The Colorado Oil and Gas Conservation Commission unanimously backed a rule on Tuesday requiring the state’s oil and gas industry to fully disclose all chemicals used in the controversial drilling process known as hydraulic fracturing, or “fracking.” Hailed as a model for the nation, the ruling has won praise by environmental groups and the oil and gas industry alike. It contains provisions to protect industry trade secrets while ramping up safety requirements against potential groundwater contamination related to the oil extraction process.
The new rule, which goes into effect on April 1, 2012, will make Colorado the most transparent state in the country when it comes to chemical disclosures related to fracking. Operators will be required to post to the disclosure website FracFocus.org the hazardous and non-hazardous chemicals used to hydraulically fracture a well, along with the concentration percentages of each chemical used. Disclosure will be required within 60 days of completion of hydraulic fracturing.
Laughter and cheers poured out of the COGCC hearing room in the Chancery Building on Lincoln Street on Tuesday as commissioners, industry leaders and environmental groups applauded each other for reaching a compromise that even COGCC Director David Neslin agreed is “probably not ideal from any one party perspective.”
“We think that these rules are a model for other states, but I think even more important is that they’re the right rules for Colorado and for our families and our neighbors,” Neslin said following his prepared remarks at Tuesday’s hearing.
The centerpiece of the concern revolved around protecting trade secrets related to the disclosure of hydraulic fracturing chemical additives and mixtures. The Colorado Oil and Gas Association called the additives and mixtures trade secrets, similar to that of the Coca-Cola recipe.
“Trade secrets are protected for every industry under the Uniform Trade Secrets Act. Like with other industries, oil and gas companies invest millions of dollars in researching and developing the best and most effective products, including increasingly ‘green’ and efficient fluids,” said Doug Flanders, director of policy and external affairs for COGA. “If trade secrets are not protected, companies would then have little incentive to use their most effective and ‘green’ hydraulic fracturing fluids products because their efforts would be lost to a competitor.”
Energy companies will be required to list chemicals and additives, but the disclosures will be listed separately. The industry argued that it would be a competitive disadvantage to link the names of chemical ingredients to respective hydraulic additives, formulas and other trade products. By not associating the chemicals with their additives, stakeholders in the energy industry hope to minimize trade secret concerns.
Mike Freeman, an attorney with Earth Justice who represented environmental interests during the many weeks of rulemaking negotiations, said environmentalists backed off their concerns over trade secrets because energy companies will be required to justify their trade secret claims. Companies will be required to certify their trade secret claims on an official, signed document maintained by the Colorado Oil and Gas Conservation Commission. Citizens will also be allowed to challenge trade secret claims through a complaint filed with the Commission. Citizens will then be allowed to appeal an unsatisfactory ruling by requesting a hearing before the nine-member Commission. If that ruling is still unsatisfactory to citizens, then a case can be brought to district court.
“This is an important step in the right direction,” said Freeman. “No one got everything they wanted with this rule, but it will provide a good foundation for, and allows Coloradans to ensure that their fracking happens safely.”
Freeman says the concern with fracking is with accidents that can occur through the drilling process itself. Energy companies say they take precautions, including requiring multiple protective layers of pressure-tested steel pipe, known as casing. Drilling operations also include cement set several hundred feet below the deepest aquifer and cemented to the surface. But Freeman says accidents happen, and when they do, hazardous chemicals can end up in drinking water.
“They’re describing the way it’s supposed to work, but we know that in this industry, as with any industry, accidents happen, and the fracking process doesn’t always go the way they want it to go,” said Freeman. “When you think about fracking, you have to think about the whole lifecycle of the process, not just the cracking of rocks underneath the surface.”
According to the Colorado Environmental Coalition, the new state rule provides Coloradans with the strongest reporting requirement in the country related to hydraulic fracturing. “The new rule represents an important step forward for the citizens of Colorado,” said Charlie Montgomery, energy organizer for CEC. “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.”
Gov. John Hickenlooper praised the new rule, but not because he believes it serves as a defense against contamination. Hickenlooper, a former geologist, has maintained for months that hydraulic fracturing is a safe process without any connection to contaminating groundwater.
“I have said all along that I think certainly, in Colorado, our groundwater is so distant from where we’re getting our gas from, in almost every case there is almost no possibility that you’re going to get contamination from fracking,” Hickenlooper said on Tuesday after the rulemaking hearing. “That being said, what this rulemaking does today is give a great deal of comfort that we are being transparent about what exactly goes down in a frack so we know that if we see something in groundwater we’ll know that it came from the fracking process.”
Colorado’s congressional delegation, including Democratic U.S. Sens. Mark Udall, Michael Bennet and U.S. Rep. Diana DeGette, D-Denver, lined up on Tuesday to offer their assessments. DeGette disagrees with Hickenlooper when it comes to safety concerns surrounding hydraulic fracturing, pointing to an Environmental Protection Agency report last week that alleges a connection between fracking and groundwater contamination in Pavillion, Wyoming. The EPA’s draft report is the first to link hydraulic fracturing to contaminated water.
“The fact that we have a proven case of a connection between hydraulic fracturing and the contamination of an aquifer underscores just how important it is that we take cautionary steps to protect our communities’ water supply,” DeGette said in a statement.
Udall echoed similar comments, suggesting that if anything, the new rule will provide transparency, which could provide comfort.
“It’s vital that the industry does everything possible to show the public in a transparent way that hydraulic fracking is being done in a safe manner,” said Udall. “It’s also important that the state continues to provide strong oversight and require a transparent process. I’ve always said that one well contaminated or one person made sick is one too many.”
Bennet believes it is important to tap into the nation’s domestic energy resources, including natural gas, but he argues that a balance must be struck between exploration and safety.
“Natural gas plays an important role in our transition to a cleaner energy future, so we must ensure
development is done safely and does not put the groundwater our communities depend on at risk,” he said in a statement.