Rep. John E. Bradley

Filed: 5/30/2011

 

 


 

 


 
09700SB2062ham003LRB097 10263 ASK 56600 a

1
AMENDMENT TO SENATE BILL 2062

2    AMENDMENT NO. ______. Amend Senate Bill 2062, AS AMENDED,
3by replacing everything after the enacting clause with the
4following:
 
5    "Section 1. Short title. This Act may be cited as the Clean
6Coal FutureGen for Illinois Act of 2011.
 
7    Section 5. Purpose. Recognizing that the FutureGen Project
8is a first-of-a-kind research project to permanently sequester
9underground captured CO2 emissions from: (1) a coal-fueled
10power plant that uses as its primary fuel source high volatile
11bituminous rank coal with greater than 1.7 pounds of sulfur per
12million btu content or (2) other approved and permitted
13captured CO2 sources in the State of Illinois, and that such a
14project would have benefits to the economy and environment of
15Illinois, the purpose of this Act is to provide the non-profit
16FutureGen Alliance with adequate liability protection and

 

 

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1permitting certainty to facilitate the siting of the FutureGen
2Project in the State of Illinois, to provide to the State of
3Illinois certain financial benefits from environmental
4attributes for the Project, and to help secure over $1 billion
5in federal funding for the Project.
 
6    Section 10. Legislative findings. The General Assembly
7finds and determines that:
8        (1) human-induced greenhouse gas emissions have been
9    identified as contributing to global warming, the effects
10    of which pose a threat to public health and safety and the
11    economy of the State of Illinois;
12        (2) in order to meet the energy needs of the State of
13    Illinois, keep its economy strong and protect the
14    environment while reducing its contribution to
15    human-induced greenhouse gas emissions, the State of
16    Illinois must be a leader in developing new low-carbon
17    technologies;
18        (3) carbon capture and storage is a low-carbon
19    technology that involves capturing the captured CO2 from
20    fossil fuel energy electric generating units and other
21    industrial facilities and injecting it into secure
22    geologic strata for permanent storage;
23        (4) the FutureGen Project is a public-private
24    partnership between the Federal Department of Energy, the
25    FutureGen Alliance, and other partners that proposes to use

 

 

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1    this new technology as part of a plan to transport and
2    store captured CO2 from a coal-fueled power plant that uses
3    as its primary fuel source high-volatile bituminous rank
4    coal with greater than 1.7 pounds of sulfur per million btu
5    content and other captured CO2 sources that are approved by
6    the appropriate State of Illinois agency and permitted in
7    the State of Illinois;
8        (5) the FutureGen Project will help ensure the
9    long-term viability of Illinois Basin coal as a major
10    energy source in the State of Illinois and throughout the
11    nation and represents a significant step in the State of
12    Illinois' efforts to become a self-sufficient, clean
13    energy producer;
14        (6) the FutureGen Project provides an opportunity for
15    the State of Illinois to partner with the Federal
16    Department of Energy, the FutureGen Alliance, and other
17    partners in the development of these innovative clean-coal
18    technologies;
19        (7) the FutureGen Project will make the State of
20    Illinois a center for developing and refining clean coal
21    technology and carbon capture and storage, and will result
22    in the development of new technologies designed to improve
23    the efficiency of the energy industry that will be
24    replicated world wide;
25        (8) the FutureGen Project is an important coal
26    development and conversion project that will create jobs in

 

 

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1    the State of Illinois during the construction and
2    operations phases, contribute to the overall economy of the
3    State of Illinois and help reinvigorate the Illinois Basin
4    coal industry; and
5        (9) the FutureGen Project and the property necessary
6    for the FutureGen Project serve a substantial public
7    purpose as its advanced clean-coal electricity generation,
8    advanced emissions control and carbon capture and storage
9    technologies will benefit the citizens of the State of
10    Illinois.
 
11    Section 15. Definitions. For the purposes of this Act:
12    "Agency" means the Illinois Environmental Protection
13Agency or the United States Environmental Protection Agency
14depending upon which agency has primacy for the CO2 injection
15permit.
16    "Captured CO2" means CO2 and other trace chemical
17constituents approved by the Agency for injection into the
18Mount Simon Formation.
19    "Carbon capture and storage" means the process of
20collecting captured CO2 from coal combustion by-products for
21the purpose of injecting and storing the captured CO2 for
22permanent storage.
23    "Carbon dioxide" or "CO2" means a colorless, odorless gas
24in the form of one carbon and 2 oxygen atoms that is the
25principal greenhouse gas.

 

 

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1    "Department" means the Department of Commerce and Economic
2Opportunity.
3    "Director" means the Director of Commerce and Economic
4Opportunity.
5    "Federal Department" means the federal Department of
6Energy.
7    "FutureGen Alliance" is a 501(c)(3) non-profit consortium
8of coal and energy producers created to benefit the public
9interest and the interest of science through the research,
10development, and demonstration of near zero-emission coal
11technology, with the cooperation of the Federal Department.
12    "FutureGen Project" means the public-private partnership
13between the Federal Department, the FutureGen Alliance, and
14other partners that will control captured CO2 and will
15construct and operate a pipeline and storage field for captured
16CO2.
17    "Mount Simon Formation" means the deep sandstone reservoir
18into which the sequestered CO2 is to be injected at a depth
19greater than 3,500 feet below ground surface and that is
20bounded by the granitic basement below and the Eau Claire Shale
21above.
22    "Operator" means the FutureGen Alliance and its member
23companies, including their parent companies, subsidiaries,
24affiliates, directors, officers, employees, and agents, or a
25not-for-profit successor-in-interest approved by the
26Department.

 

 

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1    "Operations phase" means the period of time during which
2the Operator injects and simultaneously monitors CO2 into the
3Mount Simon Formation in accordance with its permit approved by
4the Agency for the FutureGen Project.
5    "Post-injection" means after the captured CO2 has been
6successfully injected into the wellhead at the point at which
7the captured CO2 is transferred into the wellbore for carbon
8sequestration and storage into the Mount Simon Formation.
9    "Pre-injection" means all activities and occurrences prior
10to successful delivery into the wellhead at the point at which
11the captured CO2 is transferred into the wellbore for carbon
12sequestration and storage into the Mount Simon Formation,
13including but not limited to, the operation of the FutureGen
14Project.
15    "Public liability" means any civil legal liability arising
16out of or resulting from the storage, escape, release, or
17migration of the sequestered CO2 that was injected by the
18Operator. The term "public liability", however, does not
19include any legal liability arising out of or resulting from
20the construction, operation, or other pre-injection activity
21of the Operator or any other third party.
22    "Public liability action" or "action" means a written
23demand, lawsuit, or claim from any third party received by the
24Operator seeking a remedy or alleging liability on behalf of
25Operator resulting from any public liability and is limited to
26such written demands, claims, or lawsuits asserting claims for

 

 

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1property damages, personal or bodily injury damages,
2environmental damages, or trespass.
3    "Sequestered CO2" means the captured CO2 from the FutureGen
4Project operations that is injected into the Mount Simon
5Formation by the Operator.
 
6    Section 20. Title to sequestered CO2. If the FutureGen
7Alliance selects as its location for CO2 storage a designated
8site or sites in the State of Illinois suitable for injection
9of captured CO2 into the Mount Simon Formation, then the
10Operator shall retain all rights, title, and interest in and to
11and any liabilities associated with the pre-injection CO2. The
12Operator shall retain all rights, title, and interest,
13including any environmental benefits or credits, in and to and
14any liabilities associated with the sequestered CO2 during the
15operations phase of the FutureGen Project, plus an additional
1610-year period. Following the operations phase of the FutureGen
17Project, plus an additional 10-year period, and upon compliance
18with all applicable permits, the Operator shall transfer and
19convey and the State of Illinois shall accept and receive, with
20no payment due from the State of Illinois, all rights, title,
21and interest, including any future environmental benefits or
22credits, in and to and any liabilities associated with the
23sequestered CO2.
 
24    Section 25. Insurance against qualified losses.

 

 

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1    (a) The Operator shall procure an insurance policy from a
2private insurance carrier or carriers, if and to the extent
3that such a policy is available at a reasonable cost, that
4insures the Operator against any qualified loss stemming from a
5public liability action. The coverage limits for such an
6insurance policy shall be at least $25,000,000. Within every
710-year period after operations begin for the Project, the
8Operator and Department shall mutually agree on an independent
9third party, with appropriate insurance expertise, to conduct a
10risk-weighted analysis of the project, assess the appropriate
11level of insurance to protect the project from the financial
12consequences of public liability actions, and make a
13recommendation as to whether a greater amount of insurance
14coverage than the Operator has at the time is commercially
15available at a reasonable cost to the Operator. This analysis
16shall incorporate, and not be inconsistent with, results from
17similar risk-based analyses that may be required of the
18Operator by the agency permitting CO2 injection as part of its
19financial assurance process. The Operator and the Department
20shall have an opportunity to review the draft analysis and any
21recommendations for narrowed or expanded levels of insurance
22coverage prior to finalization of the analysis. If the
23independent third party recommends that a greater amount of
24insurance coverage is commercially available at a reasonable
25cost to the Operator, then the Operator shall procure the
26recommended level of insurance, to the extent the insurance is

 

 

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1commercially available and is recognized as a recoverable cost
2under the terms of any CO2 services agreement or power purchase
3agreement that may be in place for the project at the time of
4the analysis. The cost of the independent third party shall be
5borne by the Operator.
6    (b) The protections provided by the State under this Act
7and the obligations on the Operator shall only apply after the
8Operator establishes a CO2 Storage Trust Fund consistent with
9the purposes of this Act and pays a $50,000,000 fee to the
10State, which is to be deposited into the CO2 Storage Trust
11Fund. The fee shall be considered a non-refundable expenditure
12to the Operator for immediate protections and benefits provided
13by the State.
14    The purpose of the CO2 Storage Trust Fund shall be to
15complement commercially-available insurance products and to
16support the Operator's ability to satisfy financial assurance
17obligations that may be required by law or the terms of the
18Operator's permit issued by the Agency.
19    The funds in the CO2 Storage Trust Fund may used to satisfy
20any qualified loss stemming from a public liability action to
21the extent that such loss is not otherwise covered by an
22insurance policy. The funds may also be used to pay reasonable
23administrative costs associated with managing and resolving
24claims associated with the CO2 Storage Trust Fund, except that
25during the operations phase, no payments from the CO2 Storage
26Trust Fund may be used to pay legal fees associated with

 

 

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1defending claims resulting from a public liability action. The
2funds may also be used for post-operations phase activities,
3including monitoring, CO2 storage site maintenance, storage
4site staffing, insurance, well and site closure, or other
5activities for which a law or permit requires financial
6assurance.
7    The CO2 Storage Trust Fund shall be funded in the following
8manner, toward a maximum amount of $250,000,000 per 100 million
9metric tons of CO2 storage site design capacity, unless the
10permit approved by the Agency requires a higher maximum amount:
11        (1) Subsequent future annual payments to the CO2
12    Storage Trust Fund shall be made during the operations
13    phase of the project at an initial rate of $950,000 per
14    million metric tons of CO2 injected, with the rate for
15    subsequent annual payments adjusted up or down in order to
16    meet the financial requirements of the Agency's permit and
17    to fulfill the requirements of the Act.
18        (2) The Operator shall deliver annually to the
19    Department an audited financial report that includes CO2
20    Storage Trust Fund balances, liabilities, projected
21    balances, projected liabilities, and evidence that the
22    financial health of the CO2 Storage Trust Fund is
23    sufficient for the purposes of this Act.
24        (3) The Operator shall select, subject to the approval
25    of the Agency, an independent third-party trustee to
26    administer the CO2 Storage Trust Fund.

 

 

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1        (4) The trustee shall administer the CO2 Storage Trust
2    Fund on behalf of the Operator during the operations phase
3    of the Project plus an additional 10-year period, and on
4    behalf of both the Operator and the State of Illinois after
5    title to the CO2 has been transferred to the State of
6    Illinois, to ensure compliance with the Operator's permits
7    and this Act
8        (5) Once the permitting agency has issued a certificate
9    of completion, or a comparable instrument indicating the
10    site is safely closed, any surplus balance in the CO2
11    Storage Trust Fund shall be distributed to the State. If
12    the Federal Government provides liability protections that
13    obviates, in part or in full, the purpose of the CO2
14    Storage Trust Fund, then any surplus balance shall be
15    distributed in accordance with this paragraph (5).
16    (c) The Operator shall maintain an absolute minimum level
17of financial assurances in the amount of $100,000,000 against
18potential losses stemming from a public liability action, in
19the combination of insurance, CO2 Storage Trust Fund balance,
20project assets, or cash or cash equivalents during the
21operations phase of the FutureGen Project, plus an additional
2210-year period.
23    (d) Pursuant to Section 30 of this Act, the State shall
24indemnify and hold harmless the Operator against any qualified
25loss stemming from a public liability action to the extent that
26the qualified loss is greater than $100,000,000 and is not

 

 

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1covered by the combination of an insurance policy under
2subsection (a) of this Section, funds in the CO2 Storage Trust
3Fund, project assets, and cash or cash equivalents.
4    (e) If the FutureGen Alliance identifies a designated site
5or sites in Illinois suitable for injection of captured CO2
6into the Mount Simon Formation, then the Department shall be
7authorized to contract with the FutureGen Alliance, under terms
8not inconsistent with this Act, in order to define the rights
9and obligations of the FutureGen Alliance and the Department,
10including but not limited to, the insurance and indemnification
11obligations under Sections 25 and 30 of this Act.
12    (f) If federal indemnification covers all or a portion of
13the obligations assumed by the State under Section 25 of this
14Act, such State obligations shall be reduced in proportion to
15the federal indemnification and be considered subordinated to
16any federal indemnification.
17    (g) For the purpose of this Section, "qualified loss" means
18a loss by the Operator stemming from a public liability action
19other than those losses arising out of or relating to:
20        (1) the intentional or willful misconduct of the
21    Operator;
22        (2) the failure of the Operator to comply with any
23    applicable law, rule, regulation, or other requirement
24    established by the Federal Department, Agency, or State of
25    Illinois for the carbon capture and storage of the
26    sequestered CO2, including any limitations on the chemical

 

 

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1    composition of any sequestered CO2; or
2        (3) any pre-injection activities of the Operator.
 
3    Section 30. Indemnification. Notwithstanding any law to
4the contrary, subject to and consistent with the conditions
5provided in Section 25 of this Act, the State of Illinois shall
6indemnify, hold harmless, defend, and release the Operator from
7and against any public liability action asserted against the
8Operator, subject to the following terms and conditions:
9    (a) The obligation of the State of Illinois to indemnify
10the Operator does not extend to any public liability arising
11out of or relating to:
12        (1) the intentional or willful misconduct of the
13    Operator;
14        (2) the failure of the Operator to materially comply
15    with any applicable law, rule, regulation, or other
16    requirement established by the Federal Department, Agency,
17    or State of Illinois for the carbon capture and storage of
18    the sequestered CO2, including any limitations on the
19    chemical composition of any sequestered CO2;
20        (3) any pre-injection activities of the Operator; or
21        (4) a qualified loss to the extent that it is equal to
22    or less than $100,000,000 or is covered by the combination
23    of funds in an insurance policy under subsection (a) of
24    Section 25 of this Act, funds in the CO2 Storage Trust Fund
25    under subsection (b) of Section 25 of this Act, project

 

 

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1    assets, and cash or cash equivalents.
2    (b) The indemnification obligations of the State of
3Illinois assumed under Section 30 of this Act shall be reduced
4in proportion and be subordinated to any federal
5indemnification that covers all or a portion of the State's
6obligations.
 
7    Section 35. Representation. In furtherance of the State of
8Illinois' obligations set forth in subsection (b) of Section 25
9and in Section 30 of this Act, the Attorney General has the
10following duties:
11    (a) In the event that any public liability action covered
12under Section 30 of this Act is commenced against the Operator,
13the Attorney General shall, upon timely and appropriate notice
14to the Attorney General by the Operator, appear on behalf of
15the Operator and defend the action. Any such notice must be in
16writing, must be mailed within 15 days after the date of
17receipt by the Operator of service of process, and must
18authorize the Attorney General to represent and defend the
19Operator in the action. The delivery of this notice to the
20Attorney General constitutes an agreement by the Operator to
21cooperate with the Attorney General in defense of the action
22and a consent that the Attorney General shall conduct the
23defense as the Attorney General deems advisable and in the best
24interests of the Operator and the State of Illinois, including
25settlement in the Attorney General's discretion. The Operator

 

 

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1may appear in such action through private counsel to respond or
2object only to any aspect of a proposed settlement or proposed
3court order which would directly affect the day-to-day
4operations of the FutureGen Project. In any such action, the
5State of Illinois shall pay the court costs and litigation
6expenses of defending such action, to the extent approved by
7the Attorney General as reasonable, as they are incurred.
8    (b) In the event that the Attorney General determines
9either (i) that so appearing and defending the Operator
10involves an actual or potential conflict of interest or (ii)
11that the act or omission which gave rise to the claim was not
12within the scope of the indemnity as provided in Section 30 of
13this Act, the Attorney General shall decline in writing to
14appear or defend or shall promptly take appropriate action to
15withdraw as attorney for the Operator. Upon receipt of such
16declination or withdrawal by the Attorney General on the basis
17of an actual or potential conflict of interest, the Operator
18may employ its own attorney to appear and defend, in which
19event the State of Illinois shall pay the Operator's court
20costs, litigation expenses, and attorneys' fees, to the extent
21approved by the Attorney General as reasonable, as they are
22incurred.
23    (c) In any action asserted by the Operator or the State of
24Illinois to enforce the indemnification obligations of the
25State of Illinois as provided in Section 30 of the Act, the
26non-prevailing party is responsible for any reasonable court

 

 

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1costs, litigation expenses, and attorneys fees incurred by the
2prevailing party.
3    (d) Court costs and litigation expenses and other costs of
4providing a defense, including attorneys' fees, paid or
5obligated under this Section, and the costs of indemnification,
6including the payment of any final judgment or final settlement
7under this Section, must be paid by warrant from appropriations
8to the Department pursuant to vouchers certified by the
9Attorney General.
10    (e) Nothing contained or implied in this Section shall
11operate, or be construed or applied, to deprive the State of
12Illinois, or the Operator, of any defense otherwise available.
13    (f) Any judgment subject to State of Illinois
14indemnification under this Section is not enforceable against
15the Operator, but shall be paid by the State of Illinois in the
16following manner: Upon receipt of a certified copy of the
17judgment, the Attorney General shall review it to determine if
18the judgment is (i) final, unreversed, and no longer subject to
19appeal and (ii) subject to indemnification under Section 30 of
20this Act. If the Attorney General determines that it is, then
21the Attorney General shall submit a voucher for the amount of
22the judgment and any interest thereon to the State of Illinois
23Comptroller and the amount must be paid by warrant from
24appropriation to the Department to the judgment creditor solely
25out of available appropriations.
 

 

 

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1    Section 40. Permitting. The State of Illinois shall issue
2to the Operator all necessary and appropriate permits
3consistent with State and federal law and corresponding
4regulations. The State of Illinois must allow the Operator to
5combine applications when appropriate, and the State of
6Illinois must otherwise streamline the application process for
7timely permit issuance.
 
8    Section 43. Tax exemption. The State of Illinois has
9offered certain incentives to the FutureGen Alliance to make
10the State of Illinois the most attractive location for the
11FutureGen Project.
 
12    Section 45. Incentives. The State of Illinois has offered
13certain incentives to the FutureGen Alliance to make the State
14of Illinois the most attractive location for the FutureGen
15Project.
 
16    Section 900. The State Lawsuit Immunity Act is amended by
17changing Section 1 as follows:
 
18    (745 ILCS 5/1)  (from Ch. 127, par. 801)
19    Sec. 1. Except as provided in the Illinois Public Labor
20Relations Act, the Court of Claims Act, the State Officials and
21Employees Ethics Act, and Section 1.5 of this Act, and, except
22as provided in and to the extent provided in the Clean Coal

 

 

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1FutureGen for Illinois Act, the State of Illinois shall not be
2made a defendant or party in any court.
3(Source: P.A. 95-18, eff. 7-30-07; 95-331, eff. 8-21-07;
495-876, eff. 8-21-08.)
 
5    (705 ILCS 505/8.5 rep.)
6    Section 910. The Court of Claims Act is amended by
7repealing Section 8.5.
 
8    Section 997. Severability. The provisions of this Act are
9severable under Section 1.31 of the Statute on Statutes.
 
10    Section 999. Effective date. This Act takes effect upon
11becoming law.".