October 8, 2013. The state’s Mining and Energy Commission (MEC) has still not moved forward with a rule requiring disclosure of chemicals used in hydraulic fracturing fluid, although the commission’s Environmental Standards Committee approved a draft rule in the spring. The draft rule requires a drilling company to give the Department of Environment and Natural Resources (DENR) specific information identifying all chemicals used to hydraulically fracture a natural gas well. The draft rule also requires public disclosure of fracking chemicals, but allows information about any chemical legitimately designated as a trade secret to be kept confidential and identified to the public only by chemical “family”. (The draft rule allows more specific information to be requested by a health professional or by emergency response personnel to diagnose and treat a health condition or respond to an emergency.)
A recap of the controversy around the draft rule. Following committee approval of the draft rule, the Mining and Energy Commission delayed consideration of the rule because of oil and gas industry opposition. Industry representatives objected to including trade secret chemicals in the disclosure to DENR staff. The industry preferred an earlier rule draft that allowed drilling companies to withhold information on trade secret chemicals from state regulators as well as the public unless DENR needed the information to respond to environmental damage or a specific health concern. See an earlier post for more on the MEC decision to delay consideration of the disclosure rule. The important thing to remember — the conflict over the draft rule has to do with providing complete information on hydraulic fracturing chemicals to state environmental regulators. Every draft of the chemical disclosure rule has allowed drilling companies to withhold trade secret information from the public.
The oil and gas industry’s objection to routine disclosure of trade secret chemicals to DENR staff comes in part out of concern about the department’s ability to keep the information confidential. The N.C. Public Records Act generally requires state agencies to provide agency records to any citizen on request; information submitted to DENR by a drilling company would be considered a “public record” under the law. The Public Records Act, however, has existing provisions to protect the confidentiality of trade secrets and other DENR programs have successfully used those provisions to withhold trade secret information from the public. You can find an earlier post about the N.C. Public Records Act protection for trade secrets here.
Legislative intervention. During the legislative session, the N.C. Senate moved to resolve the chemical disclosure issue in favor of the oil and gas industry position. A Senate committee approved language allowing drilling companies to withhold information on a trade secret chemical used in hydraulic fracturing fluid from DENR unless the Secretary of Environment and Natural Resources requested the information to “respond to a situation that endangers public health or the environment”. Senators added the language to House Bill 94 (Amend Environmental Laws), which had already passed the House and was moving through the Senate. In response to a backlash from both the public and the Mining and Energy Commission itself, the Senate amended the bill to allow DENR staff to review — but not receive — information on trade secret chemicals used in hydraulic fracturing. You can find earlier posts on the two different Senate proposals here and here. In the end, House Bill 94 died and the General Assembly did not adopt any legislation on disclosure of hydraulic fracturing chemicals.
Back at the Mining and Energy Commission. When the MEC delayed consideration of the draft chemical disclosure rule, the commission created a new Protection of Trade Secrets and Proprietary Information Study Group to look into the issues around disclosure of trade secret information to DENR. Legislative activity overtook the study group’s work for awhile, but failure of the Senate legislation puts the issue back in the hands of the MEC without any particular legislative direction. The MEC will need to resolve on its own the tension between the oil and gas industry’s desire to withhold trade secret information from environmental regulators and DENR’s need for information that may be critical to understanding the environmental impacts of hydraulic fracturing. The next meeting of the study group has been scheduled for October 25, 2013 following the MEC meeting.