Fewer trade secrets for Wyoming fracking fluid

A court settlement will make it harder for companies to hide chemicals used in hydraulic fracturing.

 

In 2010 Wyoming became the first state to require oil and gas companies to disclose chemicals used in fracking operations. Home to the petroleum-rich Powder River Basin, proponents saw the rule as a model for other drilling-dependent states to follow. The message they hoped the regulation would convey: We can be energy-friendly and environmentally friendly too.

But the rule contained a trade secrets caveat, which allowed companies to skirt the disclosure requirement if they said the chemicals were confidential business information. That exemption created a massive loophole. Now, thanks to a settlement approved Jan. 23, companies will have to do more to justify keeping fracking chemicals secret.

An aerial view of Wyoming's Jonah natural gas field. A new settlement requires oil and gas companies to better justify trade secrets claims for fracking chemicals.
Peter Aengst

The settlement comes from a 2012 lawsuit that environmental nonprofit Earthjustice filed on behalf of public interest groups against the Wyoming Oil & Gas Conservation Commission. The suit challenged state regulators’ decisions to withhold the names of 128 fracking chemicals. It was the first time a Wyoming court interpreted trade secrets under the state’s Public Records Act, which puts the public’s right to know before a company’s protection.

Though some research has shown fracking—the drilling method that injects a mixture of water, sand and chemicals deep into the ground to release oil and gas—can harm nearby water supplies, more conclusive evidence is still needed to determine how dangerous the practice is. Chemicals range from the same benign ingredients found in everyday products like toothpaste and detergent, to cancer-causing substances like Benzene. Since frack wells often pass through aquifers, there’s a risk those chemicals could contaminate drinking water, and because of drilling-related emissions, many fracking-intensive areas suffer levels of air pollution that exceed federal standards.

Thanks to the trade secrets loophole, hundreds of chemicals remained off the public record. To qualify, companies needed to apply for a permit from the Wyoming Oil and Gas Commission. The regulators would then evaluate the companies’ claims that revealing those chemicals would hurt their competitive advantage in the industry. The amount of money spent in developing the product, and how easily other companies could copy it, were among the criteria the commission used to evaluate petitions for trade secrets.  

But critics were concerned that the commission was doling out permits without rigorous evaluation. “They were handing out exemptions left, right and center,” said Katherine O’Brien, a lawyer for the nonprofit law firm, Earthjustice.

Many Wyoming landowners also criticized the fact that the exemptions made it difficult to do groundwater testing on their own land—a precaution an increasing number of citizens are taking in order to track changes in their local water sources. Since landowners aren’t able to do blanket tests for all chemicals, the tests have to be primed to look for a specific chemical. When oil and gas companies didn’t disclose what chemicals they were using, landowners were left in the dark about potential health or environmental risks from drilling operations nearby. New rules prompted by the recent settlement may help solve this problem.

Currently, the commission has no written policies or formal standards for how to evaluate trade secrets claims, though Mark Watson, the supervisor for the Wyoming Oil and Gas Conservation Commission, pointed out that Wyoming is one of the only states that requires companies to submit a list of the chemicals they use to state regulators. Some companies fear that making that information available would allow competitors to reverse engineer their products (a fear that fracking critics say is like a food company claiming that labeling requirements threaten their business). In Texas and North Dakota, companies are only required to list chemicals on the industry-run website, fracfocus.com. Colorado also makes companies use fracfocus, but goes a step further by requiring them to list not only the chemicals, but also their concentrations.

Under the terms of the settlement, the commission must adopt stricter standards for evaluating industry claims to keep certain chemicals hidden under the trade secrets exemption. Whether or not those new standards have a big impact will depend on how rigorously and faithfully the commission implements them. For starters, companies will have to re-apply for the trade secrets exemptions granted to the 128 chemicals listed in the lawsuit. 

O’Brien sees the settlement as part of growing trend towards full disclosure. Last year, for instance, Texas energy giant, Baker Hughes, began listing 100 percent of its chemicals. “It’s a snowball effect,” she said. “Once one company does it, it becomes harder and harder for other companies to maintain that trade secrets are necessary for their survival.” 

Sarah Tory is an editorial fellow at HCN. 

Correction: And earlier version of this story indicated that the new standards had not yet been written, when in fact, they have been written and have yet to be implemented.