Much Watched Fracking Compromise Bill Faces Uncertain Future

The State of Illinois is one of the current battlegrounds in the national debate over hydraulic fracturing, or "fracking."  That state is being closely watched in large part due to the current effort to pass a comprehensive regulatory bill that is touted as an unusual compromise between industry and environmental groups.

Illinois is home to a portion of the New Albany Shale, a formation that is believed to hold between 1 billion and 8 billion cubic feet of natural gas.  That is not a tremendous amount compared to some other widely known plays like the Marcellus Shale, but there is also some belief that the New Albany formation may contain oil and other liquid hydrocarbons.

Fracking regulation is a hot-button issue in Illinois.  Illinois has yet to pass any comprehensive regulatory package.  Energy companies have leased an estimated 500,000 acres for drilling, but have held off on commencing operations until they know what rules will apply.  Meanwhile, Southern Illinois, where the New Albany Shale is located, is the most economically-challenged area of the state.  Many politicians, local residents and businesses are hopeful that drilling activity will help alleviate economic conditions.  Environmentalists are concerned that the economic boost will not be worth the damage they fear will be done to the environment.

Efforts in recent years to pass fracking regulations failed.  John Bradley, a state representative from Southern Illinois, came up with a plan.  He convened a group of negotiators from both sides of the issue to try to hash out a fracking bill that both sides could live with.  Bradley selected a core group of four negotiators from environmental groups, four from industry, plus representatives from state government, including the attorney general's office, governor's office, regulatory agencies, and the legislature.  Several months of sometimes tense negotiations resulted in a bill that was filed in February and received nationwide attention.

The bill is Illinois House Bill 2615.  Among its features are:

  • Mandatory baseline water testing before fracking starts and monitoring during operations, with a presumption of liability for any contamination that appears during operations;
  • A requirement that flowback and produced water be stored in closed containers, or, in emergencies, in lined pits for up to seven days;
  • A requirement that water ultimately be disposed of in injection wells, which are to meet prescribed standards and be tested every five years;
  • Mandatory disclosure to state officials of the agents that will be used for fracking, with the caveat that companies can claim trade-secret protection to prevent disclosure to the public at large;
  • A requirement that companies plug nearby abandoned wells to prevent water from flowing back up through those wells;
  • Limits on the release and flaring of natural gas during operations;
  • A bonding requirement of $50,000 per permit or $500,000 to cover multiple permits;
  • Provisions for public notice and comment in connection with permit applications, and mailing of notice to landowners within 1,500 feet of a proposed well site;
  • Best practice standards for well design, construction and monitoring.[1]

Environmental interests have not uniformly supported the bill.  Some groups rejected the bill, preferring to fight for a ban or moratorium on fracking.  Even groups that nominally support House Bill 2615 are conflicted.  They are simultaneously supporting rival legislation that would impose a two year moratorium, but explaining that fracking appears inevitable and House Bill 2615 may be the best possible outcome.

When the bill was filed, negotiators on both sides warned of the fragile nature of the compromise.  They issued statements that any attempt to amend the bill could cause them to withdraw support altogether.  Those warnings proved prophetic, as the bill has suffered setbacks.  The Illinois House Speaker, who was once thought to support House Bill 2615, has announced that he supports a bill that would impose a moratorium instead.  In mid-March, the bill stalled due to a dispute over severance taxes.  Less than a week after a deal was reached on that issue, an amendment was added that would require unionized well water contractors to be in place at each well site until drillers themselves were licensed.  That caused some industry-related groups to withdraw support for the bill.  A committee vote had to be postponed because it appeared that the bill would not have enough support to advance to the full House.[2]

And so the Illinois fracking bill once hailed as a potential "national model"[3] faces an uncertain future.  Many will continue to watch Illinois to see whether the hard fought fracking compromise is able to survive the legislative process.

 


[1]           Kari Lydersen, "In Illinois, Environmentalists and Industry Compromise on Fracking Bill," Midwest Energy News (2/22/2013), available at http://www.midwestenergynews.com/tag/fracking/.

[2]           Julie Wernau, "Push for Fracking Bill Delayed by Surprise Amendment," Chicago Tribune (Mar. 22, 2013), available at http://articles.chicagotribune.com/2013-03-22/business/ct-biz-0322-fracking-20130322_1_oil-and-gas-illinois-oil-surprise-amendment.

[3]           Tammy Webber, "Illinois Fracking Deal Could Be the National Model," Associated Press (Mar. 7, 2013).

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