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Both Sides of Fracking Debate Unhappy With Illinois' Proposed Rules

Supporters and opponents of shale gas development in Illinois are both unhappy over revised rules governing hydraulic fracturing (fracking) and other elements of oil and gas law that were submitted last week by state regulators.

On Friday, the Illinois Department of Natural Resources (DNR) filed 150 pages of revised rules to the state's Hydraulic Fracturing Regulatory Act (HFRA) and 13 pages of amendments to the Illinois Oil and Gas Act with the Joint Committee on Administrative Rules (JCAR). Both areas of regulation are subsets to Title 62, which covers mining, of the Illinois Administrative Code.

Last year, state lawmakers passed, and Gov. Pat Quinn subsequently signed, the HFRA, which potentially opened the state to fracking but required exploration and production (E&P) companies to disclose their fracking chemicals and to test nearby groundwater before and after they drill (see Shale Daily, June 4, 2013). DNR then published an initial version of proposed rules on fracking and scheduled a series of public hearings on the matter (see Shale Daily, Nov. 15, 2013).

Chemical disclosure rules were changed in Friday's version. The DNR said for any chemical that an E&P company deems a trade secret, "the permittee shall submit redacted and un-redacted copies of the documents identifying the specific information on the master list of chemicals claimed to be protected as trade secret." The DNR said it would use the redacted copies on its website. The filing of a second redacted copy would be required at the local public health department.

Before filing its first application with the DNR, the company must have a master list of chemicals on file with regulators. Applicants must also calculate the total estimated fluid volume that will be used in fracking operations, and include a diagram of any known previous well bores within 750 feet of the vertical plane above any part of a horizontal well bore.

The revised rules stipulate that an E&P company must file its plans with the appropriate local soil and water conservation district and any community water supply within 20 miles of the proposed water source for drilling operations.

Companies must also submit a radioactive materials management plan "to identify, manage, transport and dispose of any radioactive materials utilized or generated during the course of [fracking] operations." That plan is to incorporate background site characterization and baseline monitoring, operational phase and site release information.

Applicants would also be required to submit an emissions plan that uses green completion measures to "capture hydrocarbons during [the] flowback period and production after well completion," plus any additional technical and/or economic information "if the applicant desires an exemption for flaring or venting."

Friday's revised rules also clarified several definitions, including an expanded definition of base fluid; new definitions for by-product materials, Class II UIC (underground injection control) wells, flowback, hazardous material, stimulation treatment and several terms for radioactive materials; and struck the definition of an affected patient.

The DNR said it received nearly 31,000 public comments over the proposed rules and its staff reviewed more than 43,600 pages of material. The agency said more than 1,000 people attended public hearings in Carbondale, Chicago, Decatur, Effingham and Ina.

Brad Richards, executive vice president of the Illinois Oil & Gas Association (IOGA), called the DNR's proposed rules "unworkable."

"We're concerned that these are not going to be workable rules," Richards told NGI's Shale Daily on Tuesday. "There are things in here that will not work, and we think that there are numerous examples where the rules don't conform to legislative intent. The vague language on permitting that doesn't lead to the kind of certainty we think needs to exist for full-scale development to go forward.

"Right now we're just trying to figure out exactly what we can do. We're still trying to digest it all, but there are some elements of this that are very, very troubling. Based upon what I've seen so far, if the rules go forward as proposed, I question whether the first permit will be issued."

Richards said IOGA was disappointed with the way the rulemaking turned out after years of negotiations among various stakeholders, including the industry, environmental groups, lawmakers, the state attorney general, the Farm Bureau and others.

"This was a couple of years in the making," Richards said. "There was a lot of give and take. It was a really difficult set of negotiations strung over a very long time. We all shook hands, and as one of the main architects pointed out, it was a sign that there was compromise 'because nobody was particularly happy.' But we actually reached an agreement. And to see the rules in so many ways diverge from that tremendous effort of compromise, it's frustrating. I don't know where we go from here."

Henry Henderson, Midwest director for the National Resources Defense Council, said the proposed rules were an improvement, but he insisted that fracking was still not safe.

"While we would love to give a definitive thumbs up or down today, it is just not possible with such [a] short review time as these are highly technical rules that require considerable analysis," Henderson said Friday. "On first read, it appears that a number of the critical changes we requested have been made.

"While we have been fighting hard to get protections in place to help protect citizens in this state, we would reiterate that these rules would not make fracking 'safe.' [DNR] seems to have listened to public concern and attempted to improve the draft rules. However, Illinois remains far from prepared to protect against the risks of fracking because more research is needed concerning its public health impacts and how best to mitigate them."

JCAR is a 12-member panel of lawmakers from the state General Assembly. According to the Illinois Administrative Procedure Act, JCAR has 45 days to review the DNR's proposals but may request an additional 45 days if both entities mutually agree. The two can also agree to modifications in the proposed rulemaking.

JCAR could issue a certificate of no objection (CNO) for the proposed rules, after which the DNR could proceed to adopt them by filing them with the secretary of state for publication in the Illinois Register. If an objection is filed to the CNO, the DNR would have 90 days to respond in writing, but it could still move to adopt the rules afterward.

But Richards said there was an alternative: eight members of JCAR could vote no, effectively blocking the rules from taking force. He said that would restart the entire JCAR process but not necessarily the entire public comment process.

"One of the dilemmas that we face is that we're under the gun here. There's not a lot of time left. It's going to be interesting to see how it plays out."

In 2012, the Illinois Chamber of Commerce reported that shale formations in the southern part of the state could potentially create $9.5 billion of investment and 45,000 jobs (see Shale Daily, Dec. 17, 2012). The New Albany Shale formation underlies a substantial portion of southern Illinois.

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