North Carolina legislators look to criminalize disclosure of fracking fluids by Laura E. Carlisle, July 15, 2014, Baker Donelson Bearman Caldwell & Berkowitz PC
As many states and the federal government look towards calling for greater disclosure and regulation of the chemicals used in hydraulic fracturing, state senators in North Carolina appear to be pushing against the tide in seeking legislation to criminalize the disclosure of fracking chemicals designated as trade secrets or confidential. In late May, the North Carolina Senate passed the “Energy Modernization Act,” which designates state geologists custodians of confidential information about fracking fluids and makes releasing such information “knowingly or negligently” a misdemeanor.
Meanwhile, a number of states have passed or are in the process of developing their own regulations requiring drillers to disclose the substances used in fracking operations. Such regulations, however, allow companies to claim “trade secrets” and protect certain chemicals from public disclosure, the primary concern for drillers being the disclosure of the specific formulas used in individual wells. In this regard, North Carolina’s proposed legislation is not a complete outlier in its protection of company trade secrets and confidential information. But, the use of criminal penalties to regulate disclosure is a new tactic, and one that certainly signals state cooperation for companies seeking to protect fracking chemicals and information from public disclosure. Bill supporters insist that the legislation will help to attract resource development to the state. [Emphasis added]
Group considers suing North Carolina to stop fracking by Stephanie Coueignoux, June 16, 2014, wsoctv.com
Anson County residents are calling for action after Gov. Pat McCrory signed a law that would allow fracking permits to be issued as early as next year. Anson is one of 14 counties in North Carolina where fracking could occur. According to the Rural Advancement Foundation International-USA, those counties include Rockingham, Yadkin, Davie, Granville, Durham, Wake, Anson, Montgomery, Chatham, Lee, Sanford, Union and Moore counties.
Local advocates, like Deborah Arnason, are demanding state lawmakers hold a public hearing in Anson County to discuss fracking.
“Do I ever feel like my voice is not being heard,” she said. “My concerns are huge.”
One group said they are considering suing the state to stop fracking.
Under the new law, cities and counties cannot stop fracking locally. “No matter where we are in the state. That’s something we should be concerned about,” said Shannon Binns, with Sustain Charlotte. The Senate budget includes spending close to a million dollars in taxpayer money to drill test wells across the state.
Arnason does feel that’s fair to taxpayers who oppose fracking.
“How could they ask us to subsidize our own demise?” she said.
McCrory’s office said in the first seven years, fracking could generate close to 500 jobs and $80 million annually for the state. But some people living in Anson County said they’re more concerned about their health. [Emphasis added]
NC fracking bill orders prison time for disclosing chemicals, ignores health risks by Sue Sturgis, May 19, 2014, The Institute for Southern Studies
One aspect of the Energy Modernization Act (SB 786) that’s gotten considerable attention is the provision that would make it a Class I felony for someone to intentionally disclose chemicals in fracking fluids that are classified as trade secrets. A conviction of this lowest-level felony could bring civil fines and several months in prison. … Hannah Wiseman, a Florida State University assistant law professor who studies fracking regulations, told Mother Jones that North Carolina’s proposed law “is far stricter than most states’ provisions in terms of the penalty for violating trade secrets.” She said that the bill was “so poorly worded” that it’s unclear whether emergency responders would be charged with a felony for disclosing the information they obtain legally.
Among the concerns the legislation does not address are compulsory pooling, whereby drillers can drill on land without the owners’ permission; disposal of toxic fracking wastewater; toxic air emissions from fracking operations; long-term contamination that comes to light after a drilling operation is finished; and how to protect landowners and the environment from the lines that move gas from wells to processing facilities. In addition,the bill shrinks the zone of liability for drillers who cause drinking well contamination from 5,000 feet to 2,640 feet, and it prohibits local bans on fracking or the siting of wells.
The bill’s primary sponsors are Republican Sens. Robert Rucho of Mecklenburg County, E.S. “Buck” Newton of Wilson, and Andrew Brock of Mocksville. It also has six co-sponsors, all of them Republicans. The GOP holds supermajorities in both the North Carolina House and Senate. The legislation was introduced as new revelations surfaced about the outsized role industry interests have played in shaping the state’s proposed approach to chemical disclosure.
An earlier version of the chemical disclosure rule crafted by the MEC was pulled from consideration last year after Halliburton complained it went too far. [Emphasis added]
NC Bill Would Criminalize Disclosure Of Fracking Chemicals by Sean McLernon, May 19, 2014, Law360
North Carolina state lawmakers on Thursday introduced a bill that would criminalize disclosing chemicals used in hydraulic fracturing, declaring that any individual who intentionally releases confidential fracking data shall be guilty of Class I felony charges. The Energy Modernization Act, or S786, targets those who knowingly or negligently release information about substances used by oil and gas companies during the fracking process, calling for a felony conviction as well as leaving them open to civil action for damages. [Emphasis added]
State Legislature Wants to Make Telling the Truth About Fracking a Felony by Camel City Dispatch, May 18, 2014
On Thursday May 15th SB 786 was filed with the principle clerk. Called the “Energy Modernization Act” in an attempt to message the content and politically separate the reality of the legislation from the true result. One thing that the legislation would do is make it a Class I felony to disclose the poisonous chemicals that petrochemical companies want to pump into North Carolina’s soil. The new rules also seek to force first responders to sigh confidentially agreements in order to receive information about he poisons used following any accident. Both medical providers and fire chiefs would be bound to also not disclose what is being pumped into our ground and ground water. Following the change in rules for the State Legislative Building this is simply another attempt to criminalize behavior that cramps the style of the Republican Supermajority.
From voter suppression laws to their hard treatment of the unemployed, the North Carolina state legislature led by Sen. Phil Berger and Rep. Thom Tillis have never shied away from being the most extreme corporate advocates in America.
… A draconian move clearly aimed at whistleblowers and anyone else who might let citizens know what is going into their ground.
The North Carolina legislature’s bill is so extreme that is even contradicts actions currently being taking by oil field service companies, themselves. Baker Hughes Inc., one of the largest of these firms, announced in April that it will disclose all its frac fluid ingredients. [Refer below to more information on the questionable promise by Baker Hughes. Emphasis added]
North Carolina GOP Pushes Unprecedented Bill to Jail Anyone Who Discloses Fracking Chemicals by Molly Redden, May 19, 2014, Mother Jones
On Thursday, three Republican state senators introduced a bill that would slap a felony charge on individuals who disclosed confidential information about fracking chemicals. The bill, whose sponsors include a member of Republican party leadership, establishes procedures for fire chiefs and health care providers to obtain chemical information during emergencies. But as the trade publication Energywire noted Friday, individuals who leak information outside of emergency settings could be penalized with fines and several months in prison.
“The felony provision is far stricter than most states’ provisions in terms of the penalty for violating trade secrets,” says Hannah Wiseman, a Florida State University assistant law professor who studies fracking regulations.
The bill also allows companies that own the chemical information to require emergency responders to sign a confidentiality agreement. And it’s not clear what the penalty would be for a health care worker or fire chief who spoke about their experiences with chemical accidents to colleagues.
“I think the only penalties to fire chiefs and doctors, if they talked about it at their annual conference, would be the penalties contained in the confidentiality agreement,” says Wiseman. “But [the bill] is so poorly worded, I cannot confirm that if an emergency responder or fire chief discloses that confidential information, they too would not be subject to a felony.” In some sections, she says, “That appears to be the case.”
The disclosure of the chemicals used to break up shale formations and release natural gas is one of the most heated issues surrounding fracking. Many energy companies argue that the information should be proprietary, while public health advocates counter that they can’t monitor for environmental and health impacts without it. Under public pressure, a few companies have begun to report [some] chemicals voluntarily.
Wiseman adds that, other than the felony provision, the bill proposes disclosure laws similar to those in many other states: “It allows for trade secrets to remain trade secrets, it provides only limited exceptions for reasons of emergency and health problems, and provides penalties for failure to honor the trade secret.”
Draft regulations from the North Carolina commission have been praised as some of the strongest fracking rules in the country. But observers already worry that the final regulations will be significantly weaker. In early May, the commission put off approving a near-final chemical disclosure rule because Haliburton, which has huge stakes in the fracking industry, complained the proposal was too strict, the News & Observer reported.
For portions of the Republican-controlled North Carolina government to kowtow to the energy industry is not surprising. In February, the Associated Press reported that under Republican Gov. Pat McCrory, North Carolina’s top environmental regulators previously thwarted three separate Clean Water Act lawsuitsaimed at forcing Duke Energy, the largest electricity utility in the country, to clean up its toxic coal ash pits in the state. Had those lawsuits been allowed to progress, they may have prevented the February rupture of a coal ash storage pond, which poured some 80,000 tons of coal ash into the Dan River.
….the bill would also prevent local governments from passing any rules on fracking and limit water testing that precedes a new drilling operation. [Emphasis added]
Bill would criminalise frac fluid disclosures; North Carolina bill would make it a felony to reveal chemicals in frac fluid by Luke Johnson, Associated Press, May 16, 2014, upstreamonline
A new bill in the US state of North Carolina could make it a felony for any individual who discloses the ingredients of hydraulic fracturing fluid.
The so-called Energy Modernisation Act (pdf) would make it a Class I felony to disclose proprietary information related to fracking. The legislation also details how the information would be provided to emergency workers, who would be required to fill out confidentiality forms upon receipt.
North Carolina, which has no significant oil and gas activity currently, has been crafting regulations to attract the oil and gas industry. The state’s Deep River basin holds potential unconventional resources, but it has been little explored. There is a currently a state-wide moratorium on unconventional development in place, pending the creation of regulations.
The proposed bill would task the state geologist with maintaining the chemical information of frac fluid. The state’s emergency management office would be able to use that information for planning purposes. In the event of an accident, the information could be handed over to medical providers and fire chiefs, as well. The bill would make anyone who discloses the sensitive information subject to criminal penalties.
Class I is the lowest grade felony and is punishable by up to a few months in prison. [Emphasis added]
N.C. bill would make it a felony to disclose fracking chemicals by Mike Lee, May 16, 2014, E&E News
People who disclose confidential information about hydraulic fracturing chemicals in North Carolina would be subject to criminal penalties and civil damages, under a bill in the state Legislature. The “Energy Modernization Act,” which was introduced yesterday, would make it a Class I felony to disclose trade secrets related to hydraulic fracturing, while spelling out how the information is supposed to be provided to emergency workers. Class I is the lowest-level felony, punishable by a few months’ imprisonment.
“It is very concerning,” said Hope Taylor, executive director of Clean Water North Carolina. “That could have a very chilling effect on folks in the agencies who want to help emergency responders.”
It’s the latest twist in North Carolina’s quest to write rules allowing drilling and fracking for natural gas. The state has a potential shale field called the Deep River formation, but it passed a moratorium on development until it can establish regulations to control the industry. [Where do regulations appropriately control the industry? Where has any court, excluding jury, ruled just and fair public remedy to poisoned families and workers, or those killed by the industry? Where has water been protected? Regulated fracing is uneconomical. Regulators, politicians, NGOs and companies know this – thus the wide spread lies and deregulation while publicly promising regulations, or lies and “go slow, frac ‘n study the human guinea pigs” suggested by Dr John Cherry and the Canadian Council of Academies.]
The state’s Mining and Energy Commission, which is writing the regulations, drew criticism earlier this month when it rejected a proposal on chemical disclosure under pressure from the oil and gas industry, the Raleigh News & Observer reported. The subcommittee’s proposal would have allowed exemptions from disclosure for chemicals that are trade secrets. But the chemical companies would have been required to submit the information under seal to the state Department of Environment and Natural Resources.
The bill introduced yesterdaywas intended to smooth out the disclosure process, and environmental groups say they favor some of the provisions. It would put the state geologist in charge of maintaining the chemical information and would allow the state’s emergency management office to use it for planning. It also would allow the state to turn over the information immediately to medical providers and fire chiefs. However, the medical providers and fire chiefs could be required to sign confidentiality agreements after they receive the information. According to the bill, those agreements “may provide for appropriate legal remedies in the event of a breach of the agreement, including stipulation of a reasonable pre-estimate of likely damages.” [Why no law stipulating pre-estimates and bonds for all workers and families/communities harmed by fracing?]
The bill would pre-empt local communities from passing ordinances to control drilling and fracking. It also would limit the amount of water testing before drilling happens. [Just as Alberta did, after water wells began to go bad in frac fields]
“The bill just helps to highlight all the problems that fracking would bring to North Carolina,” said Elizabeth Ouzts, state director for Environment North Carolina.
The bill was sponsored by three Republican state senators. None of them returned calls or emails seeking comment.
Moving toward disclosure
Chemical disclosure has been a contentious issue with the advent of large-scale shale drilling. Oil field service companies like Schlumberger Ltd. and Halliburton Co. maintain that they spend millions of dollars developing the chemicals used to coax oil and gas out of the ground and want to protect their investment. Landowners and environmental groups say they can’t determine whether fracking has contaminated waterwithout knowing what’s being pumped into the ground.
Texas, Pennsylvania and other states began requiring drillers to post a list of chemicals used in specific wells to FracFocus, a website run by trade groups. The states typically have broad protections for trade secrets, but few, if any, have criminal penalties for disclosing the information.
The North Carolina proposal “seems to draw a very clear line,” said Hannah Wiseman, a professor at Florida State University College of Law. “If an individual who has not been designated as a recipient of this data gets his or her hands on it, there will be big penalties.”
The bill runs counter to recent developments on hydraulic fracturing. Baker Hughes Inc., one of the biggest oil field service companies, announced in April that it will disclose all its frac fluid ingredients (EnergyWire, April 24). [Baker Hughes is a service company to oil and gas companies. The public promise by Baker Hughes to fully disclose frac chemicals comes with this major escape hatch (refer below for the complete statement): “Where accepted by our customers and relevant governmental authorities….” There is no jurisdiction in North America where oil and gas companies and state/provincial regulators “accept” complete chemical disclosure. The promise by Baker Hughes is further tainted by this statement: “That is why Baker Hughes endorses FracFocus….” Fracfocus is filled with secrets and protections for oil and gas companies. The worst con by Fracfocus in the US and Canada is that companies only have to disclose chemicals after frac’ing, when it is always too late for anyone to protect their homes, drinking water supplies or know what they will be breathing during venting, flaring and leakage.]
In Pennsylvania, a provision in Act 13, the state law that regulates gas drilling, prohibits medical providers from disclosing confidential information about fracking chemicals. That section has been challenged in court, and a trial is underway to determine whether it’s legal under the state constitution (EnergyWire, Dec. 20, 2013). [Emphasis added]
Emails Reveal North Carolina Officials’ Close Ties With Fracking Lobby Groups by Jesse Coleman, May 16, 2014, ecowatch
In North Carolina, Halliburton and other fracking industry interests helped write a fracking chemical disclosure bill. But when that bill ended up requiring disclosure of harmful chemicals to the state environmental agency, the bill was killed and replaced with one that further limited disclosure of the chemicals used in fracking.
A cache of emails obtained by Greenpeace has revealed the cozy relationship between the hydraulic fracturing industry and North Carolina’s Mining and Energy Commission. [Emphasis added]
Baker Hughes to Disclose All Chemicals It Uses in Fracking by Alison Sider, April 28, 2014, Wall Street Journal
Oil-field service company Baker Hughes Inc. said minor formatting tweaks to an online form at FracFocus.com will allow it to fully spell out all the chemicals it uses to help coax out oil and gas out of the ground.
Baker Hughes is one of the largest oil-field services companies in the world, competing with the likes of Halliburton Co.HAL +0.25% and Schlumberger Ltd.SLB +0.37% It often has stopped short of naming chemicals used in the hydraulic fracturing process when it reports to FracFocus, the online national registry where the public can look up well details in several states.
Some companies, though not all, have resisted greater transparency around fracking fluids, citing trade secret protections. Baker Hughes said FracFocus’s new format lets companies list individual chemicals used in wells without linking them directly to specific mixtures of compounds with trade names. That way, the company said, it’s clear what’s gone down a well, but competitors won’t be able to figure out the ratios and recipes Baker Hughes has used to create its own fluids. Decoupling ingredients will sufficiently protect Baker Hughes and its energy customers operations, the company said, calling the new policy “a balance that increases public trust while encouraging commercial innovation.” …
Baker Hughes posted the new policy on its website in late March with little fanfare. The change was first reported last week by Energy and Environment Publishing.
… Schlumberger said it often fully discloses chemicals to regulators, but does still invoke trade secret exemptions on occasion. It is “increasingly the exception rather than the rule,” a spokesman said.
Halliburton fracks more in North America than any other company, and has argued that trade secret protections are critical. It worries greater disclosure could lead to reverse engineering of patented processes.
“Even if chemical ingredients are not listed with the additives in which they are found, an experienced chemist for a sophisticated competitor–knowing the types of chemicals used in different types of additives–would be able to discern which chemicals are found in which additives,” Halliburton said in a public comment last month. [Emphasis added]
Baker Hughes Plans to Disclose All Fracking Chemicals by David Wethe, April 24, 2014, Bloomberg
The world’s third-largest oilfield services provider hasn’t disclosed all of the ingredients used in fracking fluids in the past, citing competitive reasons, Melanie Kania, a spokeswoman for the Houston-based company, said today in a phone interview. “It’s actually going to take several months for the policy to go into effect,” she said. “We still need to go into negotiations with suppliers, customers, etcetera, and get all of our systems up to date.”
… Baker Hughes has been working to change its policy “for some time,” including holding private discussions with its engineers and suppliers to make sure it could disclose all of the chemicals, Kania said. Susie McMichael, a spokeswoman for Halliburton Co. (HAL), and Joao Felix, a spokesman for Schlumberger Ltd. (SLB), couldn’t immediately comment on Baker Hughes’s disclosure plans.
Schlumberger is the world’s largest oilfield services provider and Halliburton is No. 2.
Baker Hughes Pledges Fracking Chemical Disclosure With Loophole by Clean Technica, April 27, 2014
The tubes are buzzing over the news that Baker Hughes, a major global oil and gas services company, has announced plans to voluntarily disclose the chemicals it uses in fracking fluids. That seems like a major step in the right direction, but if you look at it in the context of the Interior Department’s proposed new rules for fracking on federal public and Native American lands, there ain’t much there there.
Baker Hughes certainly got some great publicity out of its announcement. For example, here’s how our friends over at Bloomberg.com reported it, under the headline “Baker Hughes Plans to Disclose All Fracking Chemicals:
Baker Hughes Inc. (BHI) plans to disclose all of the chemicals used in the rock-cracking technique used to unlock oil and natural gas from underground.
The world’s third-largest oilfield services provider hasn’t disclosed all of the ingredients used in fracking fluids in the past, citing competitive reasons, Melanie Kania, a spokeswoman for the Houston-based company, said today in a phone interview.
The article does go on to mention that the new policy hasn’t been fully hammered out yet with the supply chain, which leaves the door open for something that Kania apparently apparently did not disclose in that phone interview, namely, that the new policy includes its own mile-wide disclosure loophole.
Here’s the relevant bit from the Baker Hughes website (break added for readability):
Baker Hughes believes it is possible to disclose 100% of the chemical ingredients we use in hydraulic fracturing fluids without compromising our formulations – a balance that increases public trust while encouraging commercial innovation.
Where accepted by our customers and relevant governmental authorities, Baker Hughes is implementing a new format that achieves this goal, providing complete lists of the products and chemical ingredients used.
See what just happened here? Apparently deploying the Hobby Lobby concept of corporate personhood, basically all Baker Hughes is saying is while he/she “believes in” 100 percent disclosure, he/she is only going to apply that belief under specific circumstances, namely, when the customer agrees to it within the existing regulatory framework.
Baker Hughes does endorse FracFocus.org, an industry-funded disclosure registry, but that registry accommodates trade secrets.
That pretty much leaves us right back where we started as far as EPA is concerned, since fracking already won its loophole from the Clean Water Act.
… Meanwhile, the final rule is expected by the end of the year. [Emphasis added]