Uneven State Rules And Trade Secrets Fuel Fracking Debate

A brew of state activity, federal inaction, industry interests, and environmental concerns is bubbling over in response to public demands for more information about the chemicals used in hydraulic fracturing. Fueling the debate is the oil and gas industry’s refusal to reveal the identity of the substances in fracking fluids.

Fracking, an unconventional oil and gas recovery method, involves injecting large volumes of fluid deep underground to break up tight rock formations to extract hydrocarbons. Composed of about 90% water, 10% proppant—sand or other particulate matter—and less than 1% assorted chemical additives, the fracking fluid that oil and gas drillers use varies in composition depending on the recovery method and underlying geologic formations.

The concern over the chemicals in this fluid has grown in recent years as fracking has become more popular. The extraction technique has boosted the U.S. production of natural gas by nearly 40% in the past decade. Even as the price of natural gas tumbled in 2014, fracking is expected to continue its growth to account for more than 75% of natural gas production by 2035, according to industry projections.

Fracking’s contributions to job creation and U.S. energy independence have been significant, experts say. The fast-moving industry has blossomed in the Great Plains and in some parts of the Northeast.

As the public’s call for environmental protections and information about what substances are getting injected into the ground has grown louder, some states have created their own rules to force the industry to reveal more information about fracking chemicals. In the absence of federal guidance, however, these disclosure rules have varied in scope and efficacy from state to state.

In 2010, Wyoming became the first state to require disclosure of fracking fluid additives. Since then, some 30 states have adopted rules or are in the process of doing so. But those actions are not enough to satisfy advocates for openness. That’s because with few exceptions, state rules exempt industry from having to publicly disclose chemicals it claims are trade secrets.

These exemptions are, in most states, easily obtained, rendering disclosure rules largely ineffective for informing the public, says Matthew McFeeley, an attorney with the Natural Resources Defense Council, an environmental group. Opting out of disclosure can be as simple as marking a checkbox or writing “trade secret” on a form, he says.

“In many states, the trade-secret rules are so lax that there’s essentially no oversight,” McFeeley adds. “Companies are allowed to claim them with no justification or factual substantiation.”

The situation is changing, albeit incrementally, McFeeley points out. In a recent settlement between the Wyoming Oil & Gas Conservation Commission and a handful of environmental groups, state regulators agreed to adopt stricter standards for scrutinizing trade-secret claims. Meanwhile, a California law that takes effect later this year will require industry to disclose to the state all fracking fluid chemicals, including those that might be held as trade secrets elsewhere. And lawmakers in Florida, Kentucky, Maryland, North Carolina, and Virginia are considering fracking fluid disclosure legislation that would impose varying degrees of constraint on trade-secret exemptions.

Because some states are doing more than others, the nation has a patchwork of inconsistent disclosure rules, says Amanda Frank, a policy analyst with the Center for Effective Government. The watchdog group advocates for government transparency and accountability and was a petitioner in the Wyoming lawsuit.

Progress is being made in states like Wyoming, Frank says. “But we really need a strong federal action so that everyone is protected.”

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When drilling operators inject fracking fluid into wells, that fluid comes back up as wastewater, carrying with it additives as well as naturally occurring metals, hydrocarbons, and radioactive substances from geologic formations (see page 8). This wastewater is typically reused for drilling or injected and sequestered deep underground at other sites.

To protect rivers, lakes, streams, and groundwater from contamination with fracking fluid, environmentalists might argue for federal regulations by the Environmental Protection Agency under the Clean Water Act or Safe Drinking Water Act. But Congress included a provision in the Energy Policy Act of 2005 that forbids EPA from regulating fracking fluids. This part of the 2005 law is nicknamed the Halliburton loophole because it was inserted reportedly at the urging of then-vice president Dick Cheney, a former executive at energy giant Halliburton. Attempts in Congress to reverse the policy through amendments to the law have so far been unsuccessful.

The loophole “was a point of controversy in committee and on the House floor,” says Greg Dotson, vice president for energy policy at the Center for American Progress. He was the lead environmental and energy staffer for then-Rep. Henry A. Waxman (D-Calif.) when the Republican-controlled House of Representatives was debating the Energy Policy Act of 2005. Lawmakers offered several amendments in opposition to the loophole, though none was adopted. However, the House did agree to a provision limiting the use of diesel fuel for fracking.

Diesel fuel remains the only chemical restricted in fracking fluid under federal law. Drillers must obtain a permit under the Safe Drinking Water Act prior to injection of diesel fuel.

But there is ongoing activity regarding fracking fluids on the federal level. In the coming months, EPA is expected to release the results of a study it launched in 2011 to scrutinize the potential impacts of fracking on drinking water resources. This work will include a toxicity assessment of more than 1,000 chemicals used in fracking fluids between 2005 and 2011, the agency says. Also, EPA last May issued a notice that it was considering a possible regulation under the Toxic Substances Control Act to require disclosure of chemicals and mixtures used in fracking.

Although it could put up a fight, the industry says it is prepared to comply with stricter disclosure regulations.

“We change the level or depth of information that we provide to authorities whenever there is a change in regulation,” says Nicholas Gardiner, strategic business manager for production enhancement at Halliburton.

Last year, Halliburton spent $601 million to research and develop the products and technologies it sells to oil and gas drillers. Part of that budget went to its fracking operation, which would include work on its carefully guarded injection fluids. If Halliburton were to publicly disclose the entire composition of its fracking fluids, this would tip off its competitors and hurt its bottom line, the company argues.

“There are some chemicals that we’re not going to disclose 100%,” Gardiner tells C&EN. “Those are the ones that we claim as trade secrets.” Halliburton protects its fracking products with patents when possible, Gardiner adds.

Known additives, such as ethylene glycol and glutaraldehyde, act to prevent mineral deposits and microbial fouling, respectively, in the wells. Other chemicals help clear debris or protect steel casings (C&EN, May 12, 2014, page 31).

“While there are very few chemicals that we claim trade secret on,” Gardiner says, “those tend to be the ones that the customers want to use because they provide a differentiated result.”

In March of last year, Halliburton competitor Baker Hughes announced that it would fully disclose the chemical additives in its fracking fluids, without detailing specific product formulations. The decision came as a Department of Energy task force recommended a new approach to chemical disclosure on the website FracFocus, the nation’s voluntary, industry-backed fracking chemical disclosure registry. The approach to disclosure favored by the task force—and soon to be implemented by FracFocus—would protect companies’ trade secrets by listing chemical constituents without disclosing which commercial additive products contain them.

Halliburton is moving toward a similar type of reporting, Gardiner says. But full disclosure by the company is unlikely, he adds. Halliburton announced its intention to purchase Baker Hughes last fall, but the merger has yet to be finalized.

Although advocates for chemical disclosure applaud this progress, researchers argue that it’s not providing them with enough information.

Data are “not really provided in a meaningful way for researchers to use,” says Dustin Mulvaney, assistant professor of sustainable energy resources at San Jose State University in California. He says it took more than 100 hours of research time to sift through chemical data from a few thousand wells. “The voluntary nature of FracFocus makes the data quality somewhat questionable,” he adds.

Still, the compounds in fracking fluids are not regulated, and disclosure of chemical identities does not address gaps in data about the environmental characteristics and toxicity of these substances, says William T. Stringfellow, an environmental engineer and director of the Environmental Measurements Laboratory at Lawrence Berkeley National Laboratory.

“Is the chemical biodegradable? What’s the water solubility? Does it have a toxicology profile?” Stringfellow asks. Without this information, it is difficult for researchers to carry out the risk assessments of fracking fluid chemicals that the public is clamoring for, he adds.

To estimate the real risk these additives pose, he says, “we need full disclosure of the information in an organized and complete manner.”  

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