Tuesday, December 13, 2011

Everybody's happy about drilling rule

Posted By on Tue, Dec 13, 2011 at 5:27 PM


Tuesday, the Colorado Oil and Gas Conservation Commission approved a rule that requires oil and gas drilling companies to disclose chemicals they use to fracture underground rock formations to knock loose fossil fuels for harvesting. It's called fracking, and has become the latest tis in the environmental debate over energy exploration and production.

But the rule allows companies to not identify fluids that constitute trade secrets. To do that, the company must file a Form 41 that states under penalty of perjury that the fluid is, in fact, proprietary. The decision was, as expected, a compromise between staunch environmental advocates, who called for complete disclosure, and the industry, which isn't crazy about the public knowing every move it makes.

Dave Neslin, director of the commission, says in an interview with the Indy that drillers will still have to disclose the "trade secret" fluids to health professionals when it's needed to diagnose and treat a patient who's been exposed to it.

Neslin: A good outcome.
  • Neslin: A good outcome.

He also notes that the Colorado Open Records Act contains an exemption for trade secrets, as does federal environmental law. So it's nothing new.

In addition, Neslin stresses that even if a company claims a fluid is a trade secret, it still has to disclose what type of chemical family it comes from.

"If the state wants to question that (a trade secret designation), we can do that under our rules," Neslin says. "If a member of the public wants to contest a trade secret claim, they can do so under existing rules and statutes."

Neslin says the label trade secret is used rather rarely, actually, and there's no evidence to suggest companies are abusing that opportunity.

As for fudging the truth on claiming a liquid as a trade secret, Neslin is clear on that: "The form is going to have to be certified by the company and by a person working for the company under penalty of perjury," he says.

He also defended the provision for trade secrets, saying it would encourage companies to pursue innovation, new products and new technology. "We want to encourage companies to develop greener fracking fluids," he says, "so we have to offer them appropriate protection."

So, Neslin, the government, environmentalists and the oil and gas industry all went out for drinks and cigars to celebrate, but before doing so, issued the following news releases:

Environmental groups said this:

Colorado Environmental Coalition Applauds Compromise on Fracking Fluids as “Meaningful Step”

DENVER— A compromise on a new state rule governing the disclosure of fracking chemicals provides Coloradoans with one of the stronger reporting requirements in the country and provides some assurance to Coloradoans that they can quickly access information about what substances are being injected when wells are drilled, Colorado Environmental Coalition energy organizer Charlie Montgomery said today.

“The new rule represents an important step forward for the citizens of Colorado,” said Montgomery. “We are pleased we could reach a reasonable compromise on protecting legitimate trade secrets while ensuring that all types of fracking chemicals and their concentrations are reported to the public.

Earlier versions of the rule by the Colorado Oil and Gas Conservation Commission would have given companies broad leeway in shielding chemicals from public view by declaring them trade secrets. Under that version of the proposed rule, the privilege of trade secrets status would have been handed out with no questions asked.

However, under the compromise, companies will need to justify and certify their trade secret claims. Also, the rule endorses a broad interpretation of legal standing when it comes to citizens challenging companies’ trade secret claims.

“Colorado has taken a strong first step to addressing public health and environment concerns from fracking,” said Matt Reed, public lands director of the High Country Citizens Alliance. “The new disclosure rule, while not perfect, adds transparency to what has been a very secretive process. The result will be a better-informed public, recourse for citizens to pursue violations of the rule, and ultimately a better understanding of what chemicals are going into the ground and where.”

Gov. John Hickenlooper was so tickled that his office issued a press release calling the new rule a model for the nation:

Gov. John Hickenlooper today applauded the collaborative efforts of the oil and gas industry, many environmental groups and the Colorado Oil and Gas Conservation Commission in approving new hydraulic fracturing chemical disclosure rules.

Hickenlooper: hes applauding.
  • Hickenlooper: he's applauding.

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.

The mandatory disclosure rules will take effect April 1, 2012, and apply to all oil and gas wells hydraulically fractured in Colorado.

“These new rules give Colorado the fairest and most transparent set of fracking regulations in the country and will likely server as a model for other states,” Hickenlooper said. “We commend everyone involved for coming together to create a chemical disclosure rule that marks another big step forward for Colorado’s responsible regulation of this important industry. We believe oil and gas development can thrive while also meeting our high standards for protection of public health, water and the environment.”

The amended rules adopted today require that operators post the hazardous and non-hazardous chemicals used to hydraulically fracture a well, as well as the concentrations of each chemical, to the disclosure website www.FracFocus.org. Disclosure must be made within 60 days of completion of hydraulic fracturing.

The rules strike a balance by recognizing and protecting industry 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.

The rule builds upon major progress in chemical disclosure associated with oil and gas development. In 2008, nationally groundbreaking amendments to COGCC rules mandated disclosure of hydraulic fracturing chemicals to state regulators and health professionals upon request. Earlier this year, the COGCC worked with industry for voluntary disclosure to the publicly available FracFocus.org website. Since then, operators have posted information on about half of the wells drilled this year in Colorado to the site, with substantially all of the state’s largest operators participating.

Late today, the city issued this press release about an upcoming visit from state authorities on the oil and gas drilling regulations:

Two representatives of the Colorado Oil and Gas Conservation Commission (COGCC) will explain the procedures used to regulate oil and gas production at a meeting with the public from 6:30 to 8:30 p.m. Dec. 21 at Colorado Springs City Hall, 107 N. Nevada Ave.
The topic of the meeting will be Colorado’s current procedures to regulate oil and gas exploration and production. The presentation will not address the pros and cons of the hydraulic fracturing method known as fracking.
COGCC inspection experts Mike Leonard and Margaret Ash will make a presentation and respond to the audience’s questions regarding regulation and inspections. Leonard inspects oil and gas production wells in El Paso County.
The meeting will be hosted by City Councilmember Val Snider and State Representative Pete Lee. It will be broadcast live on SpringsTV and via the internet as streaming video at www.SpringsGov.com.
To submit questions in advance of the meeting contact Councilman Val Snider at
385-5485 or vsnider@springsgov.com .
For more information about the meeting contact Tim Burke at 385-5247.

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