HB4465 98TH GENERAL ASSEMBLY

LRB098 15843 HLH 54791 b

98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB4465

Introduced , by Rep. André M. Thapedi

SYNOPSIS AS INTRODUCED:

New Act
30 ILCS 105/5.855 new

Creates the Climate Change and Emissions Management Act. Provides that, beginning in calendar year 2016, a facility that has direct greenhouse gas emissions totalling 1,000,000 metric tons or more shall reduce its greenhouse gas emission by a specified amount. Provides that the reduction may be accomplished by applying emission offsets and emission performance credits to the facility's total annual greenhouse gas emissions or by making payments to the Climate Change and Emissions Management Fund. Creates the Climate Change and Emissions Management Fund. Contains provisions concerning reports, records, penalties, and rulemaking. Effective immediately.

FISCAL NOTE ACT MAY APPLY

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 Climate Change and Emissions Management Act.

Section 5. Definitions. As used in this Act:

"Agency" means the Illinois Environmental Protection Agency.

"Baseline emissions intensity" is defined in Section 15 of this Act.

"CO₂e" means the 100-year time horizon global warming potential of a specified gas expressed in terms of equivalency to carbon dioxide, as set forth by the Agency by rule.

"Direct emissions" means the release of specified gases from sources actually located at a facility.

"Director" means the Director of the Illinois Environmental Protection Agency.

"Emission offset" means a reduction in, geological sequestration of, or capture of specified gas emissions as provided in Section 27.

"Emission performance credit" means a reduction in the release of specified gases, expressed in metric tons, that meets the requirements of Section 20.

"Established facility" means:

(1) a facility that completed its first year of commercial operation prior to December 31, 2008; or

(2) a facility that has completed 8 years of commercial operation.

"Facility" means a privately-owned plant or other commercial or industrial structure located in Illinois. "Facility" does not include government-owned or government-operated plants or other structures.

"Fund" means the Climate Change and Emissions Management Fund.

"Fund credit" means a contribution to the Climate Change and Emissions Management Fund as provided in Section 25.

"Metric ton" shall be expressed on a CO₂e basis, unless the context clearly requires otherwise.

"Net emissions intensity" means: (i) the total direct emissions from the facility for the applicable calendar year minus the sum of (A) the facility's allowable emission offsets, (B) the allowable fund credits applied on behalf of the facility, and (C) the allowable emission performance credits applied on behalf of the facility, divided by (ii) the facility's production for the year.

"Net emissions intensity limit" means the specified gas emission targets established under Section 10.

"New facility" means:

(1) a facility that completed its first year of commercial operation on December 31, 2008 or on December 31 of a subsequent year and has completed less than 8 years of commercial operation; or

(2) a facility designated as a new facility by the Agency.

"Production" means the quantity, expressed in an applicable unit of production, of (i) end product produced by a facility or (ii) if the facility does not produce an end product, an input, output, or other standard of measurement specified by the Director as a standard measurement of production for the facility.

"Person responsible for the facility" means an owner, officer, or director of the facility designated in writing by the Agency as a person responsible for the facility.

"Specified gases" means carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and any other gas or compound specified as a greenhouse gas by the Agency by rule.

Section 10. Specified gas emission targets.

(a) This Section applies to facilities that are required to apply for the establishment of a baseline emissions intensity under Section 15.

(b) Beginning with calendar year 2016 or the first calendar year after the facility is required to apply for the establishment of a baseline emissions intensity, whichever is later, a facility's net emissions intensity for a calendar year shall not exceed:

(1) for an established facility, 88% of the baseline emissions intensity for the facility; and

(2) for a new facility:

(A) 98% of the baseline emissions intensity in the fourth year of commercial operation of the facility;

(B) 96% of the baseline emissions intensity in the fifth year of commercial operations of the facility;

(C) 94% of the baseline emissions intensity in the sixth year of commercial operations of the facility;

(D) 92% of the baseline emissions intensity in the seventh year of commercial operations of the facility; and

(E) 90% of the baseline emissions intensity in the eighth year of commercial operations of the facility; thereafter, the facility shall be classified as an established facility.

Section 15. Application; determination of baseline emission intensity.

(a) Each facility that had direct emissions totalling 1,000,000 metric tons or more in calendar year 2011, 2012, 2013, or 2014 shall apply to the Agency for the establishment of a baseline emissions intensity no later than December 31, 2015.

(b) Each new facility that is not otherwise required to apply for the establishment of a baseline emissions intensity under subsection (a) that had direct emissions totalling 1,000,000 metric tons or more in any of its first 3 years of commercial operation shall apply for the establishment of a baseline emissions intensity no later than June 1 of the facility's fourth year of commercial operation.

(c) Each facility that is not otherwise required to apply for the establishment of a baseline emissions intensity under subsection (a) or (b) of this Section shall apply for the establishment of a baseline emissions intensity no later than June 1 of the year following the year of commercial operation of a facility in which the facility first has direct emissions totalling 1,000,000 metric tons or more.

(d) An application for the establishment of a baseline emissions intensity for a facility shall:

(1) be submitted by an owner, officer, or director of the facility;

(2) be submitted on a form prescribed by the Agency; and

(3) include a verification of the information provided on the form by a third party auditor qualified under Section 35.

(e) The baseline emissions intensity for a facility that is an established facility on January 1, 2015 shall be determined by one of the following methods:

(1) by calculating the average of the ratio of total annual emissions to production for calendar year 2012, 2013, and 2014; or

(2) by using an alternative method approved in writing by the Director where the Director determines that the method in paragraph (1) is not appropriate.

(f) The baseline emissions intensity for a new facility shall be determined by one of the following methods:

(1) by calculating the ratio of total annual emissions to production for the third year of commercial operation of the facility; or

(2) by using an alternative method approved in writing by the Director where the Director determines that the method in paragraph (1) is not appropriate.

(g) The Director may establish a baseline emissions intensity that is different from the baseline emissions intensity specified in the application and may determine the unit of production for the facility. If the Director establishes a baseline emissions intensity that is different from the baseline emissions intensity specified in the application, then he or she shall notify the applicant in writing of his or her decision.

Section 20. Emission performance credits.

(a) When a facility's net emissions intensity for a calendar year is less than the facility's net emissions intensity limit for that period, the reduction in specified gas emissions that is not used in meeting the net emissions intensity limit constitutes an emission performance credit.

(b) An emission performance credit created at a facility in a year may be used to meet net emissions intensity limits for that facility in any subsequent year.

(c) An emission performance credit may be used only once by a facility.

Section 25. Climate Change and Emissions Management Fund; creation; fund credits.

(a) The Climate Change and Emissions Management Fund is hereby created as a special fund in the State treasury. Moneys in the Fund shall be used only for purposes related to reducing emissions of specified gases or to improve the State's ability to adapt to climate change, including, without limitation, the following purposes:

(1) energy conservation and energy efficiency;

(2) demonstration and use of new technologies that emphasize reductions in specified gas emissions in the discovery, recovery, processing, transportation, and use of the State's energy resources;

(3) demonstration and use of new technologies that emphasize reductions in specified gas emissions through the use of alternative energy and renewable energy sources;

(4) demonstration and use of specified gas capture, use, and storage technology;

(5) development of opportunities for removal of specified gases from the atmosphere through sequestration by sinks;

(6) measurement of the natural removal and storage of carbon; and

(7) climate change adaptation programs and measures.

(b) Any interest earned on moneys in the Climate Change and Emissions Management Fund shall be deposited into the Fund.

(c) Notwithstanding any other law to the contrary, the Climate Change and Emissions Management Fund is not subject to sweeps, administrative charge-backs, or any other fiscal or budgetary maneuver that would in any way transfer any amounts from the Climate Change and Emissions Management Fund into any other fund of the State.

(d) A person may obtain fund credits on behalf of a facility by contributing an amount equal to $15 per metric ton of direct emissions to the Fund. A fund credit obtained on or before March 31 in a year may only be used in meeting net annual emissions intensity limits for the previous year. A fund credit obtained after March 31 in a year may only be used in meeting net annual emissions intensity limits for that year. A fund credit may not be used by more than one party.

Section 27. Emission offsets.

(a) The following requirements must be met in order for a reduction in specified gas emissions to constitute one or more emission offsets:

(1) the specified gas emissions reduction must occur in Illinois;

(2) the specified gas emissions reduction must be from an action taken that is not otherwise required by law at the time the action is initiated;

(3) the specified gas emissions reduction must be real and demonstrable; and

(4) the specified gas emissions reduction must be quantifiable and measurable, directly or by accurate estimation, using replicable techniques.

(b) The following requirements must be met in order for a geological sequestration of specified gas to constitute one or more emission offsets:

(1) the specified gas that is geologically sequestered must be captured through a dedicated process from sources located at a facility in Illinois;

(2) the specified gas must be stored in a geological formation that is located wholly or partly in Illinois;

(3) the geological sequestration of the specified gas must not be required by law at the time geological sequestration of specified gas is initiated;

(4) the geological sequestration of the specified gas must be real and demonstrable; and

(5) the quantity of specified gas that is geologically sequestered must be quantifiable and measurable, directly or by accurate estimation, using replicable techniques.

(c) The following requirements must be met in order for a capture of specified gas to constitute one or more emission offsets:

(1) the specified gas must be captured through a dedicated process from sources located at a facility upgrading or refining bitumen in Illinois;

(2) the capture of the specified gas must not be required by law at the time capture of specified gas is initiated;

(3) the specified gas must be captured by infrastructure capable of capturing, and stored in geological formations capable of storing, at least 10,000,000 metric tons of specified gas per year;

(4) the quantity of specified gas that is captured must be quantifiable and measurable, directly or by accurate estimation using replicable techniques.

(d) A reduction in, geological sequestration of, or capture of specified gas emissions of one metric ton that meets the requirements of this Section constitutes one emission offset.

(e) If an emission offset is jointly held, each holder may use only a portion of the offset. The offset shall be distributed on a pro rata basis or according to any other formula set forth in an agreement between the parties.

Section 30. Exemptions. The Director may, on written application, exempt a facility from the provisions of this Act for a period not exceeding one year for each application if the Director determines that:

(1) the facility was operated under unusual conditions or was shut down for a prolonged period of time; and

(2) the conditions or shutdown caused a material reduction in the specified gas emission for the applicable period.

Section 35. Qualifications of third party auditors. A person is eligible to be a third party auditor if the person meets the following criteria:

(1) the person is a professional engineer registered under the Professional Engineering Practice Act of 1989 or a certified public accountant;

(2) the person has technical knowledge of specified gas emission quantification methodologies, audit practices, and other matters considered relevant by the Director; and

(3) the person is not a director, officer, employee, or owner of the facility or an employee or agent of the Agency.

Section 40. Reports. On or before December 31 of each year during which a facility is subject to Section 10 of this Act, the person responsible for the facility shall submit to the Agency a compliance report with respect to that facility in the form and manner prescribed by the Agency by rule. Each compliance report shall include a verification of the information provided in the report by a third party auditor qualified under Section 35.

Section 45. Records. A person responsible for a facility shall retain all records, information, and data respecting emissions intensity for at least 7 years after the date of their creation.

Section 50. Investigations. The Agency shall cause investigations to be made upon receipt of information concerning an alleged violation of this Act or any rule or regulation adopted under this Act and may cause to be made such other investigations as it shall deem advisable.

Section 55. Orders where net emissions intensity limit exceeded.

(a) The Agency may issue an order to the person responsible for a facility requiring the person responsible to take the measures specified in the order to minimize or remedy the effects of the facility releasing specified gases into the environment in amounts in excess of those within the net emissions intensity limit for the facility where:

(1) a compliance report indicates that the net emissions intensity limit for the facility has not been met;

(2) the Agency determines that the calculation of the net emissions intensity of the facility was incorrect or was based on inaccurate, incorrect or false information and that the net emissions intensity limit for the facility was exceeded; or

(3) the value for the emission offsets that was used to calculate the net emissions intensity of the facility for a year is no longer valid because some or all of the metric tons of specified gases which the emission offsets represented as not being released into the environment have subsequently been released.

(b) An order under this Section may require the person responsible to:

(1) obtain emission offsets or emission performance credits;

(2) make contributions to the Fund; or

(3) take any other measures that the director considers advisable.

(c) This Section applies whether or not a person has been required to pay an administrative penalty in relation to the matter with respect to which the order is made.

Section 60. Penalties.

(a) Any person that knowingly violates Section 10 of this Act shall be liable for a civil penalty not to exceed $200 for every metric ton by which the total release of specified gases exceeds the net emissions intensity limit for the facility. Such penalties may, upon order of the Agency or a court of competent jurisdiction, be made payable to the Climate Change and Emissions Management Fund, to be used in accordance with the provisions of this Act.

(b) Any person responsible for a facility who knowingly fails to file, in a timely manner, a compliance report under Section 40 shall be liable for a civil penalty of $100 per day for each day the report is late, not to exceed a maximum total penalty of $6,000. The penalty shall be paid to the Agency. All penalties collected by the Agency pursuant to this subsection shall be deposited into the Climate Change and Emissions Management Fund, to be used in accordance with the provisions of this Act.

(c) A person who knowingly (i) performs the functions of a third party auditor and does not meet the requirements set forth in Section 35 or (ii) retains a person as a third party auditor who does not meet the requirements set forth in Section 35 is liable for a civil penalty of not more than $50,000 in the case of an individual and not more than $500,000 in the case of a corporation.

(d) All final orders imposing civil penalties pursuant to this Section shall prescribe the time for payment of such penalties. If any such penalty is not paid within the time prescribed, interest on such penalty at the rate set forth in subsection (a) of Section 1003 of the Illinois Income Tax Act, shall be paid for the period from the date payment is due until the date payment is received. However, if the time for payment is stayed during the pendency of an appeal, interest shall not accrue during such stay.

(e) The State's Attorney of the county in which the violation occurred, or the Attorney General, may, at the request of the Agency or on his own motion, institute a civil action for an injunction, prohibitory or mandatory, to restrain violations of this Act or any rule or regulation adopted under this Act.

The State's Attorney of the county in which the violation occurred, or the Attorney General, shall bring such actions in the name of the people of the State of Illinois. Without limiting any other authority which may exist for the awarding of attorney's fees and costs, a court of competent jurisdiction may award costs and reasonable attorney's fees, including the reasonable costs of expert witnesses and consultants, to the State's Attorney or the Attorney General in a case where he has prevailed against a person who has committed a wilful, knowing, or repeated violation of this Act or any rule or regulation adopted under this Act.

(f) A person who voluntarily self-discloses non-compliance to the Agency, of which the Agency had been unaware, is entitled to a waiver of the penalties under this Section if the person can establish the following:

(1) that the non-compliance was discovered through an environmental audit or a compliance management system documented by the regulated entity as reflecting the regulated entity's due diligence in preventing, detecting, and correcting violations;

(2) that the non-compliance was disclosed in writing within 30 days of the date on which the person discovered it;

(3) that the non-compliance was discovered and disclosed prior to:

(A) the commencement of an Agency inspection, investigation, or request for information;

(B) the filing of a complaint by the Illinois Attorney General or the State's Attorney of the county in which the violation occurred;

(C) the reporting of the non-compliance by an employee of the person without that person's knowledge; or

(D) imminent discovery of the non-compliance by the Agency;

(4) that the non-compliance is being corrected and any environmental harm is being remediated in a timely fashion;

(5) that the person agrees to prevent a recurrence of the non-compliance;

(6) that no related non-compliance events have occurred in the past 3 years at the same facility or in the past 5 years as part of a pattern at multiple facilities owned or operated by the person;

(7) that the non-compliance did not result in serious actual harm or present an imminent and substantial endangerment to human health or the environment or violate the specific terms of any judicial or administrative order or consent agreement;

(8) that the person cooperates as reasonably requested by the Agency after the disclosure; and

(9) that the non-compliance was identified voluntarily and not through a monitoring, sampling, or auditing procedure that is required by statute, rule, permit, judicial or administrative order, or consent agreement.

If a person can establish all of the elements under this subsection except the element set forth in paragraph (1) of this subsection, the person is entitled to a 75% reduction in the amount of the penalty.

Section 65. Judicial review. A party may appeal any final decision of the Agency under this Act in the same manner set forth in Section 41 of the Environmental Protection Act.

Section 70. Rulemaking. The Agency shall adopt rules to implement this Act.

Section 90. The State Finance Act is amended by adding Section 5.855 as follows:

(30 ILCS 105/5.855 new)

Sec. 5.855. The Climate Change and Emissions Management Fund.

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