Section 20 ILCS 1108/25 - Insurance against qualified losses(a) The Operator shall procure an insurance policy from a private insurance carrier or carriers, if and to the extent that such a policy is available at a reasonable cost, that insures the Operator against any qualified loss stemming from a public liability actionThe coverage limits for such an insurance policy shall be at least 25,000,000. Within every 10-year period after operations begin for the Project, the Operator and Department shall mutually agree on an independent third party, with appropriate insurance expertise, to conduct a risk-weighted analysis of the project, assess the appropriate level of insurance to protect the project from the financial consequences of public liability actions, and make a recommendation as to whether a greater amount of insurance coverage than the Operator has at the time is commercially available at a reasonable cost to the Operator. This analysis shall incorporate, and not be inconsistent with, results from similar risk-based analyses that may be required of the Operator by the agency permitting CO2 injection as part of its financial assurance process. The Operator and the Department shall have an opportunity to review the draft analysis and any recommendations for narrowed or expanded levels of insurance coverage prior to finalization of the analysis. If the independent third party recommends that a greater amount of insurance coverage is commercially available at a reasonable cost to the Operator, then the Operator shall procure the recommended level of insurance, to the extent the insurance is commercially available and is recognized as a recoverable cost under the terms of any CO2 services agreement or power purchase agreement that may be in place for the project at the time of the analysis. The cost of the independent third party shall be borne by the Operator.(b) The protections provided by the State under this Act and the obligations on the Operator shall only apply after the Operator establishes a CO2 Storage Trust Fund consistent with the purposes of this Act and pays a 50,000,000 fee to the State, which is to be deposited into the CO2 Storage Trust Fund. The fee shall be considered a non-refundable expenditure to the Operator for immediate protections and benefits provided by the State. The purpose of the CO2 Storage Trust Fund shall be to complement commercially available insurance products and to support the Operator's ability to satisfy financial assurance obligations that may be required by law or the terms of the Operator's permit issued by the Agency.
The funds in the CO2 Storage Trust Fund may used to satisfy any qualified loss stemming from a public liability action to the extent that such loss is not otherwise covered by an insurance policy. The funds may also be used to pay reasonable administrative costs associated with managing and resolving claims associated with the CO2 Storage Trust Fund, except that during the operations phase, no payments from the CO2 Storage Trust Fund may be used to pay legal fees associated with defending claims resulting from a public liability action. The funds may also be used for post-operations phase activities, including monitoring, CO2 storage site maintenance, storage site staffing, insurance, well and site closure, or other activities for which a law or permit requires financial assurance.
The CO2 Storage Trust Fund shall be funded in the following manner, toward a maximum amount of 250,000,000 per 100 million metric tons of CO2 storage site design capacity, unless the permit approved by the Agency requires a higher maximum amount:
(1) Subsequent future annual payments to the CO2 Storage Trust Fund shall be made during the operations phase of the project at an initial rate of 950,000 per million metric tons of CO2 injected, with the rate for subsequent annual payments adjusted up or down in order to meet the financial requirements of the Agency's permit and to fulfill the requirements of the Act.(2) The Operator shall deliver annually to the Department an audited financial report that includes CO2 Storage Trust Fund balances, liabilities, projected balances, projected liabilities, and evidence that the financial health of the CO2 Storage Trust Fund is sufficient for the purposes of this Act.(3) The Operator shall select, subject to the approval of the Agency, an independent third-party trustee to administer the CO2 Storage Trust Fund.(4) The trustee shall administer the CO2 Storage Trust Fund on behalf of the Operator during the operations phase of the Project plus an additional 10-year period, and on behalf of both the Operator and the State of Illinois after title to the CO2 has been transferred to the State of Illinois, to ensure compliance with the Operator's permits and this Act.(5) Once the permitting agency has issued a certificate of completion, or a comparable instrument indicating the site is safely closed, any surplus balance in the CO2 Storage Trust Fund shall be distributed to the State. If the Federal Government provides liability protections that obviates, in part or in full, the purpose of the CO2 Storage Trust Fund, then any surplus balance shall be distributed in accordance with this paragraph (5).(c) The Operator shall maintain an absolute minimum level of financial assurances in the amount of 100,000,000 against potential losses stemming from a public liability action, in the combination of insurance, CO2 Storage Trust Fund balance, project assets, or cash or cash equivalents during the operations phase of the FutureGen Project, plus an additional 10-year period.(d) Pursuant to Section 30 of this Act, the State shall indemnify and hold harmless the Operator against any qualified loss stemming from a public liability action to the extent that the qualified loss is greater than 100,000,000 and is not covered by the combination of an insurance policy under subsection (a) of this Section, funds in the CO2 Storage Trust Fund, project assets, and cash or cash equivalents.(e) If the FutureGen Alliance identifies a designated site or sites in Illinois suitable for injection of captured CO2 into the Mount Simon Formation, then the Department shall be authorized to contract with the FutureGen Alliance, under terms not inconsistent with this Act, in order to define the rights and obligations of the FutureGen Alliance and the Department, including, but not limited to, the insurance and indemnification obligations under Sections 25 and 30 of this Act.(f) If federal indemnification covers all or a portion of the obligations assumed by the State under Section 25 of this Act, such State obligations shall be reduced in proportion to the federal indemnification and be considered subordinated to any federal indemnification.(g) For the purpose of this Section, "qualified loss" means a loss by the Operator stemming from a public liability action other than those losses arising out of or relating to: (1) the intentional or willful misconduct of the Operator;(2) the failure of the Operator to comply with any applicable law, rule, regulation, or other requirement established by the Federal Department, Agency, or State of Illinois for the carbon capture and storage of the sequestered CO2, including any limitations on the chemical composition of any sequestered CO2; or(3) any pre-injection activities of the Operator.Added by P.A. 097-0618,§ 25, eff. 10/26/2011.