Archive for the ‘Trade Secrets’ Category

Texas Fracking Rules Go Into Effect 2/1/2012

Photo by mrflip. Some rights reserved.

It was June of this year when HB 3328 was sent to the Governor of Texas. In the six short months since, regulations implementing the legislation – requiring public disclosure of the composition of hydraultic fracturing fluid – have been both proposed and adopted.

According to the Railroad Commission of Texas Press Release announcing the big news (the rules were adopted earlier this month), “[a] listing of chemical ingredients used to hydraulically fracture a well that has been permitted by the RRC on or after Feb. 1, 2012, must be uploaded to the public national chemical disclosure registry,”

Of course one big caveat remains: “A supplier, service company or operator is not required to disclose trade secret information unless the Attorney General or court determines the information is not entitled to trade secret protection.”

I was glad to hear, however – via a Jackson Walker e-Alert – that “[t]he Commission kept the trade secret exception narrow in the rulemaking process. While commenters requested that the Commission revise the meaning of trade secret information to include proprietary or confidential business information, the Commission found that the addition of those terms would make the scope of the definition broader than was intended by HB 3328.”

The law firms Fulbright & Jaworski and Pillsbury also have more details.

EPA Chips Away at Confidential Business Information

Photo by puamelia. Some rights reserved.

You can now know precisely which chemicals were administered to which laboratory rats and rabbits!

In what they are calling an “unprecedented” action, the EPA yesterday announced that they have made public the identities of more than 150 previously confidential chemicals mentioned in 100+ health and safety studies.

Under Section 8(e) of the Toxic Substances Control Act (15 U.S.C. §2607(e)), companies that manufacture, process, or distribute chemicals are required to provide notices to the EPA immediately if they learn that any of their chemical substances present a “substantial risk of injury to health or the environment.” While such reports would understandably reference the chemicals under scrutiny, Section 14 of the TSCA (15 U.S.C. §2613) allows said companies to omit the name of the chemical in the public version of these reports (and other types of studies) if they “believe” that information is “entitled to confidential treatment.” (Not a particularly stringent rule, eh?)

Over a year ago, the EPA began to ramp up their fight against unwarranted Confidential Business Information (CBI) claims, beginning in January of 2010, with the publication of new guidance outlining updated practices for reviewing submissions under section 8(e) for CBI claims “of chemical identities listed on the public portion of the TSCA Chemical Substances Inventory.” The guidance was followed by another Federal Register Notice in which the EPA announced that they would generally “deny a confidentiality claim for chemical identity” in health and safety studies. The new practices were intended to increase transparency by making “more health and safety information available to the public.”

Around the same time, the Assistant Administrator of EPA’s Office of Chemical Safety and Pollution Prevention sent a letter to industry trade associations, challenging them “to reduce the voluminous claims” of CBI that the industry has made. While such letters prompted some companies to voluntarily initiate declassifications of CBI, not all companies were eager to do so. In February of 2011, the EPA notified five companies that their previous CBI claims were “clearly not entitled to confidential treatment under § 14 of TSCA,” and that the EPA intended to make the information public.

In March 2011, the EPA began to declassify CBI in health and safety studies published on the EPA’s website. As of June 8, 2011, more than 100 studies had received the declassification treatment – you can see those studies here.

While the reports often contain the original language requesting confidential treatment (“Disclosure of product composition would be of benefit to competitors and would harm our Company’s ability to enable sell end products made utilizing the material whose composition is being claimed as confidential.”Report #8EHQ-92-4171), they have since been updated – by the addition of a few pages at the beginning of the document – and rescanned to indicate the declassification in some manner. (“After reconsidering the substance of the referenced TSCA 8(e) submission, Rhodia Inc. hereby agrees to declassify from confidential business information to public information all of the bracketed information identified in and redacted from the Public Notice Copy of this filing.” Report #8EHQ-91-1708)

(PETA members may want to refrain from browsing the studies, which go into detail about the administration of said declassified chemicals into various animals’ eyes. What really kills me is one such narrative emphasizing that “the test article was instilled into the eye by gently pulling the lower lid away from the eyeball to form a cup into which the test article was deposited.” (emphasis added) Regardless of how gently the lid was handled, it didn’t stop the “blistering of eyelid” by said “test article.”)

Texas Legislature Tackles Fracking Disclosure

Photo by dherrera_96. Some rights reserved.

Law firm Jackson Walker was the first to e-Alert me to the big news: On the last day of May, a bill was sent to the Governor of Texas – having been passed by the senate and house – that would amend Chapter 91 of the Texas Natural Resources Code to require public disclosure of the composition of fluids used in hydraulic fracturing. Texas is one of a handful of states to consider such rules.

HB 3328, unless vetoed by the Governor, would become effective September 1, 2011, at which point the Railroad Commission of Texas will have until July 1, 2012, to implement rules pursuant to the legislation. Once those rules go into effect, the operator of any well in Texas “on which a hydraulic fracturing treatment is performed” would be required to submit an online form revealing the chemical ingredients of hydraulic fracturing fluids used at the site. (Operators of wells for which drilling permits have already been issued at the time the rules go effective will not be subject to the requirements.)

The data disclosed would be hosted at – and available for searching on – a website called FracFocus, which currently offers only information provided voluntarily by a handful of well operators. Operators potentially subject to the new rules can read the FracFocus “How To” Guide for more information on submitting their chemical disclosure.

The disclosure required isn’t quite as all-encompassing as many had hoped – it’s limited to chemical ingredients subject to the requirements of 29 CFR 1210.1200(g)(2) and does not require disclosure of the specific quantities used. Additionally, there are protections for chemical cocktails that might be claimed as trade secrets. Still, many acknowledge this is a bold step forward, and feel optimistic that if a historically, well, red state like Texas can pass such a bill, then there’s hope on the federal front for equally green legislation.

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Many public companies, such as SANDRIDGE ENERGY INC, have already reported material risks via SEC filings in response to the legislation. knowledgemosaic users can view more examples of such disclosure here.

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