The Illinois General Assembly passed and Governor Pat Quinn signed into law a highly-publicized bill overhauling the regulation of hydraulic fracturing (fracking). Public Act 098-0022, Hydraulic Fracturing Regulatory Act. The new Illinois scheme will be among the most stringent and comprehensive in the Country, and a likely model for other States seeking to regulate the industry.

Fracking is a technique involving horizontal drilling that extracts natural gas from layers of shale rock beneath the earth’s surface. Freeing up the natural gas requires the injection of a combination of water and other additives (fracking fluid) at high pressure into the underground shale layer. Fracking wells use metal pipes (casing) to create a vertical pathway from the surface to the shale layer, and a horizontal pathway within the shale layer. After the high-pressure injection of fracking fluid into the shale layer, natural gas migrates into perforations in the metal casing. The casing is cemented in place to seal off a pathway back to the surface and prevent outward migration.

Key provisions in the proposed legislation:

Preventative Practices

The law would require permittees to submit plans and comply with numerous quality standards and best management practices pertaining to well construction, casing, and containment.

Setbacks

The proposed law includes setback provisions that aim to reduce the risk of contamination that could affect human health and the environment. For example, the law would require that well sites be at least 1,500 feet away from any surface water or groundwater intake of a public water supply.

Fluid and Waste Management Standards

These include:

  • requirements for storing fluids and managing flowback (i.e., recovered fracking fluid) during both the fracturing and production operations;
  • a requirement that flowback be tested for volatile and semi-volatile organic chemicals, inorganic chemicals, heavy metals, and naturally occurring radioactive materials prior to removal from the site;
  • duties to report releases of fracking fluids, flowback and additives to the DNR (in conjunction with any reporting obligations under federal law);
  • secondary containment requirements;
  • a requirement to immediately notify DNR and to “shut in” the well if fluid or flowback migrates outside the designated area; and
  • reporting requirements regarding “produced water” associated with permitted wells.

Tiered Requirements for Air Emission Management Practices at Oil and Gas Wells

The proposed law would require permittees to take specific actions to manage air emissions. As an initial matter, permittees must capture and route recovered natural gas and hydrocarbon fluids and put them to beneficial re-use through a method specifically identified in the statute (e.g., by routing gas through a flow line or collection system). To the extent that the practices called for in the statute are technically infeasible or economically unreasonable, permittees generally would need to capture and direct emissions into a combustion device or a flare.

Disclosure of Chemicals and Application for Trade Secret Protection

The proposed law provides that permittees must disclose to the DNR up-to-date lists of all base fluids, additives, and chemicals used in their fracking operations. The DNR will publish these lists on its website.

The disclosure provisions contain an important carve out for trade secrets. Permittees seeking to protect certain information from public disclosure by the DNR will need to submit a redacted and un-redacted version of the list described above. Further, they will need to submit a statement to show that the redacted information has competitive value and has not become a matter of public knowledge.

The law will permit limited disclosure of trade secret information to health professionals on the basis of health-related needs. The DNR will be required to promulgate regulations governing these types of disclosures.

Presumption of Groundwater Pollution

The proposed law establishes a rebuttable presumption that fracking operations have caused the “pollution or diminution of a water source” when: (1) the water source is within 1,500 feet of the well site; (2) water quality data showed no pollution prior to the start of operations; and (3) the pollution occurred during or within 30 months of the fracking operations.

To rebut the presumption, the permittee must show “clear and convincing evidence” either controverting the first or third element above or showing that the pollution resulted from another identifiable cause.

This rebuttable presumption is significant for two key reasons. First, it could trigger the DNR’s authority under the fracking law to order the permittee to restore or replace the polluted water supply. Second, it could subject a permittee to liability under the Illinois Environmental Protection Act.

Citizen Suit Provisions and Personal Injury and Property Damage Claims

On 60 days’ notice to the DNR and any alleged violator, citizens would be able to bring civil actions:

  • against the alleged violator of the Act, to compel compliance in lieu of government enforcement; or
  • against the DNR, to force it to carry out a non-discretionary duty.

In either instance, the court has the authority to award may award costs of litigation (including attorney and expert witness fees) to any party, on the basis of the importance of the proceeding and the participation of the parties to the efficient and effective enforcement of this Act.

In addition, the new legislation authorizes a civil action for personal injury or property damage claims against an operator in violation of any applicable rule or regulation established under the fracking law, and such damages would include reasonable attorney’s fees and expert witness fees.