Hydraulic fracturing in Illinois

Hydraulic fracturing in Illinois

By Bill Anaya

Last month, Gov. Pat Quinn signed the Illinois Hydraulic Fracturing Regulatory Act (P.A. 098-0022). Others may continue to seek a moratorium on hydraulic fracturing in Illinois, but with the governor's signature, a moratorium on hydraulic fracturing in Illinois is merely a protest.

We can, however, expect challenges to the hydraulic fracturing practice, if not legal challenges to the law, and both sides are well advised to consider the impact of the administrative record in challenging or supporting compliance with this law and with the laws of the state — most notably, the Illinois Environmental Protection Act.

While the statute provides the Illinois Department of Natural Resources (IDNR) with the authority to adopt rules, it is also clear that "[a]ny and all rules adopted under this Act by [IDNR] are not subject to the review, consultation, or advisement of the Oil and Gas Board."

In addition, the statute creates a "Task Force On Hydraulic Fracturing Regulation" but the task force is limited to preparing a report due Sept. 15, 2016. Under the circumstances, it is clear that the Illinois General Assembly is comfortable with the current scope and specifics identified in the statute, and with IDNR's capability in promulgating forms and rules — rules that will likely mirror the statutory requirements.

Indeed, the statute provides for specific setback requirements and a demand for a detailed description of the process. In addition, the statute adequately and clearly articulates the requirement that the applicant/operator locate hydraulic fracturing operations outside of prescribed distances and away from sensitive receptors (i.e., drinking water sources and people). The statute also mandates a detailed disclosure of hydraulic fracturing fluids used, the sources of the water to be used, the waste water disposal plan, as well as detailed description of well casing and cement sealing techniques. The statute also provides for public notice and participation. Unlike other compliance and regulatory statutes, this one requires little additional detail in rule making.

We can expect challenges at each step in the pre-permit process — from registration, application, public participation, permit issuance/denial and appeals. It is remarkably important — critical — that the parties make and supplement an administrative record because judicial review of those activities will be based solely on the admissible evidence included in the administrative record.

In Illinois, the agency's interpretation of the law it administers (and some facts) are entitled to judicial deference so long as the interpretation is not unreasonable. And, the evidence that will be subject to judicial review will be only the admissible evidence that was generated and properly supplemented in the administrative record.

There are some exceptions, but, by and large, the agency's determination will not be overturned unless the agency's decision is arbitrary, capricious or unlawful.

Interestingly, what is not being discussed is the remarkable "Presumption of pollution or diminution" described at Section 1-85 of Public Act 098-0022. That section establishes a rebuttable presumption "for the purposes of evidence and liability under State law regarding claims of pollution or diminution of a water source." Specifically, a person conducting "high volume horizontal hydraulic fracturing operations" is presumed liable for the alleged violation of "state law, if the person is performing hydraulic fracturing activities within 1,500 feet of an impacted water source," or the water quality data "showed" no pollution or diminution prior to the commencement of hydraulic fracturing operations, or the alleged violation occurred during high volume horizontal fracturing operations, or no more than 30 months after the completion of the high volume horizontal hydraulic fracturing operations.

To rebut the presumption that person must affirmatively prove by clear and convincing evidence that the water source is not within 1,500 feet of the well site, or the alleged violation had occurred prior to the commencement of the hydraulic fracturing operations or more than 30 months after the completion of the high volume horizontal fracturing operations, or the alleged violation occurred as the result of another identifiable cause.

While other states are less regulated, operators in those states have less opportunity to provide evidence of compliance. Especially to the extent that regulators in Illinois now have a rebuttable presumption, operators will be well served to discuss evidence of compliance with counsel, and develop a defensible administrative record with admissible evidence of compliance.

Bill Anaya is an environmental attorney with Arnstein & Lehr, LLP in Chicago. He is licensed in Illinois and Indiana and concentrates his practice in environmental enforcement actions and related litigation and transactions. He can be reached at wjanaya@arnstein.com.

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