Photo by mrflip. Some rights reserved.
It was June of this year when HB 3328 was sent to the Governor of Texas. In the six short months since, regulations implementing the legislation – requiring public disclosure of the composition of hydraultic fracturing fluid – have been both proposed and adopted.
According to the Railroad Commission of Texas Press Release announcing the big news (the rules were adopted earlier this month), “[a] listing of chemical ingredients used to hydraulically fracture a well that has been permitted by the RRC on or after Feb. 1, 2012, must be uploaded to the public national chemical disclosure registry, FracFocus.org.”
Of course one big caveat remains: “A supplier, service company or operator is not required to disclose trade secret information unless the Attorney General or court determines the information is not entitled to trade secret protection.”
I was glad to hear, however – via a Jackson Walker e-Alert – that “[t]he Commission kept the trade secret exception narrow in the rulemaking process. While commenters requested that the Commission revise the meaning of trade secret information to include proprietary or confidential business information, the Commission found that the addition of those terms would make the scope of the definition broader than was intended by HB 3328.”
The law firms Fulbright & Jaworski and Pillsbury also have more details.
Photo by dherrera_96. Some rights reserved.
Law firm Jackson Walker was the first to e-Alert me to the big news: On the last day of May, a bill was sent to the Governor of Texas – having been passed by the senate and house – that would amend Chapter 91 of the Texas Natural Resources Code to require public disclosure of the composition of fluids used in hydraulic fracturing. Texas is one of a handful of states to consider such rules.
HB 3328, unless vetoed by the Governor, would become effective September 1, 2011, at which point the Railroad Commission of Texas will have until July 1, 2012, to implement rules pursuant to the legislation. Once those rules go into effect, the operator of any well in Texas “on which a hydraulic fracturing treatment is performed” would be required to submit an online form revealing the chemical ingredients of hydraulic fracturing fluids used at the site. (Operators of wells for which drilling permits have already been issued at the time the rules go effective will not be subject to the requirements.)
The data disclosed would be hosted at – and available for searching on – a website called FracFocus, which currently offers only information provided voluntarily by a handful of well operators. Operators potentially subject to the new rules can read the FracFocus “How To” Guide for more information on submitting their chemical disclosure.
The disclosure required isn’t quite as all-encompassing as many had hoped – it’s limited to chemical ingredients subject to the requirements of 29 CFR 1210.1200(g)(2) and does not require disclosure of the specific quantities used. Additionally, there are protections for chemical cocktails that might be claimed as trade secrets. Still, many acknowledge this is a bold step forward, and feel optimistic that if a historically, well, red state like Texas can pass such a bill, then there’s hope on the federal front for equally green legislation.
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Many public companies, such as SANDRIDGE ENERGY INC, have already reported material risks via SEC filings in response to the legislation. knowledgemosaic users can view more examples of such disclosure here.