Showing posts with label Illinois. Show all posts
Showing posts with label Illinois. Show all posts

Proposed class action filed in Illinois state court challenging denial of fracking permits

Amy Pollard and a number of mineral rights owners have filed a proposed class action against the state of Illinois in the Circuit Court for the Second Judicial Circuit of Illinois. Plaintiffs allege that Illinois’s refusal to grant fracking permits violates their rights under the Fifth Amendment of the United States Constitution as well as their rights under the Illinois constitution. Specifically, Plaintiffs argue that the state’s conduct constitutes an unconstitutional taking without just compensation.

Although Illinois law permits fracking, the state has failed to issue regulations governing fracking permits. Oil and gas operators have therefore been unable to obtain drilling permits. Plaintiffs allege that their mineral rights are worthless without a permit because they cannot receive any royalties until drilling commences. In the complaint, Plaintiffs state that mineral rights owners have already leased thousands of acres to oil and gas operators.

Plaintiffs request attorney fees and at least $50,000 in damages for each member of the class. The class is limited to owners of mineral rights in the New Albany Shale formation in Wayne County. Plaintiffs estimate that the class could ultimately include more than one thousand mineral rights owners.

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EPA reviews states’ solid waste management regulations for oil and gas operations

In an April 1, 2014 memorandum, the U.S. Environmental Protection Agency (EPA) summarized state regulatory programs concerning the management of solid waste from oil and natural gas exploration, development and production (E&P) operations.

In reviewing each state’s regulations, the EPA focused on surface storage and disposal facilities managing produced waters, drilling muds, drilling cuttings, hydraulic fracturing return fluids, and various other waste liquids and materials intrinsically related to oil and gas E&P.

The EPA found that the state regulations were primarily concerned with the “technical requirements associated with the design, construction, operation, maintenance, closure, and reclamation of surface pits, ponds, lagoons or tanks, as well as financial assurance requirements associated with such facilities.”

Among the common parameters are state requirements for liners in pits and impoundments, secondary containment requirements for tanks, set-back requirements, and various inspection requirements. However, the EPA did find gaps in regulations relating to groundwater monitoring, leachate collection, air monitoring, and waste characterization.

Overall, with the review, the EPA had developed an understanding of the wide-range of state regulatory programs currently in place in the twenty-six (26) oil and gas producing states covered in the summary.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
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Wrongful death lawsuits, by-pass routes and first responder training – Issues relating to the transport of oil products by rail

Nineteen wrongful death lawsuits from the July 2013 train derailment and explosion in Lac-Mégantic, Quebec, Canada were transferred from U.S. District Court in Illinois to the U.S. District Court in Maine on March 21, 2014.

The Maine federal judge ordering the transfer found that these lawsuits were “related to” the Maine bankruptcy proceedings filed by Montreal Maine and Atlantic Railroad Ltd. (MMAR) one month after the accident. Presented with evidence of shared insurance between MMAR and some of the wrongful death defendants, the Court made the “limited finding that claims against certain of the defendants named therein are related to the Railway’s bankruptcy.”

Concerns about the safety of transporting oil by rail have increased following a number of recent accidents, including the Lac-Mégantic incident in which more than 40 died, a December 30, 2013 derailment of 21 tank cars in Casselton, North Dakota resulting in an explosion which required the evacuation of 1,400 people, and a November 8, 2013 derailment of more than 20 cars in a 90-car petroleum crude oil train near Aliceville, Alabama.

Approximately one-quarter of the nation’s rail traffic (about 40,000 cars) passes through Chicago on a daily basis, with some freight cars taking more than 24-hours to complete the transit through the city. With an increasing role in oil transport logistics, a 150-mile by-pass around Chicago has been suggested. The by-pass would require the laying of new track, raising the issue of funding. It would not be economically feasible for one railroad to fund the by-pass, and Chicago’s mayor’s recommendation to charge a fee for each rail car carrying hazardous materials was quickly criticized by railroad organizations.

On March 25, 2014, the Fire Chief of Casselton (North Dakota) Volunteer Fire Department testified before the Senate Homeland Security and Government Affairs Committee concerning his experience with the crude oil train derailment near the town. Chief Tim McLean expressed his gratitude for the training he received and the fire equipment purchased using federal homeland security grant dollars, and he emphasized the need to continue that funding. “Because of the growing oil industry and the likelihood that oil will continue to be shipped via rail, we must continue to train and plan for these types of incidents. Yes…the tanker cars will likely be improved and pipelines may be used more extensively, but that does not erase the fact that crude oil and other hazardous materials will continue to be shipped through our communities. Our responder community must be ready for that.”

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
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Illinois and California issue proposed administrative rules to implement hydraulic fracturing legislation

In Illinois, Governor Pat Quinn approved hydraulic fracturing legislation on June 17, 2013. The Illinois Department of Natural Resources (DNR) released proposed administrative rules to implement this legislation on November 15, 2013 – Proposed Administrative Rules for the Hydraulic Fracturing Regulatory Act and Proposed Administrative Rules for Seismicity to monitor Class II UIC wells receiving any hydraulic fracturing fluids.

The rules require oil and gas companies to disclosure chemicals used in fracking operations both before and after drilling and to test water before, during and after drilling. The rules also require the operators to provide information as to how the well will be drilled, how much fluid will be used, what pressures will be used, how water will be obtained, and how flowback fluids will be disposed. Before finalizing these rules, the DNR will hold two public hearings (November 26, 2013 in Chicago and December 3, 2013 in Ina) and will accept comments on the proposed rules through January 3, 2014.

In California, Governor Jerry Brown approved hydraulic fracturing legislation on September 20, 2013. Proposed regulations to implement the legislation were issued by the California Department of Conservation, Division of Oil, Gas and Geothermal Resources (DOGGR) on November 15, 2013. These regulations are open for public comment for 60 days (until mid-January), with five public hearings scheduled for early next year.

Under the proposed regulations, oil and gas companies would be required to apply for and obtain permits before starting hydraulic fracturing activities, notify near-by landowners of these activities, disclose all chemicals used during fracking, watch pressures and flow rates during well stimulation, and monitor groundwater quality before, during and after drilling. For the chemical disclosures, the oil and gas companies would be required to identify in the permit application what chemicals are anticipated to be used and then, within 60 days of fracking completion, to disclosure what chemicals were actually used during the operation. This information must be disclosed publicly through the Chemical Disclosure Registry (FracFocus.org).

The proposed regulations also require operators to continuously monitor pressures and flow rates during well stimulation, evaluate the condition of the well’s cement, and analyze surrounding wells and earthquake faults to prevent hydraulic fracturing fluids from migrating to other areas. While these proposed regulations will not go into effect until January 1, 2015, the DOGGR announced that emergency regulations will be in place by January 1, 2014.

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Pending hydraulic fracturing bills in Illinois legislatures

Currently there are four bills pending in the Illinois legislatures relating to high volume hydraulic fracturing activities. One bill creates the Illinois Hydraulic Fracturing Regulatory Act, two bills would ban fracking, and one requires fracking regulations to be added to the Illinois Oil and Gas Act. All of these bills are currently in committees.

House Bill 2615 which creates the Illinois Hydraulic Fracturing Regulatory Act has provisions requiring permits for hydraulic fracturing and the disclosure of fracking fluids.
  • High volume hydraulic fracturing operations require a permit. The permit application must contain detailed well and operations information, including: 
    • A detailed description of the proposed well to be fracked, including total depth, proposed angle and direction, the approximate depth at which well deviates from vertical, angle and direction non-vertical portion of the wellbore, and estimated length and direction of proposed horizontal lateral or wellbore. 
    • Estimated depth and elevation of the lowest potential fresh water along the entire length of the proposed wellbore. 
    • A detailed description of the proposed high volume hydraulic fracturing operations, including the formation affected by the operation, the anticipated surface treating pressure range, the maximum anticipated injection treating pressure, the estimated fracture pressure of the producing and confining zones, and the planned depth of all proposed perforations or depth to the top of the open hole section. 
    • A chemical disclosure report identifying each chemical and proppant anticipated to be used in the fracking fluid for each stage of the fracturing operation, including the anticipated total volume of water, fracturing additives to be used, each chemical to be intentionally added to the base fluid, and percent concentration of each chemical added. Trade secrets can be protected with appropriate information provided to the Department of Natural Resources. 
    • A plan for handling, storage, transportation, and disposal or reuse of hydraulic fracturing fluids and hydraulic fracturing flowback. 
  • Within 60 days after concluding hydraulic fracturing operations, the operator must file a high volume horizontal hydraulic fracturing operations completion report which requires the following information: 
    • The total water volume used and the type and total volume of base fluid used. 
    • The quantity of hydraulic fracturing flowback recovered from the well and a description of its disposal or re-use. 
    • A chemical disclosure report identifying each chemical and proppant used in the fracturing fluid for each stage of the hydraulic fracturing process. Trade secrets can be protected if the party seeking protection presents: 
      • Redacted and unredacted copies of documents that contain the chemical disclosure information. 
      • A justification of the claim containing a detailed description of how the information has been protected, identification of persons to whom the information has been disclosed, a certification that the information has not been published, an explanation of why the information is of competitive value, and any other information supporting the claim. 

House Bill 3086 and Senate Bill 1418 would amend the Illinois Oil and Gas Act to create the Hydraulic Fracturing Task Force to gather information, evaluate and make recommendations for the regulation of hydraulic fracturing in Illinois. Until the Task Force provides its findings, all high volume horizontal hydraulic fracturing operations are banned.

Senate Bill 3280 would amend the Illinois Oil and Gas Act to require well integrity tests before hydraulic fracturing, disclosure of fracking fluids (except for trade secrets), and re-use or disposal of flowback at an appropriate disposal facility. Operators of hydraulically fracked wells would be required to disclose all chemicals used on the FracFocus website. A service company that performed the hydraulic fracturing or a supplier of any additive used in the fracking fluid must provide to the operator the information needed for the operator to respond to the FracFocus.org website. Trade secret information may be withheld.

This article was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice Group.
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Illinois Lawmakers Propose Fracturing Legislation

On Thursday, February 21, two Illinois State Representatives proposed a bill to regulate hydraulic fracturing in the state. The proposed legislation, House Bill 2615, was prepared after months of negotiations between lawmakers, the oil and gas industry, and environmental concerns.

The bill includes a number of additional requirements for the oil and gas industry but has been hailed by the industry as a positive legislative step forward.

After the HB 2615 was proposed, Illinois Governor Pat Quinn praised the bill as being good for the state’s economy. 

The bill is supported by the oil and gas industry, in part because of the lengthy negotiations process that occurred before the law was drafted between the industry, environmental community, and state legislators. 

Thus, while some environmentalist critics of the bill urge support for a two-year moratorium on fracturing in Illinois, the comprehensive negotiations that occurred prior to the bill’s drafting mean the bill will probably be enacted into law by the legislature.

The proposed legislation would enact a number of requirements on the oil and gas industry, including:
  • A requirement that fracking fluid be stored in closed tanks; 
  • Limitations on flaring of natural gas; 
  • A requirement that fracking chemicals be disclosed to the public; 
  • A state web site where drilling applications will be made available to the public; and 
  • A legal “rebuttable presumption” that oil and gas drillers are liable for water-source contamination near high-volume fracking operations unless proven otherwise.

This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.
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