From Environmental Groups, a Double Standard on Disclosure

The debate over hydraulic fracturing and oil and gas development in California presents environmental groups with a choice. They can engage in good-faith discussions with state officials and industry representatives to craft common-sense and workable solutions that protect the environment, maintain access to homegrown energy sources, create jobs, generate revenue and support the economic recovery in California. Or, these groups can take the easy out of running a political campaign against the oil and gas industry, pushing facts and constructive ideas aside in favor of headline-grabbing slogans and inflammatory rhetoric.

For those who favor common sense and workable solutions over political posturing, the past few weeks have been disappointing. On Dec. 18, the State of California released a set of proposed regulations to increase government oversight of hydraulic fracturing, and some environmental groups immediately went on the attack. In particular, the groups took aim at the California’s Division of Oil, Gas and Geothermal Resources (DOGGR) proposal on chemical disclosure, which also includes measures to protect intellectual property, or “trade secrets.”

For example, Washington, D.C.-based Food & Water Watch claimed:

“The astonishingly weak fracking regulations proposed by our state government would do far more to protect oil company secrets than California’s environment.”

Earthworks, another group headquartered in Washington, said:

“The plan is clearly assuming that California is a ‘drill baby drill’ ‘frack baby frack’ state. … [I]t’s hard to find much to praise from this discussion draft of fracking regulations.”

The Center for Biological Diversity (CBD), based in Tucson, Ariz., alleged:

“These draft regulations would keep California’s fracking shrouded in secrecy and do little to contain the many threats posed by fracking.”

And Earthjustice – a non-profit environmental law firm in San Francisco that represents Earthworks, CBD, the Environmental Working Group, Sierra Club and many other groups – was also dissatisfied with the disclosure requirements, according to the Bakersfield Californian:

“[E]nvironmentalists said the industry should have to state exactly what it wants to inject underground, no exceptions. ‘There should be some way to disclose what those (chemicals) are,’ said George Torgun, staff attorney at Earthjustice, a San Francisco nonprofit.”

Why are these statements disappointing? Because these groups are attacking the very same disclosure requirements that currently exist in Colorado, standards which have won widespread acclaim from the environmental community. In fact, some of the very same environmental groups criticizing the California proposal were directly involved in negotiating the disclosure regulations in Colorado.

First, let’s confirm that the California proposal and Colorado disclosure regulations are effectively the same. According to DOGGR:

“After the fracturing operation, operators will be required to post information about the operations to a ‘chemical disclosure registry.’

This will include such things as the operator’s name, the well and location, depth of well, name of the geologic formation fractured, the list of chemicals used in the fracturing process, total volume of fluid used and the disposition of the fluid used for fracturing. …

Trade secret protections are specified primarily in the California Civil Code. To invoke them in the context of the proposed regulations, the owner of the trade secret will be required to demonstrate that the secret gives its owner a significant economic advantage, that disclosure of the secret would compromise that advantage, that the information has not been disclosed elsewhere, and that the fluid or substance cannot be reverse engineered to discover its composition. The proposed regulations will require that the holder of information deemed a trade secret declare under penalty of perjury that the information withheld meets these trade secret requirements. The proposed regulations also require that, should the Department or other agency determine as a result of spill or accidental release of fracturing fluid that the Department or other agency needs to know the specific composition of the fracturing fluid for investigatory or emergency response purposes, that it shall immediately be made available to the Department or other agency. The proposed regulations require disclosure to a doctor, nurse or other specified medical professional treating a patient suspected of exposure to fracturing fluid the specific chemical composition of that fluid.” p. 4-5 (emphasis added)

The State of Colorado has summarized its regulations the following way:

“The new rules, endorsed by industry and environmental groups and approved by the nine-member Colorado Oil and Gas Conservation Commission (COGCC), require oil and gas operators to publicly disclose all chemicals used in the hydraulic fracturing of their wells, while still recognizing and protecting trade secrets. …

Such confidential business information is already protected by state laws, including the Colorado Open Records Act and the Colorado Uniform Trade Secrets Act, and major federal environmental statutes. Regulators and medical professionals, however, can still obtain trade secret information upon request under the rules. Further, operators must file a form ensuring trade secret claims meet the appropriate definition, and sign an affidavit – under penalty of perjury – that chemicals cited qualify for trade secret protection.” (emphasis added)

So, both California’s proposed regulations and Colorado’s existing rules require the composition of hydraulic fracturing fluids to be disclosed, include some protections for trade secrets, and ensure that regulators and health professionals have full access to all the information they need to do their jobs.

Here’s how the New York-based Environmental Defense Fund (EDF) greeted news of the Colorado regulations, which were announced in December 2011:

“Environmental Defense Fund (EDF) today praised the State of Colorado for adopting a fracturing fluid chemical disclosure policy that, in many ways, can serve as a model for the nation.

‘The public expects and deserves full transparency from the oil and gas industry,’ said EDF President Fred Krupp. ‘Today, Colorado has taken a critical step toward building the public trust.’ …

[The rule] makes important strides in requiring companies to disclose chemical information in ways that are useful and user-friendly. The Colorado rule requires companies to disclose chemical information on a database that allows the public to search and sort information by company, chemical, geographic area and other criteria. … Finally, the Colorado rule takes a reasonable approach to trade secrets.”

EDF’s Rocky Mountain Regional Director Dan Grossman elaborated at a press conference with Colorado’s Democratic Governor John Hickenlooper, oil and gas industry representatives and environmental groups:

“This is another example of how the false choice that is often put out there, about protecting the environment and protecting economic prosperity, can be disproved. EDF is an organization that is focused on finding workable solutions to environmental issues. And this is an example of how government and industry and the environmental community can work together and create those workable solutions, and I think this is a terrific example of that.”

At the same press conference, Colorado Conservation Voters Executive Director Pete Maysmith said:

 “The clear winners of the rulemaking today are the citizens of Colorado. Now all Coloradans will know what chemicals are being used in natural gas drilling in our state. … It’s no secret that we don’t always see eye-to-eye with the natural gas industry, but this was a great example of putting aside our differences where we have them and getting something done.”

But the lead environmental group during the Colorado rulemaking process wasn’t EDF, or Colorado Conservation Voters. Instead, it was California’s own Earthjustice, which negotiated on behalf of Earthworks and other environmental groups – and told the press its clients were happy with the outcome.

Earthjustice attorney Michael Freeman told the Huffington Post:

“That’s the big advancer here. We’re getting a full picture of what’s in that fracking fluid.”

And he was quoted again in the Denver Business Journal:

“’We have a good rule that’s an important step forward for Colorado,’ said Mike Freeman, a Denver-based attorney for the Earthjustice environmental advocacy group.

‘This is the first state rule that I know of that requires the disclosure of chemical concentrations of all chemicals, not just those covered by workplace safety rules,’ Freeman said.

Earthjustice also issued a press release declaring the non-profit law firm was “instrumental” in securing a “positive outcome” for its clients:

“The Colorado Oil and Gas Conservation Commission has announced a new state rule on hydraulic fracturing that requires full disclosure of the substances used in the fracking process. The rule is one of the strongest in the country and Earthjustice’s Denver office was actively involved in shaping the decision. …

In the negotiations, Earthjustice represented the Colorado Environmental Coalition, Earthworks Oil and Gas Accountability Project, National Wildlife Federation, San Juan Citizens Alliance and High Country Citizens Alliance, and also worked closely with the Environmental Defense Fund.

‘Overall, we are pleased with the strength of this rule,’ said Freeman. ‘While all sides made compromises in the rulemaking, the requirement for disclosure of all chemicals and concentrations in fracking fluids makes Colorado a leader in state disclosure policy.’”

So in December 2011, a broad swath of environmental organizations – including some of California’s major green groups – took credit for Colorado’s hydraulic fracturing regulations which require both disclosure and the protection of trade secrets. But barely a year later, those same disclosure requirements and intellectual-property protections were sharply criticized by environmental groups in California, including some of the same organizations that actually helped write them.

None of the environmental groups that criticized DOGGR’s proposed hydraulic fracturing disclosure regulations have bothered to explain this flip-flop. Perhaps they thought nobody would notice the double standard. But the word is out now, and it’s time for these groups to explain themselves.

While the purpose of this blog post isn’t to mount a lengthy defense of intellectual property protections – that subject deserves a post of its own – there are a couple of important points about them to mention in closing. First of all, as most Californians already know because of the size and scope of the state’s information technology sector, many industries rely on trade-secret protections to ensure a fair and competitive market for their goods and services, not just oil and gas. For example, according to the Intellection Property Owners Association: “Technical and scientific information, such as formulae, manufacturing methods and specifications, designs, computer code and the like receive protection as trade secrets.”

Secondly, according to Gov. Hickenlooper, the economy-wide importance of intellectual property protections was at the heart of the agreement between industry representatives, state officials and environmental groups in Colorado:

“Respect for trade secrets is a part of what our economy is built on. There’s a balance between the public’s right to know and industry’s need for proprietary information.”

1 Comment

Post A Comment