American Oil and Gas Reporter - April 2019 - 117

ConventionCoverage: Illinois Oil & Gas Association
how the department believes the operator
should address the issue and the time
frame for doing so, Tynes continued.
"A significant change is that if you
abate within that initial time frame, the
department may not issue a civil penalty
unless the violation falls within a certain
class of serious violations that are set out
in the regulations," he stated.
Tynes said violations that always may
be subject to a fine were much the same
as they had been under the existing regulations, and included such things as operating without a permit, operating a disposal well with pressure on the annulus,
failure to maintain one's bond, failure to
report an oil or saltwater spill or natural
gas release, and failure to maintain in a
leak-free condition, among others.
Additionally, Brennan mentioned, the
civil penalty matrix for determining civil
penalties, which included specific mandatory amounts for such things as previous
violations and seriousness of the violation,
is being replaced by statutory language
limiting civil penalties to a maximum of
$1,000 a day.
Tynes noted that another significant
change would allow a permittee to request
a hearing on any amended director's decision. Under the existing regulations, he
observed, if a permittee submitted mitigating factors that prompted the department to issue an amended director's decision, the permittee had no further right
to request an administrative hearing.
Under the revised regulations, he said,
the permittee may request a hearing on
any amended director's decision.
As to the calculation of civil penalties
under the revised regulations, Tynes assured, "Penalties cannot begin to accrue
until you know you have something going
on or that you reasonably should have
known. "So if an inspector notices something on his daily route, writes it up and
30 days later you get a director's decision,
you won't be subject to a $30,000 fine."
However, he warned, if there is knowledge and the operator fails to abate, penalties of up to $1,000 a day can add up
quickly. "This is good reason to stay on
top of operations and respond immediately
to anything that may rise to the level of a
violation, he urged.
Pollution Liability
People v. HYBO Petroleum Inc. began
in 2015 when the Illinois Attorney General's Office went after the oil company
for failing to properly maintain a Class II
injection well, which allegedly resulted

in contamination of a neighboring water
well, IOGA Legal and Legislative Chairman Matthew McArthy reported.
But it caught the attention of his committee in May 2018, he said, when the
AG filed an amended complaint attempting
to hold the surface and mineral owners
liable as well.
At first, McArthy commented, he thought
maybe the AG didn't fully understand the
lessee/lessor relationship. "But in reading
through (the AG filings), it doesn't appear
to be so," he told IOGA members. "I
believe this is either a chance to go after
the industry itself by making people reluctant
to sign oil and gas leases, or it is an attempt
to go after deeper pockets."
The legal issues in the case, McArthy
advised, are:
· Can a surface and/or mineral owner
be liable for actions by an oil company
that violate the Illinois Environmental
Protection Act (IEPA)?
· Is having a landfill on one's property
the same as having an oil and gas lease
with an active injection well?
In order for a surface owner to be liable
for conduct by a third party that violates
the IEPA, McArthy said, the government
must be able to demonstrate the surface
owner had the ability to control the pollution

or source of the pollution. And in an earlier
case involving illegal dumping in a landfill
by a tenant, the court ruled in People v.
Lincoln Ltd. that while knowledge and
intent might not be elements of a claim
pursuant to the IEPA, "capacity to control
the pollution or the premises where the
pollution occurred is required."
McArthy said the AG was arguing that
the surface and mineral owners had the
capacity to control the source of contamination, and that they allowed the discharge
of contaminants by signing the lease.
"This is dangerous," he warned. "The
positions the AG's office is taking have
ramifications for the entire industry."
He raised the question of a working
interest owner. "As a nonoperating interest
owner, you don't have any control, but
(is the AG) going to find you liable for
the actions of your operator?" he posed.
"It is a slippery slope they are beginning
to go down if this case is found the way
the AG is arguing it."
Beyond that, McArthy added, "It is
going to be very difficult to get a new oil
and gas lease if this case sets a precedent
for what we have to deal with. I could
not recommend a client sign an oil and
gas lease without lots of different language
being added."
❒

Illinois Oil And Gas Advocates
Bolster Communication Efforts
EVANSVILLE, IN.-Coming out of its
annual meeting a year ago, the Illinois Oil
& Gas Association resolved to work with
the Illinois Petroleum Resources Board to
more effectively counter its detractors'
negative messaging about the industry.
Craig Hedin, who concluded his twoyear term as IOGA president at this year's
annual convention, held March 5-7 at
Evansville's Old National Events Plaza,
and new IPRB Executive Director Seth
Whitehead, reported on their progress.
In a separate presentation, Whitehead
discussed activists' attempts to shut down
the oil and gas industry in Colorado by
imposing a statewide 2,500-foot drilling
setback, and what Illinois could learn
from the Colorado industry's successful
campaign against that November 2018
ballot initiative.
Hedin recalled that following last
year's annual meeting, he and IPRB
Chairman Dale Helpingstine appointed a

joint committee headed by IOGA Board
Member Brent McDaniel of Old Ocean
Energy LLC. That committee concluded
its work last August, Hedin said, by recommending a dozen initiatives the groups
should undertake.
"Dale and I went back to our respective
organizations to prioritize those (possibilities) because we knew we couldn't
tackle all 12 at the same time," Hedin reported at this year's meeting.
The programs he said the two groups
settled on were:
· Enhancing both organizations' websites;
· Developing a legislative dashboard
or "one-click" system that links members
to lawmakers' e-mail addresses;
· Enhanced intramember e-mail capabilities;
· Disseminating a 2016 report on the
Illinois oil and gas industry's economic
impact;
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