Illinois Set to Regulate Shale Oil and Gas

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On June 17, 2013, Illinois P.A. 98-0022 (the Act), consisting of the Hydraulic Fracturing Regulatory Act (225 ILCS 732/1-1 et seq. (2013)) (HFRA) and the Illinois Hydraulic Fracturing Tax Act (35 ILCS 450/2-5 et seq. (2013)) (HF Tax Act), became law. The Act, which was the result of months of negotiations among industry and some environmental groups, had been stalled since March 2013 after a last-minute amendment added a licensing regime that would have favored water-well drilling contractors, who happen to be largely unionized. That impasse was resolved when the objectionable well-licensing regime was replaced by a local workforce credit against HF Tax Act liability.

The Act is a defeat for those environmental and community groups that favored a moratorium on horizontal hydraulic fracturing in Illinois until the U.S. Environmental Protection Agency (EPA) completed its ongoing study of fracturing’s potential to affect groundwater resources. HFRA’s supporters tout it as the United States’ most comprehensive and rigorous hydraulic fracturing regulation, and claim it sets the “best practices standard” for environmental, health and safety regulation.

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