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Illinois Releases Proposed Hydraulic Fracturing Regulations

Nearly six months after passage of the much touted Illinois Hydraulic Fracturing Regulation Act (225 ILCS 732/1-1 et seq.) (the Act), the Illinois Department of Natural Resources (IDNR) issued proposed regulations implementing the Act (the HFRA Regulations) and scheduled two public hearings to receive public input (one in Chicago on November 26, 2013 and the second in Ina (downstate Illinois) on December 3, 2013).  In addition, the IDNR will accept written comments to the HFRA Regulations until January 3, 2014 (the IDNR has created an online public comment forum).

The HFR Regulations are subject to the Illinois Administrative Procedure Act’s (IAPA’s) two-step process.  The first step is to obtain public comment no less than 45 days after issuance of notice of the proposed rule in the Illinois Register, and the second step is to finalize the regulations upon a maximum of 45 days’ written notice to the Illinois Joint Committee on Administrative Rules (JCAR).  Critics of the Act have complained that the two  public hearings (with none in central Illinois) and the January 3, 2014 deadline for comments are inadequate.  Under the IAPA, the IDNR has until November 15, 2014 to issue final HFRA Regulations.

Substantively, critics, including environmental groups who originally supported the Act, have questioned several aspects of the HFRA Regulations including: (1) the process that a health professional must take, even in an emergency, to obtain information about hydraulic fracturing chemicals furnished to the IDNR under a claim of trade secret (Section 245.730); (2) what they perceive as a relaxation of the time in which hydraulic fracturing treatment flowback may be temporarily stored in open pits (Section 245.850); and (3) what they perceive as inadequate potential monetary penalties for administrative violations (starting at $50) and operating violations (starting at $100) (Section 245.1120).

The environmental groups are not the only critics of the HFRA Regulations.  The Illinois Oil and Gas Association, which has cast the state as hostile to the oil and gas exploration and production industry, has blamed the Act’s “onerous” nature on driving more than one E&P firm to abandon Illinois in favor of Indiana, which shares the New Albany Shale formation with Illinois and Kentucky.

The IDNR also issued proposed seismicity regulations for Class II Underground Injection Control (UIC) disposal wells that are intended to receive flowback from a high volume horizontal hydraulic fracturing well.  In order to receive a permit under the Act, the operator must identify an existing Class II UIC disposal well that will receive the flowback from the production well.  The proposed regulations implement the Act’s “traffic-light” seismicity reporting and enforcement authority, and add new injection recordkeeping requirements for permittees.

Before applying for a permit under the Act, an applicant must first be registered with the IDNR for at least 30 days.  So far, no firm has registered.  IDNR officials recently predicted that it will be at least a year until hydraulic fracturing begins in Illinois.

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EPA Releases Final Permitting Guidance for Fracing with Diesel Fuel

by James A. Pardo and Brandon H. Barnes

Hydraulic fracturing (fracing) on private land has long been overseen by state regulators enforcing state-specific permitting, installation and other requirements.  The one exception is wells fractured with diesel fuel, which remain subject to U.S. Environmental Protection Agency (EPA) oversight under the Underground Injection Control (UIC) rules of the federal Safe Drinking Water Act (SDWA).  EPA typically has delegated its UIC oversight responsibility to state regulators and, for more than a year, has quietly been providing direction to these state regulators about what EPA wants to see as a condition to issuing drilling permits for wells that will be fractured with diesel.  That direction now has been reduced to a formal guidance document, which the agency issued for public review and comment on May 10, 2012.  While EPA’s proposed guidance has attracted little media attention (principally because it was issued on the same day that the Department of Interior proposed long-awaited regulations for fracing on federal lands), EPA’s latest initiative to regulate fracing is something that all stakeholders – whether they use diesel or not – need to be following closely for several reasons:  

1. EPA has proposed defining "diesel" by reference to six Chemical Abstracts Service Registry Numbers (68334-3-5; 68476-34-6; 68476-30-2; 68476-31-3; 8008-20-6; 68410-00-4), all of which essentially describe different types of diesel fuel, fuel oil or kerosene.  However, the EPA has also proposed as an alternative three broader definitions that focus on the chemical and physical characteristics of "diesel" and which, if adopted, could apply to substances like mineral oil.  These alternative definitions of "diesel" could bring many more fracing fluids, and many more fracing stakeholders, under UIC and EPA regulatory control. 

2.  EPA has proposed significant changes to existing federal permitting requirements relating to (a) permit duration and well closure; (b) Area of Review analyses; (c) well monitoring and integrity analyses; (d) water quality testing and monitoring, including baseline groundwater testing before drilling; and (e) other data and information requirements for obtaining a permit including, potentially, requiring applicants to conduct expensive seismic surveys.  While much of this information is already required by state regulatory authorities, it is clear that the permitting scheme being contemplated by EPA would be more costly, time-consuming and burdensome than the rules imposed by most states.

3. Finally, in a notable departure from its own prior pronouncements, at page 16 of its guidance, EPA suggests that fracing can open conduits in the subsurface that might allow fracing fluid to migrate upward into shallow drinking water supplies:  "Due to high injection pressures, there is potential to induce fractures that may serve as conduits for fluid migration …"  EPA’s statement is troubling because it suggests that the agency is stepping back from decades of research (including studies by USGS and EPA itself) which demonstrates that deep fracing poses no threat to shallow groundwater located above thousands of feet of bedrock and other sub-strata.  EPA’s retreat on this important point potentially opens up a new line of attack [...]

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