After considerable debate and with some continuing controversy, Illinois Governor Pat Quinn signed the Hydraulic Fracturing Regulatory Act into law. This new law will implement a regulatory program designed to strike a balance between allowing oil and gas development in Illinois using high volume horizontal fracturing, or “fracking”, technology and protecting the environment. Historically, Illinois’ low permeability shale formations have been unable to produce much oil and gas, but with recent advancements in fracking and horizontal drilling technology, the New Albany Shale formation in southern Illinois has been targeted for its potential to produce economically sustainable yields. While fracking in the Marcellus Shale formation in Pennsylvania has resulted in a recent localized oil and gas boom in that state, it remains to be seen whether fracking in the New Albany Shale formation in Illinois will have the same type of impact.

Illinois’ new fracking law was drafted through a collaborative process and with the participation of industrial, labor, and environmental groups. Illinois lawmakers have been able to accomplish what many other state legislatures have not – a fracking bill that most interested parties, despite their differences, find acceptable. Illinois’ new fracking law contains some of the strongest environmental controls and greatest transparency for fracking operations anywhere in the nation. Under the new law, fracking operations in Illinois will be regulated by the Department of Natural Resources (DNR) through an elaborate permitting process.

Illinois new fracking law is over 100 pages in length. Some of the significant provisions of the new law are described below.

Setbacks

Without special approvals or authorizations, fracking sites (i.e., not just the well but the entire property supporting the well) may not be located within certain distances of sensitive facilities and areas. Setbacks are generally as follows:

  • 300 feet from a river, lake, pond, or reservoir;
  • 500 feet from a residence, house of worship, school, hospital, nursing home, water well, or spring;
  • 750 feet from a nature preserve; and
  • 1,500 feet from any surface water of groundwater intake for a public supply.

Registration

Prior to applying for a permit, applicants must first register with the DNR and provide the following information:

  • The name and address of the registrant and any corporate parent, subsidiary, or affiliate;
  • A disclosure of all violations in the past five years of any federal or state oil and gas development laws by the applicant and any corporate parent, subsidiary, or affiliate; and
  • Proof of at least $5,000,000 in pollution liability insurance.

There is a continuing obligation for the registrant to notify the DNR of any changes in the information initially provided.

Permit Application

Completing a permit application will be a very laborious process. It is through this process that the public and interested parties will be able to learn about any proposed fracking wells and fracking operations. Permit applications to the DNR must contain a significant amount of detailed information, including:

  • A statement that the well complies with all setback requirements;
  • A description of the well, including the well depth, drilling angles, and the length of the horizontal well section in which the fracking fluids will be injected and oil and gas will be extracted;
  • The depth of the lowest point of any freshwater aquifer that will be penetrated by the fracking well;
  • A description of the fracking operation, including the name of geologic formation being developed and the pressure to be utilized for the injection of fracking fluids into the formation;
  • The location of any other well bores within 750 feet of a proposed well that will also be stimulated as part of the fracking operations;
  • The chemicals that will be used in the fracking fluids;
  • A water withdrawal and management plan describing the water supply to be used to support the fracking operation;
  • A plan for the handling, storage, transportation, and disposal of fracking fluids;
  • A well site safety plan;
  • A well site containment plan;
  • A well casing and cementing plan;
  • A traffic management plan;
  • The names and addresses of all owners of real property within 1,500 feet of the well site;
  • A draft public notice;
  • A commitment to restore the well site; and
  • Proof of adequate insurance.

The Public Notice, Comment, and Hearing

The public notice, comment, and hearing process will likely generate much interest and activity. The new law provides that notice of each permit application must be posted on the DNR’s webpage. Notice must also be given to other interested state agencies, including the Illinois State Water Survey, the Illinois State Geological Survey, and the Illinois

Environmental Protection Agency. Finally, notice will be given to the public by both direct mailings to nearby property owners and by media publication to members of the community in which the proposed fracking operations will take place. Seven days after the DNR receives an application, a 30 day public comment period will begin. Any member of the public may submit written comments. The DNR may request that the applicant respond to any substantive comments received.

Additionally, interested parties and state agencies may request that a public hearing be held. A hearing request must be in writing, and unless the request is frivolous, the DNR must hold a hearing. The hearing process is formal and must comply with the contested case requirements of Illinois’ Administrative Procedure Act. If a public hearing is held, the DNR may provide for an additional 15 days of public comment after the hearing.

Permit Issuance

After the close of the public process, the DNR will issue a permit if the following requirements are met:

  • The well site is appropriately set back from sensitive facilities and areas;
  • The permit application is complete and contains accurate information;
  • All of the operational plans (e.g., safety plan, transportation plan, water withdrawal and management plan, fracking fluid plan, etc.) are adequate;
  • The proposed fracking operations will be conducted in a way that does not harm public health and the environment;
  • A work plan that includes procedures for collecting background water samples has been submitted to the DNR;
  • The applicant has addressed any violations of Illinois’ Oil and Gas Act;
  • Any injection wells for the disposal of fracking fluids meet required integrity tests; and
  • There is no other good cause for denying the permit.

In making its determination, the DNR will consider the entirety of the record before it, including the application, public comments, the applicant’s response to any public comments, and testimony given during any public hearing. The DNR’s decision to approve or deny a fracking permit is a final agency action that is subject to judicial review.

Denial, Suspension, and Revocation

The DNR has the authority deny a permit, to suspend a permit, or to revoke a permit for good cause. Bases for such actions include an applicant’s submittal of incomplete, incorrect or misleading information in its application, violations of a permit, violations of the Illinois Oil and Gas Act, violations by the applicant of oil and gas laws in other states, and emergency conditions.

Bonds

Permit applicants are required to post a bond of $50,000 for each well or $500,000 for all of its operations in the state of Illinois. Bonds are only released after satisfactory plugging and abandonment of wells. Other collateral securities may be allowed by the DNR in lieu of bonds.

Well Preparation, Construction, Drilling, and Operation Standards

The Hydraulic Fracturing Regulatory Act provides highly detailed provisions on all aspects of preparing, constructing, and drilling fracking wells, with specified standards for site preparation, site maintenance, well casing and cementing, and blowout prevention. Operational standards include well integrity testing, fluid and waste management, and air emission controls. Fracking fluids must be stored in above ground tanks, and reserve pits may only be used for temporary storage in the event that there is more flowback than anticipated during fracking operations. Secondary containment for fracking fluid storage tanks is required.

There are specific requirements for the minimization of emissions to the atmosphere associated with the venting of hydrocarbon fluids and natural gas. Fracking operations must also minimize the production of fugitive dusts using techniques such as road maintenance and minimizing construction on windy days.

Fracking operators are required to submit various reports documenting that all operational standards have been met.

Chemical Disclosures

One issue that has received considerable attention in other states has been the secrecy surrounding the chemicals contained in fracking fluids. Operators will be required submit to the DNR information about the chemicals they use. If an operator claims a trade secret for any chemicals in the fluids being injected, then the operator must submit both redacted and unredacted documents about the chemicals as well as a written justification for the trade secret claim. Chemical disclosures under a trade secret claim may be protected if the information about the chemicals has not been published, has not been disseminated, or has not otherwise become a matter of public knowledge, and if the information can be shown to have competitive value. The new law provides administrative procedures related to both the denial by the DNR of an applicant’s trade secret claim, and the denial by the DNR of the production of trade secret information requested by a member of the public pursuant to the Freedom of Information Act. In the event that there is a release of fracking fluids to the environment, the DNR may share trade secret information with appropriate government officials in order to protect the public.

Water Testing and Water Pollution

Prior to the commencement of fracking activities, baseline water sampling must be performed on all sources of water within 1,500 feet of each well site. If there are no groundwater wells within 1,500 feet of the well site, then the closest water supply wells must be sampled. Regular sampling of water supplies near fracking sites must continue during fracking operations. The water sampling must be performed in accordance with a work plan that the operator must submit to the DNR.

The DNR has the authority to order a water quality investigation if there is a water pollution complaint. Referrals may be made by the DNR to the Illinois Environmental Protection Agency, and the state’s environmental agency may investigate any matter and initiate enforcement under the Illinois Environmental Protection Act, as appropriate.

Perhaps one of the more unique and controversial aspects of the Illinois’ new fracking law is the “rebuttable presumption” language. The law imposes a presumption that if pollution of a water supply is discovered near a fracking site, then the fracking operations will be presumed to have caused the pollution. Clear and convincing evidence is required to rebut the presumption.

Well Plugging and Well Site Restoration

Upon the completion of fracking operations, wells must be plugged and well sites must be restored, with all costs to be borne by well operators.

Seismicity

The new fracking law requires that the DNR develop rules, in consultation with the Illinois State Geological Survey, to control the inducement of seismicity caused by the well injections.

Completion Reports

Within 60 days after the completion of fracking operations in a well, the well operator must file a report with the DNR containing information about the well and the fracking operations that took place at the well.

Enforcement

Violations of the Illinois’ new fracking law may be enforced both criminally and civilly. Additionally, private citizens may initiate actions against fracking site operators, governmental instrumentalities and agencies, and the DNR.