Does anyone know more about this? Would extended family members have to file a motion if they wanted custody? Is it even possible to get the children placed with extended family right now?

The above are excerpts from a Minnesota DHS training manual. I have made a post in the leak thread, but I will relay the information I have found here. I have spent the last couple of days doing extensive research on this topic.
There are two phases of foster placement, there is "initial placement," which constitutes the immediate, emergent removal of the children and their placement in a safe environment. The second is "permanent placement," which does not mean that the children are permanently removed from the home, or custody of the children by the parents is permanently revoked, but that the children are permanently placed with a household until the completion of the case. The period between these two events is called "permanency planning" or "the move to permanency."
What your document is referring to is the legal requirement that KCHHS to do an extensive search, notification, and assessment of all relatives of the children. This is a legal requirement
even if the children have been initially placed with family.
Minnesota DHS internal policy is very clear, that even for the purposes of initial placement, family members with preexisting relationships be considered before anyone else. More importantly, the licensing requirements do not apply to initial placement, and DHS will actively assist any family member willing to be a permanent foster for kinship placement purposes in the licensing process, and will also assist in the application process for any local, state, and federal aid programs.
Edit: to be clear, it is an almost certainty that the children have
always been in the care of a close relative, and will continue to be in the care of close relatives for the full duration of the case.