HB2202 103RD GENERAL ASSEMBLY

LRB103 26411 AMQ 52774 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB2202

Introduced 2/8/2023, by Rep. Jay Hoffman

SYNOPSIS AS INTRODUCED:

New Act
30 ILCS 105/5.990 new
30 ILCS 105/5.991 new

Creates the Underground Carbon Dioxide Storage Act. Provides that the Act applies to the underground storage of carbon dioxide but does not apply to extractable mineral resources, and the rights and requirements of the Act are subordinate to the rights pertaining to oil, gas, and coal resources. Provides that a storage operator may not operate a storage facility without a storage facility permit issued by the Department of Natural Resources. Includes provisions regarding: pore space ownership; integration of ownership interests; fees; requirements for drilling near a storage facility; the applicability of certain tort claims; certificate of project completion; and rulemaking. Creates the Carbon Dioxide Storage Administrative Fund and the Carbon Dioxide Long-Term Trust Fund. Makes corresponding changes in the State Finance Act. Effective immediately.

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Underground Carbon Dioxide Storage Act.

Section 5. Statement of policy. The General Assembly finds that it is in the public interest to promote the permanent underground storage of carbon dioxide. Underground storage of carbon dioxide benefits the citizens of this State by reducing greenhouse gas emissions and by supporting jobs and economic development in local communities. Therefore, it is the policy of this State to promote the use and employment of technologies that enable the capture of carbon dioxide for the purpose of storing the carbon dioxide underground in a permanent manner.

Section 10. Applicability.

(a) This Act applies to the underground storage of carbon dioxide.

(b) Except as otherwise provided in this Act, this Act does not apply to extractable mineral resources.

(c) The rights and requirements of this Act:

(1) are subordinate to the rights pertaining to oil, gas, and coal resources; and

(2) may not adversely affect oil, gas, and coal resources, except as is strictly necessary to construct and maintain a storage facility that will provide for permanent storage of carbon dioxide.

Section 15. Definitions. As used in this Act:

"Carbon dioxide" means the chemical compound composed of one carbon and 2 oxygen atoms and includes phases, mixtures, and combinations of carbon dioxide, whether fluid, liquid or gaseous, stripped, segregated, or divided from any other fluid stream thereof, plus incidental associated substances derived from the source materials and the capture process, and any substances added to the stream to enable or improve the injection process.

"Carbon dioxide injection well" refers to a well that is used to inject carbon dioxide into a storage facility pursuant to a UIC Class VI well permit.

"Carbon dioxide plume" means the underground, 3-dimensional extent of an injected carbon dioxide stream.

"Department" means the Department of Natural Resources.

"Mineral lessee" means a lessee, identified by the records of the recorder of deeds for each county containing a portion of the proposed storage facility, who holds an interest in minerals on real property that are located above, below, or within the proposed storage facility that has been severed from the surface estate by grant, exception, reservation, lease, or any other means.

"Mineral owner" means an owner identified by the records of the recorder of deeds for each county containing a portion of the proposed storage facility who holds an interest in minerals on real property that are located above, below, or within the proposed storage facility that has been severed from the surface estate by grant, exception, reservation, lease, or any other means.

"Pore space" means subsurface cavities or voids that can be used as a storage space for carbon dioxide.

"Pore space owner" means a person, a trust, a corporation, or another entity that has title to, a right to, or an interest in pore space.

"Proposed storage facility" means a subsurface sedimentary stratum, formation, aquifer, cavity, or void that is naturally or artificially created for the use of, or is capable of being made suitable for, injecting and storing carbon dioxide and which a storage operator proposes to develop as a storage facility for the underground storage of carbon dioxide.

"Storage facility" means the subsurface area consisting of the extent of a carbon dioxide plume which is required to be delineated in an approved UIC Class VI well permit or an amendment to a UIC Class VI well permit of a storage operator.

"Storage operator" means a person, a trust, a corporation, or another entity that operates a storage facility.

"Surface or subsurface property interest owner" means a property interest owner identified by the records of the recorder of deeds for each county containing a portion of the proposed storage facility who holds a fee simple interest, other freehold interest, or leasehold in the surface or subsurface of the property, which may include mineral rights.

"UIC Class VI well permit" means a permit issued under the Underground Injection Control program of the federal Safe Drinking Water Act that allows a person, a trust, a corporation, or another entity to operate a carbon dioxide injection well.

"Underground storage of carbon dioxide" means the injection and permanent storage of carbon dioxide into underground strata and formations pursuant to at least one UIC Class VI well permit.

Section 20. Pore space ownership.

(a) Unless expressly modified, reserved, or altered by a deed, conveyance, lease, or contract, the ownership of the pore space underlying a surface estate is declared to be vested in and owned by the owner or owners of the surface estates above the pore space.

(b) This Act does not alter, amend, diminish, or invalidate common law established prior to the effective date of this Act regarding the relationship between the mineral estate and the surface estate.

(c) A grant of (i) an easement to use or (ii) a lease of pore space for underground storage of carbon dioxide is in perpetuity if specified by an easement or lease. Unless an individual who obtains an easement or lease operates carbon dioxide injection not later than 20 years after obtaining the easement or lease, interest shall lapse, extinguish, and revert to the owner of the surface estate.

Section 25. Integration of ownership interests.

(a) If at least 2 pore space owners own pore space located within a proposed carbon dioxide storage area of a storage facility, the owners may agree to integrate the owners' interests to develop the pore space as a proposed storage facility for the underground storage of carbon dioxide.

(b) If all of the owners of the pore space under subsection (a) do not agree to integrate the owners' interests, the Department may issue an order requiring the owners to integrate the owners' interests and to develop the pore space as a proposed storage facility for the underground storage of carbon dioxide to serve the public interest subject to the findings under subsection (c).

(c) Before issuing an order under subsection (b), the Department must make the following findings:

(1) that the storage operator has undertaken specific efforts to obtain a UIC Class VI well permit and is reasonably likely to obtain such a permit;

(2) that the storage operator has made a good faith effort to obtain the consent of all pore space owners located within the proposed storage facility;

(3) that the storage operator has obtained the consent of the owners of the pore space underlying at least 61% of the surface area above the proposed storage facility or amended proposed storage facility; and

(4) that all pore space owners who do not agree to integrate the owners' interests to develop the pore space as a proposed storage facility for the underground storage of carbon dioxide are or will be equitably compensated.

(d) Any unknown or missing pore space owner shall be deemed to have consented to integrate the owner's interest if the proposed storage operator complied with the notice requirements in paragraph (3) of subsection (b) of Section 30. Any unknown or missing pore space owner shall be deemed eligible for equitable compensation pursuant to paragraph (4) of subsection (c).

(e) A right to pore space granted by this Section does not confer a right to enter upon, or otherwise use, the surface of the land that is integrated under this Section unless provided in an order requiring the owners to integrate the owners' interests and to develop the pore space as a proposed storage facility for the underground storage of carbon dioxide.

Section 30. Injection permits.

(a) Injection permits have the following requirements:

(1) A storage operator may not operate a storage facility in this State without:

(A) a UIC Class VI well permit; and

(B) a valid permit issued by the Department.

(2) If a storage facility is owned by an entity other than the storage operator, the storage operator shall be responsible for obtaining a permit for a storage facility under paragraph (1). A permit for a storage facility may be transferred or assigned from one storage operator to another storage operator.

(3) An entity shall apply to the Department for a permit for a storage facility in a form and manner prescribed by the Department.

(4) An application under paragraph (3) must include the following:

(A) a filing fee of $1,000;

(B) the signature of the applicant;

(C) a statement verifying that the information submitted is true, accurate, and complete to the best of the applicant's knowledge;

(D) a statement that the interests of a mineral lessee or mineral owner will not be adversely affected. If a mineral owner or mineral lessee is adversely affected, the adversely affected mineral owner or mineral lessee and the applicant may enter into an agreement under Section 25;

(E) documentation describing the scope of the proposed project and copies of any relevant federal permits, including UIC Class VI well permits, once obtained; and

(F) an estimate of the amount of carbon dioxide to be injected into a storage facility.

(b) Injection permit applications have the following procedural requirements:

(1) The Department shall review an application submitted under subsection (a). If the Department determines that the application is complete, the Department shall notify the applicant. If the Department determines that the application is incomplete, inaccurate, or both, the Department shall return the application to the applicant.

(2) If the Department returns an application to an applicant under paragraph (1), the Department shall inform the applicant in writing that the applicant may file a corrected application not more than 60 days after the receipt of the returned application. Upon receiving a corrected application, the Department shall review the application. If the Department determines that the corrected application is complete, the Department shall notify the applicant.

(3) Upon receiving notification that the application or corrected application is complete, the applicant shall:

(A) not more than 60 days after receiving the notice that the application or corrected application is complete:

(i) place a copy of the application in a public library located in each county in which the storage facility is proposed to be located for public inspection;

(ii) publish notice under the Notice By Publication Act in each county in which the storage facility is proposed to be located and the name and address of each library in which a copy of the application is placed as required by item (1); and

(iii) provide mailed notice to each known and locatable surface estate, mineral estate, and pore space owner within or adjacent to the storage facility; and

(B) not more than 30 days after the publication or delivery of the notice under subparagraph (A), provide to the Department proof of publication of notice.

(4) Not later than 90 days after receiving proof of publication of notice under subparagraph (B) of paragraph (3), the Department shall notify the applicant in writing that the Department has either approved or denied the application.

(c) If the Department approves an application under this Section, the Department shall issue to the applicant a storage facility permit.

(d)(1) If a storage operator identifies information as trade secret or confidential and proprietary information in its permit application, the Department shall take all necessary precautions to avoid public disclosure of that information.

(2) If any entity other than the storage operator files with the Department a request for release of the confidential information identified in paragraph (1) including a statement of the reasons that the information should be disclosed, the Department shall consult with the storage operator. The Department may only release information identified in paragraph (1) if the storage operator consents.

Section 35. Fees.

(a) At the conclusion of each calendar year, the storage operator shall pay the Department a fee of $0.06 for every ton of carbon dioxide injected into a storage facility in that year, deposited into the Carbon Dioxide Storage Administrative Fund.

(b) Upon approval by the Department of an application for certificate of completion, the storage operator shall pay an additional one-time transfer fee of $0.02 per ton of carbon dioxide injected and stored at the storage facility over the permit period, deposited into the Carbon Dioxide Storage Long-Term Trust Fund.

Section 40. Funds.

(a) There is hereby created the Carbon Dioxide Storage Administrative Fund to be held as a separate fund within the State treasury and to be administered by the Department. Moneys in the fund shall be expended only as authorized by this Act.

(1) The fee collected in subsection (a) of Section 35 shall be deposited into the Carbon Dioxide Storage Administrative Fund.

(2) Moneys in the Carbon Dioxide Storage Administrative Fund may only be used:

(A) to defray expenses incurred by the Department for the regulation of storage facilities during their construction, operational, and pre-closure phases; or

(B) if the Carbon Dioxide Long-Term Trust Fund becomes depleted, to defray expenses incurred by the Department for the long-term monitoring and management of storage facilities after the department issues a certificate of project completion.

(b) There is hereby created the Carbon Dioxide Storage Long-Term Trust Fund to be held as a separate fund within the State treasury and to be administered by the Department. Moneys in the fund shall be expended only as authorized by this Act.

(1) The fee collected in subsection (b) of Section 35 shall be deposited into the Carbon Dioxide Long-Term Trust Fund.

(2) Moneys in the Carbon Dioxide Long-Term Trust Fund may only be used to defray expenses incurred by the Department for the long-term monitoring and management of storage facilities after the Department issues a certification of project completion.

Section 45. Requirements for drilling near a storage facility.

(a) A mineral owner or mineral lessee shall provide written notice to a storage operator at least 31 days prior to drilling a well if the mineral owner or mineral lessee wishes to drill a well not more than:

(1) 330 feet from the surface location of a well pursuant to a UIC Class VI well permit; or

(2) 500 feet from the uppermost confining zone of a storage facility pursuant to a UIC Class VI well permit.

(b) A well drilled under subsection (a) must be drilled in compliance with the requirements of:

(1) the Department to preserve the integrity of the storage facility;

(2) a UIC Class VI well permit; and

(3) any other applicable rules or regulations.

Section 50. Applicability of certain tort claims.

(a) A claim of subsurface trespass shall not be actionable against a storage operator conducting underground storage of carbon dioxide in accordance with a valid UIC Class VI well permit unless the claimant proves that injection or migration of carbon dioxide (i) constitutes an invasion of another's interest in the use and enjoyment of his or her land that is substantial, either intentional or negligent, unreasonable, and perceptible to the senses, or (ii) has caused direct physical injury to a person, an animal, or tangible property.

(b) A surface or subsurface property interest holder shall be permitted to recover money damages only for the loss of a nonspeculative value resulting from the injection and migration of carbon dioxide beyond the storage facility.

(c) A surface or subsurface property interest holder may seek punitive damages in accordance with Section 2-604.1 of the Code of Civil Procedure only if the storage operator knowingly or willfully violates the requirements of a UIC Class VI well permit or acts with reckless disregard for public safety.

Section 55. Certificate of project completion.

(a) Upon application from a storage operator, the Department shall consider whether each of the following factors is satisfied in determining whether to issue a certificate of project completion. The Department may only issue the certificate if the Department finds that the storage operator:

(1) is in compliance with all applicable laws governing the storage facility;

(2) shows that the storage facility is reasonably expected to retain the carbon dioxide stored therein;

(3) shows that the carbon dioxide in the storage facility is stable by showing either that:

(A) the stored carbon dioxide is essentially stationary; or

(B) if the stored carbon dioxide migrates, migration will be likely to remain within the storage facility;

(4) shows that any long-term monitoring wells, equipment, and facilities used after the closure period are in good condition and retain mechanical integrity;

(5) shows that injection wells have been plugged;

(6) shows that equipment and facilities, not including fixed structures and long-term monitoring equipment and wells, have been removed; and

(7) shows the following with respect to site closure:

(A) the storage operator has provided a notice of intent for site closure to the United States Environmental Protection Agency, or to the State regulatory body if the State assumes primacy for UIC Class VI well permitting;

(B) site closure has been authorized by the United States Environmental Protection Agency, or by the State regulatory body if the State assumes primacy for UIC Class VI well permitting; and

(C) the storage operator has provided to the United States Environmental Protection Agency the site closure report required under 40 CFR 146.93(f) on the effective date of this Act, or has provided a comparable report to the State regulatory body if the State assumes primacy for UIC Class VI well permitting.

(b) Not later than 90 days after receiving an application from the storage operator, the Department shall either:

(1) issue a certificate of project completion; or

(2) if the Department determines that the application for a certificate of project completion is incomplete, inaccurate, or both, return the application to the storage operator.

(c) If the Department returns the application to the storage operator under subsection (b), the Department shall inform the storage operator, in writing, of the deficiencies of the submitted application and inform the storage operator of the right to file a corrected application with the Department.

(d) Upon issuance of a certificate of project completion and payment of the fee under subsection (b) of Section 35, the following occurs:

(1) Title to the storage facility and all carbon dioxide stored therein is immediately transferred to the State. Title acquired by the State under this subsection includes all rights, and interests in, and all responsibilities associated with, the stored carbon dioxide and the storage facility. Notwithstanding the foregoing, no party may transfer to the State, and the State may not accept, any property interests or rights that the party does not own or have legal authority to transfer.

(2) The State assumes responsibility for all regulatory requirements associated with the storage facility and stored carbon dioxide, and the storage operator and the owner of the storage facility are released from responsibility for all regulatory requirements associated with the storage facility and stored carbon dioxide.

(3) The State assumes any potential liability associated with the storage facility and stored carbon dioxide.

(e) A certificate of project completion shall be void if the Department finds, after a hearing, that the storage operator obtained the certificate on the basis of gross misconduct, including intentional misrepresentation of information to the Department that the Department relied upon, gross negligence, willful deceit, or criminal wrongdoing. A storage operator may appeal this finding in a court of competent jurisdiction.

(f) Unless there is documentation to the contrary, the storage operator holds title to the carbon dioxide injected into and stored in a storage facility until and unless the storage operator:

(1) obtains a certificate of project completion from the Department; or

(2) expressly conveys title to a third party.

Section 60. Rules. The Department shall adopt rules to implement this Act within 180 days after the effective date of this Act.

Section 65. The State Finance Act is amended by adding Section 5.990 and 5.991 as follows:

(30 ILCS 105/5.990 new)

Sec. 5.990. The Carbon Dioxide Storage Administrative Fund.

(30 ILCS 105/5.991 new)

Sec. 5.991. The Carbon Dioxide Long-Term Trust Fund.

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 99. Effective date. This Act takes effect upon becoming law.