New fracking rules called toughest in U.S.

A late compromise over trade-secret exemptions led to the Colorado Oil and Gas Conservation Commission on Tuesday unanimously approving requirements that Gov. John Hickenlooper and others say will result in the most disclosure of hydraulic-fracturing chemicals by any state in the country.

“These new rules give Colorado the fairest and most transparent set of fracking regulations in the country and will likely serve as a model for other states,” Hickenlooper said in a news release.

The commission’s action came after negotiations between commission staff and some parties over the past several days led to agreement on several changes. One requires companies to file, and sign under penalty of perjury if it’s unmerited, a “claim of entitlement” when they seek to invoke trade-secret exemptions to the requirement. The compromise also made clear that the commission intends to broadly define what members of the public have been directly affected or aggrieved by a trade-secret claim, and thus are entitled to challenge it.

After the commission approved the compromise, both industry and conservation interests told the commission they supported it.

“We’re happy to see the outcome,” said Mike Freeman, an attorney representing conservation groups.

Tisha Schuller, president and chief executive officer of the Colorado Oil and Gas Association, told the commission, “The rule that you have just passed is something that I think you can be proud of. I’m confident that Colorado can be proud of it.”

The commission pursued the requirement at the direction of Hickenlooper, a former geologist who considers hydraulic fracturing safe but believes disclosure is needed to address public concerns about the process.

Hydraulic fracturing involves injecting fluids or gels under high pressure into underground formations to crack them open and facilitate oil and gas flow. The industry contends there has been no documented evidence of fracking contaminating domestic groundwater. However, the Environmental Protection Agency last week released a draft study finding what it called a likely link between fracking and groundwater contamination in Pavillion, Wyo.

Encana Oil & Gas (USA), the owner of the wells in question there, is disputing those findings.

The requirements will go into effect April 1. Disclosures will be posted to the existing website, where many companies already have been voluntarily disclosing fracturing constituents.

Tuesday’s approval follows what Freeman and COGCC Director Dave Neslin described as extensive “shuttle diplomacy” following last week’s hearing. The commission even delayed deliberations on the matter for a day this week to allow negotiations to continue.

Freeman said those negotiations involved “not like 20 people sitting around the table,” but rather a lot of phone calls, with Neslin often relaying information between industry and conservation-group interests.

In a comparison of Neslin to Denver Broncos late-game comeback artist Tim Tebow, commission Chairman Thomas Compton said during Tuesday’s hearing, “Please forgive me for the analogy, but I think the people of Colorado have really just secured a win here in overtime, and we have our very own Mr. Tebow to thank for that.”

In an interview, Neslin credited the negotiating parties for generating a lot of good ideas that led to most of the compromises that were reached. He said that not only do the resulting rules appear to be a model for other states, but “more importantly, we think they are the right rule for Colorado and our families and our neighbors.”

Several states have begun adopting fracturing-disclosure rules. However, they usually apply only to those substances that are listed as federal workplace hazards. Or, if chemicals not considered such hazards must be reported, the concentrations of those chemicals don’t have to be. Disclosure advocates say concentration levels are needed in order to properly assess the risk associated with the chemicals.

Neslin noted that only about half of chemicals used in fracking are considered hazardous.

“In the interests of transparency, we are requiring the disclosure of all chemicals,” he said.

Such a broad requirement had raised industry concerns, including from Halliburton Energy Services Inc., a leading provider of fracking services. Halliburton worried that requiring disclosure of not just all substances, but their concentrations, would allow for reverse engineering of proprietary fracking treatments. Alternatively, Halliburton feared, it would have to frequently invoke the trade-secret exemption, leading to public ridicule.

The compromise reached is aimed at minimizing the possibilities for competitors to figure out proprietary formulas based on disclosures. Under the finalized rules, companies will have to list maximum concentrations of chemicals, but not actual concentrations, which may be less. Also, chemicals will have to be listed only generally for each frack job, rather than as parts of specific additives companies add to the fracking formula.

The Colorado Oil and Gas Association said in a statement, “Colorado now has the strongest hydraulic fracturing rule in the country. But more importantly, we have gained a model process to bring together industry, environmental advocates, and regulators to ensure energy development continues in keeping with protecting the environmental resources of our state.”

U.S. Sens. Mark Udall and Michael Bennet of Colorado both praised the new rules. While citizen and conservation groups also generally endorsed them, Mike Chiropolos of Western Resource Advocates said they could be made stronger by such means as requiring baseline water testing before fracking begins, and use of inert tracers in fracking that could help establish whether water contamination occurs. COGA is pushing voluntary baseline testing by companies now.

Some groups also sought to have disclosure occur before fracking occurs, rather than within 60 days afterward. That way, baseline testing could target disclosed chemicals to determine whether they exist in the water ahead of time, or if fracking introduces them into the water.

Neslin said well construction and other rules are designed to protect domestic groundwater from contamination, and his staff can look for other indicators when trying to determine causes of contamination.


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