HB4370 101ST GENERAL ASSEMBLY

LRB101 16519 LNS 69148 b

101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB4370

Introduced 1/29/2020, by Rep. Thomas M. Bennett

SYNOPSIS AS INTRODUCED:

New Act
30 ILCS 105/5.930 new

Creates the Carbon Dioxide Geologic Storage Act. Provides that the Act applies to carbon dioxide injections that commence on or after January 1, 2021. Provides that a storage operator may not operate a storage facility without a reservoir permit issued by the Department of Natural Resources. Provides that a permit shall be issued if the storage operator: pays a fee to the Department of $0.08 per ton of carbon dioxide estimated to be injected into a storage facility; and owns all of the pore space in a storage facility, or owns more than 50%, but less than 100% of the pore space within a storage facility and an application to the Department to amalgamate the remaining property interests has been granted. Provides that after carbon dioxide injections at a storage facility cease, the storage operator may apply for a certificate of completion. Provides requirements the Department shall find before issuing a certificate of completion. Provides that the Department may adopt rules and issue orders to enforce the Act. Limits home rule powers. Provides for ownership and conveyance of pore space, mineral interests, title to carbon dioxide and liability, enhanced recovery projects, and restraint of trade. Creates the Illinois Geologic Sequestration Special Fund. Makes a corresponding change in the State Finance Act.

FISCAL NOTE ACT MAY APPLY

HOME RULE NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning property.

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 Carbon Dioxide Geologic Storage Act.

Section 5. Statement of policy. It is in the public interest to promote the geologic storage of carbon dioxide. Doing so will help ensure the viability of State industries under a spectrum of potential environmental regulations and will promote economic development in this State.

To be practical and effective, geologic storage of carbon dioxide requires cooperative use of surface and subsurface property interests often across large areas. It is therefore in the public interest to employ procedures that promote, in a manner fair to all interests, the use of all pore space in a clearly defined reservoir to ensure comprehensive management of the reservoir and the efficient use of natural resources. It is important that rules governing the use and development of subsurface pore space be consistent with both established precedents and subsurface private property rights.

Section 10. Definitions. As used in this Act:

"Carbon dioxide injection well" means a well that is used to inject carbon dioxide into a reservoir for geologic storage.

"Department" means the Department of Natural Resources.

"Geologic storage" means the underground storage of carbon dioxide in a reservoir.

"Mineral owner" means, as identified in the records of the recorder of deeds for each county containing some portion of the proposed reservoir, any owner of a whole or fractional interest in any or all minerals in real property above, below, or within the proposed reservoir that has been severed from the surface estate by grant, exception, reservation, lease, or other means.

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

"Pore space owner" means the person, trust, corporation, or other entity who has title to the pore space.

"Reservoir permit" means a permit issued by the Department allowing a person to establish and operate a storage facility.

"Storage facility" means the area of review as delineated in the storage operator's federal UIC program Class VI permit.

"Storage operator" means a person holding a reservoir permit under this Act and holding or applying for a UIC permit for the injection of carbon dioxide.

"Surface owners" means, as identified in the records of the recorder of deeds for each county containing some portion of the proposed reservoir, any owner of a whole or undivided fee simple interest or other freehold interest, which may or may not include mineral rights, in the surface above the proposed reservoir, but does not include an owner of a right-of-way, easement, leasehold, or any other lesser estate.

"UIC permit" means an Underground Injection Control permit authorized under the federal Safe Drinking Water Act's Underground Injection Control (UIC) Program that allows a person to operate a carbon dioxide injection well.

Section 15. Applicability. This Act applies only to carbon dioxide injections that commence on or after January 1, 2021.

Section 20. Reservoir permit.

(a) A storage operator may not operate a storage facility in this State without a valid reservoir permit issued by the Department. A reservoir permit may be transferred or assigned from one storage operator to another. Each permit is valid for one year after issuance.

(b) The Department shall issue or renew a reservoir permit if the storage operator has paid the fee required by subsection (c) and has meet the requirements of Section 30.

(c) The storage operator shall provide the Department an estimate of the amount of carbon dioxide to be injected into a storage facility for the period of the permit at the time of application for a reservoir permit. A storage operator shall pay to the Department a fee of $0.08 per ton of carbon dioxide estimated to be injected into a storage facility. Prior to any renewal, the storage operator shall pay a fee of $0.08 per ton for carbon dioxide injected into a storage facility beyond the amount contained in the storage operator's estimate for the previous year. If the amount of carbon dioxide injected into a storage facility is less than the amount estimated, the Department shall refund the storage operator any overpayment.

(d) The Department may require a storage operator to make records available to the Department relating to the amount of carbon dioxide injected into a storage facility to ensure compliance with the fee requirements of subsection (c).

(e) The fees collected in subsection (c) shall be deposited into the Illinois Geologic Sequestration Special Fund.

Section 25. Ownership and conveyance of pore space.

(a) Title to pore space is vested in the owner of the overlying surface estate.

(b) A conveyance of title to the surface estate conveys the pore space in all strata underlying the surface estate.

(c) Title to pore space may not be severed from the surface estate.

(d) Grants of easement to use or leasing of pore space is not a severance prohibited by this Section.

(e) The grants of easement or leasing of pore space shall not confer any right to enter upon or otherwise use the surface of the land unless the grant of easement or lease expressly so provides.

Section 30. Ownership requirements.

(a) No reservoir permit shall be issued unless the storage operator owns, or has obtained grants of easements or leaseholds for, all of the pore space in a storage facility.

(b) If a storage operator owns, or has obtained grants of easement or leaseholds for, more than 50% but less than 100% of the pore space within a proposed storage facility, the storage operator may apply to the Department to amalgamate the remaining property interests.

Section 35. Amalgamating property interests.

(a) If a storage operator has applied to the Department to amalgamate any remaining property interests in a storage facility, the Department shall:

(1) notify any and all nonconsenting property owners who own property interests to be amalgamated;

(2) within 120 days, but no less than 60 days after the filing of the application, the Department shall conduct a hearing to determine the fair market value of each property owner's pore space to be amalgamated. The storage operator and each property owner has the right to present evidence as to the value of the pore space, including, but not limited to, the economic benefits to the storage operator, and to be represented by an attorney; and

(3) after the hearing, issue an order determining the fair market value of each nonconsenting owner's pore space.

(b) Upon payment by the storage operator to the Department of the total fair market value of the pore space to be amalgamated, the storage operator shall be granted an easement by the Department upon the pore space. The Department shall record the easement with the appropriate county recorder of deeds. The Department shall remit funds received from the storage operator to each property owner consistent with the Department's determination of fair market value.

(c) Any easement granted under this Section shall not include the right to use the surface above a nonconsenting property owner's pore space.

(d) The Department has the authority to commit State-owned pore space to a storage facility.

Section 40. Mineral interests. A mineral owner may drill through or near a reservoir to explore for or extract minerals if the drilling, extraction, and related activities are conducted in cooperation with the storage operator and comply with Department requirements that preserve the storage facility's integrity.

Section 45. Title to carbon dioxide; liability. The storage operator has title to the carbon dioxide injected into and stored in a reservoir and holds title until the Department issues a certificate of completion. While the storage operator holds title, the storage operator is liable for any damage the carbon dioxide may cause, including damage caused by carbon dioxide that escapes from the storage facility. The pore space owner has no liability associated with the operation of a storage facility unless the storage operator is the pore space owner.

Section 55. Project completion and title transfer.

(a) After carbon dioxide injections at a storage facility cease, the storage operator may apply for a certificate of completion. Before issuing a certificate of completion, the Department, in consultation with the issuer of the UIC permit, shall find that:

(1) the storage operator is in full compliance with all laws governing the storage facility, including any ongoing UIC permit requirements;

(2) the storage operator addressed all pending claims, if any, regarding the storage facility's operation;

(3) all carbon dioxide injection wells are plugged, equipment and facilities are removed, and reclamation work is completed as required by the UIC permit issuer or the Department;

(4) the carbon dioxide in the reservoir is stable, which means that it is essentially stationary or, if it is migrating or may migrate, any migration will be unlikely to be outside of the storage facility; and

(5) all monitoring wells, equipment, and facilities to be used in the post-closure period are in good condition and retain mechanical integrity.

(b) If the Department does not complete the review of a certificate of completion application within 90 days after receipt, including the public notice and input deemed appropriate by the Department, then the certificate of completion shall be issued. If the Department does not find that the requirements in subsection (a) are met, then it may decline the application or require amendment to the application before granting the certificate of completion. If the Department requires amendment to the application, then the storage operator shall have 30 days to amend the application. Thereafter, the Department shall have 30 days to either grant or decline to grant the certificate of completion or the certificate of completion shall be issued.

(c) The Department may charge a fee to the storage operator for reviewing the certificate of completion application. The fee shall be in the amount set by Department rule. The amount shall be based on the Department's anticipated expenses that it shall incur in reviewing the certificate of completion application and shall not exceed $10,000.

(d) Once a certificate of completion is issued, the following occurs:

(1) Title to the storage facility and to the stored carbon dioxide transfers, without compensation, to the State.

(2) Title acquired by the State includes all rights and interests in, and all responsibilities associated with, the stored carbon dioxide.

(3) The storage operator is released from all regulatory requirements associated with the storage facility.

(4) Monitoring and managing the storage facility is the State's responsibility to be overseen by the Department until the federal government assumes responsibility for the long-term monitoring and management of storage facilities.

(5) If the federal government has not assumed responsibility for the long-term monitoring and management of storage facilities, then the Illinois Geologic Sequestration Special Fund shall be used for the purposes of monitoring and managing the storage facility and any other responsibility associated with the stored carbon dioxide.

Section 60. Enhanced recovery projects. This Act does not apply to applications filed with the Department proposing to use carbon dioxide for an enhanced oil or gas recovery project. Such applications shall be processed pursuant the Illinois Oil and Gas Act.

Section 65. Department powers; home rule. The Department may adopt rules and issue orders to enforce this Act. The Department may authorize its employees, qualified by training and experience, to perform the powers and duties set forth in this Act. No agency of State government or political subdivision of the State may regulate geologic storage except as expressly authorized under this Act. This Section is a limitation under subsection (i) of Section 6 of Article VII of the Illinois Constitution on the concurrent exercise by home rule units of powers and functions exercised by the State.

Section 70. Restraint of trade. None of the rights and responsibilities pursuant to this Act shall be held or construed to violate any of the statutes of this State relating to trusts, monopolies, or contracts and combinations in the restraint of trade.

Section 75. Illinois Geologic Sequestration Special Fund. The Illinois Geologic Sequestration Special Fund is created as a special fund in the State treasury. The Fund shall consist of any money deposited into the Fund as provided in subsection (e) of Section 20. Money in the Fund shall be used for the administration of this Act and for no other purpose. All interest earned on money in the Fund shall be deposited into the Fund.

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

Section 905. The State Finance Act is amended by adding Section 5.930 as follows:

(30 ILCS 105/5.930 new)

Sec. 5.930. The Illinois Geologic Sequestration Special Fund.