Bill Text: IL HB5748 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Amends the Illinois Hydraulic Fracturing Tax Act. Provides that the tax rate for the severance and production of oil or gas shall be 1.5% (rather than 3%) of the value of the oil or gas. Provides that for oil the tax shall be: (i) 1.5% of the value of the oil (rather than 3%) where the average daily production from the well in a month is less than 25 barrels; (ii) 2% of the value of the oil (rather than 4%) where the average daily production from the well in a month is between 25 barrels and 50 barrels; (iii) 2.5% of the value of the oil (rather than 5%) where the average daily production from the well in a month is between 50 barrels and 100 barrels; and (iv) 3% of the value of the oil (rather than 6%) where the average daily production from the well in a month is 100 barrels or more. Provides that for gas the tax shall be 3% (rather than 6%) of the value of the gas. Amends the Hydraulic Fracturing Regulatory Act. Deletes language stating that every applicant for a high volume horizontal hydraulic fracturing permit shall include a traffic management plan on his or her application.

Spectrum: Moderate Partisan Bill (Republican 7-1)

Status: (Failed) 2019-01-08 - Session Sine Die [HB5748 Detail]

Download: Illinois-2017-HB5748-Introduced.html

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100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 HB5748 Introduced , by Rep. Jerry Costello, II SYNOPSIS AS INTRODUCED:
35 ILCS 450/2-15
225 ILCS 732/1-35
Amends the Illinois Hydraulic Fracturing Tax Act. Provides that the tax rate for the severance and production of oil or gas shall be 1.5% (rather than 3%) of the value of the oil or gas. Provides that for oil the tax shall be: (i) 1.5% of the value of the oil (rather than 3%) where the average daily production from the well in a month is less than 25 barrels; (ii) 2% of the value of the oil (rather than 4%) where the average daily production from the well in a month is between 25 barrels and 50 barrels; (iii) 2.5% of the value of the oil (rather than 5%) where the average daily production from the well in a month is between 50 barrels and 100 barrels; and (iv) 3% of the value of the oil (rather than 6%) where the average daily production from the well in a month is 100 barrels or more. Provides that for gas the tax shall be 3% (rather than 6%) of the value of the gas. Amends the Hydraulic Fracturing Regulatory Act. Deletes language stating that every applicant for a high volume horizontal hydraulic fracturing permit shall include a traffic management plan on his or her application.
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A BILL FOR
HB5748 LRB100 20082 LNS 35365 b
AN ACT concerning hydraulic fracturing.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Hydraulic Fracturing Tax Act is
amended by changing Section 2-15 as follows:
(35 ILCS 450/2-15)
Sec. 2-15. Tax imposed.
(a) For oil and gas removed on or after July 1, 2013, there
is hereby imposed a tax upon the severance and production of
oil or gas from a well on a production unit in this State
permitted, or required to be permitted, under the Illinois
Hydraulic Fracturing Regulatory Act, for sale, transport,
storage, profit, or commercial use. The tax shall be applied
equally to all portions of the value of each barrel of oil
severed and subject to such tax and to the value of the gas
severed and subject to such tax. For a period of 24 months from
the month in which oil or gas was first produced from the well,
the rate of tax shall be 1.5% 3% of the value of the oil or gas
severed from the earth or water in this State. Thereafter, the
rate of the tax shall be as follows:
(1) For oil:
(A) where the average daily production from the
well during the month is less than 25 barrels, 1.5% 3%

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of the value of the oil severed from the earth or
water;
(B) where the average daily production from the
well during the month is 25 or more barrels but less
than 50 barrels, 2% 4% of the value of the oil severed
from the earth or water;
(C) where the average daily production from the
well during the month is 50 or more barrels but less
than 100 barrels, 2.5% 5% of the value of the oil
severed from the earth or water; or
(D) where the average daily production from the
well during the month is 100 or more barrels, 3% 6% of
the value of the oil severed from the earth or water.
(2) For gas, 3% 6% of the value of the gas severed from
the earth or water.
If a well is required to be permitted under the Hydraulic
Fracturing Regulatory Act, the tax imposed by this Section
applies, whether or not a permit was obtained.
(b) Oil produced from a well whose average daily production
is 15 barrels or less for the 12-month period immediately
preceding the production is exempt from the tax imposed by this
Act.
(c) For the purposes of the tax imposed by this Act the
amount of oil produced shall be measured or determined, in the
case of oil, by tank tables, without deduction for overage or
losses in handling. Allowance for any reasonable and bona fide

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deduction for basic sediment and water, and for correction of
temperature to 60 degrees Fahrenheit will be allowed. For the
purposes of the tax imposed by this Act the amount of gas
produced shall be measured or determined, by meter readings
showing 100% of the full volume expressed in cubic feet at a
standard base and flowing temperature of 60 degrees Fahrenheit,
and at the absolute pressure at which the gas is sold and
purchased. Correction shall be made for pressure according to
Boyle's law, and used for specific gravity according to the
gravity at which the gas is sold and purchased.
(d) The following severance and production of gas shall be
exempt from the tax imposed by this Act: gas injected into the
earth for the purpose of lifting oil, recycling, or
repressuring; gas used for fuel in connection with the
operation and development for, or production of, oil or gas in
the production unit where severed; and gas lawfully vented or
flared; gas inadvertently lost on the production unit by reason
of leaks, blowouts, or other accidental losses.
(e) All oil and gas removed from the premises where severed
is subject to the tax imposed by this Act unless exempt under
the terms of this Act.
(f) The liability for the tax accrues at the time the oil
or gas is removed from the production unit.
(Source: P.A. 98-22, eff. 6-17-13; 98-756, eff. 7-16-14.)
Section 10. The Hydraulic Fracturing Regulatory Act is

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amended by changing Section 1-35 as follows:
(225 ILCS 732/1-35)
Sec. 1-35. High volume horizontal hydraulic fracturing
permit application.
(a) Every applicant for a permit under this Act shall first
register with the Department at least 30 days before applying
for a permit. The Department shall make available a
registration form within 90 days after the effective date of
this Act. The registration form shall require the following
information:
(1) the name and address of the registrant and any
parent, subsidiary, or affiliate thereof;
(2) disclosure of all findings of a serious violation
or an equivalent violation under federal or state laws or
regulations in the development or operation of an oil or
gas exploration or production site via hydraulic
fracturing by the applicant or any parent, subsidiary, or
affiliate thereof within the previous 5 years; and
(3) proof of insurance to cover injuries, damages, or
loss related to pollution or diminution in the amount of at
least $5,000,000, from an insurance carrier authorized,
licensed, or permitted to do this insurance business in
this State that holds at least an A- rating by A.M. Best &
Co. or any comparable rating service.
A registrant must notify the Department of any change in

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the information identified in paragraphs (1), (2), or (3) of
this subsection (a) at least annually or upon request of the
Department.
(b) Every applicant for a permit under this Act must submit
the following information to the Department on an application
form provided by the Department:
(1) the name and address of the applicant and any
parent, subsidiary, or affiliate thereof;
(2) the proposed well name and address and legal
description of the well site and its unit area;
(3) a statement whether the proposed location of the
well site is in compliance with the requirements of Section
1-25 of this Act and a plat, which shows the proposed
surface location of the well site, providing the distance
in feet, from the surface location of the well site to the
features described in subsection (a) of Section 1-25 of
this Act;
(4) a detailed description of the proposed well to be
used for the high volume horizontal hydraulic fracturing
operations including, but not limited to, the following
information:
(A) the approximate total depth to which the well
is to be drilled or deepened;
(B) the proposed angle and direction of the well;
(C) the actual depth or the approximate depth at
which the well to be drilled deviates from vertical;

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(D) the angle and direction of any nonvertical
portion of the wellbore until the well reaches its
total target depth or its actual final depth; and
(E) the estimated length and direction of the
proposed horizontal lateral or wellbore;
(5) the estimated depth and elevation, according to the
most recent publication of the Illinois State Geological
Survey of Groundwater for the location of the well, of the
lowest potential fresh water along the entire length of the
proposed wellbore;
(6) a detailed description of the proposed high volume
horizontal hydraulic fracturing operations, including, but
not limited to, the following:
(A) the formation affected by the high volume
horizontal hydraulic fracturing operations, including,
but not limited to, geologic name and geologic
description of the formation that will be stimulated by
the operation;
(B) the anticipated surface treating pressure
range;
(C) the maximum anticipated injection treating
pressure;
(D) the estimated or calculated fracture pressure
of the producing and confining zones; and
(E) the planned depth of all proposed perforations
or depth to the top of the open hole section;

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(7) a plat showing all known previous wellbores within
750 feet of any part of the horizontal wellbore that
penetrated within 400 vertical feet of the formation that
will be stimulated as part of the high volume horizontal
hydraulic fracturing operations;
(8) unless the applicant documents why the information
is not available at the time the application is submitted,
a chemical disclosure report identifying each chemical and
proppant anticipated to be used in hydraulic fracturing
fluid for each stage of the hydraulic fracturing operations
including the following:
(A) the total volume of water anticipated to be
used in the hydraulic fracturing treatment of the well
or the type and total volume of the base fluid
anticipated to be used in the hydraulic fracturing
treatment, if something other than water;
(B) each hydraulic fracturing additive anticipated
to be used in the hydraulic fracturing fluid, including
the trade name, vendor, a brief descriptor of the
intended use or function of each hydraulic fracturing
additive, and the Material Safety Data Sheet (MSDS), if
applicable;
(C) each chemical anticipated to be intentionally
added to the base fluid, including for each chemical,
the Chemical Abstracts Service number, if applicable;
and

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(D) the anticipated concentration in the base
fluid, in percent by mass, of each chemical to be
intentionally added to the base fluid;
(9) a certification of compliance with the Water Use
Act of 1983 and applicable regional water supply plans;
(10) a fresh water withdrawal and management plan that
shall include the following information:
(A) the source of the water, such as surface or
groundwater, anticipated to be used for water
withdrawals, and the anticipated withdrawal location;
(B) the anticipated volume and rate of each water
withdrawal from each withdrawal location;
(C) the anticipated months when water withdrawals
shall be made from each withdrawal location;
(D) the methods to be used to minimize water
withdrawals as much as feasible; and
(E) the methods to be used for surface water
withdrawals to minimize adverse impact to aquatic
life.
Where a surface water source is wholly contained within
a single property, and the owner of the property expressly
agrees in writing to its use for water withdrawals, the
applicant is not required to include this surface water
source in the fresh water withdrawal and management plan;
(11) a plan for the handling, storage, transportation,
and disposal or reuse of hydraulic fracturing fluids and

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hydraulic fracturing flowback. The plan shall identify the
specific Class II injection well or wells that will be used
to dispose of the hydraulic fracturing flowback. The plan
shall describe the capacity of the tanks to be used for the
capture and storage of flowback and of the lined reserve
pit to be used, if necessary, to temporarily store any
flowback in excess of the capacity of the tanks.
Identification of the Class II injection well or wells
shall be by name, identification number, and specific
location and shall include the date of the most recent
mechanical integrity test for each Class II injection well;
(12) a well site safety plan to address proper safety
measures to be employed during high volume horizontal
hydraulic fracturing operations for the protection of
persons on the site as well as the general public. Within
15 calendar days after submitting the permit application to
the Department, the applicant must provide a copy of the
plan to the county or counties in which hydraulic
fracturing operations will occur. Within 5 calendar days of
its receipt, the Department shall provide a copy of the
well site safety plan to the Office of the State Fire
Marshal;
(13) a containment plan describing the containment
practices and equipment to be used and the area of the well
site where containment systems will be employed, and within
5 calendar days of its receipt, the Department shall

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provide a copy of the containment plan to the Office of the
State Fire Marshal;
(14) a casing and cementing plan that describes the
casing and cementing practices to be employed, including
the size of each string of pipe, the starting point, and
depth to which each string is to be set and the extent to
which each string is to be cemented;
(15) (blank); a traffic management plan that
identifies the anticipated roads, streets, and highways
that will be used for access to and egress from the well
site. The traffic management plan will include a point of
contact to discuss issues related to traffic management.
Within 15 calendar days after submitting the permit
application to the Department, the applicant must provide a
copy of the traffic management plan to the county or
counties in which the well site is located, and within 5
calendar days of its receipt, the Department shall provide
a copy of the traffic management plan to the Office of the
State Fire Marshal;
(16) the names and addresses of all owners of any real
property within 1,500 feet of the proposed well site, as
disclosed by the records in the office of the recorder of
the county or counties;
(17) drafts of the specific public notice and general
public notice as required by Section 1-40 of this Act;
(18) a statement that the well site at which the high

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volume horizontal hydraulic fracturing operation will be
conducted will be restored in compliance with Section
240.1181 of Title 62 of the Illinois Administrative Code
and Section 1-95 of this Act;
(19) proof of insurance to cover injuries, damages, or
loss related to pollution in the amount of at least
$5,000,000; and
(20) any other relevant information which the
Department may, by rule, require.
(c) Where an application is made to conduct high volume
horizontal fracturing operations at a well site located within
the limits of any city, village, or incorporated town, the
application shall state the name of the city, village, or
incorporated town and be accompanied with a certified copy of
the official consent for the hydraulic fracturing operations to
occur from the municipal authorities where the well site is
proposed to be located. No permit shall be issued unless
consent is secured and filed with the permit application. In
the event that an amended location is selected, the original
permit shall not be valid unless a new certified consent is
filed for the amended location.
(d) The hydraulic fracturing permit application shall be
accompanied by a bond as required by subsection (a) of Section
1-65 of this Act.
(e) Each application for a permit under this Act shall
include payment of a non-refundable fee of $13,500. Of this

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fee, $11,000 shall be deposited into the Oil and Gas Resource
Management Fund for the Department to use to administer and
enforce this Act and otherwise support the operations and
programs of the Office of Oil and Gas Resource Management. The
remaining $2,500 shall be deposited into the Illinois Clean
Water Fund for the Agency to use to carry out its functions
under this Act. The Department shall not initiate its review of
the permit application until the applicable fee under this
subsection (e) has been submitted to and received by the
Department.
(f) Each application submitted under this Act shall be
signed, under the penalty of perjury, by the applicant or the
applicant's designee who has been vested with the authority to
act on behalf of the applicant and has direct knowledge of the
information contained in the application and its attachments.
Any person signing an application shall also sign an affidavit
with the following certification:
"I certify, under penalty of perjury as provided by law
and under penalty of refusal, suspension, or revocation of
a high volume horizontal hydraulic fracturing permit, that
this application and all attachments are true, accurate,
and complete to the best of my knowledge.".
(g) The permit application shall be submitted to the
Department in both electronic and hard copy format. The
electronic format shall be searchable.
(h) The application for a high volume horizontal hydraulic

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fracturing permit may be submitted as a combined permit
application with the operator's application to drill on a form
as the Department shall prescribe. The combined application
must include the information required in this Section. If the
operator elects to submit a combined permit application,
information required by this Section that is duplicative of
information required for an application to drill is only
required to be provided once as part of the combined
application. The submission of a combined permit application
under this subsection shall not be interpreted to relieve the
applicant or the Department from complying with the
requirements of this Act or the Illinois Oil and Gas Act.
(i) Upon receipt of a permit application, the Department
shall have no more than 60 calendar days from the date it
receives the permit application to approve, with any conditions
the Department may find necessary, or reject the application
for the high volume horizontal hydraulic fracturing permit. The
applicant may waive, in writing, the 60-day deadline upon its
own initiative or in response to a request by the Department.
(j) If at any time during the review period the Department
determines that the permit application is not complete under
this Act, does not meet the requirements of this Section, or
requires additional information, the Department shall notify
the applicant in writing of the application's deficiencies and
allow the applicant to correct the deficiencies and provide the
Department any information requested to complete the

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application. If the applicant fails to provide adequate
supplemental information within the review period, the
Department may reject the application.
(Source: P.A. 98-22, eff. 6-17-13; 98-756, eff. 7-16-14;
99-139, eff. 7-24-15.)