US Department of Energy Advisory Board Task Force Report on FracFocus 2.0 concludes 84% of disclosures kept secrets

Task Force Draft for public comment: Secretary of Energy Advisory Board Task Force Report on FracFocus 2.0 by U.S. Department of Energy, February 24, 2014

Executive Summary 

Recommendations are made for improving the accuracy and completeness of registry submissions. In addition, the Task Force believes that an independent audit to assess the accuracy and compliance of the process will be useful for all stakeholders.

A large fraction of reporting wells claim at least one trade secret exemption. The Task Force favors full disclosure of all known constituents added to fracturing fluid with few, if any exceptions. A “systems approach” that reports the chemicals added separately
from the additive names and product names that contain them, generally should
provide adequate protection of trade secrets. The Task Force further calls for state and
federal regulators to adopt standards for making a trade secret claim and establish an
accompanying compliance process and a challenge mechanism.  The Task Force also makes recommendations for improving data storage and retention collected by FracFocus, the budget required for FracFocus to operate and upgrade its service and system, as well as for how these activities might be financed by a combination of DOE support and/or a user charge. All members of the Task Force support this report

The 2011 SEAB Subcommittee report made over twenty recommendations for reducing the environmental impact of unconventional gas operations. … Several of the 2011 Subcommittee recommendations were directed at increasing transparency and disclosure in order to support state and national regulations and to meet public concerns about hydraulic fracturing.

Questions for the Task Force to address

(3) Understanding the breadth of data maintained by FracFocus, how frequently
companies are using the proprietary exemption to avoid disclosure of fracturing fluid composition, and the standards for the use of this exemption. …

(7) Adequacy of funding for FracFocus activities and suggestion for possible alternative

Initially FracFocus directed those using the site to disclose all chemicals used in
fracturing fluids that appear on Material Safety Data Sheets (by common name and,
more importantly, by their Chemical Abstract Service, or CAS, identification number).
Chemicals on these sheets are believed to be hazardous to workers in an occupational setting as determined by the Occupational Safety and Health Administration, (OSHA). MSDS reporting does not include other chemicals that might be hazardous to humans in an environmental setting or that might be harmful to the environment. Thus the 2011 Subcommittee recommended that disclosure include all chemicals intentionally added to fracturing fluid, not just those that appear on MSDS. FracFocus 2.0 follows this recommendation now asking for “additional ingredients not listed on MSDS.”

Full disclosure means the public reporting of all constituents added to fracturing fluid injected into a well. Constituents include both “chemicals” and “additives” such as surfactants, friction reduction agents, and tracers that are composite material composed of several, perhaps many, molecules. As discussed below this distinction is important because companies frequently believe that it is the chemical composition of additives (or formulated materials) as a product that is most likely to have proprietary value that deserve exemption from disclosure as a “trade secret.” Most states currently require disclosure of both chemicals and additives.

It is important to assess the accuracy of well data disclosed on FracFocus since
transparency implies correct information has been filed. Examination of a limited
sample of records from FracFocus 2.0 indicates a variety of errors, partly due to many
different companies contributing data to an individual FracFocus record, besides the
operator of the well. We recommend: 

(a) FracFocus should examine the entire data entry workflow and structure, looking
for opportunities to simplify data structure and steps for data entry to reduce
the probability of data entry errors, and assuring accuracy. Simple data entry
reduces errors.

(b) FracFocus should improve the quality of the data entered into the system, especially the accuracy and completeness of reported CAS numbers. CAS numbers are the unique and universal identifier of individual chemicals that might go under a variety of different names. FracFocus 2.0 has introduced basic error checking that alerts users if an entered CAS number is in the proper format, but not whether the CAS number matches the chemical name, or even if the CAS number is currently in use. While FracFocus does not assert authority to reject
operator entries, the automatic validation system should be expanded and

(c) When FracFocus discovers an error in a company submission FracFocus should inform the company and indicate on the web site that the submitted data are in some doubt. Such a notice on the FracFocus web site would inform the regulatory authorities and the public that there is an issue and serve as incentive to the company to revise the submission. (The Task Force understands that the FracFocus variant in use in British Columbia contains this feature). This practice would also encourage operators to assure that CAS numbers received from manufacturers and suppliers are accurate.

(d) FracFocus should make provisions for submissions to include more information
about the water used as a base fluid, for example whether it is 100% fresh water
or does it contain a percentage of recycled fracturing fluid. Such data in
FracFocus would be available to EPA, state regulators and the public. …

The Task Force believes that an understanding of how well this disclosure system is working would be enhanced if an independent audit were
conducted to assess the accuracy and compliance of the process. …

The audit should be sponsored by an independent entity with the objective of shedding light on FracFocus system operations in addition to the information it houses. Accordingly, the Task Force recommends that DOE’s Office of Fossil Energy contract with a suitable audit or
consulting firm to perform this audit. The audit should include (1) the accuracy of the operator’s field records; (2) a comparison of the operator’s field records to the service company field tickets; (3) a comparison of the service company’s field ticket to the service company final report; and (4) the accuracy of the data entry into FracFocus 2.0. The audit firm should consider sample size and diversity to ensure a meaningful review and should examine, among other factors, trade secret exemption claims.

(3) Understanding the breadth of data housed in FracFocus, how frequently
companies are invoking the trade secret exemption to avoid disclosure of fracturing fluid composition, and the standards for the use of this exemption. The Task Force believes that full disclosure of all known constituents added to fracturing fluids is desirable. … Trade secret claims that shield disclosure are made to protect perceived intellectual property value of the chemical treatment. The Task Force has no wish to constrain innovation for improved environmental characteristics or performance/cost attributes of chemical stimulation, or to limit the role of proprietary information as part of the innovation process. Indeed, as discussed below, the Task Force believes this disclosure can be accomplished with little or no risk to disclosing proprietary information. Regulatory bodies have the authority to adopt binding disclosure requirements. The Task Force is challenging FracFocus to operate in a manner that encourages full disclosure with few, [if] any trade secret exceptions.

The 2011 Subcommittee strongly endorsed full disclosure of the chemical composition
of fracturing fluids:

Disclosure of fracturing fluid composition: The Subcommittee shares the
prevailing view that the risk of fracturing fluid leakage into drinking water
sources through fractures made in deep shale reservoirs is remote. Nevertheless the Subcommittee believes there is no economic or technical reason to prevent public disclosure of all chemicals in fracturing fluids, with an exception for genuinely proprietary information. While companies and regulators are moving in this direction, progress needs to be accelerated in light of public concern.

The Subcommittee believes that the high level of public concern about the
nature of fracturing chemicals suggests that the benefit of immediate and
complete disclosure of all chemical components and composition of fracturing
fluid completely outweighs the restriction on company action, the cost of
reporting, and any intellectual property value of proprietary chemicals. The
Subcommittee believes that public confidence in the safety of fracturing would
be significantly improved by complete disclosure and that the barrier to shield
chemicals based on trade secret should be set very high. Therefore the
Subcommittee recommends that regulatory entities immediately develop rules
to require disclosure of all chemicals used in hydraulic fracturing fluids on both
public and private lands.

The Task Force has learned from FracFocus that 84% of the registered wells invoked a trade secret exemption for at least one chemical, with the range by state extending from 57% to 100%, since FracFocus 2.0 went operational in June of 2013. On average, trade secret exemptions were claimed for 16% of the
chemical entries recorded in the FracFocus database between June and December
2013. (See Appendix C). While there are many different ways to assess the incidence
of the trade secret exemption claim (for example, by well, by chemical, by mass, by
state, or by operating company) this data does not suggest the level of transparency and disclosure urged by this Task Force or by the 2011 Subcommittee and supported by this Task Force. More can be done.

There may be reporting complications that can be masking, to some extent, the number
of trade secret exemptions on FracFocus and the number of trade secrets claimed. If a
submission leaves the CAS field blank or reports zero concentration of uses the “less
than” symbol, the FracFocus users may interpret such instances as a trade secret claim.
One company reviewed for the Task Force their internal records of the 1500+
disclosures made to FracFocus after 6/1/2013 and found 120 separate trade secret
claims, involving 400 chemicals from almost 58,000 chemicals reported in all the
disclosures. The company was unable to determine from the FracFocus database the
chemical agent claims attributed to this particular 1500+ sample. There seems to be a
discrepancy between the trade secret claims data indicated by FracFocus and the
internal records of some companies that suggest a much lower incidence of trade secret
claims for those companies. …

This Task Force believes that the goal should be to have very few trade secret
exemption claims from disclosure. The public is clearly concerned about the nature of
the chemicals used in hydraulic fracturing. It is much to industry’s advantage to meet
this concern. …

The federal Emergency Planning and Community Right to Know Act13 and laws enacted in several states give officials access to chemical trade secret information in times of crisis in order to give emergency first responders and health officials access to information they need. So the impression that trade secrets bar public access to information in all circumstances is incorrect. … [Ernst has been trying directly and via Access to Information Law, with extremely limited success, to get from the regulator and Encana the complete chemicals injected above the Base of Groundwater Protection on hundreds of Encana gas wells around Rosebud, notably directly into the community’s drinking water supplies in 2001 and 2004. The Alberta regulator publicly claims that all chemicals injected are submitted to the regulator and available on request.]

The Task Force urges industry to pursue complete disclosure rather than protecting
trade secrets of uncertain technical merit, especially since compliance has very low, if
any, risk of disclosing proprietary information if submission is organized by the
chemicals rather than the additives or products to the fluid. A list of chemicals that
includes the contributions from all the constituents added makes it extremely difficult to
reverse engineer to determine which chemicals and in what proportions these
chemicals are present in a particular additive or product with specific trade name. Thus
trade secret protection generally can be accomplished by reporting a list of products
and chemicals added without disclosing which chemical is in each product. In sum, the
Task Force recommendation for chemical disclosure is

– No trade secret disclaimers unless documented and attested as they do in Wyoming or Arkansas – but the fewer the better.

– Report the complete list of chemical by their CAS numbers and quantities added.

– Report a complete list of products without linking to the list of chemicals 

Operators report that chemical suppliers or pumping services demand trade secret
protection for their products. The Task Force believes that if the leading operators and
oil field service companies establish practical protocols for data transfer across the supply chain, and clear requirements for their suppliers, then supplier insistence of trade secrets will be greatly reduced and possibly disappear.

The Task Force recommends that DOE fund FracFocus to upgrade its website to be a more usable interactive database. DOE’s Office of Fossil Energy should commission an independent cost estimate of a project to construct a fully interactive database. The following are a non-exhaustive list of improvements that FracFocus should consider making:

a. Allow for searching by any field included in a FracFocus submission record
(including additive trade name, additive purpose, chemical supplier, date
submitted, etc.).

b. Eliminate the 2000 record display limit, or allow a “next” function. FracFocus
currently returns a maximum of 2000 records for any search, without
indicating which 2000 are being presented. FracFocus should either return all
results, or allow for a “next 2000” functionality.

c. Solve the CAS number concatenation problem. To the extent that the public
is using data scrapers in order to transfer information from FracFocus PDFs to
private databases (an activity that promotes better understanding of the FracFocus data in the absence of raw database availability), researchers are running into problems that arise from how CAS numbers are sometimes entered in batch instead of separately, resulting in CAS numbers appearing together on one line in an unbroken string. FracFocus should modify how the PDFs are created to eliminate this problem.

d. Allow batch downloads of PDFs. Currently, the system only permits the downloading of a single well’s chemical disclosure PDF at a time.

e. Address the SEAB 2011 report recommendation that the system “include tools for searching and aggregating data by chemical, well, by company, and by geography.”

One way to do so would be to release the full contents of the FracFocus database in raw, machine-readable form on the FracFocus website.

(6) Potential for broadening the scope of FracFocus to include any water quality data
regarding surrounding water sources both before and after hydraulic fracturing drilling
activity. There have been several other proposals for broadening the scope of FracFocus
as well. Examples of these suggestions are to require disclosure at the registry of (a) the
chemical composition of flow back and produced water from hydraulically fractured
wells; (c) concentration of radioactive elements in the flow back water from the
geological formation; (d) disclosure of pre-fracturing information such as chemicals
planned for use; and (e) “master lists” of chemicals used by particular companies in a
state in a given year. [Emphasis added]

2014 02 24 US DOE Fracfocus trade secrets by state

[Fracfocus in Alberta only started January 2013. Encana, Alberta Environment and the Alberta Energy Regulator continue to keep secret the chemicals Encana injected on many hundreds of gas wells around Rosebud frac’d from 2001 – 2013, notably the hundreds frac’d above the Base of Groundwater Protection and directly into the community’s drinking water aquifers.]

US Department of Energy: FracFocus should cut back on ‘trade secrets’ exemptions by Mike Soraghan, March 5, 2014, E&E News
A Department of Energy report released today says that hydraulic fracturing chemicals should be publicly disclosed with “few, if any, exceptions.” Trade secrets can be protected by reporting the raw chemicals separately from the additive products they go into, says the report of the task force set up by DOE to examine the disclosure website. The report calls this a “systems approach.” The common analogy is that Coca-Cola reports its ingredients on every can, but the recipe remains secret. The report says there should be standards for trade secret claims and a way for people to challenge them. … The report also says that FracFocus should include tools for searching and aggregating data. One way to do that, the report said, would be to “release the full contents of the FracFocus database in raw, machine-readable form on the FracFocus website.”

The chairman of the task force, Massachusetts Institute of Technology professor John Deutch, had said earlier this year that the industry is hurting itself by widely claiming trade secret exemptions (EnergyWire, Jan. 7).

FracFocus was launched in 2011 by the Ground Water Protection Council, a private nonprofit group [largely controlled by the oil and gas industry] in Oklahoma City governed by a board of state water and oil and gas regulators, along with the Interstate Oil and Gas Compact Commission. Two industry trade groups, the American Petroleum Institute (API) and America’s Natural Gas Alliance (ANGA), pay the operational costs. … Scrutiny has intensified since the Obama administration proposed using it for disclosure of fracturing chemicals on federal land.

API’s director of upstream and industry operations, Erik Milito, testified earlier this year to Deutch’s panel that API considers disclosure adequate now, without tightening trade secret procedures. … An EnergyWire review of the site in 2012 found that two-thirds of the reports filed by oil and gas companies had some information omitted from them as trade secrets (EnergyWire, Sept. 26, 2012). The FracFocus data is stored as a database but is not presented to the public that way. States get information from GWPC in Excel spreadsheet files each month. But when an outside user clicks, the data is converted into a PDF file and served up one well at a time.Attempts to grab large amounts of data from the site can result in users being blocked.

Industry groups oppose making the fracking data available in such spreadsheet format for fear that drilling opponents might misinterpret it and use it for political purposes. One fear is that opponents would use such data to add up how much of some toxic chemicals was used in a year. [Emphasis added]

‘Full Disclosure’ of Frack Chemicals Urged by Energy Department Advisors by Alan Kovski, March 7, 2014, Bloomberg
An Energy Department advisory board recommended “full disclosure of all known constituents” in fluids used for hydraulic fracturing, according to a draft report released March 6. The “Task Force Report on FracFocus 2.0” from the Secretary of Energy Advisory Board (SEAB) said state and federal regulators should adopt standards for companies making trade secret claims for fracking fluid ingredients and establish a compliance process and challenge mechanism. … But a large portion of the FracFocus reports on hydraulic fracturing of oil and gas wells claim at least one trade secret exemption, the report said. It said there should be “few, if any exceptions” to full disclosure. The report also recommended expanding what is reported beyond the chemical additives in the fluids.

To avoid divulging trade secrets, companies could report additive chemicals separately from the commercial products containing the chemicals, the report said. “A list of chemicals that includes the contributions from all the constituents added makes it extremely difficult to reverse engineer to determine which chemicals and in what proportions these chemicals are present in a particular additive or product with specific trade name,” the report said. The report summarized its disclosure recommendations as no trade secret disclaimers unless documented and attested, as done in Wyoming or Arkansas—and the fewer the better; complete lists of chemicals reported by their quantities and Chemical Abstracts Service registry numbers; and complete lists of products reported without linking to the list of chemicals.

Data Quality Control Sought
FracFocus should examine the entire data entry workflow and structure, looking for opportunities to simplify data structure and steps for data entry to reduce the probability of errors, the report said. FracFocus 2. 0 has introduced basic error checking that alerts users if an entered Chemical Abstracts Service number is in the proper format but not whether the CAS number matches the chemical name or even if the CAS number is in use.

Funding Changes Urged
The Ground Water Protection Council and the Interstate Oil and Gas Compact Commission, two organizations formed by state regulators, operate the FracFocus website. The annual budget for FracFocus, less than $1 million, is covered by an Energy Department grant, occasional contributions from a state and from two oil and gas industry associations. The report by the task force said the importance of FracFocus justifies a stable source of funding. [Emphasis added]

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