Illinois Senate Unanimously Passes Fracking Bill

Kelley Drye Client Advisory

The Illinois State Senate unanimously passed a bill, SB 3280, on April 26, 2012, regulating hydraulic fracturing in Illinois. Hydraulic fracturing, also known as fracking,” releases hydrocarbons from formations holding oil or natural gas, and involves pumping a mixture of water, sand, and chemical additives down a well casing or tubing, under high pressure, causing the underground formation to crack, allowing the hydrocarbons to flow more freely to the surface.

Fracking has been utilized since the 1940s, but advances in technology has made the process more widespread, including in existing shale plays in Texas, Louisiana, Pennsylvania, North Dakota, Wyoming,  and growth in other states such as Illinois, Michigan and Ohio.

Energy companies are showing increased interest in the New Albany Shale, partially located in southern Illinois.  These legislative efforts represent the latest in the efforts of many states to regulate fracking activities.  As fracking becomes more widespread, it is anticipated there will be more legislative, regulatory and litigation activity.  We continue to monitor these activities for clients and companies who are likely to be affected by such developments.

Both industry and environmental groups support the proposed legislation, which includes language that mirrors a law passed in Texas in June 2011, and a subsequent model bill from the American Legislative Exchange Council.

If enacted, the proposed legislation would give the Illinois Department of Natural Resources the authority to regulate hydraulic fracturing. It would require well operators to disclose how they intend to dispose of fracking waste and disclose the amount of water and type of chemicals used in the fracking process. It would also require companies that provide fracking services or supply chemical additives used in the fracking process to cooperate with well operators and provide them with the necessary information so the well operators may comply with their disclosure obligations.

Of notable importance to well operators, service providers and suppliers, the legislation would give them the right to withhold certain information on the basis of it being a trade secret. The only parties that would be permitted to challenge such claim would be land owners (and their farm tenants) directly affected by the hydraulic fracturing and certain Illinois departments and agencies.  The legislation would also require well operators to meet certain well casing integrity tests.

The bill now moves to the Illinois House of Representatives for consideration.