HB2835 100TH GENERAL ASSEMBLY

LRB100 09100 RJF 19254 b

100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB2835

Introduced , by Rep. Emily McAsey

SYNOPSIS AS INTRODUCED:

New Act

Creates the Crude Oil Pipeline Environmental Liability Insurance Act. Provides that all owners of crude oil pipelines transporting more than a specified amount of bitumen shall report such pipelines to the Illinois Environmental Protection Agency. Provides that on January 1, 2018 all owners of crude oil pipelines that transported more than a specified amount of bitumen over the preceding calendar year, shall maintain insurance coverage for such pipelines. Provides that after January 1, 2018 all owners of crude oil pipelines transporting more than a specified amount of bitumen shall obtain insurance coverage for such pipelines. Contains provisions specifying the requirements for insurance coverage and concerning the duties of the owners of such pipelines, the Agency, and insurance companies in relation to such insurance. Effective January 1, 2018.

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 Crude Oil Pipeline Environmental Liability Insurance Act.

Section 5. Definitions. As used in this Act:

"Agency" means the Illinois Environmental Protection Agency.

"Minimum amount of bitumen" means 100,000 barrels per day of bitumen.

Section 10. Crude oil carriers.

(a) On and after the effective date of this Act, the owner of a crude oil pipeline in the State transporting, in whole or in part, more than the minimum amount of bitumen shall report that pipeline to the Agency. If a pipeline that did not transport more than the minimum amount of bitumen on the reporting date does so later in the same year, or in any following year, the owner of the pipeline shall amend its report within 30 days to reflect its new status.

(b) On January 1, 2018, every owner of a crude oil pipeline that transported, in whole or in part, more than the minimum amount of bitumen at any time in the calendar year preceding and including January 1, 2018 shall maintain insurance coverage in accordance with this Section and maintain that coverage at all times for each pipeline where and when bitumen is being transported.

(c) After January 1, 2018, in any year in which a pipeline transports more than the minimum amount of bitumen, within 6 months after reporting the transport of more than the minimum amount of bitumen, the owner of the pipeline shall obtain insurance coverage in accordance with subsection (d) of this Section and maintain that coverage at all times for each pipeline where and when bitumen is being transported.

(d) To satisfy the requirements of this Section, the owner of a pipeline shall have environmental impairment liability insurance or the equivalent that provides coverage for on-site and off-site cleanup expenses, damages to natural resources, emergency response costs up to at least $1,000,000, bodily injury liability, and property damage liability for each pipeline.

(1) The insurance shall be provided by an independent third-party insurer with an A.M. Best Company, Inc. rating of at least "A".

(2) The insurance may be secondary to any other coverage maintained by the owner or provided by the federal Oil Spill Liability Trust Fund, but primary and non-contributory to any coverage maintained by the State or units of local government.

(3) The insurance shall be occurrence based.

(4) The State shall be listed as an additional insured on the policy.

(5) The amount of insurance shall not be less than $25,000,000 for each pipeline. The Agency, in consultation with the Department of Insurance, shall require additional coverage in accordance with this Section that the Agency concludes would be necessary in a worst-case oil spill scenario where the pipeline owner is not capable of paying to remediate the site and compensate damages, including an annual cost of remediation adjustment, to the maximum available from the market for insurance. If the amount of insurance found to be available in a year is not sufficient to cover the worst-case oil spill scenario the Agency shall:

(A) state the amount of the deficiency; and

(B) in each of the following years in which a deficiency exists, review the insurance market to determine whether the amount of coverage available has increased, and adjust the coverage to the maximum available up to the amount required to remediate the site and compensate for damages in a worst case oil spill.

(6) The Agency shall charge back the cost of making the assessments of a worst-case accident and the availability of the required insurance in the market in paragraph (5) to the owner of the pipeline.

(7) The policy shall obligate the insurer to provide 60 days notice of cancellation or non-renewal to the Agency, as well as to the owner who has purchased the policy.

(8) If the insured has received a 60-day notice of cancellation under paragraph (7), it shall replace that policy with a new policy in accordance with this Section before its existing policy is terminated or otherwise it shall cease transporting bitumen through the pipeline. If the owner's policy has been terminated and not replaced within 60 days, the owner may resume use of the pipeline for transporting bitumen if it later purchases insurance in accordance with this Section, submits proof to the Agency, and receives an order from the Agency certifying the subsequent insurance policy is current and complies with this Section.

(9) At all times, the owner shall keep the Agency informed in writing of all changes in the status of the pipeline related to whether it transports more than the minimum amount of bitumen, and, if so, whether it maintains insurance in accordance with this Section. The owner of a pipeline that transports more than the minimum amount of bitumen for only part of the time in a calendar year may elect to maintain its status as covered under this Section as if it transported more than the minimum amount of bitumen for the entire year.

Section 99. Effective date. This Act takes effect January 1, 2018.