SB2981 104TH GENERAL ASSEMBLY

LRB104 17321 BDA 30743 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB2981

Introduced 1/27/2026, by Sen. Graciela Guzmán

SYNOPSIS AS INTRODUCED:

New Act
30 ILCS 105/5.1038 new

Creates the Climate Change Superfund Act. Creates the Illinois Climate Change Superfund as a special fund in the State treasury. Requires at least 40% of the Fund to be spent on projects that directly benefit disadvantaged communities facing climate change impacts. Directs the Environmental Protection Agency to adopt rules within one year, including regarding the apportionment of liability for climate change for payments into the Fund by responsible parties, regarding qualifying expenditures from the Fund, and regarding an Illinois Climate Change Superfund Program. Requires the Agency to establish procedures to challenge its determinations of liability for climate change and provides for judicial review under the Administrative Review Law. Makes findings. Defines terms. Provides that the Act is severable. Makes conforming changes to the State Finance Act.

A BILL FOR

AN ACT concerning safety.

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 Climate Change Superfund Act.

Section 5. Findings. The General Assembly finds that:

(1) Climate alteration poses an extreme threat to the public health, safety, and general welfare in the State. Fossil fuels are by far the largest contributors to climate change. The State must take action to adapt to the impacts of climate change, including impacts from increasing temperatures, extreme weather events, flooding, drought, fragmenting ecosystems, disappearing native biodiversity, exacerbated respiratory illnesses, damaged agricultural outputs, and other climate-change-driven threats.

(2) Adaptation needs include, but are not limited to, improving and expanding local flood control infrastructure to reduce the impact of severe rainfall that is increasingly common across Illinois; installing infrastructure in cities to reduce severe urban heat events; building cooling facilities in communities and on farms for livestock; upgrading drinking water facilities and monitoring equipment to account for changes in groundwater availability and quality; restoring and maintaining wetlands, grasslands, and other native ecosystems to manage distortions in biodiversity; and distributing water, medical resources, and other public health necessities in large urban and isolated rural communities affected by climate disasters.

(3) Scientific analyses attribute more than 70% of post-1988 global greenhouse gas emissions to the world's 100 largest fossil fuel companies, underscoring their elevated responsibility.

(4) Based on decades of research, it is now possible to determine specific fossil fuel producing companies' share of responsibility for greenhouse gases released into the atmosphere over the last 50 years or more, making it possible to assign liability to and require compensation from companies commensurate with the emissions attributable to their fossil fuel production during a given time period.

(5) This Act establishes a climate change adaptation cost recovery program that will require large fossil fuel producers, which have contributed significantly to the buildup of greenhouse gases in the atmosphere, to bear a proportionate share of the cost of infrastructure investments and other expenses necessary for adaptation to the impacts of climate change in Illinois. Large fossil fuel producers are readily identifiable and economically well positioned to contribute to the Illinois Climate Change Superfund.

(6) The obligation to pay under the program will be based on the producers' historic contributions to the accumulation of the greenhouse gases that fuel climate change. The program operates under a standard of strict liability because the challenge associated with adapting to climate change presents onerous costs that would otherwise be unfairly shouldered predominantly by the State and its taxpayers. Responsible parties, as defined in this Act, will be required to pay into the Fund because their fossil fuel extraction and refining played a significant role in causing the climate pollution that now requires significant adaptation investments. This Act is remedial in nature and is not punitive, seeking compensation to address costs resulting from the past actions of polluters. No finding of wrongdoing is required.

(7) The program will cover emissions associated with the responsible parties' fossil fuel production from 2000 through 2024, a period during which the science of climate change was well established, including the role of fossil fuels, and robust data exist to allocate proportional responsibility.

Section 10. Definitions.

"Agency" means the Illinois Environmental Protection Agency.

"Annual payment date" means the date, as determined by the Agency, by which a responsible party shall pay its cost recovery demand.

"Cost recovery demand" means a charge assessed against a responsible party for cost recovery payments, as determined under Section 20.

"Costs" means direct and indirect costs in inflation-adjusted dollars to State, local, and tribal governments and Illinois residents incurred and projected to be incurred in the future to prepare for, prevent, adapt, or respond to the damages and harms associated with the impacts of covered fossil fuel emissions.

"Covered fossil fuel emissions" means, with respect to any entity, the total quantity of greenhouse gases released into the atmosphere at any time resulting from the use of fossil fuels or petroleum products extracted or refined by such entity during the covered period, expressed in metric tons of carbon dioxide equivalent, including, but not limited to, releases of greenhouse gases.

"Covered period" means the period that began January 1, 2000 and ended December 31, 2024.

"Fossil fuel" means coal, crude oil, petroleum products, or fuel gases, or their byproducts.

"Fuel gas" includes, but is not limited to, methane, natural gas, liquefied natural gas, and manufactured fuel gas.

"Fund" means the Illinois Climate Change Superfund established under Section 15.

"Greenhouse gas" means carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and any other substance emitted into the air that may be reasonably anticipated to cause or contribute to anthropogenic climate change.

"Notice of cost recovery demand" means a written or electronic communication informing a responsible party of the amount of cost recovery demand due, payable to the Fund.

"Petroleum products" means a liquid hydrocarbon at atmospheric temperature and pressure that is the product of the fractionation, distillation, or other refining or processing of crude oil and that is used as, usable as, or may be refined as, a fuel or fuel blendstock, including, but not limited to, gasoline, diesel fuel, aviation fuel, bunker fuel, and renewable fuels containing more than 5% petroleum products.

"Program" means the Illinois Climate Change Superfund Program established under Section 25.

"Qualifying expenditures" means expenditures for projects and programs within the State in support of climate change adaptation, including operational and maintenance expenses, and including both new projects and enhancement of existing facilities, infrastructure, or other projects to adapt to the existing and projected impacts from covered fossil fuel emissions. "Qualifying expenditures" includes, but is not limited to:

(1) expenditures for projects and programs that adapt to climate change and climate change's impacts to State, local, and tribal governments and Illinois residents, such as through building and infrastructure resilience;

(2) climate-resilient housing;

(3) green infrastructure enhancements to counter heat island effects;

(4) relocation expenses for residents displaced by acute weather phenomena or long-term changes in local environmental conditions;

(5) water management infrastructure, such as water mains, stormwater systems, and sewers;

(6) emergency response systems for water distribution and emergency cooling stations;

(7) improvements to agricultural facilities to improve crop and livestock durability to extreme weather; and

(8) ecosystem restoration and maintenance on public lands.

"Qualifying expenditures" also includes reasonable expenses associated with the administration of the Fund. "Qualifying expenditures" shall be construed broadly and shall include projects or programs that address climate change as a contributing, even if not sole, factor for adaptation needs. However, all qualifying expenditures must have a rational nexus to localized impacts attributable in part to climate change, and they must serve the goals identified in Section 5.

"Responsible party" means an entity (or a successor in interest to such entity) that, during any part of the covered period, was engaged in the trade or business of extracting fossil fuel or refining crude oil and is determined by the Agency to be responsible for more than one billion tons of covered fossil fuel emissions. "Responsible party" does not include any person who lacks sufficient connection with the State to satisfy the nexus requirements of the United States Constitution.

Section 15. Fund; report.

(a) The Illinois Climate Change Superfund is hereby created as a special fund in the State treasury.

(b) Moneys in the Fund shall, subject to appropriation, be used to implement the program under Section 25 and rules adopted under Section 25, including qualifying expenditures, and to reimburse any outstanding loan made from other funds used to finance the initial costs of the Agency's activities in implementing this Act. Moneys in the Fund shall not be expended for any purposes not specified in this Act or rules adopted under this Act.

(c) Moneys collected under Section 20 and rules adopted under Section 20 shall be deposited into the Fund.

(d) Moneys in the Fund shall be expended on qualifying expenditures in accordance with rules adopted by the Agency under Section 25.

(e) Not less than 40% of the moneys must be expended for projects and programs that directly benefit disadvantaged communities, as defined by the Agency, facing climate change impacts.

(f) The Agency shall prepare and submit a report to the General Assembly within 6 months of the effective date of this Act to make recommendations regarding the size of the Fund under this Section, following consideration of data analyzing the costs to the State, including adaptation needs, from fossil fuel production by responsible parties.

Section 20. Apportionment of liability.

(a) Within one year of the effective date of this Act, the Agency shall adopt rules for, at a minimum, the following purposes, subject to the express conditions described in this Section:

(1) adopting methodologies to identify responsible parties and their applicable share of covered fossil fuel emissions consistent with the provisions of this Act;

(2) registering entities that are responsible parties under the Act;

(3) issuing notices of cost recovery demand to responsible parties informing them of the cost recovery demand amount, the method and location for payment of cost recovery demands, the potential consequences of nonpayment and late payment, and information regarding the rights of parties to contest an assessment, with the following requirements:

(A) with respect to each responsible party, the cost recovery demand shall be equal to an amount that bears the same ratio to the Fund's overall size as the responsible party's applicable share of covered fossil fuel emissions bears to the aggregate applicable shares of covered fossil fuel emissions of all responsible parties;

(B) the applicable share of covered fossil fuel emissions taken into account under this Section for any responsible party shall be the amount of covered fossil fuel emissions attributable to such responsible party; and

(C) if an entity owns a minority interest in another entity of 10% or more, the calculation of the entity's applicable share of covered fossil fuel emissions taken into account under this Section shall include the applicable share of covered fossil fuel emissions taken into account under this Section by the entity in which the responsible party holds a minority interest, multiplied by the percentage of the minority interest held;

(4) accepting payments from, pursuing collection efforts against, and negotiating settlements with responsible parties, with the following requirements:

(A) payments may be made in annual installments over the course of 5 years;

(B) each annual installment under subparagraph (A) must be equal, and, at a minimum, 20% of the amount contained in the notice of cost recovery demand, unless the responsible party has paid more than 80% of that amount in previous installments; and

(C) for the annual installments under subparagraph (A), a responsible party may opt to pay more than 20% of the amount contained in the notice of cost recovery demand at any time; and

(5) adopting procedures for identifying and selecting projects and programs eligible to receive qualifying expenditures, issuance of requests for proposals from localities and not-for-profit and community organizations, grants to private individuals, or other methods as determined by the Agency, and for disbursing moneys from the Fund for qualifying expenditures.

(b) The Agency shall hold at least 2 public hearings, one in-person and one virtual, on proposed rules under this Act.

(c) Within 6 months of adopting the rules under this Act, the Agency shall serve notices of cost recovery demand on each responsible party.

(d) In determining the amount of covered fossil fuel emissions attributable to any entity, the Agency shall use the U.S. Environmental Protection Agency's Emissions Factors for Greenhouse Gas Inventories as applied to the fossil fuel volume data, as those factors existed on December 31, 2024. Additionally:

(1) In determining the amount of greenhouse gas emissions attributable to any entity, the Agency may:

(A) require an entity to provide information to the Agency related to past practices, production, extraction, refining, emissions, or other historical information about the entity necessary or appropriate to enable the Agency to determine whether such entity is a responsible party and, if so, the amount of such responsible party's covered fossil fuel emissions; and

(B) use any pertinent financial information provided by the entity to the Department of Revenue or the United States Department of the Treasury.

(e) Each responsible party shall be strictly liable to the State of Illinois for the amount contained in its notice of cost recovery demand. Each responsible party shall make compensatory payments to the State of Illinois.

(f) The amounts listed in the notice of cost recovery demand shall accrue interest at a rate equal to the rate of inflation for each fiscal year, as measured by the Consumer Price Index for All Urban Consumers as published by the United States Department of Labor for the previous year.

(g) The unpaid balance of all remaining installments shall become due immediately if any of the following occurs:

(1) the responsible party fails to pay any installment by the due date under this Act;

(2) there is a liquidation or sale of substantially all the assets of the responsible party; or

(3) the responsible party ceases to do business.

(h) Payment of the cost recovery demand may be stayed by the Agency or a court pending administrative or judicial resolution, as applicable, of a challenge filed under Section 30. While a cost recovery demand is stayed, it will continue to accrue interest.

(i) Liability under this Act is retroactive for the covered period.

(j) The Agency, the Department of Revenue, and the Attorney General are hereby authorized to implement and enforce the provisions of this Act.

Section 25. Illinois Climate Change Superfund Program; projects to be funded; criteria for eligible projects; rules. Within one year of the effective date of this Act, the Agency shall adopt rules to implement and administer this Act, including to establish an Illinois Climate Change Superfund Program that creates a procedure for acceptance, consideration, and enactment of proposals from the public for qualifying expenditures throughout the State of Illinois. The Agency shall consider submissions from the public and evaluate those submissions based on their eligibility for funding under the program and their potential to assist with addressing the health, safety, and general welfare challenges posed by climate change in Illinois.

Section 30. Appeals process.

(a) The Agency shall establish procedures for an entity to challenge its designation as a responsible party under this Act or the amount of its liability relative to other entities, as determined by reference to its overall fiscal year 2025 profits.

(b) A request for reconsideration shall state the grounds for the request and include supporting documentation. The Agency shall issue a subsequent notice of cost recovery demand or a retraction. It shall be within the Agency's sole discretion to determine whether a further administrative appellate process will be provided. If no further administrative appellate process is provided, the Agency's subsequent notice of cost recovery demand or retraction shall constitute final agency action.

(c) A responsible party may seek judicial review of a determination made by the Agency under this Section under the Administrative Review Law.

(d) A responsible party may not seek judicial review of its liability or of any other determination made by the Agency under this Act under the Administrative Review Law unless it has first exhausted all administrative review opportunities before the Agency.

Section 35. Miscellaneous provisions. This Act does not regulate emissions or restrict responsible parties from future extraction, production, refining, combustion, or sale of fossil fuels, and does not seek to punish responsible parties.

Section 40. State preemption. This Act does not:

(1) relieve the liability of an entity for damages resulting from climate change, as provided by law;

(2) abrogate the authority of home rule jurisdictions to tax, fine, restrict, or otherwise regulate activities of responsible parties, to the extent otherwise permitted by existing State and federal law;

(3) preempt, displace, or restrict any rights or remedies of a person, the State of Illinois, states other than Illinois, units of local government within or outside Illinois, or tribal governments under law relating to a past, present, or future allegation of any of the following:

(A) deception concerning the effects of fossil fuels on climate change;

(B) damage or injury resulting from the role of fossil fuels in contributing to climate change; or

(C) failure to avoid damage or injury related to climate change, including claims for nuisance, trespass, battery, design defect, negligence, failure to warn, or deceptive or unfair practices and claims for injunctive, declaratory, monetary, or other relief; or

(4) preempt or supersede any State law or rule or local ordinance, regulation, policy, or program, including, but not limited to, those that do any of the following:

(A) limit, set, or enforce standards for emissions of greenhouse gases;

(B) monitor, report, or keep records of emissions of greenhouse gases;

(C) collect revenue through fees or levy taxes; or

(D) conduct or support investigations.

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

Section 900. The State Finance Act is amended by adding Section 5.1038 as follows:

(30 ILCS 105/5.1038 new)

Sec. 5.1038. The Illinois Climate Change Superfund.