A binational push on critical-minerals production, supply chains seeks to address national risks — and holds potential regional opportunities

She lives in and represents a part of North Dakota’s coal country.

In the future, Rep. Anna Novak hopes her district also becomes known as a place where rare-earth elements and critical minerals are extracted and processed, and made into products essential for today’s economy.

It’s the reason she sponsored this year’s HB 1511, a measure signed into law earlier this year to attract companies able to use the state’s abundant supply of lignite coal as a “feedstock” to extract some of those metallic elements and minerals.

“What’s really exciting about this for me is that the products have to be processed on site. You can’t ship it somewhere else. … I have a feeling that not only will the elements be processed on site, but we will be able to produce things like lithium batteries and so forth right here in my district,” Novak says.

Under North Dakota law, companies pay a severance tax on each ton of the coal that is mined.

But HB 1511 exempts companies from this tax for the first million tons of coal used as a “feedstock” for mineral extraction. It also includes a sales tax exemption related to facility construction or expansion.

“We have a tremendous business friendly environment in North Dakota, our coal mines are already permitted, and we have the Energy and Environmental Research Center,” Novak says.

That center, housed at the University of North Dakota, recently secured a $8 million federal grant to conduct research on extracting rare earth elements from the state’s lignite coal and developing technologies related to recovery and manufacturing.

The center also is competing to be the home of an eventual $124 million commercial demonstration facility. The goal of this project, funded by the U.S. Department of Energy, would be to produce up to 1,000 tons of rare-earth elements annually — a significant amount considering the United States currently imports between 5,000 and 10,000 tons per year.

It all points to a potential economic opportunity for North Dakota, in an area of national importance. “A critical mineral has both outsized economic and national security implications,” says Chris Berry, the president of House Mountain Partners and an expert on supply chains for battery metals.

A CANADA-U.S. PARTNERSHIP

Mineral resources, such as lithium, cobalt, nickel, and rare-earth elements are essential components of batteries, electric motors, and many other advanced technologies.

They are crucial to making everyday products, electrifying transportation systems, and meeting climate-related goals and obligations for the United States and Canada.

In both countries, there is growing concern about a heavy reliance on imports of these minerals, both as raw materials and refined, as well as on a global supply chain often controlled by China. For example, Berry estimates that China owns or controls 75 to 80 percent of the entire supply chain of rare-earth elements, 80 percent of cobalt-refining capacity, and 65 to 70 percent of lithium refining.

So, what is to be done?

The good news is that the United States and Canada do not lack for a supply of critical minerals in the ground.

According to the nonpartisan Wilson Center, the United States has 750,000 metric tons of lithium reserves and Canada has 530,000. Additionally, the U.S. has 53,000 metric tons of cobalt reserves and Canada has 22,000.

However, there currently is a lack of capacity to mine, extract or process these reserves. And while a permitting process is needed to ensure safe and responsible extraction, it can be time consuming; at a site, the time it takes to go from initial greenfield status to mine development can be as long as 15 years.

To build up domestic production and North American supply chains of these minerals and metals, Berry says, policymakers need to place “a full-scale focus on permitting timelines … harmonizing permitting requirements on the state, provincial or federal level across borders.”

The two countries have committed to working more closely together, through agreements such as the Canada-U.S. Joint Action Plan on Critical Minerals Collaboration.

Under this plan, the nations have agreed to share information and data, diversify supply chains, promote trade and investment opportunities, and collaborate on research and development.

“Canada is an important supplier of 13 of the 35 minerals that the U.S. has identified as critical to economic and national security,” Canadian officials said in announcing the joint action plan in 2019. (The U.S. list has since grown from 35 to 50.) “We have the potential to become a reliable source of [others].”

FEDERAL, STATE INVESTMENTS

New federal laws, programs and investments also are in place to increase domestic production.

On the U.S. side of the border, the Inflation Reduction Act is providing a tax credit equal to 10 percent of the costs related to the production of critical minerals. This tax credit can be applied twice if the company mines and then refines the minerals.

Efforts are ongoing, too, to locate critical minerals. The Earth Mapping Resources Initiative (a collaboration between the U.S. Geological Survey and state geological surveys, funded by the Bipartisan Infrastructure Law of 2021) is identifying potential sites around the country.

Federal funds are supporting other types of research, too.

The work on lignite-coal extraction at the North Dakota research center is one example; another is the U.S. Department of Energy’s support of the Illinois Basin Carbon Ore, Rare Earth and Critical Minerals project. It is exploring the potential extraction of critical minerals from the Illinois Basin’s coal resources.

At the state level, North Dakota has the new tax credit for critical-mineral extraction, while a budget bill passed by the Michigan House in May (HB 4249) would allocate $15 million for new public-private research hubs that advance the processes for recycling and reusing critical minerals.

Additionally, Michigan Technological University and the only operating nickel mine in the United States, Eagle Mine, have received an $8.1 million federal grant to develop technologies and processes to supply critical minerals for electric-vehicle batteries.

Private industry in the Midwest also is jumping at the opportunity to develop the region’s critical minerals and battery technology industries.

Talon Metals in Minnesota has an agreement with Tesla to provide at least 75,000 metric tons of nickel concentrate over six years from its proposed mine in Tamarack. And in Ontario, Magna International Inc. will invest $470 million to build a new electric vehicle battery factory in Brampton.

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Green choice? Community solar attracting attention in Midwestern states as a path to boost competition, meet renewable energy goals

As renewable energy’s market share grows and large wind and solar facilities proliferate, many states are allowing a smaller-scale alternative: “community solar.”

The U.S. Department of Energy defines community solar as “any solar project or purchasing program, within a geographic area, in which the benefits of a solar project flow to multiple customers such as individuals, businesses, nonprofits and other groups.”

Community solar projects can be owned and operated by a for-profit company or nonprofit community organization, or have utilities “sponsor” them.

Customers within the service area of the utility in which the project is located “subscribe” to a percentage of its electrical output and receive an electric bill credit for their share.

One goal for community solar is to place renewable energy projects on land or spaces that would otherwise go undeveloped or unused, says Matt Hargarten, vice president of campaigns for the Coalition for Community Solar Access.Maps of solar energy production as of January 2023, and potential production by 2027, in Midwestern states

“There’s a lot of land near urban areas where there isn’t a lot of incentives for developers to go there,” he says. “A lot of them are built on warehouse rooftops — think Amazon [warehouses] — a lot of states encourage that.”

At the start of this year, 22 states, including Illinois and Minnesota, had enacted laws enabling community solar by specifying that such projects are not utilities, and authorizing “virtual metering” so subscribers can benefit from the community solar production.

Such laws are necessary because most states consider any entity that generates and sells electricity to be a utility subject to state regulation, Hargarten says. “I don’t know of any state where you can do third-party community solar without [an enabling] law in place,” he says.

Laws in place, changing in Illinois and Minnesota

In Illinois, the Future Energy Jobs Act from 2016 (SB 2814) created the Solar for All program, under which the Illinois Power Agency or utilities bought renewable energy credits from qualifying community solar projects in low-income areas.

The Climate and Equitable Jobs Act (SB 2408 of 2021) expanded the program by including community solar among myriad renewable energy initiatives intended to help collectively meet the state’s goal of 100 percent clean energy by 2050. This newer law:

• allows individual community solar projects to generate up to 5 MW of power, up from 2;

• boosts annual funding for community solar, aiming to raise its statewide generating capacity from 213 MW to 1,500 MW;

• shifts the project selection process from a lottery to one based on a project’s score on siting and other criteria; and

• increases annual Illinois Solar for All funding from $10 million to $50 million, allowing for the annual purchase of 3.8 million renewable energy credits through 2030.

Those credits are divided among varying types of renewable energy projects, with 27.5 percent designated for community, rooftop and residential solar — the third-highest share after wind energy and utility-scale solar.

Minnesota, which was the first Midwestern state to enact community solar legislation (HF 729 of 2013), recently updated its law.

The 2013 law required the state’s largest electric utility, Xcel, to establish a community solar “garden” program option for its customers, with generation capacity of up to 1 MW. Xcel is required to buy electricity from those gardens under a formula that was modified in 2016 to become an annual recalculation of the value of solar energy.

Under HF 2310, signed into law in May, this existing program will be joined by a new community solar garden initiative starting in 2024. It will be run by the Minnesota Department of Commerce and is targeted for residential subscribers.

As of next year, new gardens must have at least 25 subscribers per megawatt, at least half of whom must be from low- or middle-income households. That emphasis on reaching less-affluent residents makes Minnesota’s new program a “modernized best of class” for state-based, community-solar laws, Hargarten says.

HF 2310 also lets community solar gardens generate up to 5 MW and eliminates a requirement that subscribers live in the county or adjacent county where a garden is located.

‘Stand on their own’

Community solar can be attractive to legislators for different reasons.Table of community solar projects in U.S. states as of December 2022

“For me, it’s about competition; it’s about the monopoly the power companies have and it’s about the high power rates in southeast Wisconsin,” says state Sen. Duey Stroebel, author of this year’s SB 226, which would authorize community solar and grant rule-making authority to the Public Service Commission. “It’s a way to push back against high power rates.”

While Stroebel says the green energy angle is incidental for him, it’s front-and-center for Michigan Sen. Jeff Irwin, the main sponsor of this year’s SB 153, which also would establish a community solar program. (A companion bill, SB 152, would require the Michigan Public Service Commission to draft operating rules within one year of passage.)

“I’m a big believer in clean energy and, as solar becomes more efficient and more affordable, it becomes a better energy option,” Irwin says.

The Wisconsin and Michigan bills (neither of which had passed as of early June) would authorize projects of up to 5 MW and require them to have at least three subscribers.

The Wisconsin measure would allow community solar facilities to be up to 35 acres, but only in communities that approve them by a two-thirds vote of the host jurisdiction’s governing body.

Projects would be subject to local zoning and property taxation. (Under current Wisconsin law, people who generate electricity for others are exempt from property taxation but are subject to a tax based on gross revenues).

Subscribers would have to be in the service territory of the investorowned utility whose transmission lines the project would use.

Ultimately, Stroebel says, projects would “have to stand on their own.”

“They have to make economic sense,” he says. “If they can sell subscriptions, then they’ll be successful. If they can’t, they won’t.”

Irwin’s bill would require that at least 30 percent of a project’s output be reserved for low-income households or organizations that provide services, assistance or housing to low-income individuals (including tribal governments or tribally designated housing authorities).

According to Irwin, community solar is needed in Michigan because most residents can’t afford to install solar panels, roofs aren’t well-aligned for the panels, or tree cover makes rooftop solar impractical. Subscribing to a community solar project, then, becomes the best option.

And since local governments are afforded strong siting control, Irwin adds, community solar also is a way for utilities to avoid or overcome local resistance to large, industrial-scale operations.

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Laws reflect interest in, concerns about future of Midwest farmland

food securityRep. Kendell Culp grows corn and soybeans and raises beef cattle in a part of Indiana with some of the most productive agricultural land in the entire state.

But some of that same land also has appeal as a site for other uses, particularly renewable energy projects such as solar farms that are growing in number.

“It is an issue on a lot of people’s minds right now,” Culp says about what he hears from constituents about the actual and potential loss of prime farmland. He heard it as a longtime county commissioner, and again when he did his first-ever survey as a newly elected state legislator in the fall.

His response was the introduction of two bills this year — both of which became law — that will have the state taking an in-depth look at trends in farmland loss and land use, as well as policy ideas to keep this land in agricultural production.

“Measuring the acres lost is important,” Culp says, “but just as important is what it’s being lost to.”

Those are the two goals of HB 1557, a new law that directs the Indiana Department of Agriculture to detail losses of farmland between 2010 and 2022. The second enacted measure, HB 1132, creates a state-level land use task force, a group of legislators and others who will look at growth patterns in Indiana’s rural, urban and suburban areas. Loss of farmland will be one focus of this task force. Another will be the extent of food insecurity in different parts of Indiana.

“There is the perception that the less farmland, the less food,” Culp says. “I don’t think that’s necessarily been the reality because farmers always have been able to use new technologies to maximize production. But I do think that the issue of food insecurity and lost farmland is something we need to be more conscious of, especially if more acres start getting taken out of production at drastic rates.

“It’s also a really great responsibility we have [to the world]. People in other countries think more than we do about where their food comes from, and they know they rely on the U.S., specifically the states of the Midwest.”

Future pressures and needs

“No Farms No Food” is the message of the American Farmland Trust, an advocacy group founded more than 40 years ago to save the nation’s farms and ranches from development. The group’s Midwest director, Kristopher Reynolds, says it’s a message that doesn’t always resonate in this region because of the clear abundance of ranchland and farmland: Drive through much of America’s Heartland, and it’s most of what you see.

However, many states in this region have lost some of this land to population changes, sprawl and development in recent decades. Looking ahead, it’s not just residential, commercial or industrial development in new areas that could replace farmland.

The American Farmland Trust notes in a 2022 national study that “tens of millions of additional acres of rural land will be used for energy production and transmission in the coming decades.” Add to that increases in global population and the likelihood of more-frequent extreme weather events such as droughts and flooding, and keeping “nationally significant” agricultural land in production becomes important for “long-term food security and environmental health,” the authors note in that same report.

No region has a higher concentration of that “nationally significant” land than the Midwest. For states, Reynolds says, these trends point to the need for new policies that stop low-density sprawl, that incentivize or help farmers to keep prime agricultural land in production, and that limit the loss of this land to the continuing rise in energy projects.

“As an organization, we support renewable energy, but we also recognize that it can come at a cost to farmers and to farmland,” Reynolds says. “What we’ve tried to do is identify areas [for renewable projects] that are maybe less productive in terms of agriculture — brownfield sites, for instance — or look for ways where you can still have agriculture production and solar development at the same site.”

‘Once it’s out …’

The pinch on agricultural land is being felt in Wisconsin as well. According to Sen. Patrick Testin, his state has lost nearly 1 million acres over the last two decades, and he worries about future declines due to pressures not just from other types of development or uses, but to some longstanding demographic and economic trends.

“Like in many states, the average age of our farmer is increasing, and that next generation hasn’t necessarily been there to take up the mantle,” Testin says. “And we’ve seen some of our smaller operations go out of existence.”

One policy lever used by Wisconsin since 1977 is the state’s Farmland Preservation Program. Under the program, local governments have the authority to develop farmland preservation plans and zoning districts, as well as to petition the state for approval of Agricultural Enterprise Areas (AEA). With these AEA designations and zoning districts in place, local farmers then have the opportunity to access state income tax credits by entering into a farmland preservation agreement.

Under this agreement, a farmer agrees to keep the land in agricultural use for 15 years and meet the state’s soil and water conservation standards. The tax credit is $5 per acre for land in an AEA; $7.50 for land in a certified farmland preservation zoning district; and $10 for land in an AEA and a farmland preservation zoning district.

According to the Wisconsin Department of Agriculture, Trade and Consumer Protection, as of July 2021, a total of 1,061 preservation agreements had been signed covering close to 233,000 acres. Many more acres of land are eligible but not enrolled in the program.

Testin says this lack of participation points to two problems with the current program: the length of the agreement is too long (individuals don’t want to be wedded to 15 years), and the tax credits are too small. He and other legislators introduced bills this year (SB 134 and AB 133) to address both those concerns. The term of the agreement would be reduced from 15 years to 10, and the per-acre tax breaks would be increased and automatically rise in the future with inflationary changes.

“What we’re trying to do with this bill is encourage more people to participate, first of all, and then encourage more farmers to put more acreage into it,” says Wisconsin Rep. Katrina Shankland, another sponsor of the bill.

She views increased participation as a win-win-win for the state: Reward farmers for being good stewards of the land, advance the state’s conservation goals, and help preserve Wisconsin’s agricultural heritage.

“Once it’s out of [agricultural] production, it’s rarely, if ever, farmed again,” Shankland says.

‘Best opportunity for states’

Reynolds suggests that states in the Midwest develop and invest in new Purchase of Agricultural Conservation Easement programs; as of January 2022, only Michigan, Ohio and Wisconsin had any farmland acreage protected via a PACE program, according to the American Farmland Trust’s Farmland Information Center.

Under a PACE program, landowners are compensated for keeping their land for agricultural use; the compensation amount is based on the property’s fair market value.

“It’s probably the best opportunity for states to protect more farmland because they’re able to leverage federal dollars,” Reynolds says.

That money comes from the U.S. Department of Agriculture’s Agricultural Conservation Easement Program. The Inflation Reduction Act, signed into law in 2022, authorized an additional $1.4 billion for this program over the next five years. Accessing those funds, though, requires a 50 percent match. States can fill that void, and tap into newly available federal dollars, by creating a PACE program.

“We’re not making any more farmland, so we need to protect what we have — not just for production purposes, but from what we’re seeing with some of the climate projections and how it’s going to be more difficult to grow food in some other places,” Reynolds says.

“There’s also the issue of farmland changing hands at a rapid pace over the next 15 years. We want to make sure that the next generation still has access to farmland in the future.”

Michigan Sen. Roger Victory has chosen “Food Security: Feeding the Future” as the focus of his CSG Midwestern Legislative Conference Chair’s Initiative for 2023.


EXAMPLES OF STATE POLICIES TO PRESERVE FARMLAND

A famer looks out over his fields.

  • Establish agricultural districts in state statute that allow local governments to identify areas where commercial agriculture will be protected and enrolled farmers will get tax benefits of some kind.
  • Reduce the amount of money that agricultural producers must pay in local property taxes through the use of a differential assessment system.

Source: American Farmland Trust


 

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Introducing the BILLD Class for 2023

A bipartisan group of legislators from the Midwest has been selected to take part in a one-of-a-kind leadership program offered by The Council of State Governments’ Midwestern Legislative Conference.

The Bowhay Institute for Legislative Leadership Development, or BILLD, is designed for legislators from this region in their first four years of service. Photos of the state and provincial legislators selected to take part in the 2023 institute can be found below. The program will be held Aug. 18-22 in Madison, Wis.

This marks the 28th year in which the MLC has offered leadership training to its members: legislators from 11 member states, the Canadian province of Saskatchewan and three Canadian affiliate provinces. CSG Midwest provides staff support to the MLC and its various products and services, including BILLD.

This year, close to 80 lawmakers applied for a fellowship. Selections were made in May by the BILLD Steering Committee, a bipartisan group of legislators from 11 Midwestern states. Nearly 1,000 current or former state and provincial legislators have graduated from BILLD; many have gone on to serve as leaders in their legislatures and state executive branches, while others are now members of the U.S. Congress.

BILLD’s highly interactive curriculum includes a series of leadership training courses and professional development workshops in areas such as conflict resolution, negotiation, consensus building, public speaking and time management. The program also includes expert-led policy seminars as well as sessions led by the region’s legislative leaders. Along with advancing leadership and policymaking skills among the region’s newer legislators, BILLD provides the opportunity for networking and relationship building across partisan, state and international lines.

 

 

 

 

 

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Wanted: ‘Service attorneys’ for rural parts of Ohio where legal needs aren’t being met

Ohio this year will become the latest Midwestern state to offer financial incentives to fill the thinning ranks of public defenders and other attorneys practicing in rural counties.

Established under a bill signed by Gov. Mike DeWine in early 2023 (HB 150 of 2022), the Rural Practice Incentive Program authorizes the payment of up to $50,000 of an attorney’s student loans if the individual agrees to be a “service attorney” (a public defender, prosecutor or court-appointed counsel to represent indigent defendants) in an underserved community — defined as counties where the ratio of attorneys to total population is “equal to or less than” 1:700.Map showing the number of lawyers per 1,000 people in Midwestern states as of 2021.

The Ohio Bar Association estimates that two-thirds of the state’s counties don’t have enough lawyers to meet the legal needs of local residents.

Participating attorneys will be able to claim an income tax deduction for amounts repaid by the program, which is receiving $1.5 million in state funds this fiscal year. HB 150 also creates a 17-person task force to recommend ways of improving Ohio’s indigent-defense system.

Since 2013, South Dakota has operated a program to recruit attorneys to rural areas, with the state and local governments sharing the costs. Participating lawyers get a payment equal to 90 percent of one year of the cost of resident tuition and fees at the University of South Dakota School of Law; in return, they must practice for five years in the rural county or municipality. Of 31 total participants, 15 have graduated out of the program; 12 of these 15 have stayed in their communities to continue practicing.

Late last year, the Kansas Supreme Court formed a 35-member Rural Justice Initiative Committee to study population and legal professional employment trends, as well as differences in unmet legal needs related to population density. In Kansas’ rural areas, the ratio of active attorneys to population is 1:808; that compares to 2:535 in urban areas.

Two counties in the state have no attorneys at all, five counties have one attorney, and 11 others have only two. The new committee in Kansas is expected to develop ideas on how the state can address this shortage in rural areas.

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With possible end to decades-old federal law, Minnesota revamps its Indian Family Preservation Act

Minnesota Gov. Tim Walz in March signed a bill enshrining language of the U.S. Indian Child Welfare Act (ICWA) in state law, months ahead of a U.S. Supreme Court ruling that could undo the federal statute that governs when, and under what circumstances, Native American children can be fostered or adopted by non-tribal parents. SF 667 sailed through the Legislature with just one “no” vote in the Senate.Map showing number of federally recognized Native American tribes in Midwestern states as of 2023.

The new law’s goal is to ensure tenets of the ICWA remain in place in Minnesota if the federal law gets struck down. It does so through the addition and clarification of various language in the state’s existing Indian Family Preservation Act, says Minnesota Sen. Mary Kunesh, an enrolled member of the Standing Rock Lakota and chief sponsor of SF 667.

Minnesota’s Indian Family Preservation Act was enacted in 1985 to expand upon and strengthen various provisions of the ICWA. In the Midwest, Iowa, Michigan, Nebraska and Wisconsin also have comprehensive statutes that build on the federal law.

The ICWA recognizes tribal jurisdiction over foster care and adoption cases involving the children of enrolled tribal members. It establishes minimum federal standards for the removal of Native American children from their families, as well as preferences for the placement of children with extended family or other tribal families. It also institutes protections to ensure that birth parents’ voluntary relinquishments of their children are truly voluntary.

But a case before the U.S. Supreme Court, Brackeen v. Haaland, could overturn the ICWA. Plaintiffs in the case include the state of Texas and non-Native couples who tried to foster or adopt children with Native American ancestry, according to SCOTUSBlog, which provides independent analyses of cases before the court. The plaintiffs say child placement is the responsibility of states and that the federal law is racially discriminatory. Proponents of upholding the law say tribal membership is a political, not racial, category.

A ruling is expected to be handed down before the current term ends in June.

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Fourteen legislators from Great Lakes tapped as 2023 Birkholz Fellows

Congratulations to the 14 state and provincial legislators comprising the class of 2023 Birkholz Fellows.

The Birkholz Institute is an ongoing initiative of the Great Lakes-St. Lawrence Legislative Caucus (GLLC) — a binational, nonpartisan group of legislators that receives staff support from CSG Midwest. Through the institute, a small group of legislators comes together to take a deep dive into an issue on the GLLC’s policy agenda and develop policy ideas.

This year’s focus is “Climate Resiliency in Great Lakes Communities.” The institute began in late March with a webinar that explored climate trends and impacts in the Great Lakes region.

On April 21-22, this year’s Fellows will meet in Detroit for a two-day policy workshop. The GLLC is excited to convene this passionate group of legislators and focus on this critical policy area. The 2023 Birkholz Fellows are:

Illinois Sen. Laura Ellman
Indiana Rep. Maureen Bauer
Michigan Sen. Joe Bellino and Reps. Jenn Hill and Stephanie Young
Minnesota Rep. Athena Hollins and Sen. Karin Housley
Ohio Rep. Daniel Troy
Ontario MPPs Ric Bresee and Jennifer French
Québec MNAs Jöelle Boutin and Désirée McGraw
Wisconsin Sen. Kelda Roys and Rep. Deb Andraca

These biennial institutes are named in honor of the GLLC’s founder, the late Michigan Sen. Patricia (Patty) Birkholz. Sen. Birkholz’s vision for the GLLC was to “bring key Great Lakes lawmakers together regularly to share knowledge and hear other perspectives” for the purpose of “improving the impact and uniformity of practices established in statute.”

Learn more about the GLLC

 

 

 

 

 

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Fourteen legislators from Great Lakes tapped as 2023 Birkholz Fellows

Congratulations to the 14 state and provincial legislators comprising the class of 2023 Birkholz Fellows.

The Birkholz Institute is an ongoing initiative of the Great Lakes-St. Lawrence Legislative Caucus (GLLC) — a binational, nonpartisan group of legislators that receives staff support from CSG Midwest. Through the institute, a small group of legislators comes together to take a deep dive into an issue on the GLLC’s policy agenda and develop policy ideas.

This year’s focus is “Climate Resiliency in Great Lakes Communities.” The institute began in late March with a webinar that explored climate trends and impacts in the Great Lakes region. Fellows also met in Detroit for a two-day policy workshop. The 2023 Birkholz Fellows are:

  • Illinois Sen. Laura Ellman
  • Indiana Rep. Maureen Bauer
  • Michigan Sen. Joe Bellino and Reps. Jenn Hill and Stephanie Young
  • Minnesota Rep. Athena Hollins and Sen. Karin Housley
  • Ohio Rep. Daniel Troy
  • Ontario MPPs Ric Bresee and Jennifer French
  • Québec MNAs Jöelle Boutin and Désirée McGraw
  • Wisconsin Sen. Kelda Roys and Rep. Deb Andraca

These biennial institutes are named in honor of the GLLC’s founder, the late Michigan Sen. Patricia (Patty) Birkholz. Sen. Birkholz’s vision for the GLLC was to “bring key Great Lakes lawmakers together regularly to share knowledge and hear other perspectives” for the purpose of “improving the impact and uniformity of practices established in statute.”

Learn more about the GLLC

 

 

 

 

 

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More electric vehicles on the road, more questions about road revenue

More electric vehicles on the road and more-efficient internal combustion engines are good developments for the environment, but they do pose a challenge for states.

How do we continue to fund roads at adequate levels, if a core part of transportation funding — revenue from the gas tax — erodes?

“It’s an issue that’s become more prevalent this year as people turned more to EVs last year,” says Brian Sigritz, director of state fiscal studies at the National Association of State Budget Officers.

“While it’s not dire, this is an accelerating issue, and states will have to deal with it.”

The fuel economy of vehicles on U.S. roads is at record highs and expected to rise further.

Meanwhile, between September 2017 and September 2022, EV sales nationwide rose by 213 percent. The increase was even steeper in most Midwestern states. And across the country, a mix of state and federal policies is incentivizing prospective car buyers to “go electric.”

In Illinois, the Clean Energy Jobs Act of 2021 (SB 2408) sets a goal of 1 million EV registrations in the state by 2030; that would be an increase of more than 900,000 compared to end-of-the-year totals from 2021.

User-based options for states are limited

Traditionally, much of the financing of the nation’s highways, roads and bridges has come from a user-based revenue model: Charge motorists through registration fees, a motor fuel tax or other means.

The options for keeping this model intact, in an era when more motor vehicles require fewer or no trips to the gas pump, appear to be limited:

• Increase the motor fuel tax rate and/or index it to inflation.
• Charge higher registration fees, particularly for electric vehicles.
• Begin the shift from fuel taxes to another kind of road-user fee — often called a mileage- or distance-based user fee, a road-use charge (RUC) or a vehicle-miles-traveled fee.
• Start taxing the electricity used to charge EVs as a fuel.

Two-thirds of all states have raised their motor fuel taxes since 2013, including all Midwestern states but Kansas, North Dakota and Wisconsin. Currently, only Illinois, Iowa, Michigan and Nebraska index the rates to inflation or other factors.

Thirty states, including all 11 in the Midwest, charge higher registration fees for electric vehicles, with the amount often varying based on vehicle type.

Multiple states and the federal government have been studying road-use charges for many years (decades, in some cases).

None, until recently, had implemented an EV charging tax.

Iowa will soon levy electric fuel excise tax

Starting July 1, Iowa will tax electricity used at all non-residential EV charging stations at the rate of 2.6 cents per kilowatt-hour (kWh) — the first Midwestern state to do so, and just the third nationwide after Kentucky and Pennsylvania.

Iowa’s EV charging tax is one facet of legislation passed four years ago, HF 767. That measure, in turn, was based on recommendations from a study that had been done one year earlier by the state Department of Transportation.

The goal of that legislatively mandated study: look at ways to prepare the state for long-term declines in motor fuel tax revenue. HF 767 also included a supplemental EV registration fee (beginning at $65 a year in 2020, now at $130) and created a hydrogen fuel excise tax of 65 cents per gallon equivalent — the amount of an alternative fuel needed to equal the energy of one gallon of gas.

According to Stuart Anderson, director of the Iowa DOT’s transportation development division, those three steps offered the best intermediate solution to the long-term decline in motor fuel tax revenue.

The DOT’s 2018 report said an EV charging tax “would be consistent with the existing process of collecting an excise tax on motor fuels” and, like taxes on traditional fuels, would function as a user fee that could be applied to out-of-state vehicles.

But the report also noted a problem: collecting this electric fuel excise tax from home-based chargers, where the U.S. Department of Energy estimates 80 percent of EV charging occurs, would be an administrative nightmare.

That’s one reason why the state of Oregon is focusing on a road-use charge, says Scott Boardman, a policy advisor in the Oregon Department of Transportation’s innovative programs office.

“Most charging is done at home, so it’s potentially very difficult to administer because you’d need a separate (electric) meter, or you’d have to ask people to report their usage honestly,” he notes.

Even so, the idea of an EV charging tax at public charging stations is generating legislative interest. Oklahoma will be the fourth state to implement the tax, starting in January 2024, under legislation (HB 2234) passed in 2021. Legislation from Kansas this year, HB 2004, calls for a 3-cent per kWh “road repair” tax on public EV chargers.

The bill’s sponsor, Rep. Bill Rhiley, says he proposed the tax to “solve the decline in road tax income and the increase in road and bridge repair costs.”

Kansas, Minnesota studying road-user charge

The fourth potential option for states is the road-user charge (RUC). It upholds the “user pays” principle and covers electric and internal combustion engine vehicles, says Owen Minott, a senior policy analyst at the Bipartisan Policy Center.

“A road-use charge is something you can start implementing and testing and beginning to adapt,” Minott says. “Whether or not it’s a perfect system, it’s the only available option for the medium term.”

Under voluntary RUC demonstration projects, states determine a per-mile charge. Mileage is tracked by “plug-ins” inserted into a vehicle’s on-board computer or smartphone apps. Some states also allow for manual data entry. Participating drivers are generally given a motor fuel tax credit for fuel purchases.

Kansas transportation officials are now studying the RUC concept, if only to get a Midwestern perspective into the national dialogue, says Joel Skelley, director of policy for the Kansas Department of Transportation, noting the nation’s coastal states often have been at the forefront on the issue.

The Kansas DOT’s “Midwest Road Use Charge” pilot program is scheduled to launch later this year. Once the demonstration phase is complete, Kansas will work with Minnesota to expand the study’s reach to interstate traffic, he says.

“We want a seat at the table, not to be on the menu,” Skelley adds. ‘We want to be proactive in looking at our options and not be pressured into picking something that’s not in our best interest.”

In its most recent study, Minnesota collected data on 64 vehicles that drove more than 565,000 miles. The DOT’s final report on the study, issued in August 2022, concluded that imposing a per-mileage fee is technically feasible.

But it also noted that several issues required “further analysis.” That includes evolving on-board vehicle technology, the logging of out-of-state travel and travel in Minnesota by out-of-state drivers, and how federal motor fuel tax credits would be administered.

Anderson says Iowa’s DOT is interested in the RUC concept and is keeping an eye on states’ pilot programs. But officials are not interested in an Iowa-only charge, which would forfeit fees from out-of-state vehicles, he adds.

“Our feeling was that [an RUC] needs to be driven at the national level rather than having 50 different solutions,” he says.

In 2013, Oregon legislators passed SB 810, creating OreGO, the first RUC pricing program in the nation. It is for light-duty vehicles with a fuel economy of 20 mpg or better.

Drivers opting in to the program pay 1.9 cents per mile and get a credit for the fuel tax (38 cents per gallon) they pay.

Participants choose from multiple options to track their mileage and pay the charge. GPS data may only be used to track miles, personal data can’t be disclosed, and all collected data is destroyed within 30 days of payment processing.

A legislative proposal in Oregon this year (HB 3297) would make the program mandatory beginning in July 2027 for model year 2028 vehicles getting 30 mpg or better.

The post More electric vehicles on the road, more questions about road revenue appeared first on CSG Midwest.

Feed people, help farmers: How two nutrition programs have grown in two Midwestern states

This article, written in support of the 2023 MLC Chair’s Initiative of Michigan Sen. Roger Victory on “Food Security: Feeding the Future,” shows how Michigan and Minnesota have helped expand the reach of initiatives that expand the purchasing power of SNAP recipients at local farmers markets.

 

 

More than a decade ago, a program known as Double Up Food Bucks launched in a handful of local farmers markets in Detroit.

Not long after, a similar pilot initiative, Market Bucks, was up and running in Minneapolis.

With both initiatives, the idea was to boost the food-purchasing power of lower-income people getting assistance via the federal Supplemental Nutrition Assistance Program (SNAP), while also opening up new sales opportunities for local farmers. These were not state programs. Eventually, though, they got the attention of legislators who saw promise in an approach that could address three objectives at once.

“We feed people, we get money into our farmers’ pockets, and people are able to get fresh, healthy vegetables in a community-centered setting,” Minnesota Sen. Erin Maye Quade says.

Funding for Market Bucks began being included in Minnesota’s budget in the middle of the last decade; likewise, Michigan lawmakers started allocating dollars for Double Up Bucks. That has allowed for an expansion of both of these programs to locations across each state.

In Minnesota, for example, Market Bucks was available in 105 different farmers markets last year, says Jill Westfall, director of programs for Hunger Solutions Minnesota.

More SNAP purchasing power

Here is how Market Bucks works: For purchases of SNAP-eligible foods at a farmers market, a SNAP participant gets a dollar-for-dollar match, up to $10 per visit. Spend $10 at the farmers market, and you can get $20 worth of items. State funding is used to cover that match.

A federal grant provides another dollar-for-dollar match (also up to $10 per visit) for purchases of fresh fruits and vegetables. This program is known as Produce Market Bucks.

“That double match made it more attractive, especially for some of our smaller farmers markets,” Westfall says.

Demand for the program has never been higher, and it’s one reason why Sen. Maye Quade and other legislators want a funding boost in Minnesota’s new biennial budget. She has proposed an annual appropriation of $500,000, up from the existing $325,000 (SF 1927). Right now, Market Bucks is only available at farmers markets. Under Maye Quade’s bill, two other options would be added: one, direct sales from farmers; and two, sales based on a “community supported agriculture model,” in which individuals purchase subscriptions, or shares, of food produced from a local farm in advance of the growing season.

Michigan’s Double Up Bucks provides a similar dollar-for-dollar match. It only applies to purchases of fruits and vegetables, but sales are not limited to farmers markets. Grocery stores are able to participate as well. At these stores, during the heart of Michigan’s growing season (July through November), at least 20 percent of the sales for Double Up Bucks must come from state-grown products, says Nathan Medina, senior manager of state policy for the Fair Food Network.

Michigan’s most recent annual appropriation for Double Up Bucks was $900,000, but a supplemental budget proposal would mark a big shift in state support — a proposed $15.5 million in spending that would be spread over five years. Medina says that change would provide the program with more funding certainty and improve the chances of securing federal grants.

Since its start in Detroit, Double Up Bucks has expanded to more than 25 U.S. states, including most in the Midwest. The scope of these programs, as well as their sources of funding, varies from state to state. Federal support for nutrition incentive programs such as Double Up Bucks and Market Bucks began with the 2014 farm bill, and Medina says the next farm bill is likely to include additional funding opportunities and enhanced federal matches.

 

The post Feed people, help farmers: How two nutrition programs have grown in two Midwestern states appeared first on CSG Midwest.