through a domiciled association to self-employed individuals and small employers who are members of the association, even if the self-employed individual or small employer has fewer than two current employees. Entities that are eligible to file a combined tax return for purposes of state tax laws are considered a single employer for purposes of determining the number of current employees. Small employer status must be determined on an annual basis as of the renewal date of the health benefit plan. The provisions of this chapter continue to apply to an employer who no longer meets the requirements of this definition until the annual renewal date of the employer's health benefit plan.

(b) Where an association, described as defined in section 62A.10, subdivision 1 62L.045, comprised of employers contracts with a health carrier to provide coverage to its members who are small employers, the association shall be considered to be a and health benefit plans it provides to small employer employers, are subject to section 62L.045, with respect to those small employers in the association that employ no fewer than two nor more than 29, or after June 30, 1995, more than 49, current employees, even though the association also provides coverage to its members that do not qualify as small employers. An association in existence prior to July 1, 1993, is exempt from this chapter with respect to small employers that are members as of that date. However, in providing coverage to new employers after July 1, 1993, the existing association must comply with all requirements of this chapter. Existing associations must register with the commissioner of commerce prior to July 1, 1993. With respect to small employers having not fewer than 30 nor more than 49 current employees, the July 1, 1993, date in this paragraph becomes July 1, 1995, and the reference to "after" that date becomes "on or after."

(c) If an employer has employees covered under a trust specified in a collective bargaining agreement under the federal Labor-Management Relations Act of 1947, United States Code, title 29, section 141, et seq., as amended, or employees whose health coverage is determined by a collective bargaining agreement and, as a result of the collective bargaining agreement, is purchased separately from the health plan provided to other employees, those employees are excluded in determining whether the employer qualifies as a small employer. Those employees are considered to be a separate small employer if they constitute a group that would qualify as a small employer in the absence of the employees who are not subject to the collective bargaining agreement.

Sec. 15. Minnesota Statutes 1994, section 62L.03, subdivision 3, is amended to read:

Subd. 3. [MINIMUM PARTICIPATION AND CONTRIBUTION.] (a) A small employer that has at least 75 percent of its eligible employees who have not waived coverage participating in a health benefit plan and that contributes at least 50 percent toward the cost of coverage of each eligible employees employee must be guaranteed coverage on a guaranteed issue basis from any health carrier participating in the small employer market. The participation level of eligible employees must be determined at the initial offering of coverage and at the renewal date of coverage. A health carrier must not increase the participation requirements applicable to a small employer at any time after the small employer has been accepted for coverage. For the purposes of this subdivision, waiver of coverage includes only waivers due to: (1) coverage under another group health plan; (2) coverage under Medicare Parts A and B; or (3) coverage under MCHA permitted under section 62E.141; or (4) coverage under medical assistance under chapter 256B or general assistance medical care under chapter 256D.

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(b) If a small employer does not satisfy the contribution or participation requirements under this subdivision, a health carrier may voluntarily issue or renew individual health plans, or a health benefit plan which must fully comply with this chapter. A health carrier that provides a health benefit plan to a small employer that does not meet the contribution or participation requirements of this subdivision must maintain this information in its files for audit by the commissioner. A health carrier may not offer an individual health plan, purchased through an arrangement between the employer and the health carrier, to any employee unless the health carrier also offers the individual health plan, on a guaranteed issue basis, to all other employees of the same employer.

(c) Nothing in this section obligates a health carrier to issue coverage to a small employer that currently offers coverage through a health benefit plan from another health carrier, unless the new coverage will replace the existing coverage and not serve as one of two or more health benefit plans offered by the employer.

Sec. 16. Minnesota Statutes 1994, section 62L.03, subdivision 4, is amended to read:

Subd. 4. [UNDERWRITING RESTRICTIONS.] Health carriers may apply underwriting restrictions to coverage for health benefit plans for small employers, including any preexisting condition limitations, only as expressly permitted under this chapter. For purposes of this section, "underwriting restrictions" means any refusal of the health carrier to issue or renew coverage, any premium rate higher than the lowest rate charged by the health carrier for the same coverage, any preexisting condition limitation or, preexisting condition exclusion, or any exclusionary rider. Health carriers may collect information relating to the case characteristics and demographic composition of small employers, as well as health status and health history information about employees, and dependents of employees, of small employers. Except as otherwise authorized for late entrants, preexisting conditions may be excluded by a health carrier for a period not to exceed 12 months from the effective date of coverage of an eligible employee or dependent, but exclusionary riders must not be used. When calculating a preexisting condition limitation, a health carrier shall credit the time period an eligible employee or dependent was previously covered by qualifying prior coverage, provided that the individual maintains continuous coverage. Late entrants may be subject to a preexisting condition limitation not to exceed 18 months from the effective date of coverage of the late entrant, but must not be subject to any exclusionary rider or preexisting condition exclusion. The credit must be given for all qualifying coverage with respect to all preexisting conditions, regardless of whether the conditions were preexisting with respect to any previous qualifying coverage. Section 60A.082, relating to replacement of group coverage, and the rules adopted under that section apply to this chapter, and this chapter's requirements are in addition to the requirements of that section and the rules adopted under it. A health carrier shall, at the time of first issuance or renewal of a health benefit plan on or after July 1, 1993, credit against any preexisting condition limitation or exclusion permitted under this section, the time period prior to July 1, 1993, during which an eligible employee or dependent was covered by qualifying coverage, if the person has maintained continuous coverage.

Sec. 17. Minnesota Statutes 1994, section 62L.03, subdivision 5, is amended to read:

Subd. 5. [CANCELLATIONS AND FAILURES TO RENEW.] (a) No health carrier shall cancel, decline to issue, or fail to renew a health benefit plan as a result of the claim experience or health status of the persons covered or to be covered by the health benefit plan.

(b) A health carrier may cancel or fail to renew a health benefit plan:

(1) for nonpayment of the required premium;

(2) for fraud or misrepresentation by the small employer, or, with respect to coverage of an individual eligible employee or dependent, fraud or misrepresentation by the eligible employee or dependent, with respect to eligibility for coverage or any other material fact;

(3) if eligible employee participation during the preceding calendar year declines to less than 75 percent, subject to the waiver of coverage provision in subdivision 3;

(4) if the employer fails to comply with the minimum contribution percentage required under subdivision 3; or

(4) for any other reasons or grounds expressly permitted by the respective licensing laws and regulations governing a health carrier, including, but not limited to, service area restrictions imposed on health maintenance organizations under section 62D.03, subdivision 4, paragraph (m), to the extent that these grounds are not expressly inconsistent with this chapter.

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(c) A health carrier may fail to renew a health benefit plan:

(1) if eligible employee participation during the preceding calendar year declines to less than 75 percent, subject to the waiver of coverage provision in subdivision 3;

(5) (2) if the health carrier ceases to do business in the small employer market under section 62L.09; or

(6) (3) if a failure to renew is based upon the health carrier's decision to discontinue the health benefit plan form previously issued to the small employer, but only if the health carrier permits each small employer covered under the prior form to switch to its choice of any other health benefit plan offered by the health carrier, without any underwriting restrictions that would not have been permitted for renewal purposes; or

(7) for any other reasons or grounds expressly permitted by the respective licensing laws and regulations governing a health carrier, including, but not limited to, service area restrictions imposed on health maintenance organizations under section 62D.03, subdivision 4, paragraph (m), to the extent that these grounds are not expressly inconsistent with this chapter.

(b) (d) A health carrier need not renew a health benefit plan, and shall not renew a small employer plan, if an employer ceases to qualify as a small employer as defined in section 62L.02. If a health benefit plan, other than a small employer plan, provides terms of renewal that do not exclude an employer that is no longer a small employer, the health benefit plan may be renewed according to its own terms. If a health carrier issues or renews a health plan to an employer that is no longer a small employer, without interruption of coverage, the health plan is subject to section 60A.082.

Sec. 18. [62L.045] [ASSOCIATIONS.]

Subdivision 1. [DEFINITIONS.] For purposes of this section, the following terms have the meanings given:

(a) "Association" means:

(1) an association as defined in section 60A.02;

(2) a multiple employer trust as defined in section 60A.02, subdivision 1a, paragraph (c);

(3) a group or organization of political subdivisions;

(4) an educational cooperative service unit created under section 123.58; or

(5) a joint self-insurance pool authorized under section 471.617, subdivision 2.

(b) "Qualified association" means an association, as defined in this subdivision, that:

(1) is registered with the commissioner;

(2) provides health plan coverage through a health carrier that participates in the small employer market in this state, other than through associations;

(3) has and adheres to membership and participation criteria and health plan eligibility criteria that are not designed to disproportionately include or attract small employers that are likely to have low costs of health coverage or to disproportionately exclude or repel small employers that are likely to have high costs of health coverage; and

(4) permits any small employer that meets its membership, participation, and eligibility criteria to become a member and to obtain health plan coverage through the association.

Subd. 2. [QUALIFIED ASSOCIATIONS.] (a) A qualified association, as defined in this section, and health benefit plans offered by it, to it, or through it, to a small employer in this state must comply with the requirements of this chapter regarding guaranteed issue, guaranteed renewal, preexisting condition limitations, credit against preexisting condition limitations for continuous coverage, treatment of MCHA enrollees, and the definition of dependent, and with section 62A.65, subdivision 5, paragraph (b). They must also comply with all other requirements of this chapter not specifically exempted in paragraph (b) or (c).

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(b) A qualified association and a health carrier offering, selling, issuing, or renewing a health benefit plan to, or to cover, a small employer in this state through the qualified association, may, but are not, in connection with that health benefit plan, required to:

(1) offer the two small employer plans described in section 62L.05; or

(2) offer to small employers that are not members of the association, health benefit plans offered to, by, or through the qualified association.

(c) A qualified association, and a health carrier offering, selling, issuing, and renewing a health benefit plan to, or to cover, a small employer in this state must comply with section 62L.08, with the following modifications:

(1) for health benefit plans that the health carrier does not offer in the small employer market, other than through associations, the premium rates charged to small employers may differ from health benefit plans that the health carrier offers in the small employer market generally, but only to the extent of actuarially valid differences in the benefits or other permitted variations in coverage. These premium rate differences may be used only with the prior approval of the commissioner. The differences in premiums must not be based upon assumed differences in the persons to be covered through the association as compared to persons covered by the health carrier in the small employer market generally; and

(2) the premium rates charged to small employers may be discounted to reflect marketing and administrative cost savings realized by the health carrier as a result of services performed by the association. Any such premium rate discounts must be approved in advance by the commissioner.

Subd. 3. [OTHER ASSOCIATIONS.] Associations as defined in this section that are not qualified associations; health benefit plans offered, sold, issued, or renewed through them; and the health carriers doing so, must fully comply with this chapter, with respect to small employers that are members of the association. The premium rates charged to small employers may, however, be discounted to reflect marketing and administrative cost savings realized by the health carrier as a result of services performed by the association. Any such premium rate discounts must be approved in advance by the commissioner.

Subd. 4. [PRINCIPLES; ASSOCIATION COVERAGE.] (a) This subdivision applies to associations as defined in this section, whether qualified associations or not, and is intended to clarify subdivisions 1 to 3.

(b) This section applies only to associations that provide coverage to small employers.

(c) The requirements of guaranteed issue and guaranteed renewal apply to coverage issued to cover small employers and persons covered through them, within the context of an arrangement between an association and a health carrier. A health carrier is not required under this chapter to comply with guaranteed issue and guaranteed renewal with respect to its relationship with the association itself. An arrangement between the health carrier and the association, once entered into, must comply with guaranteed issue and guaranteed renewal with respect to members of the association that are small employers and persons covered through them.

(d) When an arrangement between a health carrier and an association has validly terminated, the health carrier has no continuing obligation to small employers and persons covered through them, except as otherwise provided in:

(1) section 62A.65, subdivision 5, paragraph (b);

(2) any other continuation or conversion rights applicable under state or federal law; and

(3) section 60A.082, relating to group replacement coverage, and rules adopted under that section.

(e) When an association's arrangement with a health carrier has terminated and the association has entered into a new arrangement with that health carrier or a different health carrier, the new arrangement is subject to section 60A.082 and rules adopted under it, with respect to members of the association that are small employers and persons covered through them.

(f) An association that offers its members more than one health plan may have uniform rules restricting movement between the health plans, if the rules do not discriminate against small employers.

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(g) This chapter does not require or prohibit separation of an association's members into one group consisting only of small employers and another group or other groups consisting of all other members. The association must comply with this section with respect to the small employer group.

(h) For purposes of this section, "member" of an association includes an employer participant in a multiple employer trust or other type of association.

(i) For purposes of this section, coverage issued to, or to cover, a small employer includes a certificate of coverage issued directly to the employer's employees and dependents, rather than to the small employer.

Sec. 19. Minnesota Statutes 1994, section 62L.09, subdivision 1, is amended to read:

Subdivision 1. [NOTICE TO COMMISSIONER.] A health carrier electing to cease doing business in the small employer market shall notify the commissioner 180 days prior to the effective date of the cessation. The health carrier shall simultaneously provide a copy of the notice to each small employer covered by a health benefit plan issued by the health carrier. For purposes of this section, "cease doing business" means to discontinue issuing new health benefit plans to small employers and to refuse to renew all of the health carrier's existing health benefit plans issued to small employers, the terms of which permit refusal to renew under the circumstances specified in this subdivision. This section does not permit cancellation of a health benefit plan, unless permitted under its terms.

Upon making the notification, the health carrier shall not offer or issue new business in the small employer market. The health carrier shall renew its current small employer business due for renewal within 120 days after the date of the notification but shall not renew any small employer business more than 120 days after the date of the notification. The renewal period for business renewed during that 120-day period shall end on the effective date of the cessation.

A health carrier that elects to cease doing business in the small employer market shall continue to be governed by this chapter with respect to any continuing small employer business conducted by the health carrier.

Sec. 20. Minnesota Statutes 1994, section 62L.12, subdivision 2, is amended to read:

Subd. 2. [EXCEPTIONS.] (a) A health carrier may sell, issue, or renew individual conversion policies to eligible employees and dependents otherwise eligible for conversion coverage under section 62D.104 as a result of leaving a health maintenance organization's service area.

(b) A health carrier may sell, issue, or renew individual conversion policies to eligible employees and dependents otherwise eligible for conversion coverage as a result of the expiration of any continuation of group coverage required under sections 62A.146, 62A.17, 62A.21, 62C.142, 62D.101, and 62D.105.

(c) A health carrier may sell, issue, or renew conversion policies under section 62E.16 to eligible employees and dependents.

(d) A health carrier may sell, issue, or renew individual continuation policies to eligible employees and dependents as required.

(e) A health carrier may sell, issue, or renew individual health plans if the coverage is appropriate due to an unexpired preexisting condition limitation or exclusion applicable to the person under the employer's group health plan or due to the person's need for health care services not covered under the employer's group health plan.

(f) A health carrier may sell, issue, or renew an individual health plan, if the individual has elected to buy the individual health plan not as part of a general plan to substitute individual health plans for a group health plan nor as a result of any violation of subdivision 3 or 4.

(g) Nothing in this subdivision relieves a health carrier of any obligation to provide continuation or conversion coverage otherwise required under federal or state law.

(h) Nothing in this chapter restricts the offer, sale, issuance, or renewal of coverage issued as a supplement to Medicare under sections 62A.31 to 62A.44, or policies or contracts that supplement Medicare issued by health maintenance organizations, or those contracts governed by section 1833 or 1876 of the federal Social Security Act, United States Code, title 42, section 1395 et. seq., as amended.

(i) Nothing in this chapter restricts the offer, sale, issuance, or renewal of individual health plans necessary to comply with a court order.

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Sec. 21. Minnesota Statutes 1994, section 62Q.17, subdivision 2, is amended to read:

Subd. 2. [COMMON FACTORS.] All participants in a purchasing pool must live within a common geographic region, be employed in a similar occupation, or share some other common factor as approved by the commissioner of commerce. The membership criteria must not be designed to include disproportionately employers, groups, or individuals likely to have low costs of health coverage, or to exclude disproportionately employers, groups, or individuals likely to have high costs of health coverage.

Sec. 22. Minnesota Statutes 1994, section 62Q.17, subdivision 6, is amended to read:

Subd. 6. [EMPLOYER-BASED PURCHASING POOLS.] Employer-based purchasing pools must, with respect to small employers as defined in section 62L.02, meet all the requirements of chapter 62L. The experience of the pool must be pooled and the rates blended across all groups. Pools may decide to create tiers within the pool, based on experience of group members. These tiers must be designed within the requirements of section 62L.08. The governing structure may establish criteria limiting movement between tiers. Tiers must be phased out within two years of the pool's creation. Notwithstanding chapter 62L, a health plan company may discount its premium rates for small employers to reflect marketing and administrative savings realized by the health plan company due to services provided by the pool. Any such premium rate discounts must be approved in advance by the commissioner.

Sec. 23. Minnesota Statutes 1994, section 62Q.17, subdivision 8, is amended to read:

Subd. 8. [REPORTS.] Prior to the initial effective date of coverage, and annually on July 1 thereafter, each pool shall file a report with the information clearinghouse and the commissioner of commerce. The information clearinghouse must use the report to promote the purchasing pools. The annual report must contain the following information:

(1) the number of lives in the pool;

(2) the geographic area the pool intends to cover;

(3) the number of health plans offered;

(4) a description of the benefits under each plan;

(5) a description of the premium structure, including any copayments or deductibles, of each plan offered;

(6) evidence of compliance with chapter 62L;

(7) a sample of marketing information, including a phone number where the pool may be contacted; and

(8) a list of all administrative fees charged.

Sec. 24. Minnesota Statutes 1994, section 62Q.17, is amended by adding a subdivision to read:

Subd. 9. [ENFORCEMENT.] Purchasing pools must register prior to offering coverage, and annually on July 1 thereafter, with the commissioner of commerce on a form prescribed by the commissioner. The commissioner of commerce shall enforce this section and all other state laws with respect to purchasing pools, and has for that purpose all general rulemaking and enforcement powers otherwise available to the commissioner of commerce. The commissioner may charge an annual registration fee sufficient to meet the costs of the commissioner's duties under this section.

Sec. 25. Minnesota Statutes 1994, section 72A.201, is amended by adding a subdivision to read:

Subd. 13. [IMPROPER CLAIM OF DISCOUNT.] (a) No insurer, integrated service network, or community integrated service network shall intentionally provide a health care provider with an explanation of benefits or similar document claiming a right to a discounted fee, price, or other charge, when the insurer, integrated service network, or community integrated service network does not have an agreement with the provider for the discount with respect to the patient involved.

(b) The insurer, integrated service network, or community integrated service network may, notwithstanding paragraph (a), claim the right to a discount based upon a discount agreement between the health care provider and another entity, but only if:

(1) that agreement expressly permitted the entity to assign its right to receive the discount;

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(2) an assignment to the insurer, integrated service network, or community integrated service network of the right to receive the discount complies with any relevant requirements for assignments contained in the discount agreement; and

(3) the insurer, integrated service network, or community integrated service network has complied with any relevant requirements contained in the assignment.

When an explanation of benefits or similar document claims a discount permitted under this paragraph, it shall prominently state that the discount claimed is based upon an assignment and shall state the name of the entity from whom the assignment was received.

(c) No insurer, integrated service network, or community integrated service network that has entered into an agreement with a health care provider that involves discounted fees, prices, or other charges shall disclose the discounts to another entity, with the knowledge or expectation that the disclosure will result in claims for discounts prohibited under paragraphs (a) and (b).

Sec. 26. [REPEALER; POLITICAL SUBDIVISION ASSOCIATIONS.]

Minnesota Statutes 1994, section 62L.08, subdivision 7a, is repealed effective January 1, 1996.

Sec. 27. [EFFECTIVE DATES.]

Sections 1 to 3, 9, 10, 14, and 18 are effective January 1, 1996. Section 16 is effective the day following final enactment.

ARTICLE 7

MISCELLANEOUS

Section 1. Minnesota Statutes 1994, section 62J.05, subdivision 2, is amended to read:

Subd. 2. [MEMBERSHIP.] (a) [NUMBER.] The Minnesota health care commission consists of 27 30 members, as specified in this subdivision. A member may designate a representative to act as a member of the commission in the member's absence. The governor and legislature shall coordinate appointments under this subdivision to ensure gender balance and ensure that geographic areas of the state are represented in proportion to their population.

(b) [HEALTH PLAN COMPANIES.] The commission includes four members representing health plan companies, including one member appointed by the Minnesota Council of Health Maintenance Organizations, one member appointed by the Insurance Federation of Minnesota, one member appointed by Blue Cross and Blue Shield of Minnesota, and one member appointed by the governor.

(c) [HEALTH CARE PROVIDERS.] The commission includes six members representing health care providers, including one member appointed by the Minnesota Hospital Association, one member appointed by the Minnesota Medical Association, one member appointed by the Minnesota Nurses' Association, one rural physician appointed by the governor, and two members appointed by the governor to represent providers other than hospitals, physicians, and nurses.

(d) [EMPLOYERS.] The commission includes four members representing employers, including (1) two members appointed by the Minnesota Chamber of Commerce, including one self-insured employer and one small employer; and (2) two members appointed by the governor.

(e) [CONSUMERS.] The commission includes seven consumer members, including three members appointed by the governor, one of whom must represent persons over age 65; one member appointed by the consortium of citizens with disabilities to represent consumers with physical disabilities or chronic illness; one member appointed by the mental health association of Minnesota, in consultation with the Minnesota chapter of the society of Americans for recovery, to represent consumers with mental illness or chemical dependency; one appointed under the rules of the senate; and one appointed under the rules of the house of representatives.

(f) [EMPLOYEE UNIONS.] The commission includes three representatives of labor unions, including two appointed by the AFL-CIO Minnesota and one appointed by the governor to represent other unions.

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(g) [STATE AGENCIES.] The commission includes the commissioners of commerce, employee relations, and human services.

(h) [REGIONAL COORDINATING BOARDS.] The commission includes one member who is the chair of a regional coordinating board, elected by a majority vote of the chairs of the regional coordinating boards.

(i) [COUNTIES.] The commission includes one county commissioner appointed by the association of Minnesota counties, and one administrator of a county or multicounty community health board appointed by the metro intercounty association. The appointing authorities shall coordinate their appointments so that one county representative resides in a rural area of the state and the other in a metropolitan area of the state.

(h) (j) [CHAIR.] The governor shall designate the chair of the commission from among the governor's appointees.

Sec. 2. Minnesota Statutes 1994, section 62J.05, subdivision 9, is amended to read:

Subd. 9. [REPEALER.] This section is repealed effective July 1, 1996 2000.

Sec. 3. Minnesota Statutes 1994, section 62J.09, subdivision 1, is amended to read:

Subdivision 1. [GENERAL DUTIES.] The regional coordinating boards are locally controlled boards consisting of providers, health plan companies, employers, consumers, and elected officials. Regional coordinating boards may:

(1) recommend that the commissioner approve voluntary agreements between providers in the region that will improve quality, access, or affordability of health care but might constitute a violation of antitrust laws if undertaken without government direction;

(2) make recommendations to the commissioner regarding major capital expenditures or the introduction of expensive new technologies and medical practices that are being proposed or considered by providers;

(3) undertake voluntary activities to educate consumers, providers, and purchasers or to promote voluntary, cooperative community cost containment, access, or quality of care projects about community plans and projects promoting health care cost containment, consumer accountability, access, and quality and efforts to achieve public health goals;

(4) (2) make recommendations to the commissioner regarding ways of improving affordability, accessibility, and quality of health care in the region and throughout the state.;

(3) provide technical assistance to parties interested in establishing or operating a community integrated service network or integrated service network within the region. This assistance must complement assistance provided by the commissioner under section 62N.23;

(4) advise the commissioner on public health goals, taking into consideration the relevant portions of the community health service plans, plans required by the Minnesota comprehensive adult mental health act, the Minnesota comprehensive children's mental health act, and the community social service act plans developed by county boards or community health boards in the region under chapters 145A, 245, and 256E;

(5) prepare an annual regional education plan that is consistent with and supportive of public health goals identified by community health boards in the region; and

(6) serve as advisory bodies to identify potential applicants for federal Health Professional Shortage Area and federal Medically Underserved Area designation as requested by the commissioner.

Sec. 4. Minnesota Statutes 1994, section 62J.09, subdivision 6, is amended to read:

Subd. 6. [TECHNICAL ASSISTANCE.] The commissioner shall provide technical assistance to regional coordinating boards. Technical assistance includes providing each regional board with timely information concerning action plans, enrollment data, and health care expenditures affecting the regional board's region.

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Sec. 5. Minnesota Statutes 1994, section 62J.09, subdivision 8, is amended to read:

Subd. 8. [REPEALER.] This section is repealed effective July 1, 1996 2000.

Sec. 6. Minnesota Statutes 1994, section 62J.17, subdivision 4a, is amended to read:

Subd. 4a. [EXPENDITURE REPORTING.] (a) [GENERAL REQUIREMENT.] A provider making a major spending commitment after April 1, 1992, shall submit notification of the expenditure to the commissioner and provide the commissioner with any relevant background information.

(b) [REPORT.] Notification must include a report, submitted within 60 days after the date of the major spending commitment, using terms conforming to the definitions in section 62J.03 and this section. Each report is subject to retrospective review and must contain:

(1) a detailed description of the major spending commitment, including the specific dollar amount of each expenditure, and its purpose;

(2) the date of the major spending commitment;

(3) a statement of the expected impact that the major spending commitment will have on charges by the provider to patients and third party payers;

(4) a statement of the expected impact on the clinical effectiveness or quality of care received by the patients that the provider expects to serve;

(5) a statement of the extent to which equivalent services or technology are already available to the provider's actual and potential patient population;

(6) a statement of the distance from which the nearest equivalent services or technology are already available to the provider's actual and potential population;

(7) a statement describing the pursuit of any lawful collaborative arrangements; and

(8) a statement of assurance that the provider will not use, purchase, or perform health care technologies and procedures that are not clinically effective and cost-effective, unless the technology is used for experimental or research purposes to determine whether a technology or procedure is clinically effective and cost-effective.

The provider may submit any additional information that it deems relevant.

(c) [ADDITIONAL INFORMATION.] The commissioner may request additional information from a provider for the purpose of review of a report submitted by that provider, and may consider relevant information from other sources. A provider shall provide any information requested by the commissioner within the time period stated in the request, or within 30 days after the date of the request if the request does not state a time.

(d) [FAILURE TO COMPLY.] If the provider fails to submit a complete and timely expenditure report, including any additional information requested by the commissioner, the commissioner may make the provider's subsequent major spending commitments subject to the procedures of prospective review and approval under subdivision 6a.

Sec. 7. Minnesota Statutes 1994, section 62J.48, is amended to read:

62J.48 [CRITERIA FOR REIMBURSEMENT.]

All ambulance services licensed under section 144.802 are eligible for reimbursement under the integrated service network system and the regulated all-payer option by health plan companies. The commissioner shall require community integrated service networks, integrated service networks, and all-payer insurers health plan companies to adopt the following reimbursement policies.

(1) All scheduled or prearranged air and ground ambulance transports must be reimbursed if requested by an attending physician or nurse, and, if the person is an enrollee in an integrated service network or, community integrated service network, or health maintenance organization if approved by a designated representative of an integrated service network or a community service network the managed care plan who is immediately available on a 24-hour basis. The designated representative must be a registered nurse or a physician assistant with at least three years of critical care or trauma experience, or a licensed physician.

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(2) Reimbursement must be provided for all emergency ambulance calls in which a patient is transported or medical treatment rendered.

(3) Special transportation services must not be billed or reimbursed if the patient needs medical attention immediately before transportation.

Sec. 8. Minnesota Statutes 1994, section 62M.07, is amended to read:

62M.07 [PRIOR AUTHORIZATION OF SERVICES.]

(a) Utilization review organizations conducting prior authorization of services must have written standards that meet at a minimum the following requirements:

(1) written procedures and criteria used to determine whether care is appropriate, reasonable, or medically necessary;

(2) a system for providing prompt notification of its determinations to enrollees and providers and for notifying the provider, enrollee, or enrollee's designee of appeal procedures under clause (4);

(3) compliance with section 72A.201, subdivision 4a, regarding time frames for approving and disapproving prior authorization requests;

(4) written procedures for appeals of denials of prior authorization which specify the responsibilities of the enrollee and provider, and which meet the requirements of section 72A.285, regarding release of summary review findings; and

(5) procedures to ensure confidentiality of patient-specific information, consistent with applicable law.

(b) No utilization review organization, health plan company, or claims administrator may conduct or require prior authorization of emergency confinement or emergency treatment. The enrollee or the enrollee's authorized representative may be required to notify the health plan company, claims administrator, or utilization review organization as soon after the beginning of the emergency confinement or emergency treatment as reasonably possible.

Sec. 9. Minnesota Statutes 1994, section 62M.09, subdivision 5, is amended to read:

Subd. 5. [WRITTEN CLINICAL CRITERIA.] A utilization review organization's decisions must be supported by written clinical criteria and review procedures, based on accepted medical practice. Clinical criteria and review procedures must be established with appropriate involvement from actively practicing physicians or providers. A utilization review organization must use written clinical criteria, as required, for determining the appropriateness of the certification request. The utilization review organization must have a procedure for ensuring, at a minimum, the periodic annual evaluation and updating of the written criteria based on sound clinical principles.

Sec. 10. Minnesota Statutes 1994, section 62M.10, is amended by adding a subdivision to read:

Subd. 7. [AVAILABILITY OF CRITERIA.] Upon request, a utilization review organization shall provide to an enrollee or to an attending physician or provider the criteria used for a specific procedure to determine the necessity, appropriateness, and efficacy of that procedure and identify the database, professional treatment guideline, or other basis for the criteria.

Sec. 11. Minnesota Statutes 1994, section 62P.05, is amended by adding a subdivision to read:

Subd. 5. [SMALL RURAL HOSPITALS.] Each small rural hospital shall file information with the commissioner of health and calculate its growth in revenues pursuant to the requirements of this chapter. Small rural hospitals that do not file as part of a hospital system are exempt from the repayment provisions of subdivision 4. However, the commissioner retains the authority to initiate an investigation and order repayment pursuant to this section, if the commissioner believes that there is an unreasonable rate of growth in revenues and if the hospital fails to demonstrate good cause for exceeding the statutory growth limits. For purposes of this subdivision, "small rural hospital" is defined as a licensed hospital with less than 50 beds.

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Sec. 12. Minnesota Statutes 1994, section 72A.20, is amended by adding a subdivision to read:

Subd. 32. [UNFAIR HEALTH RISK AVOIDANCE.] No insurer or health plan company may design a network of providers, policies on access to providers, or marketing strategy in such a way as to discourage enrollment by individuals or groups whose health care needs are perceived as likely to be more expensive than the average. This subdivision does not prohibit underwriting and rating practices that comply with Minnesota law.

Sec. 13. Minnesota Statutes 1994, section 72A.20, is amended by adding a subdivision to read:

Subd. 33. [PROHIBITION OF INAPPROPRIATE INCENTIVES.] No insurer or health plan company may give any financial incentive to a health care provider based solely on the number of services denied or referrals not authorized by the provider. This subdivision does not prohibit capitation or other compensation methods that serve to hold health care providers financially accountable for the cost of caring for a patient population.

Sec. 14. Minnesota Statutes 1994, section 136A.1355, subdivision 3, is amended to read:

Subd. 3. [LOAN FORGIVENESS.] For the period July 1, 1993 through June 30, 1995 fiscal years beginning on and after July 1, 1995, the higher education coordinating board may accept up to four applicants who are fourth year medical students, three applicants who are pediatric residents, and four applicants who are family practice residents, and one applicant who is an internal medicine resident, per fiscal year for participation in the loan forgiveness program. If the higher education coordinating board does not receive enough applicants per fiscal year to fill the number of residents in the specific areas of practice, the resident applicants may be from any area of practice. The eight resident applicants can may be in any year of training; however, priority must be given to the following categories of residents in descending order: third year residents, second year residents, and first year residents. Applicants are responsible for securing their own loans. Applicants chosen to participate in the loan forgiveness program may designate for each year of medical school, up to a maximum of four years, an agreed amount, not to exceed $10,000, as a qualified loan. For each year that a participant serves as a physician in a designated rural area, up to a maximum of four years, the higher education coordinating board shall annually pay an amount equal to one year of qualified loans. Participants who move their practice from one designated rural area to another remain eligible for loan repayment. In addition, if a resident participating in the loan forgiveness program serves at least four weeks during a year of residency substituting for a rural physician to temporarily relieve the rural physician of rural practice commitments to enable the rural physician to take a vacation, engage in activities outside the practice area, or otherwise be relieved of rural practice commitments, the participating resident may designate up to an additional $2,000, above the $10,000 maximum, for each year of residency during which the resident substitutes for a rural physician for four or more weeks.

Sec. 15. Minnesota Statutes 1994, section 136A.1355, subdivision 5, is amended to read:

Subd. 5. [LOAN FORGIVENESS; UNDERSERVED URBAN COMMUNITIES.] For the period July 1, 1993 to June 30, 1995 fiscal years beginning on and after July 1, 1995, the higher education coordinating board may accept up to four applicants who are either fourth year medical students, or residents in family practice, pediatrics, or internal medicine per fiscal year for participation in the urban primary care physician loan forgiveness program. The resident applicants may be in any year of residency training; however, priority will be given to the following categories of residents in descending order: third year residents, second year residents, and first year residents. If the higher education coordinating board does not receive enough qualified applicants per fiscal year to fill the number of slots for urban underserved communities, the slots may be allocated to students or residents who have applied for the rural physician loan forgiveness program in subdivision 1. Applicants are responsible for securing their own loans. For purposes of this provision, "qualifying educational loans" are government and commercial loans for actual costs paid for tuition, reasonable education expenses, and reasonable living expenses related to the graduate or undergraduate education of a health care professional. Applicants chosen to participate in the loan forgiveness program may designate for each year of medical school, up to a maximum of four years, an agreed amount, not to exceed $10,000, as a qualified loan. For each year that a participant serves as a physician in a designated underserved urban area, up to a maximum of four years, the higher education coordinating board shall annually pay an amount equal to one year of qualified loans. Participants who move their practice from one designated underserved urban community to another remain eligible for loan repayment.

Sec. 16. Minnesota Statutes 1994, section 136A.1356, subdivision 3, is amended to read:

Subd. 3. [ELIGIBILITY.] To be eligible to participate in the program, a prospective midlevel practitioner must submit a letter of interest to the higher education coordinating board prior to or while attending a program of study designed to prepare the individual for service as a midlevel practitioner. Before completing the first year of this program, A midlevel practitioner student who is accepted into this program must sign a contract to agree to serve at least two of the first four years following graduation from the program in a designated rural area.

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Sec. 17. Minnesota Statutes 1994, section 136A.1356, subdivision 4, is amended to read:

Subd. 4. [LOAN FORGIVENESS.] The higher education coordinating board may accept up to eight applicants per year for participation in the loan forgiveness program. Applicants are responsible for securing their own loans. Applicants chosen to participate in the loan forgiveness program may designate for each year of midlevel practitioner study, up to a maximum of two years, an agreed amount, not to exceed $7,000, as a qualified loan. For purposes of this provision, "qualifying educational loans" are government and commercial loans for actual costs paid for tuition, reasonable education expenses, and reasonable living expenses related to the graduate or undergraduate education of a health care professional. For each year that a participant serves as a midlevel practitioner in a designated rural area, up to a maximum of four years, the higher education coordinating board shall annually repay an amount equal to one-half a qualified loan. Participants who move their practice from one designated rural area to another remain eligible for loan repayment.

Sec. 18. [137.43] [GRANTS FOR AREA HEALTH EDUCATION CENTER PROGRAMS.]

Subdivision 1. [GRANT APPLICATION.] The board of regents of the University of Minnesota, through the academic health center and the University of Minnesota-Duluth School of Medicine, is requested to apply for a federal area health education center program grant. If awarded a grant, the University of Minnesota-Duluth School of Medicine, in cooperation with public or private, nonprofit area health education centers, is requested to plan, develop, and operate area health education center programs. The University of Minnesota-Duluth School of Medicine is requested to develop cooperative arrangements with two area health education centers in year two of the grant, and develop cooperative arrangements with an additional two centers in year three of the grant.

Subd. 2. [PROGRAM REQUIREMENTS.] Each program must:

(1) provide preceptorship educational experiences for health science students;

(2) maintain community-based primary care residency programs or be affiliated with such programs;

(3) maintain continuing education programs for health professionals or coordinate its activities with such programs;

(4) maintain learning resources and dissemination systems;

(5) have agreements with community-based organizations for educating and training health professionals;

(6) train health professionals, including nurses and allied health professionals; and

(7) carry out recruitment and health career awareness programs among minority and other students in medically underserved areas of the state.

Sec. 19. [137.44] [PHYSICIAN SUBSTITUTE DEMONSTRATION PROJECT.]

Subdivision 1. [ESTABLISHMENT.] The board of regents, through the University of Minnesota academic health center, is requested to establish and administer a physician substitute (locum tenens and emergency room coverage) demonstration project at up to four rural demonstration sites within the state. The academic health center is requested to coordinate the administration of the project with the commissioner of health and the office of rural health and primary health care.

Subd. 2. [PROJECT ACTIVITIES.] The project must:

(1) encourage physicians to serve as substitute physicians for the demonstration sites;

(2) provide a central register of physicians interested in serving as physician substitutes at the demonstration sites;

(3) provide a referral service for requests from demonstration sites for physician substitutes; and

(4) provide physician substitute services at rates that reflect the administrative savings resulting from centralized referral and credentialing.

Subd. 3. [CREDENTIALING; PROFESSIONAL EDUCATION.] The academic health center is requested to credential persons desiring to serve as physician substitutes. The academic health center may employ physician substitutes serving in the demonstration project as temporary clinical faculty, and may provide physician substitutes with additional opportunities for professional education and interaction.

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Subd. 4. [DEMONSTRATION SITES.] The academic health center is requested to designate up to four rural communities as demonstration sites for the project. The academic health center is requested to choose sites based on a community's need for physician substitute services and the willingness of the community to work cooperatively with the academic health center and participate in the demonstration project evaluation.

Subd. 5. [EVALUATION.] The commissioner of health, through the office of rural health and primary care, shall evaluate the demonstration project and present an evaluation report to the legislature by January 15, 1996. The commissioner may contract with a nonprofit rural health policy organization to evaluate the demonstration project. The evaluation must identify any modifications necessary to improve the effectiveness of the project. The evaluation must also include a recommendation on whether the demonstration project should be extended to other areas of the state.

Sec. 20. Minnesota Statutes 1994, section 144.1464, subdivision 2, is amended to read:

Subd. 2. [CRITERIA.] (a) The commissioner, through the organization under contract, shall award grants to hospitals and clinics that agree to:

(1) provide secondary and post-secondary summer health care interns with formal exposure to the health care profession;

(2) provide an orientation for the secondary and post-secondary summer health care interns;

(3) pay one-half the costs of employing the secondary and post-secondary summer health care intern, based on an overall hourly wage that is at least the minimum wage but does not exceed $6 an hour; and

(4) interview and hire secondary and post-secondary pupils for a minimum of six weeks and a maximum of 12 weeks; and

(5) employ at least one secondary student for each post-secondary student employed, to the extent that there are sufficient qualifying secondary student applicants.

(b) In order to be eligible to be hired as a secondary summer health intern by a hospital or clinic, a pupil must:

(1) intend to complete high school graduation requirements and be between the junior and senior year of high school;

(2) be from a school district in proximity to the facility; and

(3) provide the facility with a letter of recommendation from a health occupations or science educator.

(c) In order to be eligible to be hired as a post-secondary summer health care intern by a hospital or clinic, a pupil must:

(1) intend to complete a two-year or four-year degree program and be planning on enrolling in or be enrolled in that degree program;

(2) be enrolled in a Minnesota educational institution or be a resident of the state of Minnesota; priority must be given to applicants from a school district or attend an educational institution in proximity to the facility; and

(3) provide the facility with a letter of recommendation from a health occupations or science educator.

(d) Hospitals and clinics awarded grants may employ pupils as secondary and post-secondary summer health care interns beginning on or after June 15, 1993, if they agree to pay the intern, during the period before disbursement of state grant money, with money designated as the facility's 50 percent contribution towards internship costs.

Sec. 21. Minnesota Statutes 1994, section 144.1464, subdivision 3, is amended to read:

Subd. 3. [GRANTS.] The commissioner, through the organization under contract, shall award separate grants to hospitals and clinics meeting the requirements of subdivision 2. The grants must be used to pay one-half of the costs of employing secondary and post-secondary pupils in a hospital or clinic during the course of the program. No more than 50 percent of the participants may be post-secondary students, unless the program does not receive enough qualified secondary applicants per fiscal year. No more than five pupils may be selected from any secondary or post-secondary institution to participate in the program and no more than one-half of the number of pupils selected may be from the seven-county metropolitan area.

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Sec. 22. Minnesota Statutes 1994, section 144.1464, subdivision 4, is amended to read:

Subd. 4. [CONTRACT.] The commissioner shall contract with a statewide, nonprofit organization representing facilities at which secondary and post-secondary summer health care interns will serve, to administer the grant program established by this section. Grant funds that are not used in one fiscal year may be carried over to the next fiscal year. The organization awarded the grant shall provide the commissioner with any information needed by the commissioner to evaluate the program, in the form and at the times specified by the commissioner.

Sec. 23. Minnesota Statutes 1994, section 144.147, subdivision 1, is amended to read:

Subdivision 1. [DEFINITION.] "Eligible rural hospital" means any nonfederal, general acute care hospital that:

(1) is either located in a rural area, as defined in the federal Medicare regulations, Code of Federal Regulations, title 42, section 405.1041, or located in a community with a population of less than 5,000, according to United States Census Bureau statistics, outside the seven-county metropolitan area;

(2) has 100 or fewer beds;

(3) is not for profit; and

(4) has not been awarded a grant under the federal rural health transition grant program, which would be received concurrently with any portion of the grant period for this program.

Sec. 24. Minnesota Statutes 1994, section 144.1484, subdivision 1, is amended to read:

Subdivision 1. [SOLE COMMUNITY HOSPITAL FINANCIAL ASSISTANCE GRANTS.] The commissioner of health shall award financial assistance grants to rural hospitals in isolated areas of the state. To qualify for a grant, a hospital must: (1) be eligible to be classified as a sole community hospital according to the criteria in Code of Federal Regulations, title 42, section 412.92 or be located in a community with a population of less than 5,000 and located more than 25 miles from a like hospital currently providing acute short-term services; (2) have experienced net income losses in the two most recent consecutive hospital fiscal years for which audited financial information is available; (3) consist of 40 or fewer licensed beds; and (4) demonstrate to the commissioner that it has obtained local support for the hospital and that any state support awarded under this program will not be used to supplant local support for the hospital. The commissioner shall review audited financial statements of the hospital to assess the extent of local support. Evidence of local support may include bonds issued by a local government entity such as a city, county, or hospital district for the purpose of financing hospital projects; and loans, grants, or donations to the hospital from local government entities, private organizations, or individuals. The commissioner shall determine the amount of the award to be given to each eligible hospital based on the hospital's financial need operating loss margin (total operating losses as a percentage of total operating revenue) for the two most recent consecutive fiscal years for which audited financial information is available and the total amount of funding available. One hundred percent of the available funds will be disbursed proportionately based on the operating loss margins of the eligible hospitals.

Sec. 25. Minnesota Statutes 1994, section 144.1486, subdivision 4, is amended to read:

Subd. 4. [ELIGIBILITY REQUIREMENTS.] In order to qualify for community health center program funding, a project must:

(1) be located in a rural shortage area that is a medically underserved, federal health professional shortage, or governor designated shortage area. "Rural" means an area of the state outside the ten-county seven-county Twin Cities metropolitan area and outside of the Duluth, St. Cloud, East Grand Forks, Moorhead, Rochester, and LaCrosse census defined urbanized areas;

(2) represent or propose the formation of a nonprofit corporation with local resident governance, or be a governmental entity. Applicants in the process of forming a nonprofit corporation may have a nonprofit coapplicant serve as financial agent through the remainder of the formation period. With the exception of governmental entities, all applicants must submit application for nonprofit incorporation and 501(c)(3) tax-exempt status within six months of accepting community health center grant funds;

(3) result in a locally owned and operated community health center that provides primary and preventive health care services, and incorporates quality assurance, regular reviews of clinical performance, and peer review;

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(4) seek to employ midlevel professionals, where appropriate;

(5) demonstrate community and popular support and provide a 20 percent local match of state funding; and

(6) propose to serve an area that is not currently served or was not served prior to establishment of a state-funded community health center by a federally certified medical organization.

Sec. 26. Minnesota Statutes 1994, section 144.1489, subdivision 3, is amended to read:

Subd. 3. [LENGTH OF SERVICE.] Participants must agree to provide obligated service for a minimum of two years. A participant may extend a contract to provide obligated service for a third and fourth year, subject to board approval and the availability of federal and state funding.

Sec. 27. Minnesota Statutes 1994, section 144.801, is amended by adding a subdivision to read:

Subd. 11. [FIRST RESPONDER.] "First responder" means an individual who is certified by the commissioner to perform, at a minimum, basic emergency skills before the arrival of a licensed ambulance service, and is:

(1) a member of an organized service recognized by a local political subdivision whose primary responsibility is to respond to medical emergencies to provide initial medical care before the arrival of a licensed ambulance service; or

(2) a member of an organized industrial medical first response team.

Sec. 28. Minnesota Statutes 1994, section 144.804, subdivision 1, is amended to read:

Subdivision 1. [DRIVERS AND ATTENDANTS.] No publicly or privately owned basic ambulance service shall be operated in the state unless its drivers and attendants possess a current emergency care course certificate authorized by rules adopted by the commissioner of health according to chapter 14. Until August 1, 1994 1997, a licensee may substitute a person currently certified by the American Red Cross in advanced first aid and emergency care or a person who has successfully completed the United States Department of Transportation first responder curriculum, and who has also been trained to use basic life support equipment as required by rules adopted by the commissioner under section 144.804, subdivision 3, for one of the persons on a basic ambulance, provided that person will function as the driver while transporting a patient. The commissioner may grant a variance to allow a licensed ambulance service to use attendants certified by the American Red Cross in advanced first aid and emergency care and, until August 1, 1997, to use attendants who have successfully completed the United States Department of Transportation first responder curriculum, and who have been trained to use basic life support equipment as required by rules adopted by the commissioner under subdivision 3, in order to ensure 24-hour emergency ambulance coverage. The commissioner shall study the roles and responsibilities of first responder units and report the findings by January 1, 1991. This study shall address at a minimum:

(1) education and training;

(2) appropriate equipment and its use;

(3) medical direction and supervision; and

(4) supervisory and regulatory requirements.

Sec. 29. Laws 1990, chapter 591, article 4, section 9, is amended to read:

Sec. 9. [SUNSET.]

Sections 1 to 4 and 6 are repealed on June 30, 1995.

Sec. 30. Laws 1993, chapter 224, article 4, section 40, is amended to read:

Sec. 40. [INTEGRATED CHILDREN'S DATABASE.]

Subdivision 1. [PLAN.] The departments of education, administration, health and human services, and the office of strategic and long-range planning shall jointly develop a plan for an integrated statewide children's service

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database. The plan must contain common essential data elements that include all children from birth through kindergarten enrollment by July 1, 1995. The essential data elements shall be the basis for a statewide children's service database. Initial service areas shall include but are not limited to: early childhood and family education, ECFE tribal schools, children with special health care needs, learning readiness, way to grow, early childhood special education part H, even start, school health, home visitor, lead poisoning screening, child care resources and referral, child care service development, child trust fund, migrant child care, dependent child care, headstart and community resource program.

In developing a plan for a statewide integrated children's database the joint planning team must:

(1) conduct a high-level needs analysis of service delivery and reporting and decision making areas;

(2) catalogue current information systems;

(3) establish outcomes for developing systems;

(4) analyze the needs of individuals and organizations that will use the system; and

(5) identify barriers to sharing information and recommend changes to the Data Practices Act to remove those barriers.

Subd. 2. [DATA STORAGE.] The departments of education, administration, corrections, health and human services, and the office of strategic and long-range planning must provide to the legislature by January 30, 1995, a plan for storing essential data elements for family service centers to use. This plan will include reporting of data to the state as a by-product of both family service and school district internal operations.

Subd. 3. [AGENCY SYSTEM INTEGRATION.] Any state agency or department with programs serving children that is designing or redesigning its information system must ensure that the resulting information system can be fully integrated into the statewide children's service database by June 30, 1995. Agencies or departments must submit plans to design or redesign information systems for review by the information policy office to ensure that agency or department information can be fully integrated into the statewide children's service database.

Sec. 31. Laws 1994, chapter 625, article 5, section 10, subdivision 2, is amended to read:

Subd. 2. [SCOPE OF STUDY.] The commissioner of health shall continue the study developed as part of Minnesota Statutes, section 62J.045, on the impact of state health care reform on the financing of medical education and research activities in the state. The study shall address issues related to the institutions engaged in these activities, including hospitals, medical centers, and health plan companies, and will report on the need for alternative funding mechanisms for medical education and research activities. The commissioner shall monitor ongoing public and private sector activities related to the study of the financing of medical education and research activities and include a description of these activities in the final report as applicable. The commissioner shall submit a report on the study findings, including recommendations on mechanisms to finance medical education and research activities, to the legislature by February 15, 1995 1996.

Sec. 32. [MALPRACTICE REFORM STUDY.]

The attorney general shall study issues related to medical malpractice reform, and shall present to the legislature, by December 15, 1995, recommendations and draft legislation for medical malpractice reforms that will reduce health care costs in Minnesota. In developing these recommendations, the attorney general shall consider medical malpractice laws in other states, with particular attention to medical malpractice laws in California.

Sec. 33. [RESOURCE BASED RELATIVE VALUE SCALE.]

The commissioner of human services shall develop an implementation plan to reimburse physicians and other MinnesotaCare program providers using a resource based relative value scale. The resource based relative value scale may incorporate elements of the Medicare resource based relative value scale, but must use a Minnesota-specific multiplier. The commissioner shall present the implementation plan to the legislature by December 15, 1995.

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Sec. 34. [ADVISORY COMMITTEE ON CHILDREN WITH SPECIAL HEALTH CARE NEEDS.]

The commissioners of health, human services, and education shall establish a 15-member advisory committee to develop a strategy to provide comprehensive and coordinated care for children with special health care needs. The initiatives to be considered by the committee shall include, but are not limited to, recommendations made by the commissioners of health and human services in their February 15, 1995, report to the legislature on the distribution and scope of specialized health care for children. The advisory committee must include parents, advocates, providers, payers, and representatives of state agencies, and is governed by Minnesota Statutes, section 15.059. The advisory committee shall present recommendations for a strategy to the commissioners by December 15, 1995.

Sec. 35. [HEALTH COVERAGE DEMONSTRATION PROJECT.]

Subdivision 1. [ESTABLISHMENT.] The commissioner of health shall award a grant to regional coordinating board five to develop a pilot project to provide health coverage counseling, information, and advocacy services to individuals obtaining health care services within the geographic area served by the regional coordinating board. The board may contract with a nonprofit organization to develop and administer the pilot project. The pilot project must:

(1) provide individuals with assistance in interpreting the terms of their certificate, contract, or policy of health coverage, including but not limited to, terms relating to covered services, limitations on services, limitations on access to providers, and enrollee complaint and appeal procedures;

(2) maintain a current listing of health care providers serving health plan company enrollees within regional coordinating board five, and assist individuals in determining whether services provided by a specific provider are covered under the health plan; and

(3) assist and serve as advocates for enrollees in the complaint and appeals process.

The commissioner of health and the commissioner of commerce shall require all health plan companies serving enrollees within regional coordinating board five to regularly provide the regional coordinating board, or the entity under contract with the board, with current listings of providers and current certificates, contracts, or policies of coverage.

Subd. 2. [EVALUATION.] The commissioner of health, through the office of rural health and in consultation with the commissioner of commerce, shall evaluate the effectiveness of the pilot project. The commissioner of health shall recommend to the legislature by January 15, 1997, whether the pilot project should be extended beyond the sunset date, and whether the services provided by the pilot project should be made available to enrollees living within the areas served by other regional coordinating boards.

Subd. 3. [SUNSET.] This section expires July 1, 1997.

Sec. 36. [APPROPRIATION.]

Subdivision 1. [AREA HEALTH EDUCATION CENTER GRANT.] $....... is appropriated from the health care access fund to the board of regents of the University of Minnesota for the biennium ending June 30, 1997, to be used as the state match for federal funding received through the area health education center grant applied for under section 137.43. This appropriation is available to the board only if the University of Minnesota-Duluth School of Medicine receives a federal area health education center grant.

Subd. 2. [RURAL PHYSICIAN ASSOCIATE PROGRAM.] $....... is appropriated from the health care access fund to the board of regents of the University of Minnesota for the biennium ending June 30, 1997, to expand the rural physician associate program administered by the University of Minnesota academic health center from 40 to 60 students over a two-year period.

Subd. 3. [PHYSICIAN SUBSTITUTE DEMONSTRATION PROJECT.] (a) $....... is appropriated from the health care access fund to the board of regents of the University of Minnesota for the biennium ending June 30, 1997, for costs incurred by the academic health center in credentialing physician substitutes and employing physician substitutes as temporary clinical faculty under section 137.44.

(b) $....... is appropriated from the health care access fund to the commissioner of health for the biennium ending June 30, 1997, to evaluate the physician substitute demonstration project established under section 137.44.

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Sec. 37. [APPROPRIATION; RESOURCE LINE.]

$....... is appropriated from the health care access fund to the commissioner of health for the fiscal year beginning July 1, 1996, to operate a 1-800 resource phone line for information on programs and services for children with special health care needs, and to conduct outreach and communications activities related to this resource phone line.

Sec. 38. [APPROPRIATION.]

$....... is appropriated from the health care access fund to the commissioner of health for the biennium ending June 30, 1997, to implement section 35 (health coverage demonstration project).

Sec. 39. [REVISOR INSTRUCTION.]

(a) The revisor of statutes is instructed to change the term "children's health plan" and similar terms to "MinnesotaCare program" and similar terms, wherever in Minnesota Statutes and Minnesota Rules the term "children's health plan" and similar terms appear, including the revisor's heading that immediately precedes Minnesota Statutes 1994, section 256.9351, except that the revisor shall retain the reference to "children's health plan" in Minnesota Statutes, section 256.9357, subdivision 1.

(b) The revisor of statutes is instructed to change the title of Minnesota Statutes, chapter 62Q, to "REQUIREMENTS FOR HEALTH PLAN COMPANIES."

Sec. 40. [REPEALER.]

Minnesota Statutes 1994, sections 62J.045; 62J.07, subdivision 4; 62J.09, subdivision 1a; 62J.19; and 62J.65, are repealed.

Laws 1993, chapter 247, article 1, sections 12, 13, 14, 15, 18, and 19, are repealed.

Sec. 41. [EFFECTIVE DATE.]

Sections 22 to 26 and 29 are effective the day following final enactment.

ARTICLE 8

FINANCING

Section 1. Minnesota Statutes 1994, section 151.48, is amended to read:

151.48 [OUT-OF-STATE WHOLESALE DRUG DISTRIBUTOR LICENSING REQUIREMENTS.]

(a) It is unlawful for an out-of-state wholesale drug distributor to conduct business in the state without first obtaining a license from the board and paying the required fee.

(b) Application for an out-of-state wholesale drug distributor license under this section shall be made on a form furnished by the board.

(c) The issuance of a license under sections 151.42 to 151.51 shall not change or affect tax liability imposed by the department of revenue on any out-of-state wholesale drug distributor.

(d) No person acting as principal or agent for any out-of-state wholesale drug distributor may sell or distribute drugs in the state unless the distributor has obtained a license.

(e) (d) The board may adopt regulations that permit out-of-state wholesale drug distributors to obtain a license on the basis of reciprocity to the extent that an out-of-state wholesale drug distributor:

(1) possesses a valid license granted by another state under legal standards comparable to those that must be met by a wholesale drug distributor of this state as prerequisites for obtaining a license under the laws of this state; and

(2) can show that the other state would extend reciprocal treatment under its own laws to a wholesale drug distributor of this state.

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Sec. 2. Minnesota Statutes 1994, section 270.101, subdivision 1, is amended to read:

Subdivision 1. [LIABILITY IMPOSED.] A person who, either singly or jointly with others, has the control of, supervision of, or responsibility for filing returns or reports, paying taxes, or collecting or withholding and remitting taxes and who fails to do so, or a person who is liable under any other law, is liable for the payment of taxes, penalties, and interest arising under chapters 295, 296, 297, 297A, and 297C, or sections 290.92 and 297E.02.

Sec. 3. Minnesota Statutes 1994, section 295.50, subdivision 3, is amended to read:

Subd. 3. [GROSS REVENUES.] "Gross revenues" are total amounts received in money or otherwise by:

(1) a resident hospital for patient services;

(2) a resident surgical center for patient services;

(3) a nonresident hospital for patient services provided to patients domiciled in Minnesota;

(4) a nonresident surgical center for patient services provided to patients domiciled in Minnesota;

(5) a resident health care provider, other than a staff model health carrier, for patient services;

(6) a nonresident health care provider for patient services provided to an individual domiciled in Minnesota or patient services provided in Minnesota;

(7) a wholesale drug distributor for sale or distribution of legend drugs that are delivered: (i) to a Minnesota resident by a wholesale drug distributor who is a nonresident pharmacy directly, by common carrier, or by mail; or (ii) in Minnesota by the wholesale drug distributor, by common carrier, or by mail, unless the legend drugs are delivered to another wholesale drug distributor who sells legend drugs exclusively at wholesale. Legend drugs do not include nutritional products as defined in Minnesota Rules, part 9505.0325;

(8) a staff model health plan company as gross premiums for enrollees, copayments, deductibles, coinsurance, and fees for patient services covered under its contracts with groups and enrollees;

(9) a resident pharmacy for medical supplies, appliances, and equipment; and

(10) a nonresident pharmacy for medical supplies, appliances, and equipment provided to consumers domiciled in Minnesota or delivered into Minnesota.

Sec. 4. Minnesota Statutes 1994, section 295.50, subdivision 4, is amended to read:

Subd. 4. [HEALTH CARE PROVIDER.] (a) "Health care provider" means:

(1) a person furnishing any or all of the following goods or services directly to a patient or consumer: medical, surgical, optical, visual, dental, hearing, nursing services, drugs, medical supplies, medical appliances, laboratory, diagnostic or therapeutic services, or any goods and services not listed above that qualifies for reimbursement under the medical assistance program provided under chapter 256B. For purposes of this clause, "directly to a patient or consumer" includes goods and services provided in connection with independent medical examinations under section 65B.56 or other examinations for purposes of litigation or insurance claims;

(2) a staff model health plan company; or

(3) a licensed ambulance service.

(b) Health care provider does not include hospitals, nursing homes licensed under chapter 144A, pharmacies, and surgical centers.

Sec. 5. Minnesota Statutes 1994, section 295.50, subdivision 10a, is amended to read:

Subd. 10a. [PHARMACY.] "Pharmacy" means a pharmacy, as defined in section 151.01 required to be licensed under chapter 151, or a pharmacy required to be licensed by any other jurisdiction.

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Sec. 6. Minnesota Statutes 1994, section 295.53, subdivision 1, is amended to read:

Subdivision 1. [EXEMPTIONS.] The following payments are excluded from the gross revenues subject to the hospital, surgical center, pharmacy, wholesale drug distributor, or health care provider taxes under sections 295.50 to 295.57:

(1) payments received for services provided under the Medicare program, including payments received from the government, and organizations governed by sections 1833 and 1876 of title XVIII of the federal Social Security Act, United States Code, title 42, section 1395, and enrollee deductibles, coinsurance, and copayments, whether paid by the individual Medicare enrollee or by insurer or other third party Medicare supplemental coverage as defined in section 62A.011, subdivision 3, clause (10). Payments for services not covered by Medicare are taxable;

(2) medical assistance payments including payments received directly from the government or from a prepaid plan;

(3) payments received for home health care services;

(4) payments received from hospitals or surgical centers for goods and services on which liability for tax is imposed under section 295.52 or the source of funds for the payment is exempt under clause (1), (2), (7), (8), or (10);

(5) payments received from health care providers for goods and services on which liability for tax is imposed under sections 295.52 to 295.57 or the source of funds for the payment is exempt under clause (1), (2), (7), (8), or (10);

(6) amounts paid for legend drugs, other than nutritional products, to a wholesale drug distributor reduced by reimbursements received for legend drugs under clauses (1), (2), (7), and (8);

(7) payments received under the general assistance medical care program including payments received directly from the government or from a prepaid plan;

(8) payments received for providing services under the MinnesotaCare program including payments received directly from the government or from a prepaid plan and enrollee deductibles, coinsurance, and copayments;. For purposes of this clause, coinsurance means the portion of payment that the enrollee is required to pay for the covered service;

(9) payments received by a resident health care provider or the wholly owned subsidiary of a resident health care provider for care provided outside Minnesota to a patient who is not domiciled in Minnesota;

(10) payments received from the chemical dependency fund under chapter 254B;

(11) payments received in the nature of charitable donations that are not designated for providing patient services to a specific individual or group;

(12) payments received for providing patient services if the services are incidental to conducting medical research incurred through a formal program of health care research conducted in conformity with federal regulations governing research on human subjects. Payments received from patients or from other persons paying on behalf of the patients are subject to tax;

(13) payments received from any governmental agency for services benefiting the public, not including payments made by the government in its capacity as an employer or insurer;

(14) payments received for services provided by community residential mental health facilities licensed under Minnesota Rules, parts 9520.0500 to 9520.0690, community support programs and family community support programs approved under Minnesota Rules, parts 9535.1700 to 9535.1760, and community mental health centers as defined in section 245.62, subdivision 2;

(15) government payments received by a regional treatment center;

(16) payments received for hospice care services;

(17) payments received by a resident health care provider or the wholly owned subsidiary of a resident health care provider for medical supplies, appliances and equipment delivered outside of Minnesota;

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(18) payments received for services provided by community supervised living facilities for persons with mental retardation or related conditions licensed under Minnesota Rules, parts 4665.0100 to 4665.9900;

(19) payments received by a post-secondary educational institution from student tuition, student activity fees, health care service fees, government appropriations, donations, or grants. Fee for service payments and payments for extended coverage are taxable; and

(20) payments received for services provided by: residential care homes licensed under chapter 144B; board and lodging establishments providing only custodial services, that are licensed under chapter 157 and registered under section 157.031 to provide supportive services or health supervision services; and assisted living programs, congregate housing programs, and other senior housing options; and

(21) payments received by wholesale drug distributors for prescription drugs sold directly to veterinarians or veterinary bulk purchasing organizations.

Sec. 7. Minnesota Statutes 1994, section 295.53, subdivision 3, is amended to read:

Subd. 3. [RESTRICTION ON ITEMIZATION SEPARATE STATEMENT OF TAX.] A hospital, surgical center, pharmacy, or health care provider must not separately state the tax obligation under section 295.52 on bills provided to individual patients in a deceptive or misleading manner. It must not separately state tax obligations on bills provided to patients, consumers, or other payers when the amount received for the services or goods is not subject to tax.

Pharmacies that separately state the tax obligations on bills provided to consumers or to other payers who purchase legend drugs may state the tax obligation as two percent of the wholesale price of the legend drugs. Pharmacies must not state the tax obligation as two percent of the retail price.

Whenever the commissioner determines that a person has engaged in any act or practice constituting a violation of this subdivision, the commissioner may bring an action in the name of the state in the district court of the appropriate county to enjoin the act or practice and to enforce compliance with this subdivision, or the commissioner may refer the matter to the attorney general or the county attorney of the appropriate county. Upon a proper showing, a permanent or temporary injunction, restraining order, or other appropriate relief must be granted.

Sec. 8. Minnesota Statutes 1994, section 295.53, subdivision 4, is amended to read:

Subd. 4. [DEDUCTION FOR RESEARCH.] (a) In addition to the exemptions allowed under subdivision 1, a hospital or health care provider which is exempt under section 501(c)(3) of the Internal Revenue Code of 1986 or is owned and operated under authority of a governmental unit, may deduct from its gross revenues subject to the hospital or health care provider taxes under sections 295.50 to 295.57 revenues equal to expenditures for allowable research programs.

(b) For purposes of this subdivision, expenditures for allowable research programs are the direct and general program costs for activities which are part of a formal program of medical and health care research approved by the governing body of the hospital or health care provider which also includes active solicitation of research funds from government and private sources. Any Allowable research on humans or animals must:

(1) have as its purpose the development of new knowledge in basic or applied science relating to the diagnosis and treatment of conditions affecting the human body;

(2) be subject to review by appropriate regulatory committees by individuals with expertise in the subject matter of the proposed study but who have no financial interest in the proposed study and are not involved in the conduct of the proposed study; and

(3) be subject to review and supervision by an institutional review board operating in conformity with federal regulations such as an institutional review board if the research involves human subjects or an institutional animal care and use committee operating in conformity with federal regulations if the research involves animal subjects. Research expenses are not exempt if the study is a routine evaluation of health care methods or products used in a particular setting conducted for the purpose of making a management decision. Costs of clinical research activities paid directly for the benefit of an individual patient are excluded from this exemption. Basic research in fields including biochemistry, molecular biology, and physiology are also included if such programs are subject to a peer review process.

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(c) No deduction shall be allowed under this subdivision for any revenue received by the hospital or health care provider in the form of a grant, gift, or otherwise, whether from a government or nongovernment source, on which the tax liability under section 295.52 is not imposed or for which the tax liability under section 295.52 has been received from a third party as provided for in section 295.582.

(d) Effective beginning with calendar year 1995, the taxpayer shall not take the deduction under this section into account in determining estimated tax payments or the payment made with the annual return under section 295.55. The total deduction allowable to all taxpayers under this section for calendar years beginning after December 31, 1994, may not exceed $65,000,000. To implement this limit, each qualifying hospital and qualifying health care provider shall submit to the commissioner by March 15 its total expenditures qualifying for the deduction under this section for the previous calendar year. The commissioner shall sum the total expenditures of all taxpayers qualifying under this section for the calendar year. If the resulting amount exceeds $65,000,000, the commissioner shall allocate a part of the $65,000,000 deduction limit to each qualifying hospital and health care provider in proportion to its share of the total deductions. The commissioner shall pay a refund to each qualifying hospital or provider equal to its share of the deduction limit multiplied by two percent. The commissioner shall pay the refund no later than May 15 of the calendar year.

Sec. 9. Minnesota Statutes 1994, section 295.55, subdivision 4, is amended to read:

Subd. 4. [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A taxpayer with an aggregate tax liability of $30,000 or more during a calendar quarter ending the last day of March, June, September, or December of the first year the taxpayer is subject to the tax must remit all liabilities by means of a funds transfer as defined in section 336.4A-104, paragraph (a), for the remainder of the year. A taxpayer with an aggregate tax liability of $120,000 or more during a calendar fiscal year ending June 30, must remit all liabilities by means of a funds transfer as defined in section 336.4A-104, paragraph (a), in the subsequent calendar year. The funds transfer payment date, as defined in section 336.4A-401, is on or before the date the tax is due. If the date the tax is due is not a funds-transfer business day, as defined in section 336.4A-105, paragraph (a), clause (4), the payment date is on or before the first funds-transfer business day after the date the tax is due.

Sec. 10. [295.56] [TRANSFER OF ACCOUNTS RECEIVABLE.]

When a hospital or health care provider transfers, assigns, or sells accounts receivable to another person who is subject to tax under this chapter, liability for the tax on the accounts receivable is imposed on the transferee, assignee, or buyer of the accounts receivable. No liability for these accounts receivable is imposed on the transferor, assignor, or seller of the accounts receivable.

Sec. 11. Minnesota Statutes 1994, section 295.57, is amended to read:

295.57 [COLLECTION AND ENFORCEMENT; REFUNDS; RULEMAKING; APPLICATION OF OTHER CHAPTERS; ACCESS TO RECORDS.]

Subdivision 1. [APPLICATION OF OTHER CHAPTERS.] Unless specifically provided otherwise by sections 295.50 to 295.58, the enforcement, interest, and penalty provisions under chapter 294, appeal provisions in sections 289A.43 and 289A.65, criminal penalties in section 289A.63, and refunds provisions in section 289A.50, and collection and rulemaking provisions under chapter 270, apply to a liability for the taxes imposed under sections 295.50 to 295.58.

Subd. 2. [ACCESS TO RECORDS.] For purposes of administering the taxes imposed by sections 295.50 to 295.59, the commissioner may access patients' records that contain billing or other financial information without prior consent from the patients. The data collected is classified as private or nonpublic data.

Sec. 12. Minnesota Statutes 1994, section 295.582, is amended to read:

295.582 [AUTHORITY.]

(a) A hospital, surgical center, pharmacy, or health care provider that is subject to a tax under section 295.52, or a pharmacy that has paid additional expense transferred under this section by a wholesale drug distributor, may transfer additional expense generated by section 295.52 obligations on to all third-party contracts for the purchase of health care services on behalf of a patient or consumer. The expense must not exceed two percent of the gross revenues received under the third-party contract, plus two percent of copayments and deductibles paid by the individual patient or consumer. The expense must not be generated on revenues derived from payments that are

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excluded from the tax under section 295.53. All third-party purchasers of health care services including, but not limited to, third-party purchasers regulated under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, or 79A, or under section 471.61 or 471.617, must pay the transferred expense in addition to any payments due under existing contracts with the hospital, surgical center, pharmacy, or health care provider, to the extent allowed under federal law. A third-party purchaser of health care services includes, but is not limited to, a health carrier, integrated service network, or community integrated service network that pays for health care services on behalf of patients or that reimburses, indemnifies, compensates, or otherwise insures patients for health care services. A third-party purchaser shall comply with this section regardless of whether the third-party purchaser is a for-profit, not-for-profit, or nonprofit entity. A wholesale drug distributor may transfer additional expense generated by section 295.52 obligations to entities that purchase from the wholesaler, and the entities must pay the additional expense. Nothing in this section limits the ability of a hospital, surgical center, pharmacy, wholesale drug distributor, or health care provider to recover all or part of the section 295.52 obligation by other methods, including increasing fees or charges.

(b) Each third-party purchaser regulated under any chapter cited in paragraph (a) shall include with its annual renewal for certification of authority or licensure documentation indicating compliance with paragraph (a) this section. If the commissioner responsible for regulating the third-party purchaser finds at any time that the third-party purchaser has not complied with paragraph (a) this section, the commissioner may by order fine or censure the third-party purchaser or revoke or suspend the certificate of authority or license of the third-party purchaser to do business in this state. The third-party purchaser may appeal the commissioner's order through a contested case hearing in accordance with chapter 14.

(c) A hospital, surgical center, pharmacy, or health care provider that chooses to transfer the additional expense of section 295.52 obligations to third-party purchasers under paragraph (a) shall itemize the obligation on invoices, billings, or other documentation which are submitted to third-party purchasers for payment of health care services. Effective July 1, 1995, all third-party purchasers required to pay the transferred expense under paragraph (a) must pay itemized obligations.

(d) All contracts between third-party purchasers and providers of dental services licensed or registered under chapter 150A must require the dental provider to itemize the tax obligation on invoices, billings, and other documentation, and may not prohibit itemization or give the provider the option of not itemizing the tax obligation. Providers of dental services are prohibited from entering into a contract or agreement not to itemize the tax obligation, and violation of this requirement is grounds for disciplinary action under chapter 150A.

Sec. 13. [MINNESOTACARE TAX STUDY.]

The commissioner of health, in cooperation with the commissioner of revenue and the commissioner of commerce, shall study the effects of the MinnesotaCare taxes levied under Minnesota Statutes, section 295.52. The commissioner shall examine the extent to which:

(1) the MinnesotaCare taxes are passed on to third-party purchasers;

(2) third-party purchasers pay the transferred expenses and comply with the requirements of Minnesota Statutes, section 295.582;

(3) the MinnesotaCare taxes are passed on to individual consumers in the form of higher fees or charges; and

(4) entities subject to the MinnesotaCare tax absorb all or part of the tax burden through more efficient operation.

The commissioner of health shall present findings and recommendations to the legislature by December 15, 1995.

Sec. 14. [EFFECTIVE DATE.]

Sections 1 and 5 are effective the day following final enactment.

Sections 2, 6, and 9 are effective for tax periods beginning on or after January 1, 1996.

Section 3 is effective for services provided on or after July 1, 1995.

Section 4 is effective January 1, 1995.

Section 7 is effective for statements of the tax made on or after July 1, 1995.

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Section 8 is effective for research deductions incurred on or after July 1, 1995.

Section 10 is effective for transfers of accounts receivable on or after July 1, 1995.

Section 11 is effective for audits conducted on or after the day following final enactment."

Delete the title and insert:

"A bill for an act relating to health; MinnesotaCare; establishing requirements for integrated service networks; modifying requirements for health plan companies; establishing the standard health coverage; delaying the regulated all-payer option; modifying universal coverage and insurance reform provisions; expanding eligibility for the MinnesotaCare program; establishing prescription drug coverage for low-income Medicare beneficiaries; extending the health care commission and regional coordinating boards; making technical changes; reducing tax deductions for the voluntarily uninsured; appropriating money; amending Minnesota Statutes 1994, sections 60A.02, subdivision 1a; 60B.02; 60B.03, subdivision 2; 60G.01, subdivisions 2, 4, and 5; 62A.10, subdivisions 1 and 2; 62A.65, subdivisions 5 and 8; 62D.02, subdivision 8; 62D.042, subdivision 2; 62D.11, subdivision 1; 62E.141; 62H.04; 62H.08; 62J.017; 62J.04, subdivision 1a; 62J.05, subdivisions 2 and 9; 62J.09, subdivisions 1, 1a, 6, and 8; 62J.152, subdivision 5; 62J.17, subdivision 4a; 62J.48; 62L.02, subdivisions 11, 16, 24, and 26; 62L.03, subdivisions 3, 4, and 5; 62L.09, subdivision 1; 62L.12, subdivision 2; 62M.07; 62M.09, subdivision 5; 62M.10, by adding a subdivision; 62N.02, by adding subdivisions; 62N.04; 62N.10, by adding a subdivision; 62N.11, subdivision 1; 62N.13; 62N.14, subdivision 3; 62P.05, by adding a subdivision; 62Q.01, subdivisions 2, 3, 4, and by adding subdivisions; 62Q.03, subdivisions 1, 6, 7, 8, 9, 10, and by adding subdivisions; 62Q.07, subdivisions 1 and 2; 62Q.09, subdivision 3; 62Q.11; 62Q.165; 62Q.17, subdivisions 2, 6, 8, and by adding a subdivision; 62Q.18; 62Q.19; 62Q.25; 62Q.30; 62Q.41; 72A.20, by adding subdivisions; 72A.201, by adding a subdivision; 136A.1355, subdivisions 3 and 5; 136A.1356, subdivisions 3 and 4; 144.1464, subdivisions 2, 3, and 4; 144.147, subdivision 1; 144.1484, subdivision 1; 144.1486, subdivision 4; 144.1489, subdivision 3; 144.801, by adding a subdivision; 144.804, subdivision 1; 151.48; 256.9353, subdivision 1; 256.9354, subdivisions 1, 4, 5, and by adding a subdivision; 256.9357, subdivisions 1, 2, and 3; 256.9358, by adding a subdivision; 256.9363, by adding a subdivision; 256B.057, subdivision 3; 256B.69, by adding a subdivision; 256D.03, by adding a subdivision; 270.101, subdivision 1; 290.01, subdivision 19a; 295.50, subdivisions 3, 4, and 10a; 295.53, subdivisions 1, 3, and 4; 295.55, subdivision 4; 295.57; and 295.582; Laws 1990, chapter 591, article 4, section 9; Laws 1993, chapter 224, article 4, section 40; Laws 1994, chapter 625, article 5, sections 5, subdivision 1; and 10, subdivision 2; proposing coding for new law in Minnesota Statutes, chapters 62L; 62N; 62Q; 137; and 295; repealing Minnesota Statutes 1994, sections 62J.045; 62J.07, subdivision 4; 62J.09, subdivision 1a; 62J.152, subdivision 6; 62J.19; 62J.65; 62L.08, subdivision 7a; 62P.01; 62P.02; 62P.03; 62P.07; 62P.09; 62P.11; 62P.13; 62P.15; 62P.17; 62P.19; 62P.21; 62P.23; 62P.25; 62P.27; 62P.29; 62P.31; 62P.33; 62Q.03, subdivisions 2, 3, 4, 5, and 11; 62Q.21; and 62Q.27; Laws 1993, chapter 247, article 1, sections 12, 13, 14, 15, 18, and 19; Minnesota Rules, part 4685.1700, subpart 1, item D."

With the recommendation that when so amended the bill be re-referred to the Committee on Financial Institutions and Insurance without further recommendation.

The report was adopted.

Osthoff from the Committee on General Legislation, Veterans Affairs and Elections to which was referred:

H. F. No. 1106, A bill for an act relating to elections; campaign finance; prohibiting lobbying by a principal campaign committee or political party committee that issues refund receipt forms; amending Minnesota Statutes 1994, sections 10A.322, subdivisions 1, 2, 4, and by adding a subdivision; and 290.06, subdivision 23; proposing coding for new law in Minnesota Statutes, chapter 10A.

Reported the same back with the following amendments:

Page 1, line 13, after "expenditures" insert "derived from the use of the refund receipt program"

With the recommendation that when so amended the bill pass.

The report was adopted.

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Tunheim from the Committee on Transportation and Transit to which was referred:

H. F. No. 1149, A bill for an act relating to highways; providing for noise abatement along freeways and expressways; amending Minnesota Statutes 1994, sections 116.07, subdivision 2a; 160.02, by adding a subdivision; and 161.125, subdivision 1.

Reported the same back with the following amendments:

Page 2, line 30, after the period, insert "The commissioner shall report to the legislature by February 1 of each year on noise abatement studies and measures undertaken during the previous calendar year and planned for the next three years under this subdivision."

Amend the title as follows:

Page 1, line 3, after the semicolon insert "requiring annual reports to the legislature on noise abatement studies and programs;"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Environment and Natural Resources.

The report was adopted.

Clark from the Committee on Housing to which was referred:

H. F. No. 1156, A bill for an act relating to metropolitan government; establishing the metropolitan livable communities advisory board; establishing the metropolitan livable communities fund and providing for fund distribution; reducing the levy authority of the metropolitan mosquito control commission; requiring the metropolitan mosquito control district to liquidate certain assets; providing for certain revenue sharing; amending Minnesota Statutes 1994, sections 116J.556; 473.167, subdivisions 2, 3, and by adding a subdivision; 473.702; 473.704, subdivisions 2, 3, 5, 6, 7, 8, 13, and 17; 473.711, subdivision 2; and 473F.08, subdivisions 5, 7a, and by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 473.

Reported the same back with the recommendation that the bill pass and be re-referred to the Committee on Taxes.

The report was adopted.

Tunheim from the Committee on Transportation and Transit to which was referred:

H. F. No. 1171, A bill for an act relating to motor vehicles; modifying appearance of special license plates issued to amateur radio station licensees; amending Minnesota Statutes 1994, section 168.12, subdivision 2.

Reported the same back with the recommendation that the bill pass and be re-referred to the Committee on Economic Development, Infrastructure and Regulation Finance.

The report was adopted.

Clark from the Committee on Housing to which was referred:

H. F. No. 1327, A bill for an act relating to the city of Richfield; authorizing the formation of nonprofit corporations for the purpose of owning low and moderate income housing developments.

Reported the same back with the recommendation that the bill pass and be re-referred to the Committee on Taxes.

The report was adopted.

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Anderson, R., from the Committee on Health and Human Services to which was referred:

H. F. No. 1363, A bill for an act relating to health; modifying provisions relating to drug dispensing; amending Minnesota Statutes 1994, section 152.11, subdivision 1.

Reported the same back with the following amendments:

Page 2, after line 17, insert:

"Sec. 2. Minnesota Statutes 1994, section 152.11, subdivision 2, is amended to read:

Subd. 2. No person may dispense a controlled substance included in schedule III or IV of section 152.02 without a written or oral prescription from a doctor of medicine, a doctor of osteopathy licensed to practice medicine, a doctor of dental surgery, a doctor of dental medicine, a doctor of podiatry, or a doctor of veterinary medicine, lawfully licensed to prescribe in this state, or a state bordering Minnesota, and having a current federal drug enforcement administration registration number. Such prescription may not be dispensed or refilled except with the written or verbal consent of the prescriber, and in no event more than six months after the date on which such prescription was issued and no such prescription may be refilled more than five times."

Amend the title as follows:

Page 1, line 4, delete "subdivision 1" and insert "subdivisions 1 and 2"

With the recommendation that when so amended the bill pass.

The report was adopted.

Carlson from the Committee on Education to which was referred:

H. F. No. 1435, A bill for an act relating to education; exempting high school league tournament admissions from the sales tax with certain conditions; amending Minnesota Statutes 1994, section 297A.25, subdivision 30.

Reported the same back with the recommendation that the bill pass and be re-referred to the Committee on Taxes.

The report was adopted.

Johnson, R., from the Committee on Labor-Management Relations to which was referred:

H. F. No. 1437, A bill for an act relating to employment; requiring disclosure to recruited employees in the food processing industry; providing penalties; proposing coding for new law in Minnesota Statutes, chapter 181.

Reported the same back with the recommendation that the bill pass and be re-referred to the Committee on Judiciary.

The report was adopted.

Sarna from the Committee on Commerce, Tourism and Consumer Affairs to which was referred:

H. F. No. 1469, A bill for an act relating to elevator safety; changing responsibility for certain administrative and enforcement activities; changing certain exemptions; imposing penalties; amending Minnesota Statutes 1994, sections 16B.61, subdivision 1; 16B.72; 16B.73; 183.351, subdivisions 2 and 5; 183.353; 183.354; 183.355, subdivisions 1, 3, and by adding a subdivision; 183.357, subdivisions 1 and 3; 183.358; and 326.244, subdivision 5; proposing coding for new law in Minnesota Statutes, chapter 183.

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1148

Reported the same back with the following amendments:

Page 1, line 15, delete "16B.749" and insert "16B.75"

Page 2, line 5, delete "16B.749" and insert "16B.75"

Page 2, after line 7, insert:

"Sec. 2. Minnesota Statutes 1994, section 16B.61, subdivision 1a, is amended to read:

Subd. 1a. [ADMINISTRATION BY COMMISSIONER.] The commissioner shall administer and enforce the state building code as a municipality with respect to public buildings and state licensed facilities in the state. The commissioner shall establish appropriate permit, plan review, and inspection fees for public buildings and state licensed facilities. Fees and surcharges for public buildings and state licensed facilities must be remitted to the commissioner, who shall deposit them in the state treasury for credit to the special revenue fund.

Municipalities other than the state having a contractual agreement with the commissioner for code administration and enforcement service for public buildings and state licensed facilities shall charge their customary fees, including surcharge, to be paid directly to the contractual jurisdiction by the applicant seeking authorization to construct a public building or a state licensed facility. The commissioner shall contract with a municipality other than the state for plan review, code administration, and code enforcement service for public buildings and state licensed facilities in the contractual jurisdiction if the building officials of the municipality meet the requirements of section 16B.65 and wish to provide those services and if the commissioner determines that the municipality has enough adequately trained and qualified building inspectors to provide those services for the construction project.

The commissioner shall administer and enforce the provisions of the code relating to elevators statewide, except as provided for under section 183.357, subdivision 3."

Page 4, line 9, strike "city" and insert "municipality"

Page 6, line 19, strike "construction mechanic" and insert "industry education program"

Renumber the sections in sequence

Amend the title as follows:

Page 1, line 6, delete "subdivision 1" and insert "subdivisions 1 and 1a"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Governmental Operations.

The report was adopted.

Tunheim from the Committee on Transportation and Transit to which was referred:

H. F. No. 1485, A bill for an act relating to occupations and professions; permitting protective agents to perform certain traffic control duties; amending Minnesota Statutes 1994, section 326.338, subdivision 4.

Reported the same back with the recommendation that the bill pass.

The report was adopted.

Wenzel from the Committee on Agriculture to which was referred:

H. F. No. 1510, A bill for an act relating to agriculture; permanently extending sales tax exemption for used farm machinery; requiring a study of farm costs; amending Minnesota Statutes 1994, section 297A.25, subdivision 59.

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1149

Reported the same back with the following amendments:

Page 1, line 17, delete "and" and insert a comma and after "organizations" insert ", and agricultural businesses"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Taxes.

The report was adopted.

Wenzel from the Committee on Agriculture to which was referred:

H. F. No. 1511, A bill for an act relating to agriculture; appropriating money for continuation of certain legal actions against the United States Department of Agriculture.

Reported the same back with the following amendments:

Page 1, line 6, after "APPROPRIATION" insert "; MARKET ORDERS LEGAL ACTION"

Page 1, after line 12, insert:

"Sec. 2. [APPROPRIATION; MILK MARKETING ECONOMIC STUDIES.]

$100,000 is appropriated from the general fund to the commissioner of agriculture for purposes of funding economic research studies by the department or by the universities of Minnesota and/or Wisconsin to determine the impacts on the upper midwest dairy industry of reforming or eliminating the federal milk marketing order system."

Amend the title as follows:

Page 1, line 4, before the period, insert "and for milk marketing economic research studies"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Environment and Natural Resources Finance.

The report was adopted.

Sarna from the Committee on Commerce, Tourism and Consumer Affairs to which was referred:

H. F. No. 1537, A bill for an act relating to commerce; modifying the petroleum tank release cleanup program in the department of commerce; limiting the amount of the deductible required on residential and small business sites; establishing registration requirements for consultants and contractors; amending Minnesota Statutes 1994, sections 115C.02, by adding a subdivision; 115C.09, subdivision 3; and 115C.11, subdivision 1.

Reported the same back with the following amendments:

Page 1, delete section 1

Page 4, line 7, delete "and small"

Page 4, line 8, delete "business" and delete everything after "sites"

Page 4, line 9, delete everything before the comma

Page 5, line 31, delete "Sections 1 to 3 are" and insert "Section 1 is" and after the period, insert "Section 2 is effective as of August 1, 1995."

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Renumber the sections in sequence

Amend the title as follows:

Page 1, line 5, delete "and small business"

Page 1, line 8, delete "115C.02, by adding a subdivision;"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Economic Development, Infrastructure and Regulation Finance.

The report was adopted.

Clark from the Committee on Housing to which was referred:

H. F. No. 1594, A bill for an act relating to tax increment financing; authorizing pilot projects for the creation of housing replacement projects in the cities of Crystal and Fridley.

Reported the same back with the recommendation that the bill pass and be re-referred to the Committee on Local Government and Metropolitan Affairs.

The report was adopted.

Wenzel from the Committee on Agriculture to which was referred:

H. F. No. 1618, A bill for an act relating to nonpoint source pollution; modifying the agriculture best management practices loan program and the clean water partnership loan program; amending Minnesota Statutes 1994, sections 17.117, subdivisions 2, 4, 6, 7, 8, 9, 10, 11, 14, 16, and by adding subdivisions; and 103F.725, subdivision 1a.

Reported the same back with the following amendments:

Page 3, lines 15 to 18, reinstate the stricken language

Page 3, line 19, reinstate the stricken "(c)"

Page 3, line 31, delete "cost reimbursement" and insert "cost-incurred"

Page 4, lines 23 to 27, reinstate the stricken language

Page 7, lines 1 to 3, reinstate the stricken language

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Environment and Natural Resources.

The report was adopted.

Long from the Committee on Local Government and Metropolitan Affairs to which was referred:

H. F. No. 1627, A bill for an act relating to economic development and redevelopment; establishing the metropolitan revitalization fund; providing funding for housing and urban development in the metropolitan area; authorizing a special jobs opportunity program for AFDC recipients; providing for a sales tax refund for certain construction materials; creating an urban homesteading program; providing funding for affordable housing that is related to community economic development and redevelopment; providing for a sales tax refund for certain construction materials; appropriating money; amending Minnesota Statutes 1994, sections 290.01, subdivision 19b; 297A.15, by

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1151

adding a subdivision; 297A.25, by adding a subdivision; 462A.201, by adding a subdivision; 462A.222, subdivision 3; 477A.011, subdivision 37; 477A.013, subdivisions 8, 9, and by adding subdivisions; and 477A.03, subdivision 1; proposing coding for new law in Minnesota Statutes, chapters 256; and 473; repealing Minnesota Statutes 1994, sections 504.33; 504.34; and 504.35.

Reported the same back with the following amendments:

Page 2, line 10, delete "Subdivision 1. [FUND USES.] (a)"

Page 5, line 24, delete "city aid base" and insert "aid amount in 1995"

Page 5, line 25, delete "city aid base" and insert "aid amount in 1995"

Page 6, line 12, delete "city aid base" and insert "aid amount in 1995"

Page 6, line 23, strike "subdivision" and insert "subdivisions" and after "9," insert "10, and 11,"

With the recommendation that when so amended the bill be re-referred to the Committee on Housing without further recommendation.

The report was adopted.

Clark from the Committee on Housing to which was referred:

H. F. No. 1655, A bill for an act relating to homeless youth; providing for transitional housing; appropriating money; amending Minnesota Statutes 1994, section 256E.115.

Reported the same back with the following amendments:

Page 1, line 17, delete everything after the period

Page 1, delete lines 18 to 21

Page 1, line 22, delete "homeless youth."

Page 2, lines 9 and 10, delete "and the review committee"

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Health and Human Services.

The report was adopted.

Osthoff from the Committee on General Legislation, Veterans Affairs and Elections to which was referred:

S. F. No. 1099, A bill for an act relating to elections; permitting election judges to serve outside the county where they reside in certain cases; amending Minnesota Statutes 1994, section 204B.19, subdivision 1.

Reported the same back with the recommendation that the bill pass and be placed on the Consent Calendar.

The report was adopted.

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SECOND READING OF HOUSE BILLS

H. F. Nos. 220, 401, 450, 497, 667, 672, 698, 1065, 1106, 1363 and 1485 were read for the second time.

SECOND READING OF SENATE BILLS

S. F. Nos. 739 and 1099 were read for the second time.

INTRODUCTION AND FIRST READING OF HOUSE BILLS

The following House Files were introduced:

Rest; Anderson, R.; Anderson, I.; Abrams and Weaver introduced:

H. F. No. 1699, A bill for an act relating to health; developing a birth defects registry system; requiring a report; appropriating money; proposing coding for new law in Minnesota Statutes, chapter 144.

The bill was read for the first time and referred to the Committee on Health and Human Services.

Murphy introduced:

H. F. No. 1700, A bill for an act relating to corrections; appropriating money to fund productive day initiative programs in local correctional facilities in Hennepin, Ramsey, and St. Louis counties.

The bill was read for the first time and referred to the Committee on Judiciary Finance.

Pugh introduced:

H. F. No. 1701, A bill for an act relating to courts; case records; prohibiting certain agreements to seal certain documents in connection with litigation; proposing coding for new law as Minnesota Statutes, chapter 552.

The bill was read for the first time and referred to the Committee on Judiciary.

Rukavina; Tomassoni; Bakk; Anderson, I., and Solberg introduced:

H. F. No. 1702, A bill for an act relating to taxation; providing for allocation among governmental units of increases in the assessed valuation of commercial-industrial property within the taconite tax relief area; providing a formula for the distribution of additional revenues to municipalities within the taconite tax relief area; proposing coding for new law as Minnesota Statutes, chapter 276A.

The bill was read for the first time and referred to the Committee on Taxes.

Goodno, Rest, Weaver, Garcia and Osthoff introduced:

H. F. No. 1703, A bill for an act relating to local government; limiting development in unincorporated areas; proposing coding for new law in Minnesota Statutes, chapter 414.

The bill was read for the first time and referred to the Committee on Local Government and Metropolitan Affairs.

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1153

Rest introduced:

H. F. No. 1704, A bill for an act relating to limited liability companies; making various technical and conforming changes; amending Minnesota Statutes 1994, sections 322B.105; 322B.115, subdivisions 2, 3, and 4; 322B.12, subdivision 1; 322B.125, subdivision 1; 322B.135, subdivision 3; 322B.145; 322B.15, subdivisions 1, 3, and 4; 322B.155; 322B.175; 322B.20, subdivision 2; 322B.313, subdivision 2; 322B.33, subdivisions 4 and 9; 322B.34, subdivisions 1 and 3; 322B.346, subdivision 2; 322B.36, subdivisions 2 and 3; 322B.363, subdivision 1; 322B.373, subdivision 2; 322B.376; 322B.383, subdivision 1; 322B.386, subdivisions 4 and 7; 322B.40, subdivision 6; 322B.42, subdivisions 2 and 4; 322B.54, subdivision 1; 322B.56, subdivision 1; 322B.60, subdivision 2; 322B.643, subdivision 3; 322B.646; 322B.653; 322B.666, subdivision 2; 322B.693, subdivision 1; 322B.699, subdivision 6; 322B.72, subdivisions 2 and 3; 322B.75, subdivision 1; 322B.77, subdivision 1; 322B.803, subdivisions 1 and 2; 322B.813, subdivision 5; 322B.833, subdivisions 1, 2, and 4.

The bill was read for the first time and referred to the Committee on Commerce, Tourism and Consumer Affairs.

Knoblach, Simoneau, Dempsey, Kalis and Ostrom introduced:

H. F. No. 1705, A bill for an act relating to government finance; limiting the time within which authorized bonds may be issued; proposing coding for new law in Minnesota Statutes, chapter 16A.

The bill was read for the first time and referred to the Committee on Capital Investment.

Carruthers, Perlt, Bakk and Swenson, D., introduced:

H. F. No. 1706, A bill for an act relating to game and fish; authorizing elderly residents to take fish without a license; amending Minnesota Statutes 1994, sections 97A.451, subdivisions 2 and 7; and 97A.475, subdivision 6.

The bill was read for the first time and referred to the Committee on Environment and Natural Resources.

Delmont, Sarna, Mahon, Jennings and Entenza introduced:

H. F. No. 1707, A bill for an act relating to occupations; requiring the department of labor and industry to provide for licensure of pipefitters on inactive status; amending Minnesota Statutes 1994, section 326.48, subdivision 1.

The bill was read for the first time and referred to the Committee on Commerce, Tourism and Consumer Affairs.

Bettermann introduced:

H. F. No. 1708, A bill for an act relating to state government; department of employee relations; establishing a program to promote responsiveness, innovation, productivity, and employee involvement within executive agencies; appropriating money; proposing coding for new law in Minnesota Statutes, chapter 43A.

The bill was read for the first time and referred to the Committee on Governmental Operations.

Workman introduced:

H. F. No. 1709, A bill for an act relating to the city of Chanhassen; authorizing certain bid specifications for playground equipment on an experimental basis.

The bill was read for the first time and referred to the Committee on Local Government and Metropolitan Affairs.

Davids, Kahn and Solberg introduced:

H. F. No. 1710, A bill for an act relating to employment; establishing and modifying certain salary limits; amending Minnesota Statutes 1994, sections 3.855, subdivision 3; 15A.083, subdivisions 5, 6a, and 7; and 43A.17, subdivisions 1, 3, and by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 15A; repealing Minnesota Statutes 1994, sections 15A.081, subdivisions 1, 7, and 7b; and 43A.18, subdivision 5.

The bill was read for the first time and referred to the Committee on Governmental Operations.

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Lourey introduced:

H. F. No. 1711, A bill for an act relating to education; allowing the plans for reorganizing school districts to determine the allocation of certain homestead and agricultural credit aid; amending Minnesota Statutes 1994, sections 122.23, subdivision 2; and 122.242, subdivision 9.

The bill was read for the first time and referred to the Committee on Education.

Boudreau introduced:

H. F. No. 1712, A bill for an act relating to the city of Faribault; exempting a tax increment financing district from certain restrictions; appropriating money to be used for a local economic development loan and grant program.

The bill was read for the first time and referred to the Committee on Local Government and Metropolitan Affairs.

Greenfield introduced:

H. F. No. 1713, A bill for an act relating to health care; clarifying the physician surcharge; clarifying the health maintenance organization surcharge; modifying certain hospital and nursing home payments; amending Minnesota Statutes 1994, sections 147.01, subdivision 6; 256.9657, subdivision 3; 256.969, subdivision 9; 256B.19, subdivisions 1c and 1d; and 256B.431, subdivision 23.

The bill was read for the first time and referred to the Committee on Health and Human Services.

Greenfield introduced:

H. F. No. 1714, A bill for an act relating to health; eliminating the fees for copies of patient records when obtaining records for a social security claim or appeal; amending Minnesota Statutes 1994, section 144.335, subdivision 5.

The bill was read for the first time and referred to the Committee on Health and Human Services.

Holsten and Pugh introduced:

H. F. No. 1715, A bill for an act relating to workers' compensation; adding correctional officers to the presumption of occupational disease; amending Minnesota Statutes 1994, section 176.011, subdivision 15.

The bill was read for the first time and referred to the Committee on Labor-Management Relations.

Knight, Larsen and Wolf introduced:

H. F. No. 1716, A bill for an act relating to energy; delaying the repeal of the energy conservation efficiency program in state-owned buildings; amending Laws 1991, chapter 235, article 5, section 3.

The bill was read for the first time and referred to the Committee on Regulated Industries and Energy.

Schumacher, Opatz and Knoblach introduced:

H. F. No. 1717, A bill for an act relating to appropriations; appropriating money to reimburse Benton county for landfill cleanup costs.

The bill was read for the first time and referred to the Committee on Environment and Natural Resources Finance.

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Rest, Goodno, Osthoff, Weaver and Garcia introduced:

H. F. No. 1718, A bill for an act relating to cities; providing for annexation; proposing coding for new law as Minnesota Statutes, chapter 414A; repealing Minnesota Statutes 1994, sections 414.01; 414.011; 414.012; 414.02; 414.031; 414.0325; 414.033; 414.035; 414.036; 414.041; 414.051; 414.06; 414.061; 414.063; 414.065; 414.067; 414.07; 414.08; and 414.09.

The bill was read for the first time and referred to the Committee on Local Government and Metropolitan Affairs.

Onnen introduced:

H. F. No. 1719, A bill for an act relating to local government; authorizing temporary relocation of certain McLeod county offices to places outside of the county seat.

The bill was read for the first time and referred to the Committee on Local Government and Metropolitan Affairs.

Sviggum introduced:

H. F. No. 1720, A bill for an act relating to insurance; permitting liability insurance coverage to include coverage for punitive damages; amending Minnesota Statutes 1994, section 60A.06, by adding a subdivision.

The bill was read for the first time and referred to the Committee on Financial Institutions and Insurance.

Tunheim introduced:

H. F. No. 1721, A bill for an act relating to state lands; authorizing the conveyance of certain state land in Roseau county.

The bill was read for the first time and referred to the Committee on Environment and Natural Resources.

Workman, Bertram, Molnau, Mulder and Osthoff introduced:

H. F. No. 1722, A bill for an act relating to education; establishing a program to expand the economic freedom of lower-income students to select their schools of attendance; appropriating money; amending Minnesota Statutes 1994, section 124A.032; proposing coding for new law in Minnesota Statutes, chapter 124A.

The bill was read for the first time and referred to the Committee on Education.

Wejcman introduced:

H. F. No. 1723, A bill for an act relating to health; increasing the fee to include a confirmatory testing and a follow-up system to track infants with inborn metabolic diseases; amending Minnesota Statutes 1994, section 144.125.

The bill was read for the first time and referred to the Committee on Health and Human Services.

Jennings, Bertram, Pelowski, Dauner and Lieder introduced:

H. F. No. 1724, A bill for an act relating to employment; modifying provisions relating to prevailing wages; amending Minnesota Statutes 1994, sections 177.42, subdivisions 4 and 6; 177.43, subdivisions 1 and 3; and 471.345, subdivision 7; proposing coding for new law in Minnesota Statutes, chapter 177.

The bill was read for the first time and referred to the Committee on Labor-Management Relations.

Otremba, Cooper, Dauner, Daggett and Hugoson introduced:

H. F. No. 1725, A bill for an act relating to taxation; providing for assessment of platted land in certain municipalities; amending Minnesota Statutes 1994, section 273.11, subdivision 14.

The bill was read for the first time and referred to the Committee on Taxes.

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1156

Carruthers, Greiling, Kahn and Pawlenty introduced:

H. F. No. 1726, A bill for an act relating to state government; administrative rulemaking; establishing a procedure for legislative review of certain rules to ensure that they accomplish legislative goals in the most expeditious, cost-effective, and least intrusive manner possible; amending Minnesota Statutes 1994, sections 3.842, subdivision 3; and 14.09; repealing Minnesota Rules, parts 2010.0600 and 2010.9905.

The bill was read for the first time and referred to the Committee on Governmental Operations.

Jaros, Murphy, Solberg and Bakk introduced:

H. F. No. 1727, A bill for an act relating to taxation; allocating $1,000,000 annually from the occupation taxes paid by taconite companies to the Natural Resources Research Institute of the University of Minnesota, to be used for certain purposes; appropriating money; proposing coding for new law in Minnesota Statutes, chapter 298.

The bill was read for the first time and referred to the Committee on Environment and Natural Resources Finance.

Carlson introduced:

H. F. No. 1728, A bill for an act relating to education; moving teachers at the Minnesota center for arts education from the unclassified to the classified service; amending Minnesota Statutes 1994, section 43A.08, subdivisions 1 and 1a.

The bill was read for the first time and referred to the Committee on Education.

Tuma introduced:

H. F. No. 1729, A bill for an act relating to health care; requiring certification of a facility to serve persons with Prader-Willi Syndrome.

The bill was read for the first time and referred to the Committee on Health and Human Services.

Solberg and Anderson, I., introduced:

H. F. No. 1730, A bill for an act relating to education; creating a sparsity revenue formula for capital facilities and equipment revenue; allowing levy for special assessments; amending Minnesota Statutes 1994, sections 124.243, subdivision 2; 124.244, subdivision 1; and 124.912, subdivision 1.

The bill was read for the first time and referred to the Committee on Education.

Dempsey, Frerichs, Pugh and Worke introduced:

H. F. No. 1731, A bill for an act relating to motor vehicles; directing registrar to revoke vehicle registrations obtained with worthless checks; requiring notice to deputy registrars; proposing coding for new law in Minnesota Statutes, chapter 168.

The bill was read for the first time and referred to the Committee on Transportation and Transit.

Rice introduced:

H. F. No. 1732, A bill for an act relating to occupations; modifying the entertainment agencies act; amending Minnesota Statutes 1994, sections 184A.01, subdivisions 4, 5, 7, 8, and by adding subdivisions; 184A.02; 184A.03; 184A.04, subdivisions 1 and 3; 184A.05; 184A.06, subdivisions 1, 2, and by adding a subdivision; 184A.09; 184A.10; and 184A.12; repealing Minnesota Statutes 1994, section 184A.01, subdivision 2.

The bill was read for the first time and referred to the Committee on Commerce, Tourism and Consumer Affairs.

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1157

Schumacher, Opatz and Knoblach introduced:

H. F. No. 1733, A bill for an act relating to the environment; modifying the definition of a qualified facility for purposes of the landfill cleanup program; amending Minnesota Statutes 1994, section 115B.39, subdivision 2.

The bill was read for the first time and referred to the Committee on Environment and Natural Resources.

Krinkie, Milbert, Smith, Abrams and Olson, E., introduced:

H. F. No. 1734, A bill for an act relating to taxation; exempting used watercraft from the sales and use tax; amending Minnesota Statutes 1994, section 297A.25, by adding a subdivision.

The bill was read for the first time and referred to the Committee on Taxes.

Carlson introduced:

H. F. No. 1735, A bill for an act relating to education; allowing waivers of application fees under certain circumstances; allowing certain exceptions to the enrollment limit for state grants; modifying the allocation process for child care grants; amending Minnesota Statutes 1994, sections 136A.121, subdivision 9; and 136A.125, subdivision 6; proposing coding for new law in Minnesota Statutes, chapter 135A.

The bill was read for the first time and referred to the Committee on Education.

Kalis; Johnson, R.; Johnson, V.; Ozment and Winter introduced:

H. F. No. 1736, A bill for an act relating to motor vehicles; allowing retired firefighters to receive special firefighter license plates; amending Minnesota Statutes 1994, section 168.12, subdivision 2b.

The bill was read for the first time and referred to the Committee on Transportation and Transit.

Broecker, Holsten, Mares, Bradley and Jennings introduced:

H. F. No. 1737, A bill for an act relating to workers' compensation; permitting certain collective bargaining agreements; proposing coding for new law in Minnesota Statutes, chapter 176.

The bill was read for the first time and referred to the Committee on Labor-Management Relations.

Greenfield introduced:

H. F. No. 1738, A bill for an act relating to human services; adding to definition of base level funding; adding provisions for local children's mental health collaborative; changing provisions for integrated fund task force; requiring approval for a collaborative's integrated service system; amending Minnesota Statutes 1994, sections 245.492, subdivisions 2, 6, 9, and 23; 245.493, subdivision 2; 245.4932, subdivisions 1, 2, 3, and 4; 245.494, subdivisions 1 and 3; 245.495; 245.496, subdivision 3, and by adding a subdivision; and 256B.0625, subdivision 37; proposing coding for new law in Minnesota Statutes, chapter 245.

The bill was read for the first time and referred to the Committee on Health and Human Services.

Dawkins and Rukavina introduced:

H. F. No. 1739, A bill for an act relating to education; providing for revenue for reducing school district class size ratios; appropriating money; amending Minnesota Statutes 1994, sections 124A.225, by adding a subdivision; and 297A.02, subdivision 5.

The bill was read for the first time and referred to the Committee on Education.

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1158

Dempsey and Ness introduced:

H. F. No. 1740, A bill for an act relating to education; repealing the reduction in voter-approved operating referendum revenue; repealing Minnesota Statutes 1994, section 124A.03, subdivision 3b.

The bill was read for the first time and referred to the Committee on Education.

Boudreau introduced:

H. F. No. 1741, A bill for an act relating to state lands; authorizing the conveyance of state land in Rice county.

The bill was read for the first time and referred to the Committee on Education.

Long and Anderson, I., introduced:

H. F. No. 1742, A bill for an act relating to health; insurance; providing for certain breast cancer coverage; proposing coding for new law in Minnesota Statutes, chapter 62A.

The bill was read for the first time and referred to the Committee on Health and Human Services.

Carlson introduced:

H. F. No. 1743, A bill for an act relating to education; establishing a planning process for a state-of-the-art vocational high school; appropriating money.

The bill was read for the first time and referred to the Committee on Education.

Milbert introduced:

H. F. No. 1744, A bill for an act relating to taxation; sales and use; exempting construction materials and supplies used to construct certain sports facilities; amending Minnesota Statutes 1994, section 297A.25, by adding a subdivision.

The bill was read for the first time and referred to the Committee on Taxes.

Orenstein introduced:

H. F. No. 1745, A bill for an act relating to state agencies; establishing the office of citizen advocate in the department of administration; directing the office to represent the interests of citizens with complaints against executive branch agencies; coordinating the services of ombudspersons; appropriating money; proposing coding for new law in Minnesota Statutes, chapter 16B.

The bill was read for the first time and referred to the Committee on Governmental Operations.

CONSENT CALENDAR

H. F. No. 1047 was reported to the House.

There being no objection, H. F. No. 1047 was continued on the Consent Calendar.

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1159

SPECIAL ORDERS

H. F. No. 533, A bill for an act relating to the Paynesville area hospital district; authorizing the district to annex the city of Eden Valley to the district.

The bill was read for the third time and placed upon its final passage.

The question was taken on the passage of the bill and the roll was called. There were 129 yeas and 0 nays as follows:

Those who voted in the affirmative were:

    Abrams       Farrell      Knoblach     Ness         Skoglund
    Anderson, B. Finseth      Koppendrayer Olson, E.    Smith
    Anderson, R. Frerichs     Kraus        Olson, M.    Solberg
    Bakk         Garcia       Krinkie      Onnen        Stanek
    Bertram      Girard       Larsen       Opatz        Sviggum
    Bettermann   Goodno       Leighton     Orenstein    Swenson, D.
    Bishop       Greiling     Leppik       Orfield      Swenson, H.
    Boudreau     Haas         Lieder       Osskopp      Sykora
    Bradley      Hackbarth    Lindner      Osthoff      Tomassoni
    Broecker     Harder       Long         Ostrom       Tompkins
    Brown        Hasskamp     Lourey       Otremba      Trimble
    Carlson      Hausman      Luther       Ozment       Tuma
    Carruthers   Holsten      Lynch        Paulsen      Tunheim
    Clark        Hugoson      Macklin      Pawlenty     Van Dellen
    Commers      Huntley      Mahon        Pellow       Van Engen
    Cooper       Jaros        Mares        Pelowski     Vickerman
    Daggett      Jefferson    Mariani      Perlt        Wagenius
    Dauner       Jennings     Marko        Peterson     Weaver
    Davids       Johnson, A.  McCollum     Pugh         Wejcman
    Dawkins      Johnson, R.  McElroy      Rhodes       Wenzel
    Dehler       Johnson, V.  McGuire      Rostberg     Winter
    Delmont      Kahn         Milbert      Rukavina     Wolf
    Dempsey      Kalis        Molnau       Sarna        Worke
    Dorn         Kelley       Mulder       Schumacher   Workman
    Entenza      Kinkel       Munger       Seagren      Sp.Anderson,I
    Erhardt      Knight       Murphy       Simoneau

The bill was passed and its title agreed to.

H. F. No. 901 was reported to the House.

Swenson, D.; Greiling; Ostrom and Johnson, R., moved to amend H. F. No. 901, the first engrossment, as follows:

Page 1, delete lines 12 to 18, and insert:

"Subd. 12. [DRIVER EDUCATION PROGRAMS.] Driver training courses offered through the public schools and driver training courses offered by private or commercial schools or institutes shall include instruction which must encompass at least:"

The motion prevailed and the amendment was adopted.

H. F. No. 901, A bill for an act relating to drivers' licenses; requiring additional information in drivers' education programs, the driver's license examination, and the driver's manual regarding the legal and financial consequences of violating DWI-related laws; amending Minnesota Statutes 1994, sections 169.121, by adding a subdivision; and 171.13, subdivisions 1 and 1b.

The bill was read for the third time, as amended, and placed upon its final passage.

The question was taken on the passage of the bill and the roll was called. There were 129 yeas and 0 nays as follows:

Those who voted in the affirmative were:

    Abrams       Farrell      Knoblach     Ness         Skoglund
    Anderson, B. Finseth      Koppendrayer Olson, E.    Smith
    Anderson, R. Frerichs     Kraus        Olson, M.    Solberg
    Bakk         Garcia       Krinkie      Onnen        Stanek
    Bertram      Girard       Larsen       Opatz        Sviggum
    Bettermann   Goodno       Leighton     Orenstein    Swenson, D.
    Bishop       Greiling     Leppik       Orfield      Swenson, H.
    Boudreau     Haas         Lieder       Osskopp      Sykora
    Bradley      Hackbarth    Lindner      Osthoff      Tomassoni
    Broecker     Harder       Long         Ostrom       Tompkins
    Brown        Hasskamp     Lourey       Otremba      Trimble
    Carlson      Hausman      Luther       Ozment       Tuma
    Carruthers   Holsten      Lynch        Paulsen      Tunheim
    Clark        Hugoson      Macklin      Pawlenty     Van Dellen
    Commers      Huntley      Mahon        Pellow       Van Engen
    Cooper       Jaros        Mares        Pelowski     Vickerman
    Daggett      Jefferson    Mariani      Perlt        Wagenius
    Dauner       Jennings     Marko        Peterson     Weaver
    Davids       Johnson, A.  McCollum     Pugh         Wejcman
    Dawkins      Johnson, R.  McElroy      Rhodes       Wenzel
    Dehler       Johnson, V.  McGuire      Rostberg     Winter
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    Delmont      Kahn         Milbert      Rukavina     Wolf
    Dempsey      Kalis        Molnau       Sarna        Worke
    Dorn         Kelley       Mulder       Schumacher   Workman
    Entenza      Kinkel       Munger       Seagren      Sp.Anderson,I
    Erhardt      Knight       Murphy       Simoneau

The bill was passed, as amended, and its title agreed to.

H. F. No. 1011, A bill for an act relating to traffic regulations; prohibiting radar jammers; amending Minnesota Statutes 1994, section 169.14, by adding a subdivision.

The bill was read for the third time and placed upon its final passage.

The question was taken on the passage of the bill and the roll was called. There were 129 yeas and 0 nays as follows:

Those who voted in the affirmative were:

    Abrams       Farrell      Knight       Murphy       Skoglund
    Anderson, B. Finseth      Knoblach     Ness         Smith
    Anderson, R. Frerichs     Koppendrayer Olson, E.    Solberg
    Bakk         Garcia       Kraus        Olson, M.    Stanek
    Bertram      Girard       Krinkie      Onnen        Sviggum
    Bettermann   Goodno       Larsen       Opatz        Swenson, D.
    Bishop       Greenfield   Leighton     Orenstein    Swenson, H.
    Boudreau     Greiling     Leppik       Orfield      Sykora
    Bradley      Haas         Lieder       Osskopp      Tomassoni
    Broecker     Hackbarth    Lindner      Osthoff      Tompkins
    Brown        Harder       Long         Ostrom       Trimble
    Carlson      Hasskamp     Lourey       Otremba      Tuma
    Carruthers   Hausman      Luther       Ozment       Tunheim
    Clark        Holsten      Lynch        Paulsen      Van Dellen
    Commers      Hugoson      Macklin      Pawlenty     Van Engen
    Cooper       Huntley      Mahon        Pellow       Vickerman
    Daggett      Jaros        Mares        Pelowski     Wagenius
    Dauner       Jefferson    Mariani      Peterson     Weaver
    Davids       Jennings     Marko        Pugh         Wejcman
    Dawkins      Johnson, A.  McCollum     Rhodes       Wenzel
    Dehler       Johnson, R.  McElroy      Rostberg     Winter
    Delmont      Johnson, V.  McGuire      Rukavina     Wolf
    Dempsey      Kahn         Milbert      Sarna        Worke
    Dorn         Kalis        Molnau       Schumacher   Workman
    Entenza      Kelley       Mulder       Seagren      Sp.Anderson,I
    Erhardt      Kinkel       Munger       Simoneau

The bill was passed and its title agreed to.

H. F. No. 838 was reported to the House.

Johnson, R., moved to amend H. F. No. 838, the second engrossment, as follows:

Page 2, line 29, before "To" insert "Notwithstanding any provision of Minnesota Statutes, sections 356.24 and 356.25, to the contrary,"

Page 3, line 1, delete ", chapter" and insert "1994, sections 353.01 through 353.46."

Page 3, delete line 2

The motion prevailed and the amendment was adopted.

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H. F. No. 838, A bill for an act relating to Olmsted county; authorizing the county to create a nonprofit corporation to own and operate a hospital and medical center; providing the county board with related powers and duties.

The bill was read for the third time, as amended, and placed upon its final passage.

The question was taken on the passage of the bill and the roll was called. There were 131 yeas and 0 nays as follows:

Those who voted in the affirmative were:

    Abrams       Finseth      Koppendrayer Olson, M.    Solberg
    Anderson, B. Frerichs     Kraus        Onnen        Stanek
    Anderson, R. Garcia       Krinkie      Opatz        Sviggum
    Bakk         Girard       Larsen       Orenstein    Swenson, D.
    Bertram      Goodno       Leighton     Orfield      Swenson, H.
    Bettermann   Greenfield   Leppik       Osskopp      Sykora
    Bishop       Greiling     Lieder       Osthoff      Tomassoni
    Boudreau     Haas         Lindner      Ostrom       Tompkins
    Bradley      Hackbarth    Long         Otremba      Trimble
    Broecker     Harder       Lourey       Ozment       Tuma
    Brown        Hasskamp     Luther       Paulsen      Tunheim
    Carlson      Hausman      Lynch        Pawlenty     Van Dellen
    Carruthers   Holsten      Macklin      Pellow       Van Engen
    Clark        Hugoson      Mahon        Pelowski     Vickerman
    Commers      Huntley      Mares        Perlt        Wagenius
    Cooper       Jaros        Mariani      Peterson     Weaver
    Daggett      Jefferson    Marko        Pugh         Wejcman
    Dauner       Jennings     McCollum     Rhodes       Wenzel
    Davids       Johnson, A.  McElroy      Rice         Winter
    Dawkins      Johnson, R.  McGuire      Rostberg     Wolf
    Dehler       Johnson, V.  Milbert      Rukavina     Worke
    Delmont      Kahn         Molnau       Sarna        Workman
    Dempsey      Kalis        Mulder       Schumacher   Sp.Anderson,I
    Dorn         Kelley       Munger       Seagren
    Entenza      Kinkel       Murphy       Simoneau
    Erhardt      Knight       Ness         Skoglund
    Farrell      Knoblach     Olson, E.    Smith

The bill was passed, as amended, and its title agreed to.

GENERAL ORDERS

Carruthers moved that the bills on General Orders for today be continued. The motion prevailed.

MOTIONS AND RESOLUTIONS

Tunheim moved that the name of Finseth be added as an author on H. F. No. 563. The motion prevailed.

Carlson moved that the name of Huntley be added as an author on H. F. No. 1191. The motion prevailed.

Hugoson moved that his name be stricken as an author on H. F. No. 1572. The motion prevailed.

Workman moved that the name of Stanek be added as an author on H. F. No. 1579. The motion prevailed.

Workman moved that the name of Stanek be added as an author on H. F. No. 1593. The motion prevailed.

Greenfield moved that the names of Otremba and Wejcman be added as authors on H. F. No. 1602. The motion prevailed.

Davids moved that the name of Haas be added as an author on H. F. No. 1660. The motion prevailed.

Delmont moved that the name of Bishop be added as an author on H. F. No. 1695. The motion prevailed.

Bishop moved that the following statement be printed in the Journal of the House: "It was my intention to vote in the affirmative on Monday, March 27, 1995, when the vote was taken on the final passage of H. F. No. 1399." The motion prevailed.

JOURNAL OF THE HOUSE - 31st Day - Top of Page 1162

Schumacher moved that the following statement be printed in the Journal of the House: "It was my intention to vote in the affirmative on Monday, March 27, 1995, when the vote was taken on the final passage of S. F. No. 214, as amended." The motion prevailed.

Pelowski moved that S. F. No. 257 be recalled from the Committee on General Legislation, Veterans Affairs and Elections and together with H. F. No. 450, now on the Technical Consent Calendar, be referred to the Chief Clerk for comparison. The motion prevailed.

Wagenius moved that H. F. No. 672, now on Technical General Orders, be re-referred to the Committee on Environment and Natural Resources Finance. The motion prevailed.

Marko moved that H. F. No. 791 be returned to its author. The motion prevailed.

Johnson, V., moved that H. F. No. 1396 be returned to its author. The motion prevailed.

Johnson, V., moved that H. F. No. 1440 be returned to its author. The motion prevailed.

ADJOURNMENT

Carruthers moved that the House adjourn. The motion prevailed, and the Speaker declared the House stands adjourned until 2:30 p.m., Thursday, March 30, 1995.

Edward A. Burdick, Chief Clerk, House of Representatives

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