Cracks in fracking disclosure
Colorado oil and gas regulators are scheduled to take their first enforcement measures against companies for their suspected failure to fully comply with a year-and-a-half-old rule requiring disclosure of chemicals used in hydraulic fracturing.
The move follows criticism over their lack of action to date and questions raised by a Harvard Law School study over Colorado and other states’ use of the publicly accessible FracFocus chemical registry website, http://www.fracfocus.org, as their regulatory mechanism.
The alleged violations involving at least 11 companies to date typically just pertain to just a handful of wells, or in some cases a single well, per company. Colorado Oil and Gas Conservation Commission enforcement officer Peter Gowen said they generally involve things such as inadvertent errors.
“I don’t think we’ve seen anyone who is deliberately not complying with the rule. It’s mostly mistakes and perhaps missing deadlines or basically not keeping up with the volume of paperwork that they have to report,” he said.
At its meeting at the end of the month, the commission is scheduled to take action against Noble Energy, Bill Barrett Corp., Marathon Oil, ConocoPhillips, Kerr-McGee, Gunnison Energy, Laramie Energy II, McElvain Energy, Synergy Resources Corp. and Orr Energy for cases involving wells in western Colorado and elsewhere. It is expected to take action later against Encana.
Commission staff have reached settlement agreements with most of the companies under which they would pay $1,000 fines per each well, rather than the $10,000 fine per well that is possible, if the commission approves the agreements.
Said Bruce Baizel, energy program director for the Durango-based Earthworks conservation group, “Often you have to get the companies’ attention that it’s not a costless violation, so issuing a fine is one way to get a company’s attention. We’ll see if that increases compliance.”
The state’s enforcement efforts follow an April report from Harvard Law School’s Environmental Law Program Policy Initiative, and authored principally by the program’s policy director, Kate Konschnik. The report says reliance on FracFocus as a regulatory tool should be reconsidered, and suggests that FracFocus “prevents states from enforcing timely disclosure requirements, creates obstacles for compliance for reporting companies,” and lacks a requirement for substantiation when trade secret assertions are made.
In early June, Environment & Energy Publishing’s EnergyWire reported that its review of state records showed that more than a fifth of Colorado’s and Pennsylvania’s frack disclosure reports for last year were filed late, without penalties resulting.
Baizel has been critical of Colorado’s disclosure enforcement track record, but applauded the COGCC’s action now.
“They’ve taken some criticism and in this instance it looks like they’re doing the right thing. They actually heard us,” he said.
He said the frack disclosure enforcement actions would be the first he’s aware of anywhere in the country except for one case in North Dakota.
The Harvard report said that as of April, 18 states required fracturing chemical disclosure, with 11 directing or allowing companies to report chemical use to FracFocus. The federal Bureau of Land Management also is considering a disclosure rule making use of FracFocus.
The COGCC passed its rule in late 2011 to address public desires for transparency regarding what’s injected into wells during fracking, and the rule went into effect the following April. It requires well-specific disclosure to FracFocus within 60 days after a fracking operation ends, and never more than 120 days after an operation starts.
The rule’s passage came after negotiations between parties including COGCC staff, industry and conservationists to reach a compromise. Many companies already had begun voluntarily disclosing fracking chemicals on FracFocus, a project of the Groundwater Protection Council and the Interstate Oil and Gas Compact Commission. The council consists of state regulatory agencies and the commission is an organization of governors of oil- and gas-producing states.
Among the Harvard study’s criticisms was lack of a searchable database on FracFocus. The study also said that it was difficult for states to readily determine when a disclosure is made to FracFocus, preventing enforcement of timely disclosure.
In June, FracFocus rolled out what it called FracFocus 2.0, with upgrades including conversion to an XML database platform for improved searchability, including by date.
On June 20, the COGCC notified companies that it planned to begin enforcement of the rule.
Gowen said there hadn’t been a formal grace period before then.
“It’s just that we weren’t well set up to interface with the FracFocus website,” he said.
The COGCC now has an automated system for matching its database of fracked wells with the FracFocus one to ensure that disclosure is occurring, he said.
He added, “We’ve always expected to enforce the rule. It’s just that we’ve basically been focusing on other enforcement priorities and I guess the issue of enforcement of that particular rule had not come up.”
But he said he believes that following the recent criticism, direction came from Gov. John Hickenlooper or the Department of Natural Resources director Mike King to make sure compliance is occurring and enforcement is taking place for noncompliance.
While Baizel believes 80 percent compliance isn’t very good, Gowen considers it good for a rule’s first year. He characterized the amount of enforcement being required as “surprisingly small.”
He said at least one violation resulted from a company uploading information in a development version of FracFocus and not getting it transferred to the active site at the proper time.
Some violations entailed clerical errors such as filing information under the wrong American Petroleum Institute number — a unique identifier for every well.
In Marathon’s case, it entered one API digit wrong for a well, making the disclosure unsearchable by API number, regulators say. Gowen said Marathon has asked for a COGCC hearing on the alleged violation rather than settling.
Encana spokesman Doug Hock said his company used FracFocus before it was required, and uses it in Texas as well as Colorado, and he doesn’t believe the company has found it to be unworkable.
“There’s human error involved, or can be, so it’s not a perfect system but I think it’s a good tool for transparency and to help people understand what’s being used in the process,” he said.
Contacted for this story, Noble Energy said in a prepared statement, “We know hydraulic fracturing is safe — our challenge is to connect the science with people. One avenue is through transparency, which we provide by disclosure on the FracFocus website.”
Noble said it has listed more than 1,240 wells on FracFocus, initially entering a high volume of wells at once.
“Since then, we have implemented additional processes and procedures to help ensure the data for each well is entered into the FracFocus database accurately within the established timeframe. Only 0.2 percent of our total reports in Colorado have been out of compliance with the data-entry rule, and the oversights were corrected upon discovery.”
Baizel said one question surrounding FracFocus is whether state open records laws apply, and thus how the public can go about checking the accuracy of what’s reported.
Earthworks is a litigant in a suit against Wyoming under its open records law, contending the state is rubber-stamping frack disclosure trade-secret exemption claims there. He said similar concerns could arise in Colorado.