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September 03, 2014 Articles

Fracking in Illinois: The Uncertainty Continues

Uncertainty, doubt, and insecurity have returned about whether the New Albany Shale formation in the Illinois basin will be developed by fracking.

By Shannon L. Haney – September 3, 2014

In June 2013, Illinois legislators, regulators, industry, and environmental groups celebrated the end to a hard-fought negotiation effort that led to the enactment of the Illinois Hydraulic Fracturing Regulatory Act. Whether each group agreed with each and every provision in the act, at the very least, with passage of the act, industry, regulators, and environmental groups had some structure regarding the statutory legal process for conducting high-volume horizontal hydraulic fracturing (fracking) in Illinois.

But this celebration and hope for a defined legal structure was short-lived. With the delay in enacting the implementing regulations and changes in agency leadership, uncertainty, doubt, and insecurity have returned about whether the New Albany Shale formation in the Illinois basin will be developed by fracking.

The Hydraulic Fracturing Regulatory Act
The act is one of the broadest statutory schemes regarding hydraulic fracturing in the 50 states. While a number of federal laws touch on aspects of fracking, no overriding federal legislation or regulatory scheme currently governs fracking operations. Regulation of fracking is currently handled at the state level. The newly enacted act in Illinois is one of the most extensive schemes, covering items from permitting, groundwater monitoring, traffic management, chemical-fluid disclosure, penalties for violations, and seismicityAlmost every step in the process of well siting, permitting, development, operation, and closure has been addressed or is slated to be addressed by the implementing regulations.

While the act is extensive, a few provisions are specifically notable. First, the act contains a provision that goes against one of the most fundamental precepts of law—namely, that a party is innocent until proven guilty. The act creates a regulatory groundwater scheme that contains a presumption that groundwater contamination discovered in a defined area surrounding a fracking well was caused by the operator of the well. 225 ILCS 732/1-85. This presumption remains in place for up to two and a half years after the operation of the well has ceased. This presumption can be rebutted only by identifying an alternative cause of the contamination, showing that the pollution occurred prior to or more than two-and-a-half years after the fracturing operations, or showing that the well site is outside a defined distance from the contaminated water source. This provision requires the well operator to prove by clear and convincing evidence that the contamination is not a result of the fracking operations. 225 ILCS 732/1-85(c).

Second, the act prescribes a new definition of “pollution or diminution,” which is stricter than the vast majority of current environmental standards that have been developed based on risk. “Pollution and diminution” under the act allows a mere detection of benzene or any carcinogen in the water source to suffice for a violation. 225 ILCS 732/1-5. The level of benzene or carcinogen does not have to rise to the level of any risk or human-health standard; only a detection of the contaminant is required.

Third, the act requires that a fracking operator disclose to the Illinois Department of Natural Resources (IDNR) a master list of the chemical fluids that are proposed to be used for the fracturing. 225 ILCS 732/1-77. This list must include the base fluid as well as any additives. Further, the driller must notify IDNR within 24 hours if any changes are made to the list of planned fracking fluids. A driller can seek to protect its specific formula for the fracking fluid, but must prove that it has treated its specific fracking fluid as trade-secret information and has not disclosed it in the public domain, along with a number of other factors.

The Proposed IDNR Regulations 
The act delegates to the IDNR the authority to draft and implement governing regulations for fracking. 225 ILCS 732/1-130. After passage of the act, the drilling industry believed that the IDNR implementing regulations would be passed early in 2014 so that the issuance of permits for high-volume hydraulic fracturing could begin in the summer of 2014. While thedraft proposed rules were issued for public comment by IDNR on November 15, 2013, and the public comment period closed on January 3, 2014, the rules and regulations have not been enacted. This has caused uncertainty about when the legal requirements to obtain a permit will be finalized. According to reports, IDNR has received more than 35,000 public comments on the rules, although there is speculation that the volume of comments was driven by fracking opposition groups hoping to delay the implementation of the act.

The proposed regulations expand upon the provisions of the act. As outlined in further detail in the regulations, the sheer volume of plans, certifications, and information that must be submitted by a permit applicant is astounding. Section 245.210 of the proposed regulations contains a list of 28 separately listed plans or certifications that must be submitted with the application, each of which must contain highly detailed information including a directional-drilling plan, an operations plan, a chemical disclosure report, a water-source-management plan, a fluids-and-flowback plan, a traffic-management plan, and a fugitive-dust-control plan. 37 Ill. Reg. 18118. This required abundance of information and plans stands in stark contrast to the requirement that IDNR approve, reject, or approve with conditions any application within 60 days. Prop. Sec. 245.300, 37 Ill. Reg. 18152. Given this dichotomy, it seems likely that IDNR will be requesting that applicants waive this 60-day requirement.

Further, even if IDNR can move mountains by reviewing and approving each of the detailed operation plans in the application, the multiple opportunities for public comment and input on the application will almost certainly require an extension of the 60-day timeframe. Under the proposed regulations, multiple opportunities for public input and comments exist on the permit. An initial 30-day public-comment period begins seven days after IDNR publishes the permit application to its website. Prop. Sec. 245.260, 37 Ill. Reg. 18141. During this period, a request for public hearing may be made by an “adversely affected person,” a neighboring landowner or well permitee, or another qualifying person. Prop. Sec. 245.270(a); 37 Ill. Reg. 18142. While the proposed rules attempt to limit the time that such a public hearing is to take by limiting discovery “except for good cause shown,” the likelihood that any public hearing can be scheduled—much less completed—within a 60-day time frame is slim. Prop. Sec. 245.270(g), 37 Ill. Reg. 18147-18148. Following the public hearing, another 15-day public-comment period is contemplated to allow public comment in response to the evidence and testimony at the hearing. It seems improbable that a 30-day comment period, a public hearing, and a follow-up 15-day comment period can be completed within the 60-day time frame for approval of a permit under the proposed regulations. Sec. 245.300(a), 37 Ill. Reg. 18152.

Uncertain Regulatory Future 
Given the volume of comments that have been submitted on the proposed fracking regulations, along with staffing deficiencies at IDNR, it seems unlikely that final rules will be adopted in the near future. It is also unclear what proposed changes from the comments received by IDNR will be incorporated into the final promulgated rules. IDNR Director Marc Miller, however, has been quoted as indicating that the final regulations are on track to be republished prior to the November 15, 2014, deadline. Until the regulatory framework has been promulgated and implemented via approval of the first few permits through IDNR, uncertainty will hamper the development of fracking operations in Illinois.

Keywords: energy litigation, Illinois, fracking, Illinois Hydraulic Fracturing Regulatory Act, Illinois Department of Natural Resources, IDNR

Shannon L. Haney is an officer with Greensfelder, Hemker & Gale, P.C. in St. Louis, Missouri.

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