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Illinois General Assembly· SB 1697Governor Approved

CARBON CAPTURE-COMPENSATION, the official text

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SB1697 Enrolled                     LRB104 09225 AAS 19282 b

1   AN ACT concerning regulation.

2   Be it enacted by the People of the State of Illinois,

3 represented in the General Assembly:

4   Section 5. The Carbon Dioxide Transportation and

5 Sequestration Act is amended by adding Section 22 as follows:

6   (220 ILCS 75/22 new)

7   Sec. 22. Compensation for damages to the surface.

8   (a) An affected landowner is entitled to reasonable

9 compensation from an applicant who has been granted a

10 certificate of authority under this Act for damages resulting

11 from access to the landowner's property for required

12 activities taken to construct the pipeline, including, but not

13 limited to, the following:

14  (1) compensation for damage to growing crops, trees,

15  shrubs, fences, roads, structures, improvements, personal

16  property, and livestock thereon and compensation for the

17  loss of the value of a commercial crop impacted by

18  pipeline installation; the value of the crop shall be

19  calculated based on local market price by:

20  (A) determining the average per acre yield for the

21  same crop on comparable adjacent acreage;

22  (B) determining the price received for the sale of

23  the same crop on comparable adjacent acreage;
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1   (C) determining the acreage of the area impacted

2   by pipeline activities and applying the determined

3   price; and

4   (D) making an initial determination of the value

5   of the crop, which shall be determined by the affected

6   landowner and submitted to the applicant who has been

7   granted a certificate of authority under this Act;

8   (2) compensation to return the surface estate,

9   including soil conservation practices, such as terraces,

10  grassed waterways, and other conservation practices, to

11  the condition of the surface prior to accessing the

12  property;

13  (3) compensation for damage to the productive

14  capability of the soil resulting from compaction or

15  rutting if the parties are incapable of reaching

16  resolution for such issues under the mitigation agreement

17  detailed in paragraph (6) of subsection (b) of Section 20.

18  An applicant shall not access a property where excessively

19  wet soil conditions would not allow normal farming

20  operations due to increased risk of soil erosion, rutting,

21  or compaction. The Department of Agriculture may

22  temporarily halt construction or any other activities on a

23  proposed pipeline upon a finding of an applicant's

24  noncompliance with this paragraph. If there is a dispute

25  between the applicant who has been granted a certificate

26  of authority under this Act and the landowner regarding
    SB1697 Enrolled  -3-  LRB104 09225 AAS 19282 b

1   the value of the damage to the productive capability of

2   the soil, the applicant who has been granted a certificate

3   of authority under this Act and the landowner shall

4   consult with a representative of the soil and water

5   conservation district in the respective county where the

6   parcel of property is located for recommendations to

7   restore the productive capability of the soil; and

8   (4) compensation for damage to surface and subsurface

9   drainage, including, but not limited to:

10  (A) compensation in that the applicant who has

11  been granted a certificate of authority under this Act

12  shall perform immediate and temporary repairs for

13  damage that occurs to subsurface drainage tiles that

14  have water actively flowing through them at the time

15  of damage; and

16  (B) compensation such that the applicant who has

17  been granted a certificate of authority under this Act

18  shall compensate the affected landowner to permanently

19  restore drainage to the condition of the drainage

20  prior to accessing the property.

21  (b) The compensation for damages required by subsection

22 (a) shall be paid in any manner mutually agreed upon by the

23 applicant who has been granted a certificate of authority

24 under this Act and the affected landowners. Unless otherwise

25 agreed, the applicant who has been granted a certificate of

26 authority under this Act shall tender to the landowner payment
    SB1697 Enrolled  -4-                 LRB104 09225 AAS 19282 b

1 by check or draft no later than 60 days after completing the

2 required activities under the application if the occurrence or

3 value of damages is not disputed. The landowner's remedy for

4 unpaid or disputed compensation shall be an action for damages

5 in any court of competent jurisdiction for the parcel of

6 property or the greater part thereof on which the activities

7 were conducted, and the landowner shall be entitled to recover

8 reasonable damages and attorney's fees if the landowner

9 prevails.

10  (c) If any landowner prevails in litigation seeking

11 compensation for damages under this Section, the applicant who

12 has been granted a certificate of authority under this Act

13 shall be responsible for such reasonable attorney's fees and

14 costs as the court may allow and a judgment may be entered

15 therefor in favor of the plaintiff if the attorney's fees and

16 costs are not paid as provided by the court.

17  (d) Nothing in this Section shall have any impact on an

18 applicant's fulfillment of the requirement to enter into an

19 agreement with the Department of Agriculture that governs the

20 mitigation of agricultural impacts associated with the

21 construction of the proposed pipeline as detailed in paragraph

22 (6) of subsection (b) of Section 20. An applicant shall comply

23 with the requirements of the agreement that governs the

24 mitigation of agricultural impacts as detailed in paragraph

25 (6) of subsection (b) of Section 20.
    SB1697 Enrolled       -5-        LRB104 09225 AAS 19282 b

1   Section 10. The Safety and Aid for the Environment in

2 Carbon Capture and Sequestration Act is amended by changing

3 Section 15 as follows:

4   (415 ILCS 185/15)

5   Sec. 15. Integration and unitization of ownership

6 interests.

7   (a) If at least 2 pore space owners own pore space located

8 within a proposed sequestration facility, the owners may agree

9 to integrate the owners' interests to develop the pore space

10 as a proposed sequestration facility for the underground

11 sequestration of carbon dioxide.

12  (b) If all of the pore space owners within a proposed or

13 permitted sequestration facility do not agree to integrate the

14 pore space owners' interests, the sequestration operator may

15 petition the Department of Natural Resources to issue an order

16 requiring the pore space owners to integrate their interests

17 and authorizing the sequestration operator or sequestration

18 facility permit holder to develop and use the integrated pore

19 space as a sequestration facility for carbon sequestration.

20 Such an order for unitization and integration of pore space

21 may only be issued if the sequestration operator has obtained

22 the rights from pore space owners of pore space underlying at

23 least 75% of the surface area above the proposed sequestration

24 facility. The petition shall include, but is not limited to:

25  (1) the name and address of the petitioners;
    SB1697 Enrolled          -6-  LRB104 09225 AAS 19282 b

1   (2) the property index numbers or legal descriptions

2   for the parcels of property and a geologic description of

3   the pore space within the proposed or permitted

4   sequestration facility;

5   (3) a disclosure of any parcels of property overlying

6   the pore space to be integrated, identified by property

7   index numbers or legal descriptions, in which the

8   applicant, any of its owners, officers, corporate

9   subsidiaries, or parents, sister companies, or affiliates,

10  at the time of submission of the application or within 10

11  years prior to the submission of the application, have or

12  had any real or personal interest, whether direct or

13  indirect;

14  (4) the names and addresses of all pore space owners

15  owning property within the proposed or permitted

16  sequestration facility as disclosed by the records of the

17  office of the recorder for the county or counties in which

18  the proposed or permitted sequestration facility is

19  situated and a list of consenting and nonconsenting pore

20  space owners, as well as a list of all properties for which

21  a pore space owner is unknown or nonlocatable;

22  (5) a statement that the petitioner has exercised due

23  diligence to locate each pore space owner and to seek an

24  agreement with each for pore space rights for the

25  sequestration facility, including a description of the

26  good faith efforts taken to identify, contact, and
    SB1697 Enrolled  -7-  LRB104 09225 AAS 19282 b

1   negotiate with each nonconsenting pore space owner;

2   (6) a statement of the type of operations for the

3   proposed or permitted sequestration facility;

4   (7) a plan for determining the quantity of pore space

5   sequestration capacity to be assigned to each separately

6   owned parcel of property based on the surface area acreage

7   overlying the proposed or permitted sequestration facility

8   and for using the surface for Class VI well permit

9   required activities under Section 35;

10  (8) the method by which pore space owners will be

11  compensated for use of the pore space, and a copy of all

12  agreements entered into with consenting pore space owners

13  regarding the compensation paid to a consenting pore space

14  owner;

15  (9) the method by which nonconsenting pore space

16  owners will receive just compensation; and

17  (10) a nonrefundable application fee of $250,000.

18  The application fee shall be deposited into the Oil and

19 Gas Resource Management Fund for the Department of Natural

20 Resources' costs related to administration of this Act.

21  (c) If the petition for a unitization order concerns

22 unknown or nonlocatable pore space owners, the applicant shall

23 provide public notice once a week for 2 consecutive weeks in

24 the newspaper of the largest circulation in each county in

25 which the proposed sequestration facility is located within 30

26 days prior to submission of the petition for a unitization and
    SB1697 Enrolled     -8-         LRB104 09225 AAS 19282 b

1 integration order. The petitioner shall file proof of such

2 notice with the Department of Natural Resources with the

3 petition. The petitioner shall also provide public notice of

4 the public hearing described in subsection (d) in the same

5 manner within 30 days prior to the hearing on the petition for

6 a unitization order. The petitioner shall also send notice of

7 the filing of the petition and the notice of the public hearing

8 via certified mail to the last known address of each

9 nonlocatable pore space owner and provide copies of those

10 notices to the Department of Natural Resources. The notice

11 shall:

12         (1) state that a petition for a unitization and

13  integration order has been filed with the Department of

14  Natural Resources;

15         (2) describe the formation or formations and pore

16  space proposed to be unitized;

17         (3) in the case of an unknown pore space owner,

18  indicate the name of the last known pore space owner;

19         (4) in the case of a nonlocatable pore space owner,

20  identify the pore space owner and the owner's last known

21  address; and

22         (5) state that any person claiming an interest in the

23  properties proposed to be unitized should notify the

24  operator of the proposed sequestration facility at the

25  published address within 20 days of the publication date.

26  Unknown or nonlocatable pore space owners that have not
    SB1697 Enrolled    -9-  LRB104 09225 AAS 19282 b

1 claimed an interest by the time of the Department of Natural

2 Resources' public notice in subsection (d) shall be deemed to

3 have consented to unitization and integration of their pore

4 space.

5   (d) Prior to issuing an order to unitize and integrate

6 pore space, the Department of Natural Resources shall issue a

7 public notice of the petition and shall hold a public hearing

8 on the petition. The public notice shall include copies of the

9 petition and all included attachments that are not protected

10 under the Freedom of Information Act. The public notice shall

11 include an opportunity for public comments and shall contain

12 the date, time, and location of the public hearing as decided

13 by the Department. At the public hearing, the Department shall

14 allow interested persons to present views and comments on the

15 petition. The hearings must be open to the public and recorded

16 by stenographic or mechanical means. The Department of Natural

17 Resources will make available on its website copies of all

18 comments received.

19  (e) The Department of Natural Resources shall issue an

20 order unitizing and integrating pore space under subsection

21 (b) within 60 days after the hearing upon a showing that:

22        (1) the petitioner has obtained a Class VI well permit

23  or, if the well permit application is still pending at

24  least one year from the date the petition has been filed,

25  that the petitioner has received a Finding of

26  Administrative Completeness from the United States
    SB1697 Enrolled  - 10 - LRB104 09225 AAS 19282 b

1   Environmental Protection Agency;

2   (2) the petitioner has made a good faith effort to

3   seek an agreement with all pore space owners located

4   within the proposed or permitted sequestration facility;

5   (3) the petitioner has obtained the rights from pore

6   space owners of at least 75% of the surface area above the

7   proposed sequestration facility; and

8   (4) all nonconsenting pore space owners have received

9   or will receive just compensation for use of the pore

10  space and use of the surface for Class VI well permit

11  required activities. Additionally, a nonconsenting pore

12  space owner's such compensation shall be no less than the

13  average total payment package, considered as a whole with

14  respect to an individual owner, provided in agreements

15  during the previous 365 days to similarly situated

16  consenting pore space owners for use of their pore space

17  by the same sequestration operator for the same

18  sequestration project. The nonconsenting pore space

19  owner's compensation shall include just compensation and

20  any operations term or injection term payments made upon

21  or after the initiation of injection provided to

22  consenting pore space owners in consideration of allowing

23  use of their pore space for sequestration of carbon

24  dioxide, but Such compensation shall exclude any

25  incentives, such as signing bonuses, provided to

26  consenting pore space owners prior to the initiation of
    SB1697 Enrolled      - 11 - LRB104 09225 AAS 19282 b

1   injection. Such compensation shall include any operations

2   term or injection term payments made upon or after the

3   initiation of injection provided to consenting pore space

4   owners in consideration of allowing use of their pore

5   space for sequestration of carbon dioxide. In determining

6   if pore space owners are similarly situated, the

7   Department of Natural Resources shall take into account:

8   the size, location, and proximity of the pore space; the

9   geologic characteristics of the pore space; the

10  restrictions on the use of the surface; the actual use of

11  the surface; the relevant law applicable at the time the

12  consenting pore space agreement was signed; title defects

13  and title warranties; the proximity of the pore space

14  owners' property to any carbon sequestration

15  infrastructure on the surface; whether the injection

16  interferes with any known mineral rights; and the fair

17  market value of pore space when entering into a commercial

18  contract. When evaluating the compensation provided to a

19  similarly situated pore space owner, the Department of

20  Natural Resources shall exclude any compensation provided

21  to a pore space owner of a property identified by the

22  applicant in paragraph (3) of subsection (b) and any

23  compensation that was not provided as part of an arm's

24  length transaction.

25  Unknown or nonlocatable pore space owners shall also

26  receive just compensation in the same manner as provided
    SB1697 Enrolled  - 12 - LRB104 09225 AAS 19282 b

1   to the other nonconsenting pore space owners that must be

2   held in a separate escrow account for 20 years for future

3   payment to the previously unknown or nonlocatable pore

4   space owner upon discovery of that owner. After 20 years,

5   the compensation shall be transferred to the State

6   Treasurer under the Revised Uniform Unclaimed Property

7   Act.

8   (f) The Department of Natural Resources' order for

9 unitization and integration of pore space under this Section

10 is not effective until the petitioner has been issued a Class

11 VI well permit from the United States Environmental Protection

12 Agency and the carbon sequestration permit from the Illinois

13 Environmental Protection Agency.

14  (g) An order for integration and unitization under this

15 Section shall: provide for the unitization of the pore space

16 identified in the petition; authorize the integration of pore

17 space of nonconsenting pore space owners in the pore space

18 identified; provide for who may unitize the pore space to

19 establish a sequestration facility to be permitted by the

20 Illinois Environmental Protection Agency; and make provision

21 for payment of just compensation to nonconsenting pore space

22 owner under the integration order.

23  (h) A petitioner shall provide a copy of any order for

24 unitization and integration of pore space to the Illinois

25 Environmental Protection Agency.

26  (i) If groundwater monitoring required by a Class VI
    SB1697 Enrolled          - 13 - LRB104 09225 AAS 19282 b

1 permit indicates that the source of drinking water has been

2 rendered unsafe to drink or to provide to livestock, the

3 sequestration operator shall provide an alternate supply of

4 potable drinking water within 24 hours of the monitoring

5 results becoming available and an alternate supply of water

6 that is safe for other uses necessary within 30 days of the

7 monitoring results becoming available. The alternate supplies

8 of both potable water and water that is safe for other uses

9 shall continue until additional monitoring by the

10 sequestration operator shows that the water is safe for

11 drinking and other uses.

12  (j) After an order for unitization and integration of pore

13 space is issued, the petitioner shall request that the

14 Department of Natural Resources issue separate orders

15 establishing the amount of just compensation to be provided to

16 each nonconsenting pore space owner. When submitting this

17 request, the petitioner shall provide information

18 demonstrating the good faith efforts taken to negotiate an

19 agreement with the nonconsenting pore space owner, including,

20 but not limited to, the number and extent of the petitioner's

21 contacts with the pore space owner, whether the petitioner

22 explained the compensation offer to the pore space owner,

23 whether the compensation offer was comparable to similarly

24 situated pore space owners, what efforts were made to address

25 the pore space owner's concerns, and the likelihood that

26 further negotiations would be successful. All orders requiring
SB1697 Enrolled  - 14 - LRB104 09225 AAS 19282 b

 1 the provision of just compensation shall be made after notice
 2 and hearing in which the Department of Natural Resources shall
 3 determine the appropriate amount of just compensation to be
 4 provided to each nonconsenting pore space owner as described
 5 in this Section. The Department shall adopt reasonable rules
 6 governing such hearings as may be necessary. In such a
 7 hearing, the burden shall be on the petitioner to prove the
 8 appropriate amount of just compensation consistent with this
 9 Section. Both the petitioner and the pore space owner shall be
10 permitted to provide testimony and evidence regarding the
11 appropriateness of the amount of just compensation proposed by
12 the sequestration operator. An order by the Department of
13 Natural Resources establishing the appropriate amount of just
14 compensation to be provided to a nonconsenting pore space
15 owner shall be a final agency decision subject to judicial
16 review under the Administrative Review Law. Such proceedings
17 for judicial review may be commenced in the circuit court of
18 the county in which any part of the pore space is situated. The
19 Department of Natural Resources shall not be required to
20 certify any record to the court or file any answer in court or
21 otherwise appear in any court in a judicial review proceeding,
22 unless there is filed in the court with the complaint a receipt
23 from the Department of Natural Resources acknowledging payment
24 of the costs of furnishing and certifying the record. Failure
25 on the part of the plaintiff to file such receipt in court
26 shall be grounds for dismissal of the action.
SB1697 Enrolled  - 15 - LRB104 09225 AAS 19282 b

1 (Source: P.A. 103-651, eff. 7-18-24.)
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