LITTLE ROCK — Critics have charged that a rule that would require companies to reveal the chemicals they use in natural-gas wells contains troubling oversights.
A provision added to the final version of the rule approved in December would allow companies to claim certain chemicals in “fracking” fluid as trade secrets in “limited situations” if the commission’s director gives approval. In these cases, the companies still have to provide the chemical family of the specific chemical being withheld.
Shane Khoury, deputy director of the commission and its chief counsel, said that the revised rule relies on federal law to define when companies have the right not to disclose information. That gives companies less leeway to argue against disclosure than an earlier version of the rule would have, Khoury said.
“Basically, we think the current version of the rule is more stringent - [we] strengthened the rule,” he said. “The original draft version had a reference to proprietary information that had no standard; it was very vague.”
The worry is that if chemicals are not disclosed, it could make it more difficult for concerned landowners to test their wells, to see whether drilling has affected drinking water quality.
In “fracking,” as hydraulic fracturing is called, thousands of tons of fluid are injected into wells in order to release natural gas. The fluid is mostly made up of sand and water, but contains small amounts of other chemicals used to reduce bacteria and friction and prevent corrosion, among other things. Some of these chemicals are toxic, even in trace amounts.
The Arkansas Department of Environmental Quality has investigated hundreds of claims of water contamination but has not found any conclusive link between drilling and water quality.
The new rule defines “trade secrets” under the criteria set forth in federal law 42 U.S.C. 11042, which says that if disclosing the name of a chemical is likely to “cause substantial harm to the competitive position of such person,” the information can qualify as a trade secret, provided it has never been disclosed to any other person or agency.
But some still say the rule is not clear enough about when a chemical can be kept secret.
The League of Women Voters of Arkansas and the Sierra Club submitted a comment to the commission director last month, asking that the rule incorporate federal regulations that were developed to clarify the trade secret law.
Specifically, they asked that the commission incorporate guidelines spelled out in the federal Emergency Planning and Community Right to Know Act, which provides more detailed criteria for determining whether information qualifies as a trade secret.
Craig Segall, an attorney for the Sierra Club, said the rule “doesn’t define a clear process the director can use to judge [trade secret] claims, and really importantly, it doesn’t offer a clear public process for members of the public to push back.”
The end result, he said, willmore chemicals being classified as secrets than are warranted.
The comment also asked that the rule specify that the information disclosed to the commission be made public. While the Oil and Gas Commission has said it plans to create a searchable database available on its website, that is not stipulated in the rule.
Khoury said commission rules generally do not stipulate that information be made available online, though the commission does post well data and other information on its website, www.aogc.state.ar.us.
“The reality is, we can have it on the website for everybody to see quicker than stopping the process and starting over,” he said, referring to rewriting the rule to include that provision.
And the information the commission obtains is already subject to the state’s Freedom of Information Act, he added.
“It’s not anything we’re trying to hide; it will be on the website,” Khoury said.
Khoury said that while the commission might consider adopting the suggestions made in comments or amending the rule later, Arkansas law and state administrative procedures already provide a route for public appeal. And the director could choose to follow the guidelines to which the Sierra Club referred, in addition to the U.S. code, without having to amend the rule.
The rule is in the final stages of implementation, Khoury said, and will become official Jan. 15 if none of the commissioners objects. However, Khoury said the comments have been sent to the commissioners, who may decide to halt implementation in order to make additional changes.
Dusty Horwitt, senior counsel for the Environmental Working Group, said that while protection for chemical formulas makes sense, he does not think companies should be allowed to hold back the names and Chemical Abstract Services numbers for any of the chemicals they use. Those numbers allow the chemicals to be searched in a database.
“I am concerned about the trade secret provision, and the reason is because the exception could become the rule, especially for toxic additives,” he said. The Environmental Working Group is a Washington, D.C.-based advocacy group.
Andy Cheshier of Citizens Against Resource Exploitation, an Arkansas environmental group, said he wants total disclosure, with no exceptions for trade secrets.
“I don’t believe they need to have trade secrets. ... Let the patent law protect them. Why not give it to us? We need to know these chemicals,” he said. Cheshier and other members of the group have submitted comments to the Oil and Gas Commission requesting the rule be changed.
But Khoury said the commission does not anticipate an influx of requests for trade secret protection, nor that companies will try to withhold the names of the most toxic chemicals used. But there’s no reason to believe the trade secrets language will keep information about dangerous chemicals secret, he said, adding that the determination is made based on whether disclosure will damage competitiveness, not how dangerous the chemicals are.
“I think people have the impression that every chemical used will be submitted for trade secrets,” he said. “From what we’ve seen before, and from what other states have seen, we’re not going to have a huge amount of requests.”
In Wyoming, where a similar disclosure rule was put in place in September, requests for trade secret exemption havenot been all that common, said Tom Doll, the state’s oil and gas supervisor.
Doll said companies have requested trade secret status for about 20 to 24 individual chemicals so far, a small proportion of the chemicals that have been disclosed. Doll said most companies have been compliant with the rule.
“We’re not being inundated with requests; I don’t see that that’s being abused,” he said. “What I see on the other hand is full disclosure.”
Business, Pages 22 on 01/04/2011