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Bench & Bar of Minnesota is the official publication of the Minnesota State Bar Association.

2007 Legislative Session in Review

Mr. Grooms’ annual review of the highlights of the Minnesota legislative session reports success for MSBA’s legislative agenda, lists bills of interest to lawyers in multiple areas of law, and looks ahead to anticipate key issues likely to confront the Legislature in the 2008 session. 

The 2006 elections brought significant change to the State Capitol. In addition to DFL control of both bodies of the Legislature, the DFL caucuses also had newly elected leadership with Sen.Larry Pogemiller (DFL-Minneapolis) elected as Senate Majority Leader and Rep. Margaret Ann Kelliher (DFL-Minneapolis) elected as Speaker of the House. It was with these changes that the 2007 legislative session began on January 3, and it quickly became apparent that the change in party control would have a significant impact on many aspects of the legislative process.

Passage of the budget bills proved to be a long and difficult process, as the new DFL majorities were committed to funding their key priorities of increasing access to health care for children, providingproperty tax relief, increasing education spending, and providing for new sources of transportation revenue, all of which was primarily funded by increased fees and taxes. In contrast, Gov. Pawlenty and House and Senate Republicans remained focused on the message that there was no need for any tax increase with the state’s projected $2 billion budget surplus. This led to a show-down over many of the individual budget bills, with the governor vetoing and sending back to the Legislature six major budget bills, as well as the capital bonding bill. In the end, legislative leadership was forced to compromise with the governor and ended up passing a $35 million budget, representing an almost 10 percent increase in spending for the upcoming fiscal biennium, only slightly above what the governor had recommended. The governor did veto the tax bill, due to the last-minute inclusion of a provision providing for automatic inflationary increases in future budget forecasts, and has not indicated any present intent to call the Legislature back for a special session to pass a new tax bill.

As sessions held in odd-numbered years are traditionally focused on passing the state budget, it was not expected that many substantial policy changes would be tackled in 2007. However, three policy issues did quickly emerge and dominate much of the legislative session – renewable energy, the smoking ban and the ever-present debate over dedicated funding for the environment and the arts.

By the end of February, Gov. Pawlenty had signed legislation requiring that at least 25 percent of Minnesota’s electricity be generated from renewable energy sources by the year 2025. This was followed by the passage of additional legislation that establishes a task force to recommend to the 2008 Legislature a plan to reduce greenhouse gas emissions by 80 percent by the year 2050.

Following closely behind, the statewide smoking ban, or Freedom to Breathe Act, also moved quickly through the process, despite a significant number of obstacles along the way. Members from the Iron Range delegation opposed the measure due to the impact they felt it would have on small restaurant and bar owners in the more rural areas of the state. In the end, a compromise was reached and the ban was signed into law, effective October 1, 2007.

Finally, despite being championed by Senate Majority Leader Larry Pogemiller (DFL-Minneapolis) and House Majority Leader Tony Sertich (DFL-Chisholm), the proposed constitutional amendment which would dedicate sales tax revenue to the environment and the arts failed to advance again this session. While it survived conference committee negotiations over how to allocate the new revenue and was poised for a vote on the House and Senate floors, legislators did not have enough time in the last minutes of session to take the amendment up for a vote. Advocates have already indicated their intent to pick up right where they left off, and hope to pass the legislation within the first few weeks of the 2008 session.

The 2007 legislative session was noteworthy not only for the passage of a statewide smoking ban and significant energy legislation, but also for the strength that Gov. Pawlenty and the minority Republican caucuses exhibited in preventing the newly elected DFL majorities from implementing many of their spending initiatives. Looking ahead, with the November 2008 elections looming and all House members facing reelection, the 2008 legislative session will likely be even more politically charged than this year, amplified by the significant national attention being paid to Gov. Pawlenty.

Legislative Agenda

All MSBA legislative proposals put forward in the 2007 legislative session have been passed and signed into law.

The Probate Section’s technical corrections bill was signed into law as Chapter 12. This legislation conforms the language authorizing bonding for individuals who are professional fiduciaries. The term “guardian” is replaced with “guardian of the person” and “conservator of estate.” The terms “executor of a will” and “administrator of the estate” are replaced by “personal representative.” This legislation was carried by lawyer-legislators Rep. Steve Simon (DFL-St. Louis Park) and Sen. Linda Scheid (DFL-Brooklyn Park).

While the Real Property Section had proposed to repeal the statute requiring disclosure for property transfers within airport zones, a compromise with the Minnesota Association of Realtors, which modifies the disclosure duties, was signed on May 10 as Chapter 64. This legislation was carried by Sen. Ann Rest (DFL-New Hope) and Rep. Mike Beard (R-Shakopee).

The second Real Property Section proposal regarding homestead judgment enforcement and the Construction Law Section proposal on contribution and indemnity claims were combined into S.F. 241, which was signed into law by the governor as Chapter 105. The Real Property Section’s homestead judgment proposal is also included in S.F. 1533, which has also been signed by the governor as Chapter 106. These proposals were originally carried by lawyer-legislators Rep. Dave Olin (DFL-Thief River Falls), Sen. Tom Neuville (R-Northfield), and Sen. Don Betzold (DFL-Fridley). The final version of the Construction Law Section’s proposal was a collaborative agreement reached with the Builders Association of Minnesota and interested legislators, which included the chair of the House Public Safety and Civil Justice Committee, lawyer-legislator Rep. Joe Mullery (DFL-Minneapolis).

The MSBA legislative agenda also included support for adequate funding for the Minnesota judicial branch, legal aid and pro bono programs, and the public defenders system. Signed into law as Chapter 54, the Omnibus Public Safety Finance Bill appropriates $2 billion to the corrections and judicial system, creates three new judgeships for the Court of Appeals, seven new district court judgeships, and authorizes a 3 percent increase in judicial salaries for each of the next two years. The bill also provides:

  •  $90 million for the biennium for the Supreme Court, with $13.3 million directed to civil legal services each year;
  •  $20 million for the biennium for the Court of Appeals, including, effective January 1, 2008, three new judges to help address the court’s caseload increase;
  •  $500 million for the biennium for the trial courts, including $5 million for seven new judges effective January 1, 2008. The new judgeships will be created in the following districts:

    Three in the 1st District
    One in the 7th District
    One in the 9th District
    Two in the 10th District

  •  $135.8 million for the biennium for the Board of Public Defense, including $3.2 million the first year and $5 million the second year for 34 new attorneys;
  •  $4.1 million for the biennium to maintain and expand the drug courts;
  • $2.8 million for guardian ad litem services.

Looking Ahead – 2008 Session

Slated to begin on February 12, 2008, the 2008 legislative session will likely continue where this one left off, but instead of primarily focusing on passing a budget, legislators will have more time to delve into policy issues that were not addressed during the 2007 session.

It would appear likely that two issues of concern to the legal community will be addressed next session. First, following the release of the Quie Commission Report on Judicial Selection in March, it is anticipated that this issue will be debated in the 2008 legislative session. Lawyer-legislator Tom Neuville (R-Northfield) did author legislation on this topic during the 2007 session (S.F. 234).

A second issue likely to rise to the forefront is the issue of sales and use taxes. A provision was included in the vetoed Omnibus Tax Bill that would have established a Joint Legislative Subcommittee on Sales and Use Tax. This subcommittee was given the charge of examining the current sales and use tax base in light of future demographic and economic trends, and to recommend alternative tax structures to improve stability and equity of state tax policy. Even though the tax bill was vetoed by the governor, it is expected that the state’s current sales and use tax structure will be an issue next year and beyond. Particularly noteworthy for MSBA members was lawyer-legislator Rep. Melissa Hortman’s (DFL-Brooklyn Park) bill to expand the sales and use tax to include services, including nonbusiness legal services (H.F. 2163).

MSBA Bill Tracking

As this was a budget year, passage of the various budget bills was the top priority for legislators. As noted above, the funding bill for the judicial system, the Public Safety Finance bill, Chapter 54, was passed and signed into law after a slight detour due to one of the bill’s insurance provisions. An initial version of the bill included language requiring that insurers act in “good faith” when handling claims. This provision would penalize insurance companies that fail to have a “reasonable basis for denying benefits,” or act with a “reckless disregard of the lack of a reasonable basis” for denying claims. If found to be in violation of either of these standards, insurance companies could be held liable for costs, damages, and attorneys fees. Some House Republicans strongly opposed this provision and demanded the governor veto the entire bill if this provision remained. The governor and House and Senate leadership agreed to remove the “good faith” provision and give their “best efforts” to pass a stand-alone “good faith” bill in 2008. The governor also agreed to have no line item vetoes of the Public Safety bill. The “good faith” provision was then removed from the bill, which was passed and signed by Gov. Pawlenty.

In addition to appropriating monies for the courts, legal aid and the public defender’s office, the bill also includes a number of policy provisions:

  • The Collateral Sanctions Committee is required to study issues relating to how criminal convictions and adjudications affect individuals’ employment and professional licensing opportunities in Minnesota (to be completed by January 2008).
  • The Sentencing Guidelines Commission is required to study the effectiveness of the offender-reentry funding and programs, as well as the effectiveness of the state’s drug court. It must report its final findings and recommendations to the Legislature by January 2009. The commission is also directed to propose changes to the sentencing guidelines grid for controlled substance offenses.
  • Termination of Lease by Domestic Abuse Victim. Permits victims of domestic abuse to terminate a lease. [H.F. 1841]
  • Prohibitions on use of a polygraph in criminal sexual conduct complaints.
  • Corporate Dissolution. Amendment to the Minnesota Business Corporations Act providing that all statutory and common law rights of persons who may bring claims of injury to a person, including death, are not affected by a dissolution under the act.
  • Domestic Abuse No Contact Order. Provides that a party is guilty of a felony if they have a repeat violation of a No Contact Order. [H.F. 506]
  • Board of Public Defense in 4th Judicial District. Directs the Board of Public Defense and the Hennepin County Board of Commissioners to jointly prepare a report to the Legislature on the funding for the public defender’s office in the 4th Judicial District and recommend specific legislation for state funding of the office.

Below is a list of other bills of interest to the Minnesota State Bar Association that have been signed into law following the 2007 legislative session.

Administrative Law

  • Chapter 10. H.F. 1678/S.F. 1294. Public Utilities Commission Electronic Filing Authorization. This legislation makes technical changes to the filing procedure with the PUC, allowing for electronic filing. Effective date: January 1, 2008.
  • Chapter 88. S.F. 1019/H.F. 1549. Technical Change Relating to Ex Parte Rules of the Public Utilities Commission. Another technical bill, this legislation makes a small change to the Ex Parte Rules of the PUC. Effective date: August 1, 2007.

Business Law

  • Chapter 18. H.F. 1004/S.F. 809. Mortgage Broker Regulations. One of two predatory lending bills passed this session, this legislation prohibits a mortgage broker or lender from making or arranging a loan without verifying the borrower’s ability to pay back the money, taking into account insurance, taxes, and interest. It also requires the lender to inform borrowers that they will have to pay taxes and insurance, and prohibits the practice of ‘churning,’ or having a lender arrange or provide a loan to finance an existing loan when the new loan does not benefit the borrower. Effective date: August 1, 2007.
  • Chapter 74. S.F. 988/H.F. 931. Regulating Predatory Lending Practices. This legislation, also regulating the mortgage lending industry, allows individuals and companies the right to sue if they have been victimized by dishonest or predatory lending practices. The legislation would apply to inflated appraisals, and courts could sentence perpetrators of mortgage fraud with up to two years of jail time, with the possibility of harsher penalties if the victim is considered to be vulnerable because of age, physical condition or mental capacity. Effective date: August 1, 2007, applicable to crimes committed on or after that date.
  • Chapter 108. H.F. 1758/S.F. 1574. Security Breach Liability. This legislation prohibits businesses that accept a credit or similar card in connection with a transaction from retaining the access code that permits use of the card, after the transaction is completed. It also makes such a business liable to a financial institution for costs resulting from a breach of the security of the retained access code. Various effective dates.
  • Chapter 119. S.F. 221/H.F. 287. Disclosure of Employee Information. This legislation requires employers to provide written notice of certain employee rights and remedies. Effective date: January 1, 2008.
  • Chapter 148. H.F. 1608/S.F. 1346. Secretary of State Provisions (included in H.F. 548/S.F. 471). Included in the Omnibus State Government Finance Bill, this legislation contains provisions affecting business entities, Uniform Commercial Code (“UCC”) filings, and notaries. It includes provisions regarding copies of registrations for assumed names; amending the penalty and reinstatement provisions; making changes regarding investor cooperatives; clarifying and amending fees paid by limited partnerships; amending annual report requirements for limited partnerships and limited liability partnerships; modifying name change filing requirements for foreign limited partnerships; amending the uses of the UCC account to allow it to be used to provide, improve, and expand other online or remote lien and business entity filings, retrieval, and payment method services provided by the secretary of state; amending the UCC filing requirements to add additional formats as acceptable filing methods; and amending filing fees under the UCC to provide that $5 of each fee for online filing be deposited in the UCC account. Various effective dates.

Civil Law

  • Chapter 79. H.F. 772/S.F. 608. Aircraft Insurance Minimum Liability Limits. Legislation that increases the minimum liability insurance coverage for licensed pilots in Minnesota and calls for a study of third-party liability issues has been passed by the House and Senate and signed into law. A compromise was reached to push back the effective date to January 1, 2009. The study is due to the Legislature by November 15, 2007.
  • Chapter 99. S.F. 1333/H.F. 1675. Car Buyers’ Bill of Rights. This legislation requires auto dealers to inform buyers about add-ons, including antitheft devices and rust-proofing, and how these will affect their monthly payments. It also requires dealers to tell consumers when they have viewed their credit report, and makes it illegal for dealers to market used cars as “certified” if they have been significantly damaged in a crash, flood, or fire, or if the odometer has been reset. Effective date: January 1, 2008.

Construction Law

  • Chapter 70. H.F. 1708/S.F. 1509. Hennepin County Design-Build Provisions. This legislation modifies the design-build process in Hennepin County and stipulates that the Hennepin County Board cannot award more than 10 percent of its total projects for any fiscal year to design-build contracts. Effective date: August 1, 2007.
  • Chapter 135. H.F. 1283/S.F. 1103. Independent Contractors Exemption Certificate (included in H.F. 122/S.F. 62). Included in the Omnibus Jobs and Economic Development Finance Bill, this legislation requires independent contractors working in commercial or residential building construction or improvement services to, after meeting certain qualifications, obtain an independent contractor exemption certificate. Effective date: July 1, 2008.
  • Chapter 140. H.F. 1208/S.F. 998. Construction Code and Licensing Provisions. This legislation implements an Executive Order which consolidates various code enforcement and licensing functions in the Department of Labor. It also adopts uniform code and licensing enforcement provisions and establishes boards for the regulation of plumbing, electrical work, and high pressure piping systems. Various effective dates.
  • Chapter 148. S.F. 1278/H.F. 571. Best Value for Construction Bids (included in H.F. 548). Included in the Omnibus State Government Finance Bill, this legislation defines “best value” for the purposes of contracts for construction, building, alteration, improvement, or repair services and authorizes the use of best value contracting for state and local projects.

Courts

  • Chapter 32. S.F. 846/H.F. 958. Deficiency Funding Bill. ($47,000 for Tax Court, $200,000 for Board of Judicial Standards, $200,000 for Board of Public Defense for appeal transcript costs.)
  • Chapter 61. H.F. 455/S.F. 300. Public Defender Modifications. The Public Defender Housekeeping bill made clarifying changes to statutory public defense provisions, including changing the title of “deputy state public defender” to the “chief appellate public defender,” updating a provision stating that a full-time chief district public defender may not engage in outside law practice, repealing a $40 per hour reimbursement rate for public defenders, and repealing the unconstitutional public defender copay requirement and reinstating the prior copayment and the right to decline post-conviction cases. Effective date: August 1, 2007.

Environmental Law

  • Chapter 131. S.F. 1131/H.F. 1021. Uniform Environmental Covenants Act (introduced as H.F. 1063/S.F. 1051). This bill enacts the Uniform Environmental Covenants Act, which specifies the nature of rights, role of the environmental agency, and subordination of interest; specifies the required and permissive contents of an environmental covenant; contains rules with respect to the validity of an environmental covenant and its effect on other instruments; addresses the relationship to other land-use laws; contains enforcement provisions; and amends the statute under which the attorney general may recover certain costs of litigation to add a cross-reference to the new environmental covenants law.

Family Law

  • Chapter 49. H.F. 1400/S.F. 358. Adoption Information Assistance Provided to Genetic Siblings. Signed into law as Chapter 49, this legislation allows for a person who is at least 19 years old and was adopted or placed in Department of Human Services guardianship to have access to their siblings’ contact information, providing there has been mutual consent for the release of this information. Agencies are permitted to charge a reasonable fee for the service. Effective date: August 1, 2007.
  • Chapter 118. S.F. 1271/H.F. 1500. Child Support Modifications. This legislation makes various changes to child support regulations. It includes provisions regarding the child support enforcement program; removing or resuming a medical support offset and suspension or resumption of charging interest on child support judgments if specified statutory conditions are met as part of marriage dissolution; amending the law providing for calculation of support based on potential income to specify that it applies to child support orders, including orders for past support of reimbursement of public assistance issued under Chapters 256, 257, 518B or 518C; amending the statute specifying the circumstances under which a parent is not considered voluntarily unemployed or underemployed; amending the statute governing modification of a maintenance or support order and establishing a presumption of a substantial change in circumstances; adding a deviation to Minn. Stat. 518A.34 when an obligee of child support resides in a country other than the U.S. which has a higher or lower standard of living; amending the statute dealing with work-related or education-related child care costs and suspension of an order by the public authority for child care expenses; modifying provisions governing health care coverage; amending the statute providing that judgments are good for ten years to specify that it does not apply to child support judgments, including judgments by operation of law; adding special provisions dealing with the nonexpiration of child support judgments, with retroactive applicability to judgments that exist on or before the date of enactment and to all judgments that come into existence after that date, including judgments by operation of law; and amending the statute dealing with child support judgments allowing the interest rate on judgments to be consistent with general law. Various effective dates.

Real Property Law

  • Chapter 73. H.F. 1919/S.F. 2161. Platting Statute Amendments. A recodification of the platting statute, this legislation clarifies the permissible uses of platting; defines terms; updates the statute to reflect changes in standards, technologies, and processes; cross references to reduce redundancies; and logically organizes the plat preparation and recording requirements. Effective date: August 1, 2007.
  • Chapter 90. S.F. 303/H.F. 267. Municipal Boundary Adjustment Advisory Task Force. This legislation modifies municipal boundary adjustment provisions and extends the advisory task force study report due date to January 2008. This report, which was originally due in January 2007, is to outline recommendations on what changes should be made to the law regarding municipal boundary adjustments. Effective date: May 22, 2007.
  • Chapter 92. H.F. 849/S.F. 961. Shoreland Resorts Regulation. This legislation will allow resort owners to conduct maintenance on existing structures and replace damaged or destroyed structures as long as they continue to operate as resorts. It also allows owners to “minimally” expand structures when necessary to bring them into code compliance, provided that they do not bring the structures any closer to shoreline. Effective date: August 1, 2007.
  • Chapter 116. S.F. 1396/H.F. 1629. Fair Market Value in Certain Dedication Proceedings. This legislation amends the dedication provisions of municipal planning and zoning law, specifically the provision that allows a city or township to accept a cash fee in lieu of dedication of land. This bill clarifies that fair market value is to be determined by the average fair market value of unplatted land that is under the city’s adopted comprehensive plan and may be served by municipal sanitary sewer and water service, community septic, or private well. The old standard would still be used for redevelopment on previously developed land. Effective date: August 1, 2007.
  • Chapter 141. S.F. 1196/H.F. 1205. Establishing the Manufactured Home Relocation Trust Fund. This legislation creates the Minnesota Manufactured Home Relocation Trust Fund as a separate account in the Housing Development Account. Park owners would be required to pay into the account when they move, change usage or close a home park. Manufactured home owners are entitled to relocation costs from this fund, if they are required to relocate due to park closure or conversion. Various effective dates.
  • Chapter 150. S.F. 493/H.F. 49. Defining Certain Criminal Gang Behavior as a Public Nuisance. This legislation classifies certain gang activities and the habitual use of particular places for gang activity as a public nuisance. A county or city attorney, the attorney general, or any Minnesota resident may file a suit to stop the nuisance-creating activity or accommodation of the activity. A court may additionally order reasonable requirements to prevent future gang activities. Penalties for violation of a court order are punishable by a fine or criminal penalty. Effective date: August 1, 2007.

Probate Law

  • Chapter 120. S.F. 883/H.F. 1074. Darlene Luther Revised Uniform Anatomical Gift Act. This legislation adopts the Revised Uniform Anatomical Gift Act. Effective date: April 1, 2008.
  • Chapter 126. H.F. 1396/S.F. 795. Guardianship and Conservatorship Study. This legislation requires that the state court administrator convene a study group to make recommendations on guardianship and conservatorship. The group will include representatives from district court probate divisions, county adult protection services, the MSBA, the Department of Veterans Affairs, the Minnesota Association for Guardianship and Conservatorship, the National Guardianship Association, and other involved parties. Study is due back to the Legislature by March 15, 2008.

Public Law

  • Chapter 83. S.F. 1755/H.F. 1486. Charitable Organizations Authorized for Joint Powers Agreements. This legislation adds charitable organizations to the list of entities that are authorized to enter into joint powers agreements with other governmental units. The charitable organization would have to meet the definition found in Chapter 309 which regulates charitable solicitations and would have to be properly registered with the attorney general. Effective date: August 1, 2007.
  • Chapter 110. H.F. 1303/S.F. 1165. Authorizing Meetings by Telephone or Other Electronic Means Under Certain Conditions. This legislation amends the open meeting law to allow for meetings to be held by telephone or other electronic means in the case of pandemic flu or emergency declaration. Effective date: August 1, 2007.

Editor’s Note: Portions of this report were taken from documents prepared by the Minnesota Legislature and the Minnesota Legislature website. This report is not legal advice. You must read each chapter for its specific terms.


Thanks!

The MSBA thanks the chairs of the House Public Safety and Civil Justice Committee, lawyer-legislator Rep. Joe Mullery (DFL-Minneapolis); the Senate Judiciary Committee, lawyer-legislator Sen. Mee Moua (DFL-St. Paul); the House Public Safety Finance Division, Rep. Michael Paymar (DFL-St. Paul) and the Senate Public Safety Budget Division, Sen. Linda Higgins (DFL-Minneapolis); along with the House, Senate and Revisor’s staff, for their work with MSBA during the 2007 legislative session. The MSBA also thanks all the lawyer-legislators, and their staffs, who supported the MSBA:

House of Representatives
Rep. Joe Atkins (DFL-Inver Grove Heights)
Rep. John Berns (R-Wayzata)
Rep. Chris DeLaForest (R-Andover)
Rep. Tom Emmer (R-Delano)
Rep. Melissa Hortman (DFL-Brooklyn Park)
Rep. Paul Kohls (R-Minneapolis)
Rep. John Lesch (DFL-St. Paul)
Rep. Tina Liebling (DFL-Rochester)
Rep. Terry Morrow (DFL-St. Peter)
Rep. Dave Olin (DFL-Thief River Falls)
Rep. Steve Simon (DFL-St. Louis Park)
Rep. Steve Smith (R-Mound)
Rep. Paul Thissen (DFL-Minneapolis)
Rep. Jean Wagenius (DFL-Minneapolis)
Rep. Torrey Westrom (R-Elbow Lake)
Rep. Ryan Winkler (DFL-Golden Valley)

Senate
Sen. Ellen Anderson (DFL-St. Paul)
Sen. Don Betzold (DFL-Fridley)
Sen. Satveer Chaudhary (DFL-Fridley)
Sen. Tarryl Clark (DFL-St. Cloud)
Sen. Dick Cohen (DFL-St. Paul)
Sen. Leo Foley (DFL-Coon Rapids)
Sen. Ron Latz (DFL-St. Louis Park)
Sen. Geoff Michel (R-Edina)
Sen. Tom Neuville (R-Northfield)
Sen. Mary Olson (DFL-Bemidji)
Sen. Julianne Ortman (R-Chanhassen)
Sen. Linda Scheid (DFL-Brooklyn Park)
Sen. Chuck Wiger (DFL-North St. Paul)

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