SB1697 104TH GENERAL ASSEMBLY

LRB104 09225 AAS 19282 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB1697

Introduced 2/5/2025, by Sen. Laura Fine

SYNOPSIS AS INTRODUCED:

220 ILCS 75/20
220 ILCS 75/22 new
415 ILCS 185/15

Amends the Carbon Dioxide Transportation and Sequestration Act. Provides that the Illinois Commerce Commission shall not issue any certificate of authority under the Act before July 1, 2026. Removes language providing that if, after July 1, 2026, the Pipeline and Hazardous Materials Safety Administration has not adopted final revisions to specified pipeline safety rules, the Commission may only approve a certificate of authority if it finds that the applicant has met all of the requirements of the Act, has already acquired all of its other necessary approvals, and is compliant with any requirements or conditions adopted by the Commission. Provides that a nonconsenting pore space owner's compensation shall include just compensation and any operations term or injection term payments made upon or after the initiation of injection provided to consenting pore space owners in consideration of allowing use of their pore space for sequestration of carbon dioxide. Provides that a nonconsenting pore space owner's compensation shall be no less than the average total payment package, considered as a whole with respect to an individual owner, provided in agreements to similarly situated consenting pore space owners for use of their pore space by the same sequestration operator for the same sequestration project (instead of provided in agreements during the previous 365 days to similarly situated consenting pore space owners). Amends the Safety and Aid for the Environment in Carbon Capture and Sequestration Act. Provides that an affected landowner is entitled to reasonable compensation from an applicant that has been granted a certificate of authority under this Act for damages resulting from access to the landowner's property for required activities taken to construct the pipeline, including, but not limited to, compensation for specified damages. Sets forth provisions concerning payment of the compensation; attorney's fees; and an applicant entering into an agreement with the Department of Agriculture that governs the mitigation of agricultural impacts associated with the construction of the proposed pipeline. Makes other changes.

A BILL FOR

AN ACT concerning regulation.

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

Section 5. The Carbon Dioxide Transportation and Sequestration Act is amended by changing Section 20 and by adding Section 22 as follows:

(220 ILCS 75/20)

Sec. 20. Application.

(a) No person or entity may construct, operate, or repair a carbon dioxide pipeline unless the person or entity possesses a certificate of authority. Nothing in this Act requires a legacy carbon dioxide pipeline to obtain a certificate of authority.

(b) The Commission, after a hearing, may grant an application for a certificate of authority authorizing the construction and operation of a carbon dioxide pipeline if it makes a specific written finding as to each of the following:

(1) the application was properly filed;

(2) the applicant is fit, willing, and able to construct and operate the pipeline in compliance with this Act and with Commission regulations and orders of the Commission or any applicable federal agencies;

(3) the applicant has entered into one or more agreements with a source or sources that will result in the reduction of carbon dioxide emissions from that source or sources and the applicant has filed such agreement or agreements as part of its application;

(4) the applicant has filed with the Pipeline and Hazardous Materials Safety Administration of the U.S. Department of Transportation all forms required by that agency in advance of constructing a carbon dioxide pipeline;

(5) the applicant has filed with the U.S. Army Corps of Engineers all applications for permits required by that agency in advance of constructing a carbon dioxide pipeline;

(6) the applicant has entered into an agreement with the Illinois Department of Agriculture that governs the mitigation of agricultural impacts associated with the construction of the proposed pipeline;

(6.1) the applicant has applied for any and all other federal permits necessary to construct and operate a carbon dioxide pipeline;

(6.2) the applicant has held at least 2 prefiling public meetings to receive public comment concerning the proposed carbon dioxide pipeline in each county where the pipeline is to be located, no earlier than 6 months prior to the filing of the application. Notice of the public meeting shall be published in a newspaper of general circulation within the affected county once a week for 3 consecutive weeks, beginning no earlier than one month prior to the first public meeting. Notice of each public meeting, including a description of the carbon dioxide pipeline, must be provided in writing to the clerk of each county where the project is to be located and to the chief clerk of the Commission. A representative of the Commission shall be invited to each prefiling public meeting. The applicant shall maintain a dedicated public website which provides details regarding the proposed route of the pipeline, plans for construction, status of the application, and the manner in which members of the public may offer their opinions regarding the pipeline;

(6.3) the applicant has directly contacted the owner of each parcel of land located within 2 miles of the proposed pipeline route by certified mail, or made good faith efforts if the owner of record cannot be located, advising them of the proposed pipeline route and of the date and time of each public meeting to be held in the county in which each landowner's property is located;

(6.4) the applicant has prepared and submitted a detailed emergency operations plan, which addresses at a minimum, emergency operations plan requirements adopted by the Illinois Emergency Management Agency and Office of Homeland Security under paragraph (4) of subsection (f) of Section 5 of the Illinois Emergency Management Agency Act. The submitted emergency operations plan shall also provide for post-emergency analysis and controller actions. In addition, the applicant shall demonstrate that it has communicated with the county emergency services and disaster agency (ESDA), or other relevant mandated ESDA, to coordinate its emergency operations plan for the pipeline with the county ESDA's, or other relevant mandated ESDA's, emergency operations plan;

(7) the applicant possesses the financial, managerial, legal, and technical qualifications necessary to construct and operate the proposed carbon dioxide pipeline; and

(8) the proposed pipeline is consistent with the public interest, public benefit, and legislative purpose as set forth in this Act. In addition to any other evidence the Commission may consider on this specific finding, the Commission shall consider the following:

(A) any evidence of the effect of the pipeline upon the economy, infrastructure, and public safety presented by local governmental units that will be affected by the proposed pipeline route;

(B) any evidence of the effect of the pipeline presented by property owners who will be affected by the proposed pipeline or facility, provided that the Commission need not hear evidence as to the actual valuation of property such as that as would be presented to and determined by the courts under the Eminent Domain Act;

(C) any evidence presented by the Department of Commerce and Economic Opportunity regarding the current and future local, statewide State-wide, or regional economic effect, direct or indirect, of the proposed pipeline or facility including, but not limited to, ability of the State to attract economic growth, meet future energy requirements, and ensure compliance with environmental requirements and goals;

(D) any evidence addressing the factors described in items (1) through (8) of this subsection (b) or other relevant factors that is presented by any other State agency, unit of local government, the applicant, a party, or other entity that participates in the proceeding, including evidence presented by the Commission's staff; and

(E) any evidence presented by any State or federal governmental entity as to how the proposed pipeline will affect the security, stability, and reliability of public infrastructure.

In its written order, the Commission shall address all of the evidence presented, and if the order is contrary to any of the evidence, the Commission shall state the reasons for its determination with regard to that evidence.

(c) When an applicant files its application for a certificate of authority with the Commission, it shall provide notice to each unit of local government where the proposed pipeline will be located and include a map of the proposed pipeline route. The applicant shall also publish notice in a newspaper of general circulation in each county where the proposed pipeline is located.

(d) An application for a certificate of authority filed pursuant to this Section shall request either that the Commission review and approve a specific route for a carbon dioxide pipeline, or that the Commission review and approve a project route width that identifies the areas in which the pipeline would be located, with such width ranging from the minimum width required for a pipeline right-of-way up to 200 feet in width. A map of the route or route width shall be included in the application. The purpose for allowing the option of review and approval of a project route width is to provide increased flexibility during the construction process to accommodate specific landowner requests, avoid environmentally sensitive areas, or address special environmental permitting requirements.

(e) The Commission's rules shall ensure that notice of an application for a certificate of authority is provided within 30 days after filing to the landowners along a proposed project route, or to the potentially affected landowners within a proposed project route width, using the notification procedures set forth in the Commission's rules. If the Commission grants approval of a project route width as opposed to a specific project route, then the applicant must, as it finalizes the actual pipeline alignment within the project route width, file its final list of affected landowners with the Commission at least 14 days in advance of beginning construction on any tract within the project route width and also provide the Commission with at least 14 days' notice before filing a complaint for eminent domain in the circuit court with regard to any tract within the project route width.

(f) If an applicant has obtained all necessary federal licenses, permits, and authority necessary to construct and operate a carbon dioxide pipeline before it files an application pursuant to this Section, then the Commission shall make its determination on any application for a certificate of authority and issue its final order within 11 months after the date that the application is filed. The Commission's failure to act within this time period shall not be deemed an approval or denial of the application.

(g) A final order of the Commission granting a certificate of authority pursuant to this Act shall be conditioned upon the applicant obtaining all required permits or approvals from the Pipeline and Hazardous Materials Safety Administration of the U.S. Department of Transportation, U.S. Army Corps of Engineers, and Illinois Department of Agriculture, in addition to all other permits and approvals necessary for the construction and operation of the pipeline prior to the start of any construction. The final order must specifically prohibit the start of any construction until all such permits and approvals have been obtained. The Commission shall not issue any certificate of authority under this Act before July 1, 2026 and until (i) the Pipeline and Hazardous Materials Safety Administration has adopted final revisions to its pipeline safety rules intended to enhance the safe transportation of carbon dioxide by pipelines to accommodate an anticipated increase in the number of carbon dioxide pipelines and volume of carbon dioxide transported in the proposed rulemaking designated Regulatory Information Number 2137-AF60, and (ii) the Commission has verified that the submitted application complies with those finalized rules. If, after July 1, 2026, the Pipeline and Hazardous Materials Safety Administration has not adopted final revisions to its pipeline safety rules under the proposed rulemaking designated Regulatory Information Number 2137-AF60, the Commission may only approve a certificate of authority under this Section if it finds that the applicant has met all of the requirements of this Act, has already acquired all of its other necessary approvals, and is compliant with any requirements or conditions adopted by the Commission subsection (g-5).

(g-5) In granting a certificate under this Act, the Commission shall adopt such requirements or impose such conditions upon a certificate as in its opinion are necessary to preserve public safety, as long as such requirements are compatible with the minimum standards prescribed by the Pipeline and Hazardous Material Safety Administration.

(h) Within 6 months after the Commission's entry of an order approving either a specific route or a project route width under this Section, the owner or operator of the carbon dioxide pipeline that receives that order may file supplemental applications for minor route deviations outside the approved project route width, allowing for additions or changes to the approved route to address environmental concerns encountered during construction or to accommodate landowner requests. The supplemental application shall specifically detail the environmental concerns or landowner requests prompting the route changes, including the names of any landowners or entities involved. Notice of a supplemental application shall be provided to any State agency or unit of local government that appeared in the original proceeding and to any landowner affected by the proposed route deviation at the time that supplemental application is filed. The route deviations shall be approved by the Commission no sooner than 90 days after all interested parties receive notice of the supplemental application, unless a written objection is filed to the supplemental application within 45 days after such notice is received. If a written objection is filed, then the Commission shall issue an order either granting or denying the route deviation within 90 days after the filing of the objection. Hearings on any such supplemental application shall be limited to the reasonableness of the specific variance proposed, and the issues of the public interest and benefit of the project or fitness of the applicant shall be considered only to the extent that the route deviation has raised new concerns with regard to those issues.

(i) A certificate of authority to construct and operate a carbon dioxide pipeline issued by the Commission shall contain and include all of the following:

(1) a grant of authority to construct and operate a carbon dioxide pipeline as requested in the application, subject to the laws of this State; and

(2) the right to seek eminent domain authority from the Commission under Section 8-509 of the Public Utilities Act.

(j) All applications under this Act pending before the Commission on the effective date of this amendatory Act of the 103rd General Assembly shall be dismissed without prejudice.

(Source: P.A. 103-651, eff. 7-18-24.)

(220 ILCS 75/22 new)

Sec. 22. Compensation for damages to the surface.

(a) An affected landowner is entitled to reasonable compensation from an applicant who has been granted a certificate of authority under this Act for damages resulting from access to the landowner's property for required activities taken to construct the pipeline, including, but not limited to, the following:

(1) compensation for damage to growing crops, trees, shrubs, fences, roads, structures, improvements, personal property, and livestock thereon and compensation for the loss of the value of a commercial crop impacted by pipeline installation; the value of the crop shall be calculated based on local market price by:

(A) determining the average per acre yield for the same crop on comparable adjacent acreage;

(B) determining the price received for the sale of the same crop on comparable adjacent acreage;

(C) determining the acreage of the area impacted by pipeline activities and applying the determined price; and

(D) making an initial determination of the value of the crop, which shall be determined by the affected landowner and submitted to the applicant who has been granted a certificate of authority under this Act;

(2) compensation to return the surface estate, including soil conservation practices, such as terraces, grassed waterways, and other conservation practices, to a condition as near as practicable to the condition of the surface prior to accessing the property;

(3) compensation for damage to the productive capability of the soil resulting from compaction or rutting if the parties are incapable of reaching resolution for such issues under the mitigation agreement detailed in paragraph (6) of subsection (b) of Section 20. Such compensation shall include, but is not limited to, compensation for when a pipeline applicant accesses a property where excessively wet soil conditions would not allow normal farming operations due to increased risk of soil erosion, rutting, or compaction; if there is a dispute between the applicant who has been granted a certificate of authority under this Act and the affected landowner regarding the value of the damage to the productive capability of the soil, the applicant who has been granted a certificate of authority under this Act shall consult with a representative of the soil and water conservation district in the respective county where the parcel of property is located for recommendations to restore the productive capability of the soil; and

(4) compensation for damage to surface and subsurface drainage, including, but not limited to:

(A) compensation in that the applicant who has been granted a certificate of authority under this Act shall perform immediate and temporary repairs for damage that occurs to subsurface drainage tiles that have water actively flowing through them at the time of damage; and

(B) compensation such that the applicant who has been granted a certificate of authority under this Act shall compensate the affected landowner to permanently restore drainage to a condition as near as practicable to the condition of the drainage prior to accessing the property.

(b) The compensation for damages required by subsection (a) shall be paid in any manner mutually agreed upon by the applicant who has been granted a certificate of authority under this Act and the affected landowners. Unless otherwise agreed, the applicant who has been granted a certificate of authority under this Act shall tender to the landowner payment by check or draft no later than 60 days after completing the required activities under the application if the occurrence or value of damages is not disputed. The landowner's remedy for unpaid or disputed compensation shall be an action for damages in any court of competent jurisdiction for the parcel of property or the greater part thereof on which the activities were conducted, and the landowner shall be entitled to recover reasonable damages and attorney's fees if the landowner prevails.

(c) If any surface owner prevails in litigation seeking compensation for damages under this Section, the applicant who has been granted a certificate of authority under this Act shall be responsible for such reasonable attorney's fees and costs as the court may allow and a judgment may be entered therefor in favor of the plaintiff if the attorney's fees and costs are not paid as provided by the court.

(d) Nothing in this Section shall have any impact on an applicant's fulfillment of the requirement to enter into an agreement with the Department of Agriculture that governs the mitigation of agricultural impacts associated with the construction of the proposed pipeline as detailed in paragraph (6) of subsection (b) of Section 20.

Section 10. The Safety and Aid for the Environment in Carbon Capture and Sequestration Act is amended by changing Section 15 as follows:

(415 ILCS 185/15)

Sec. 15. Integration and unitization of ownership interests.

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

(b) If all of the pore space owners within a proposed or permitted sequestration facility do not agree to integrate the pore space owners' interests, the sequestration operator may petition the Department of Natural Resources to issue an order requiring the pore space owners to integrate their interests and authorizing the sequestration operator or sequestration facility permit holder to develop and use the integrated pore space as a sequestration facility for carbon sequestration. Such an order for unitization and integration of pore space may only be issued if the sequestration operator has obtained the rights from pore space owners of pore space underlying at least 75% of the surface area above the proposed sequestration facility. The petition shall include, but is not limited to:

(1) the name and address of the petitioners;

(2) the property index numbers or legal descriptions for the parcels of property and a geologic description of the pore space within the proposed or permitted sequestration facility;

(3) a disclosure of any parcels of property overlying the pore space to be integrated, identified by property index numbers or legal descriptions, in which the applicant, any of its owners, officers, corporate subsidiaries, or parents, sister companies, or affiliates, at the time of submission of the application or within 10 years prior to the submission of the application, have or had any real or personal interest, whether direct or indirect;

(4) the names and addresses of all pore space owners owning property within the proposed or permitted sequestration facility as disclosed by the records of the office of the recorder for the county or counties in which the proposed or permitted sequestration facility is situated and a list of consenting and nonconsenting pore space owners, as well as a list of all properties for which a pore space owner is unknown or nonlocatable;

(5) a statement that the petitioner has exercised due diligence to locate each pore space owner and to seek an agreement with each for pore space rights for the sequestration facility, including a description of the good faith efforts taken to identify, contact, and negotiate with each nonconsenting pore space owner;

(6) a statement of the type of operations for the proposed or permitted sequestration facility;

(7) a plan for determining the quantity of pore space sequestration capacity to be assigned to each separately owned parcel of property based on the surface area acreage overlying the proposed or permitted sequestration facility and for using the surface for Class VI well permit required activities under Section 35;

(8) the method by which pore space owners will be compensated for use of the pore space, and a copy of all agreements entered into with consenting pore space owners regarding the compensation paid to a consenting pore space owner;

(9) the method by which nonconsenting pore space owners will receive just compensation; and

(10) a nonrefundable application fee of $250,000.

The application fee shall be deposited into the Oil and Gas Resource Management Fund for the Department of Natural Resources' costs related to administration of this Act.

(c) If the petition for a unitization order concerns unknown or nonlocatable pore space owners, the applicant shall provide public notice once a week for 2 consecutive weeks in the newspaper of the largest circulation in each county in which the proposed sequestration facility is located within 30 days prior to submission of the petition for a unitization and integration order. The petitioner shall file proof of such notice with the Department of Natural Resources with the petition. The petitioner shall also provide public notice of the public hearing described in subsection (d) in the same manner within 30 days prior to the hearing on the petition for a unitization order. The petitioner shall also send notice of the filing of the petition and the notice of the public hearing via certified mail to the last known address of each nonlocatable pore space owner and provide copies of those notices to the Department of Natural Resources. The notice shall:

(1) state that a petition for a unitization and integration order has been filed with the Department of Natural Resources;

(2) describe the formation or formations and pore space proposed to be unitized;

(3) in the case of an unknown pore space owner, indicate the name of the last known pore space owner;

(4) in the case of a nonlocatable pore space owner, identify the pore space owner and the owner's last known address; and

(5) state that any person claiming an interest in the properties proposed to be unitized should notify the operator of the proposed sequestration facility at the published address within 20 days of the publication date.

Unknown or nonlocatable pore space owners that have not claimed an interest by the time of the Department of Natural Resources' public notice in subsection (d) shall be deemed to have consented to unitization and integration of their pore space.

(d) Prior to issuing an order to unitize and integrate pore space, the Department of Natural Resources shall issue a public notice of the petition and shall hold a public hearing on the petition. The public notice shall include copies of the petition and all included attachments that are not protected under the Freedom of Information Act. The public notice shall include an opportunity for public comments and shall contain the date, time, and location of the public hearing as decided by the Department. At the public hearing, the Department shall allow interested persons to present views and comments on the petition. The hearings must be open to the public and recorded by stenographic or mechanical means. The Department of Natural Resources will make available on its website copies of all comments received.

(e) The Department of Natural Resources shall issue an order unitizing and integrating pore space under subsection (b) within 60 days after the hearing upon a showing that:

(1) the petitioner has obtained a Class VI well permit or, if the well permit application is still pending at least one year from the date the petition has been filed, that the petitioner has received a Finding of Administrative Completeness from the United States Environmental Protection Agency;

(2) the petitioner has made a good faith effort to seek an agreement with all pore space owners located within the proposed or permitted sequestration facility;

(3) the petitioner has obtained the rights from pore space owners of at least 75% of the surface area above the proposed sequestration facility; and

(4) all nonconsenting pore space owners have received or will receive just compensation for use of the pore space and use of the surface for Class VI well permit required activities. Additionally, a nonconsenting pore space owner's such compensation shall be no less than the average total payment package, considered as a whole with respect to an individual owner, provided in agreements during the previous 365 days to similarly situated consenting pore space owners for use of their pore space by the same sequestration operator for the same sequestration project. The nonconsenting pore space owner's compensation shall include just compensation and any operations term or injection term payments made upon or after the initiation of injection provided to consenting pore space owners in consideration of allowing use of their pore space for sequestration of carbon dioxide, but Such compensation shall exclude any incentives, such as signing bonuses, provided to consenting pore space owners prior to the initiation of injection. Such compensation shall include any operations term or injection term payments made upon or after the initiation of injection provided to consenting pore space owners in consideration of allowing use of their pore space for sequestration of carbon dioxide. In determining if pore space owners are similarly situated, the Department of Natural Resources shall take into account: the size, location, and proximity of the pore space; the geologic characteristics of the pore space; the restrictions on the use of the surface; the actual use of the surface; the relevant law applicable at the time the consenting pore space agreement was signed; title defects and title warranties; the proximity of the pore space owners' property to any carbon sequestration infrastructure on the surface; whether the injection interferes with any known mineral rights; and the fair market value of pore space when entering into a commercial contract. When evaluating the compensation provided to a similarly situated pore space owner, the Department of Natural Resources shall exclude any compensation provided to a pore space owner of a property identified by the applicant in paragraph (3) of subsection (b) and any compensation that was not provided as part of an arm's length transaction.

Unknown or nonlocatable pore space owners shall also receive just compensation in the same manner as provided to the other nonconsenting pore space owners that must be held in a separate escrow account for 20 years for future payment to the previously unknown or nonlocatable pore space owner upon discovery of that owner. After 20 years, the compensation shall be transferred to the State Treasurer under the Revised Uniform Unclaimed Property Act.

(f) The Department of Natural Resources' order for unitization and integration of pore space under this Section is not effective until the petitioner has been issued a Class VI well permit from the United States Environmental Protection Agency and the carbon sequestration permit from the Illinois Environmental Protection Agency.

(g) An order for integration and unitization under this Section shall: provide for the unitization of the pore space identified in the petition; authorize the integration of pore space of nonconsenting pore space owners in the pore space identified; provide for who may unitize the pore space to establish a sequestration facility to be permitted by the Illinois Environmental Protection Agency; and make provision for payment of just compensation to nonconsenting pore space owner under the integration order.

(h) A petitioner shall provide a copy of any order for unitization and integration of pore space to the Illinois Environmental Protection Agency.

(i) If groundwater monitoring required by a Class VI permit indicates that the source of drinking water has been rendered unsafe to drink or to provide to livestock, the sequestration operator shall provide an alternate supply of potable drinking water within 24 hours of the monitoring results becoming available and an alternate supply of water that is safe for other uses necessary within 30 days of the monitoring results becoming available. The alternate supplies of both potable water and water that is safe for other uses shall continue until additional monitoring by the sequestration operator shows that the water is safe for drinking and other uses.

(j) After an order for unitization and integration of pore space is issued, the petitioner shall request that the Department of Natural Resources issue separate orders establishing the amount of just compensation to be provided to each nonconsenting pore space owner. When submitting this request, the petitioner shall provide information demonstrating the good faith efforts taken to negotiate an agreement with the nonconsenting pore space owner, including, but not limited to, the number and extent of the petitioner's contacts with the pore space owner, whether the petitioner explained the compensation offer to the pore space owner, whether the compensation offer was comparable to similarly situated pore space owners, what efforts were made to address the pore space owner's concerns, and the likelihood that further negotiations would be successful. All orders requiring the provision of just compensation shall be made after notice and hearing in which the Department of Natural Resources shall determine the appropriate amount of just compensation to be provided to each nonconsenting pore space owner as described in this Section. The Department shall adopt reasonable rules governing such hearings as may be necessary. In such a hearing, the burden shall be on the petitioner to prove the appropriate amount of just compensation consistent with this Section. Both the petitioner and the pore space owner shall be permitted to provide testimony and evidence regarding the appropriateness of the amount of just compensation proposed by the sequestration operator. An order by the Department of Natural Resources establishing the appropriate amount of just compensation to be provided to a nonconsenting pore space owner shall be a final agency decision subject to judicial review under the Administrative Review Law. Such proceedings for judicial review may be commenced in the circuit court of the county in which any part of the pore space is situated. The Department of Natural Resources shall not be required to certify any record to the court or file any answer in court or otherwise appear in any court in a judicial review proceeding, unless there is filed in the court with the complaint a receipt from the Department of Natural Resources acknowledging payment of the costs of furnishing and certifying the record. Failure on the part of the plaintiff to file such receipt in court shall be grounds for dismissal of the action.

(Source: P.A. 103-651, eff. 7-18-24.)