Texas House lawmakers Sunday night voted to require public disclosure of the chemicals in fluids used for hydraulic fracturing (fracking) after disparities with legislation passed earlier by the Senate (see Shale Daily, May 27) were hammered out in conference committee.
A handful of state regulators -- such as those in Arkansas, Wyoming and Michigan -- require some form of disclosure, but Texas would be the first state to mandate public disclosure through legislation. "This is mandatory, well by well," state Rep. Jim Keffer (R-Eastland) told NGI. "We've taken it really several steps further, and I think in a positive direction."
Gov. Rick Perry has not indicated whether he would sign the bill (HB 3328).
The bill requires full public disclosure of the chemical composition of fracking fluids on a well-by-well basis and seeks to establish a model for other states to follow, Keffer said. The bill also protects confidential business information while still disclosing the information needed for research, regulatory investigations and medical treatment.
"My hope is that this bill takes some of the mystery out of the fracturing process," Keffer said. "The oil and gas industry is vital to our economy, and the use of this technology is an important tool to increase domestic energy production. I believe the industry can coexist with the people of Texas, and this bill strikes a balance between creating a sustainable market for business and ensuring the health and safety of the public."
The legislation provides operators with the ability to challenge disclosure if they feel that certain contents of the fluid they use constitute a trade secret. Disclosure would be made on the existing Frac Focus Chemical Disclosure Registry website.
The registry is a joint project of the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission and was designed for operators to report chemical ingredients listed on the federal Material Safety Data Sheet (MSDS). Under HB 3328, all chemicals intentionally used in the fracturing process (whether listed on MSDS or not) must be reported and publicly disclosed.
"We look forward to the next steps of the process, working with leadership at the Texas Railroad Commission as they draft specific rules for the disclosure of frack fluids," said Justin Furnace, president of the Texas Independent Producers and Royalty Owners Association.
The Railroad Commission of Texas (RRC) would be tasked with adopting rules for disclosure of MSDS chemicals by July 1, 2012. Rules for disclosure of non-MSDS chemicals would need to be developed by July 1, 2013.
State Sen. Troy Fraser (R-Horseshoe Bay) had sought a later deadline for rules to govern disclosure of non-MSDS chemicals, which are more likely to be "trade secrets," Keffer said.
"They'll have up to another year for the non-MSDS, and that's where the trade secret and really the other things come into play," Keffer said. "Like everybody, we want to take our time and make sure we do it right and we don't harm the service industry. If the Railroad Commission can promulgate the rules quicker than that, they can."
RRC Chair Elizabeth Ames Jones said Tuesday the RRC will begin work to craft rules for frack chemical disclosure.
"A common sense frack fluid disclosure policy will balance the Railroad Commission's dual mission to prevent the waste of Texas' energy resources, and to protect the environment and the public's health and safety. The policy will be built on the sound foundation that the Railroad Commission has already laid through our staff's active leadership in the crafting of Frac Focus, a disclosure website.
"I expect any rule to formalize best practices while protecting proprietary information. As more foreign companies are investing in businesses that drill here in Texas, and more wells are produced using hydraulic fracturing, it is important that our public disclosure rule does not undermine a frack company's intellectual property and trade secrets."
"The Texas Oil and Gas Association [TXOGA] is proud that Texas is once again a national leader in crafting energy policy for the 21st century," said Debbie Hastings, TXOGA vice president of environmental affairs. "As a result of the state's leadership, Texas will become a game-changer when it comes to debunking myths or misconceptions about hydraulic fracturing. The transparency and accessibility achieved by this legislation will reinforce how and why hydraulic fracturing has been safely used for more than 60 years."
Lawmakers could not agree on a proposal to rename/reconfigure the Railroad Commission of Texas that was amended to HB 3328. It is expected to be taken up again during the legislative session of 2013 (see Shale Daily, April 6).