Groups upset at Wyoming’s shield for industry fracking secrets

Groups upset at Wyoming’s shield for industry fracking secrets by Kyke Roerink, November 27, 2012, Star-Tribune
In Wyoming, oil and natural gas producers disclose more information about hydraulic fracturing than in any other state in the country. The nation’s environmental groups, though, claim they’re withholding information. Wyoming is the national trailblazer in disclosures. In 2010, Wyoming was the first state to require companies give a pre-fracturing disclosure of chemicals pumped underground and used to fracture underground pathways for oil and gas. Along with the pre-fracturing requirements, companies in the state must publicize more than 20 other factors critical to the process. Fourteen other states used the Wyoming disclosure laws as a model to create their own rules and regulations. Colorado and Utah recently followed in Wyoming’s footsteps. States on the East Coast are using the framework, as well. Environmental groups generally don’t deny the industry’s strides in transparency. But they do criticize the justifications companies use to exempt themselves from disclosing all of the chemicals they pump into the ground while fracking. The state-granted exemptions are known as trade secrets.

Companies ask for the status because they claim not doing so would cause substantial economic harm to their business. Companies like Schlumberger and Halliburton reported to the Wyoming Oil and Gas Conservation Commission that they’ve spent millions of dollars researching and developing chemical solutions used during fracking. Schlumberger did not return calls to the Star-Tribune. Halliburton’s position is clearly explained in public documents, said company spokeswoman Susie McMichael. When the companies find a solution that works, they sell it to other businesses in the industry. Energy companies purport that disclosure would allow other companies to determine the chemical formulas and produce the solutions on their own. The Wyoming Oil and Gas Conservation Commission is the arbiter for determining trade secret status — and hence, non-disclosure — for chemical mixtures used for fracking in Wyoming. The provision is a caveat in the disclosure law that has environmental groups up in arms and energy companies playing defense.

The Powder River Basin Resource Council, a landowner’s group, is leading the fight to overturn the exemption for trade secrets. The council filed a lawsuit against the Wyoming Oil and Gas Conservation Commission in March, demanding that companies disclose all chemicals they use during fracking. “For us it’s like a can of Coke,” said Shannon Anderson, attorney and organizer for the council. “You get the ingredient list, but you don’t get the formula.” Anderson is incredulous at energy company claims, calling the industry’s understanding of a trade secret “overbroad.” Anderson believes the Wyoming Oil and Gas Conservation Commission is rubber-stamping the requests.
“The exception proves the rule,” she said. Anderson said she understands the competitive nature of the fracking industry and the legitimate interests companies have when it comes to making profits. “We’re sensitive to these issues, but there is a balance,” she said. “They’ve been very cavalier and err on the side of non-disclosure.”

Earning trade secret status is no easy task, said John Robitaille, vice president of the Petroleum Association of Wyoming, an oil and natural gas industry trade group. Since the Wyoming rules went into effect, the Wyoming Oil and Gas Conservation Commission had granted more than 140 trade secret exemptions as of August 2011, former state oil and gas supervisor Tom Doll said at a Casper conference that month. There are only two known cases of the Wyoming Oil and Gas Conservation Commission denying trade secret status to producers, Anderson said. “If an applicant is requesting trade secret status and they’ve met all the conditions, then we will grant it,” King said. Wyoming Oil and Gas Conservation Commission rules provide that companies must disclose to the commission “the base stimulation fluid, chemical additives, compounds and concentration used in each stage of a well stimulation program” in order to be eligible for trade secret status, rules say. King said the rules adequately protect all parties and adhere to state and federal guidelines. “The rule is clear,” Robitaille said, “and the operators are following it to the best of their abilities.”

The Natural Resource Defense Council believes Wyoming regulators are not enforcing the laws well enough. “Regardless of what the states require, they are not disclosing enough,” said Matthew McFeeley, a legal fellow with the council.
He studied more than 30 reports where the base fluid used on a fracking job was not disclosed, a violation of commission rules. “In certain areas of the state (regulators) don’t care if it’s disclosed,” said Amy Mall, senior policy analyst with the Natural Resource Defense Council.The council provided well completion or recompletion reports and logs from Sweetwater and Sublette counties that show SWEPI, Black Bear Oil Corporation and Devon Energy didn’t provide exact concentrations for the source of base fluids. Because specific numbers were not listed, it means one of two things: The state let the companies go unpunished, or the companies were exempt because of trade secret status. If companies want to withhold information about base fluids on the reports for the sake of confidentiality, the Wyoming Oil and Gas Conservation Commission supervisor has the authority to exempt them from disclosure, said Richard Garrett, a lobbyist for the Wyoming Outdoor Council. King said the commission is not turning a blind eye to legal infractions, and producers are playing by the rules. “We haven’t had any violations of our rules since our rules were set in place,” King said.
McFeeley said Wyoming regulators are letting producers submit reports without exact specifications of chemical concentrations in formulas, which violates Wyoming law.

The penalties for violations are not strict enough, said Mall, of the Natural Resource Defense Council. She claimed that small fines encourage an environment where producers feel comfortable ignoring the law. If it’s cheaper to pay a fine than abide by the law, companies will just keep going, Mall said. The Wyoming Oil and Gas Conservation Commission rules state that producers can be fined no more than $5,000 for each violation and for each day the violation continues. Penalties don’t create complacency, said Robitaille of the Petroleum Association of Wyoming. And King questioned the premise of the concern.“I don’t see how you could say penalties are too lax because we haven’t imposed any yet,” King said. The debate between the energy industry and environmental groups over fracking is now on a new platform: a Wyoming district court. Anderson and King will square off in January and the ruling will either keep the status quo or begin an era that allows for no exceptions.

The nexus between the public and private sectors is much larger than people think, said the Wyoming Outdoor Council’s Garrett. He believes the protection of publicly owned groundwater should be elevated to a higher level of protection than industry trade secrets. “(The Wyoming Oil and Gas Conservation Commission) does not have a higher priority to protect trade secrets. They have a higher obligation to protect the public,” Garrett said. [Emphasis added]

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