This post was written by Todd Maiden, Marilyn Moberg, and Michael Mandell
On November 15, 2013, the California Department of Conservation, Division of Oil, Gas, and Geothermal Resources (DOGGR) released draft regulations affecting hydraulic fracturing activities within the state that some state officials are touting as the "toughest in the nation." These proposed regulations include a public disclosure requirement of the chemicals used in "well stimulation activities" (including hydraulic fracturing and acid stimulation treatment).
Specifically, DOGGR’s proposed regulations, based on California Senate Bill 4 (S.B. 4), require operators to post publically on the Chemical Disclosure Registry the trade name, supplier, and descriptions of the additives used in their fracking fluids within 60 days after an operation ends. In Wyoming, which enacted similar legislation in 2010, there has already been litigation regarding issues of trade secrets protection. Wyoming’s regulation requires that the owner or operator of a well provide the Wyoming Oil and Gas Conservation Commission with, inter alia, the identity of all compounds contained in fracturing fluid additives for each fracturing operation. Wyo. Admin. Code OIL GEN Ch. 3 § 45(d)(ii). However, the regulation exempted information from disclosure to the public if an operator requested, and the Commission supervisor found that the information was a trade secret. See Id. at § 45(f) ("confidentiality protection shall be provided consistent with WYO. STAT. ANN. § 16-4-203(d)(v) of the the Wyoming Public Records Act, for the following records: ‘trade secrets, privileged information and confidential commercial, financial, geological or geophysical data furnished by or obtained from any person.’"). On November 20, the Wyoming Supreme Court heard arguments over whether a trade secret exemption could be invoked to prevent disclosure of the chemicals used in hydraulic fracturing. See Powder River Basin Resource Council v. Wyoming Oil & Gas Conservation Commission, No. S-13-0120. In contrast, S.B. 4 specifically provides that the following information is not a trade secret:
- Identification of the chemical constituents of additives
- The concentrations of the additives;
- Pollution monitoring data;
- Health and safety data ; and
- Chemical composition of the flowback fluid following well stimulation.
In addition to trade secret issues, there has also been litigation involving fracking where plaintiffs allege negligence, strict liability, medical monitoring trust funds and nuisance against oil and gas companies. See, e.g., Fiorentino v. Cabot Oil & Gas Corp., 750 F. Supp. 2d 506 (M.D. Pa. 2010) (asserting, inter alia, causes of action for negligence, private nuisance, medical monitoring trust funds, and gross negligence). Thus far, courts have been unwilling to dismiss these claims until fact investigation ends. See, e.g., Fiorentino, 750 F. Supp. 2d at 509–510 (M.D. Pa. 2010) (deferring judgment on plaintiff’s claims until the end of discovery); Kamuck v. Shell Energy Holdings GP, LLC. No. 4:11–1425, 2012 WL 1463594 (M.D. Pa. Mar. 19, 2012) (same); Berish v. Southwestern Energy Production Co. 763 F. Supp. 2d 702, 704 (M.D. Pa. 2011) (same). For instance, in Pennsylvania, plaintiffs—63 individuals who executed leases giving an oil and gas company the right to extract natural gas from their properties—alleged the defendants improperly conducted hydraulic fracturing that allowed the release of methane, natural gas, and other toxins onto their land and into their groundwater. Fiorentino, 750 F. Supp. 2d at 509–10. These plaintiffs claimed that they experienced property damage and physical illness, that they live in constant fear of future illness, and that they suffer severe emotional distress. Thus, they requested an injunction prohibiting future natural gas operations, damages (under strict liability theory), and the cost of future health monitoring. Id. On ruling on the defendants’ motion to dismiss, the Fiorentino court refused to dismiss the plaintiffs’ claims until the record was more fully developed and instead instructed the defendants to reassert their arguments at the summary judgment stage. Id. at 512-13. Firoentino is just now entering the summary judgment stage—two years after the court denied the defendants’ motion to dismiss.
Reed Smith has extensive experience in hydraulic fracturing issues and commercial and toxic tort litigation and is following these issues closely. If you have any further questions, please contact one of the authors of this post.