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27 June 2011
On May 31 2011 the Texas legislature adopted HB 3328, requiring hydraulic fracturing operators to disclose the chemical constituents of fluids used in the fracturing process on a well-by-well basis.(1) The bill passed by a majority of 137 to eight in the Texas House of Representatives and 31 to nil in the Texas Senate, and is expected to be signed into law by Governor Rick Perry. By enacting HB 3328, Texas becomes the latest state to mandate the disclosure of chemicals used in hydraulic fracturing, although each state has taken its own approach to regulating the burgeoning development of natural gas resources.(2) Many of the state regulations have divergent provisions and require disclosure in slightly different manners. The Texas bill instructs the Railroad Commission of Texas, which regulates oil and gas production, to draft hydraulic fracturing disclosure regulations pursuant to the provisions of the bill.
HB 3328 imposes different disclosure requirements for varying categories of chemicals. For fracturing chemicals that are subject to the Occupational Safety and Health Administration's (OSHA) requirements for material safety data sheets (MSDS), the well operator must disclose those chemicals to the Railroad Commission and post a list of the chemicals on the website hosted by the Interstate Oil and Gas Commission (www.FracFocus.org). Pursuant to existing OSHA regulations, an MSDS must be made available to any employees that might handle potentially harmful substances in their work duties.(3) The Texas bill makes public this information about OSHA-regulated chemicals that by law was already available to well-operator employees.
If a chemical is not required to be disclosed on an MSDS, but was nevertheless intentionally included in the fracturing fluid to assist with the fracturing process, the chemical must be disclosed to the Railroad Commission and noted on www.FracFocus.org or another publicly accessible website. Chemical constituents that were not purposely added, but occur only incidentally in the fracturing fluid, need not be disclosed.
Notably, HB 3328 does not mandate disclosure of the actual quantities of the chemicals used or the techniques utilised by well operators to implement the fracturing process. Rather, the bill requires only the disclosure of specific chemical identifying information, such as names and physical characteristics.
In addition, the legislation allows well operators to claim trade secret protection for certain fracturing chemicals or compositions.(4) If granted, a fracturing fluid with trade secret status would be exempt from the disclosure obligations described above, subject to existing information disclosure laws promulgated by the Public Information Act. Only land owners where the well is located, land owners of adjacent property and state agencies with jurisdiction will have standing to challenge the trade secret status of a fracturing chemical or composition. Regardless of these trade secret protections, HB 3328 also requires that chemical information be disclosed to any health professional or emergency responder who needs the information for medical treatment.
Unless vetoed by the governor, HB 3328 will become law on September 1 2011. The law will affect only wells that receive drilling permits after the effective date of the Railroad Commission's forthcoming regulations. The commission will have until July 1 2012 to adopt regulations affecting the disclosure of MSDS chemicals, and until July 1 2013 to adopt regulations relating to the non-MSDS ingredients and the trade secret exemption process. In spite of these deadlines, Railroad Commissioner David Porter has stated that the commission intends to finalise all of the rules – not just those relating to the MSDS chemicals – by July 1 2012. According to Porter, the commission will host public forums throughout the state in the coming months to gather public comment on the new legislation.
For further information on this topic please contact Stephen C Dillard or Barclay Richard Nicholson at Fulbright & Jaworski's Houston office by telephone (+1 713 651 5151), fax (+1 713 651 5246) or email (email@example.com or firstname.lastname@example.org). Alternatively, contact Kenneth S Komoroski at Fulbright & Jaworski's Canonsburg office by telephone (+1 724 416 0400), fax (+1 724 416 0404) or email (email@example.com).
(1) HB 3328, 2011 Leg, 82 Sess (TX 2011), available at http://www.capitol.state.tx.us/tlodocs/82R/billtext/pdf/HB03328F.pdf#navpanes=0.
(2) See, for example, 25 Pa Code §78.55 (as part of the permitting process, drilling companies must disclose the names of all chemicals to be stored and used at a drilling site in the Pollution Prevention and Contingency Plan submitted to the Department of Environmental Protection); Wy Oil & Gas Comm'n § 3-8(c) (operators must disclose chemical additives and proposed concentrations in the Application for Permit to Drill or Deepen).
(3) See 29 CFR § 1910.1200(g)(2), available at http://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=STANDARDS&p_id=10099.
(4) The process for claiming trade secret status is not set forth in HB 3328, but will be designed and enacted by the Railroad Commission over the next two years.
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Barclay Richard Nicholson