65 ILCS 5/11-124-5

(65 ILCS 5/11-124-5)

Sec. 11-124-5. Acquisition of water systems by eminent domain.

(a) In addition to other provisions providing for the acquisition of water systems or water works, whenever a public utility subject to the Public Utilities Act utilizes public property (including, but not limited to, right-of-way) of a municipality for the installation or maintenance of all or part of its water distribution system, the municipality has the right to exercise eminent domain to acquire all or part of the water system, in accordance with this Section. Unless it complies with the provisions set forth in this Section, a municipality is not permitted to acquire by eminent domain that portion of a system located in another incorporated municipality without agreement of that municipality, but this provision shall not prevent the acquisition of that portion of the water system existing within the acquiring municipality.

(b) Where a water system that is owned by a public utility (as defined in the Public Utilities Act) provides water to customers located in 2 or more municipalities, the system may be acquired by a majority of the municipalities by eminent domain. If the system is to be acquired by more than one municipality, then there must be an intergovernmental agreement in existence between the acquiring municipalities providing for the acquisition.

(c) If a water system that is owned by a public utility provides water to customers located in one or more municipalities and also to customers in an unincorporated area and if at least 70% of the customers of the system or portion thereof are located within the municipality or municipalities, then the system, or portion thereof as determined by the corporate authorities, may be acquired, using eminent domain or otherwise, by either a municipality under subsection (a) or an entity created by agreement between municipalities where at least 70% of the customers reside. For the purposes of determining "customers of the system", only retail customers directly billed by the company shall be included in the computation. The number of customers of the system most recently reported to the Illinois Commerce Commission for any calendar year preceding the year a resolution is passed by a municipality or municipalities expressing preliminary intent to purchase the water system or portion thereof shall be presumed to be the total number of customers within the system. The public utility shall provide information relative to the number of customers within each municipality and within the system within 60 days after any such request by a municipality.

(d) In the case of acquisition by a municipality or municipalities or a public entity created by law to own or operate a water system under this Section, service and water supply must be provided to persons who are customers of the system on the effective date of this amendatory Act of the 94th General Assembly without discrimination based on whether the customer is located within or outside of the boundaries of the acquiring municipality or municipalities or entity, and a supply contract existing on the effective date of this amendatory Act of the 94th General Assembly must be honored by an acquiring municipality, municipalities, or entity according to the terms so long as the agreement does not conflict with any other existing agreement.

(e) For the purposes of this Section, "system" includes all assets reasonably necessary to provide water service to a contiguous or compact geographical service area or to an area served by a common pipeline and include, but are not limited to, interests in real estate, all wells, pipes, treatment plants, pumps and other physical apparatus, data and records of facilities and customers, fire hydrants, equipment, or vehicles and also includes service agreements and obligations derived from use of the assets, whether or not the assets are contiguous to the municipality, municipalities, or entity created for the purpose of owning or operating a water system.

(f) Before making a good faith offer, a municipality may pass a resolution of intent to study the feasibility of purchasing or exercising its power of eminent domain to acquire any water system or water works, sewer system or sewer works, or combined water and sewer system or works, or part thereof. Upon the passage of such a resolution, the municipality shall have the right to review and inspect all financial and other records, and both corporeal and incorporeal assets of such utility related to the condition and the operation of the system or works, or part thereof, as part of the study and determination of feasibility of the proposed acquisition by purchase or exercise of the power of eminent domain, and the utility shall make knowledgeable persons who have access to all relevant facts and information regarding the subject system or works available to answer inquiries related to the study and determination.

The right to review and inspect shall be upon reasonable notice to the utility, with reasonable inspection and review time limitations and reasonable response times for production, copying, and answer. In addition, the utility may utilize a reasonable security protocol for personnel on the municipality's physical inspection team.

In the absence of other agreement, the utility must respond to any notice by the municipality concerning its review and inspection within 21 days after receiving the notice. The review and inspection of the assets of the company shall be over such period of time and carried out in such manner as is reasonable under the circumstances.

Information requested that is not privileged or protected from discovery under the Illinois Code of Civil Procedure but is reasonably claimed to be proprietary, including, without limitation, information that constitutes trade secrets or information that involves system security concerns, shall be provided, but shall not be considered a public record and shall be kept confidential by the municipality.

In addition, the municipality must, upon request, reimburse the utility for the actual, reasonable costs and expenses, excluding attorneys' fees, incurred by the utility as a result of the municipality's inspection and requests for information. Upon written request, the utility shall issue a statement itemizing, with reasonable detail, the costs and expenses for which reimbursement is sought by the utility. Where such written request for a statement has been made, no payment shall be required until 30 days after receipt of the statement. Such reimbursement by the municipality shall be considered income for purposes of any rate proceeding or other financial request before the Illinois Commerce Commission by the utility.

The municipality and the utility shall cooperate to resolve any dispute arising under this subsection. In the event the dispute under this subsection cannot be resolved, either party may request relief from the circuit court in any county in which the water system is located, with the prevailing party to be awarded such relief as the court deems appropriate under the discovery abuse sanctions currently set forth in the Illinois Code of Civil Procedure.

The municipality's right to inspect physical assets and records in connection with the purpose of this Section shall not be exercised with respect to any system more than one time during a 5-year period, unless a substantial change in the size of the system or condition of the operating assets of the system has occurred since the previous inspection. Rights under franchise agreements and other agreements or statutory or regulatory provisions are not limited by this Section and are preserved.

The passage of time between an inspection of the utilities and physical assets and the making of a good faith offer or initiation of an eminent domain action because of the limit placed on inspections by this subsection shall not be used as a basis for challenging the good faith of any offer or be used as the basis for attacking any appraisal, expert, argument, or position before a court related to an acquisition by purchase or eminent domain.

(g) Notwithstanding any other provision of law, the Illinois Commerce Commission has no approval authority of any eminent domain action brought by any governmental entity or combination of such entities to acquire water systems or water works, except as is provided in subsection (h) of Section 10-5-10 of the Eminent Domain Act.

(h) The provisions of this Section are severable under Section 1.31 of the Statute on Statutes.

(i) This Section does not apply to any public utility company that, on January 1, 2006, supplied a total of 70,000 or fewer meter connections in the State unless and until (i) that public utility company receives approval from the Illinois Commerce Commission under Section 7-204 of the Public Utilities Act for the reorganization of the public utility company or (ii) the majority control of the company changes through a stock sale, a sale of assets, a merger (other than an internal reorganization) or otherwise. For the purpose of this Section, "public utility company" means the public utility providing water service and includes any of its corporate parents, subsidiaries, or affiliates possessing a franchised water service in the State.

(j) Any contractor or subcontractor that performs work on a water system acquired by a municipality or municipalities under this Section shall comply with the requirements of Section 30-22 of the Illinois Procurement Code. The contractor or subcontractor shall submit evidence of compliance with Section 30-22 to the municipality or municipalities.

(k) The municipality or municipalities acquiring the water system shall offer available employee positions to the qualified employees of the acquired water system.

(Source: P.A. 103-13, eff. 6-9-23.)