Frac Reporting – Loophole?

As we’ve reported before, today marks the beginning of mandatory reporting of the components of fluid used in hydraulic fracturing of oil and gas wells drilled in Texas. A careful reading of the regulations indicates that you shouldn’t hold your breath to see what’s going into that well that’s planned for your back yard. Even if it’s permitted today, the actual reporting of frac fluid isn’t required until the well completion report is filed with the State; an operator has up to 90 days following the drilling of a well to file a completion report. However, the so-called Chemical Disclosure Registry form must be completed and uploaded to www.fracfocus.org at the same time the completion report is filed — although there’s nothing preventing companies from doing it sooner.

The regulations allow a company to claim that the identity and/or proportion of frac fluid ingredients is a “trade secret” and is therefore exempt from detailed reporting. Even then, the regs specify that “the chemical family or other similar description associated with such chemical ingredient must be provided.” And regardless of trade secret status, the identity and proportions of all ingredients must be disclosed to “any health professional or emergency responder who needs the information for diagnostic, treatment or other emergency response purposes.”

At the same time, land surface owners where the well is drilled, as well as landowners adjacent to that location, can challenge the trade secret designation by completing and submitting certain information (the regs suggest, but don’t require, this format [PDF]). Interestingly, you don’t have to explain why you want to make the challenge, and you have up to 24 months after the date the well completion report is filed to submit a challenge. 

Now, my reading of this section of the regulations is that if the office of the Texas Attorney General determines that the withheld information is not entitled to trade secret status, the information must be disclosed…but only to the requestor who challenged the status. This would seem to be a rather large loophole; there’s no provision for a retroactive public disclosure on fracfocus.org.

I suspect that those companies who historically have played fast and loose with regulations (you know who you are…and many of us also know who you are) will do the same with this one. The majority will shoot for full compliance. But there may be an interesting dynamic involved, because the portion of the regs dealing with trade secrecy  seems to give equal status to “a supplier, service company, or operator,” and each of these participants in the process might have different objectives and agendas.