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Opponents raise voices as tax & fee deal reached for fracking bill
By STEVE BINDER
Illinois Correspondent

SPRINGFIELD, Ill. — Proponents of a freeze on all horizontal hydraulic fracturing (fracking) to extract oil and gas from the state’s shale layers lobbied last week at the State Capitol to drive home their concern the practice is unsafe and could wreck the environment.

The opponents of fracking, including members of Southern Illinoisans Against Fracturing Our Environment (SAFE) and Environment Illinois, received a surprise advocate when state House Speaker Mike Madigan (D-Chicago) said he supports a two-year ban on the process.

“Just read about what’s happened in Pennsylvania,” Madigan said, when asked why he supported a moratorium, noting the water quality issues raised since fracking began in that state.
The House’s Revenue and Finance Committee likely will vote on the regulation bill sometime this week; it was supposed to vote on the measure, HB 2615, on Friday but postponed all action until this week. 
The bill’s chief sponsors, southern Illinois Rep. John Bradley (D-Marion) and east-central Illinois Rep. David Reis (R-Olney), already have 50 other House members supporting the proposed law, which has been called the toughest in the United States. It was written over the course of the past five months with the help of environmental groups, as well as members of the oil and gas industries.

But no matter how strict the regulations are, residents from southern Illinois who lobbied last week said too little is known about the impact of using high-pressure mixtures of water, sand, gravel and chemicals to crack deep rock formations for extracting oil and natural gas.

“I have a home, a well and two kids, and all it would take is one spill and I would lose everything,” said Tabitha Tripp, who lives on 10 acres in Union County. “That’s why I’m here. It’s important that the people that represent us … know that we are awake and are aware, and we don’t want this going on in southern Illinois.”
Bruce Ratain, a member of Environment Illinois, said he understands why some environmental groups helped draft the legislation. Without it, he noted, drillers mostly are unregulated now in the state.

He still believes fracking could become “a rolling environmental disaster,” but he recognizes there appears to be a growing base of support for the state to do something to regulate the practice.
“At the same time as we’re idealistic, we’re also pragmatic,” Ratain said. “The worst thing for Illinois would be the status quo, with no regulations or restrictions whatsoever.”

Setting drill fees & taxes
Bradley is chair of the House’s Revenue Committee, which announced it had reached an agreement that sets the drilling fees and taxes to be included in the bill. Gov. Pat Quinn already has said he supports the legislation and noted the cash-strapped state would benefit from the additional revenue and the estimated 40,000 jobs expected to be added when drilling gets going.
Well operators would have to pay $11,000 to the state’s Department of Natural Resources for each well’s permit, in addition to a $2,000 fee to the Illinois Environmental Protection Agency. The permit fees are paid upon application and regardless of whether a permit is issued, said Mark Denzler, a vice president with the Illinois Manufacturer’s Assoc.

Buyers of the oil or natural gas would pay a 3 percent tax on each barrel extracted for the first two years, and up to 6 percent thereafter if the well produces 100 barrels a day, Denzler said.
It’s unclear how much in taxes could be collected, but Denzler estimated that for one well producing 200 barrels of oil a day, and with the price of oil at $90 a barrel, Illinois could receive about $200,000 a year in taxes from that well.
3/20/2013