FRACKING CHEMICAL DISCLOSURE
Disclosure of Chemicals used in Hydraulic Fracturing
By: Jesse Miller
Abstract
The disclosure of Hydraulic Fracturing chemicals used in drilling processes in the United States
has generated much controversy. While the benefits produced by disclosure of these chemicals
is substantial, the drilling industry is generally opposed to such disclosure. A variety of current
federal laws would provide for comprehensive chemical disclosure, for example, under the Safe
Drinking Water Act; however, the drilling industry has obtained universal carve outs from
disclosure laws, prominently the “Halliburton Loophole.” Increasingly, states are enacting
chemical disclosure regimes. These vary substantially from state-to-state and often are not
comprehensive or properly enforced. Recent efforts at industry self-regulation, as well as
shareholder proposals, have failed at initiating adequate chemical disclosure. These efforts are in
fact detrimental, recent scholarship argues, as they serve to obfuscate the need to enact reform in
this arena by displaying of sham of self-regulation. The proposed FRAC Act, closing the
Halliburton Loophole, provides a comprehensive path to universal and comprehensive, federally
regulated, chemical disclosure.
Introduction
Induced Hydraulic Fracturing (“Fracking”) is a process of accessing underground natural
resources, primarily natural gas, through the highly pressurized injection of a water, sand and
chemicals mix (the “Fracking mix”). Fracking technology has been employed as a way to
expand driller’s well outputs since 1947. In recent years the United States and Canada has
experienced an explosion in Fracking operations in efforts to access previously untapped
resources. The growth of the industry has been spurred by skyrocketing energy prices, foreign
unrest and the emergence of natural gas as a primary and relatively clean energy source.
While economic and other factors garner much support for the Fracking industry, concerns about
certain aspects of Fracking produce significant critiques.
Fracking has a substantial
environmental impact; contaminating water tables, depleting water resources, producing noise
pollution and releasing gases and chemicals into the air. These effects have produced significant
health concerns, too.
This paper seeks to examine one aspect of the Fracking story: disclosure by Fracking operators
of chemicals used in the Fracking mix. Drillers who employ chemicals in their Fracking
operations are generally not required to comprehensively disclose the contents of those
chemicals to interested parties. Parties interested in the contents of the chemicals used in
Fracking include communities proximate to drilling operations.
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The story of Fracking chemical disclosure in the past decade is a rollercoaster of federal
regulations and exemptions, patchwork state and municipal laws, and industry attempts at selfregulation. First, this paper will outline the issue. Then, the history and current status of federal
regulation of Fracking chemical disclosure is explained. Next, state law on the issue is surveyed.
Finally, after examining the Fracking industry’s attempts at self-regulation, the paper concludes
with suggestions on how to address the issue.
The Issue
Fracking involves injecting highly pressurized Fracking mix into wells, facilitating the expansion
of underground fissures and the release of natural gas and oil for extraction. Fracking mix
consists of large amounts of water mixed with sand and a cocktail of chemicals. The chemicals
serve to extend fractures, increase lubrication and generate water-soluble gelling agents to
increase viscosity.
Chemicals containing volatile organic compounds (VOCs) may be used in Fracking operations.
Benzene, toluene, ethyl benzene, and xylenes may be present in Fracking chemicals. These
VOCs are often carcinogens and can cause symptoms such as headache, loss of coordination, and
damage to the liver and kidneys. VOCs contribute to ground-level ozone, which can trigger
severe respiratory and immune system problems.
The following is a sampling of chemicals used by one major Fracking company during a drilling
operation:
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Acetic acid and Hydrochloric acid
corrosion inhibitors including additives CI-111, CI-14, CI-27
HyTemp I and O additives to protect steel casings
Ferrotrol additives
BioCare bacterial control product which prevents growth of organisms which may
interfere with extraction
ClayCare additives which work to prevent ground reformation in wells
Friction reducer chemicals which make water easier to pump with higher pressure
Source: http://public.bakerhughes.com/shalegas/disclosure.html
Generally, about .5% of the Fracking mix consists of chemicals. The precise chemical “cocktail”
may vary depending on the topography of a particular well. These chemicals often include
known carcinogens and toxins.
Significant concerns have arisen as to the health and
environmental dangers of the chemicals used in the Fracking mix. As the young industry
develops, numerous instances of serious environmental and health related catastrophes have
arisen, which many charge is the effect of residual chemicals from Fracking.
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In the U.S, trillions of potentially toxic Fracking mix has been injected into the earth. While
drilling companies take certain precautions to properly segregate toxins, there is significant risk
of water table contamination. Containments from fracking can cause death of proximate flora
and fauna and produce other environmental and health detriments.
Concerned communities in states where Fracking takes place have long demanded that
companies disclose what chemicals are being used in the process. This disclosure can provides
many benefits. The National Resources Defense Council has been active in articulating the
benefits of comprehensive Fracking chemical disclosure, which include:
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Prior to the commencement of drilling, communities could test the chemical
composition of groundwater and continually monitor the groundwater to assess
contamination levels. Appropriate precautions and remedial steps could then be
enacted as necessary.
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Medical personnel need to be aware of Fracking chemical composition in order to
be able to appropriately respond in the event of drilling accidents or
environmental contamination.
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Disclosure of chemicals would highlight specific potential dangers to the
environment by bringing greater public awareness to drilling effects, wastetreatment, and societal impact.
Another major benefit to comprehensive Fracking chemical disclosure is the fostering of
scientific research which could result in “greener” and safer Fracking mix. Scientists and
researchers, if armed with the knowledge of what chemicals are used in Fracking, could identify
what composite chemicals are environmentally harmful, and work to develop safer alternatives.
However, interested parties, significantly communities proximate to Fracking drilling operations,
have much difficulty obtaining chemical disclosure. Much tension is produced as these
interested parties desire to obtain this chemical information while drilling companies seek to
keep this information confidential. The Fracking industry, with limited exceptions, has generally
been resistant to chemical disclosure regulations. Drilling companies claim that the chemicals
used in Fracking consists of trade secrets. Opponents of Fracking, meanwhile, have accused the
industry of invoking trade secret protection as a pretense in order to veil the harmful effects of
Fracking by keeping the chemicals secret.
The following excerpt from a Fracking operator’s proxy statement reveals that the industry is
aware that if chemical disclosure regimes are implemented communities would be horrified by
the contents of Fracking mix and this could work to limit Fracking operations.
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Some federal, state and foreign governmental bodies have adopted laws
and regulations or are considering legislative and regulatory proposals that, if
signed into law, would among other things require the public disclosure of
chemicals used in hydraulic fracturing operations and would subject hydraulic
fracturing to more stringent regulation. Such federal, state or foreign legislation
and/or regulations could impair our operations, increase our operating costs,
and/or greatly reduce or eliminate demand for the Company’s pressure pumping
services.
Source: Baker Hughes, Inc., Form 10-K.
The Lack of Federal Disclosure Regulations
Fracking companies would be required to disclose the chemicals used in the drilling process
under several federal disclosure rules. However, the Fracking industry is exempt from virtually
all federal disclosure laws. Primarily, the industry is exempt from the Clean Water Act and Safe
Drinking Water Act due to the "Halliburton loophole" in the Energy Policy Act of 2005,
exempting corporations from revealing the chemicals used in fracking mix. The Halliburton
Loophole amends the Safe Drinking Water Act to exclude from the definition of underground
injection “the underground injection of fluids or propping agents (other than diesel fuels)
pursuant to hydraulic fracturing operations relating to oil, gas, or geothermal activities.”
Interestingly, and some would say damningly, the Halliburton Loophole was
inserted by then Vice President and former Halliburton executive Dick Cheney. Halliburton, Inc.
is a prominent operator in the Fracking industry.
Additionally, Fracking chemical disclosure should be mandated by the following federal
regulations, however, as Professor David Spence explains, each regulation has carved out an
exemption for the benefit of the Fracking industry. The Resource Conservation and Recovery
Act exempts Fracking from federal regulations related to hazardous waste materials. The
Superfund law generally requires that polluters remediate environmental impact of carcinogens,
except if they come from oil or gas. The Comprehensive Environmental Response,
Compensation, and Liability Act. The Resource Conservation and Recovery Act. The National
Environmental Policy Act. The Toxic Release Inventory under the Emergency Planning and
Community Right-to-Know Act.
These exemptions represent the industry’s successful efforts in maintaining its confidentiality
regime with regard to the Fracking chemical mix. The purported reason for the industry’s
opposition to regulation in each instance is trade secrets, as explained above. Meanwhile,
regulators have generally been loath to challenge the industry, perhaps because of the substantial
economic benefits Fracking has wrought.
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Some legislators in Congress, however, have recognized the importance of comprehensive
Fracking chemical disclosure. The Fracturing Responsibility and Awareness of Chemicals Act
(“FRAC Act”) represents a legislative effort to close the Halliburton Loophole. The FRAC Act
was a proposal to define Fracking as a federally regulated activity under the Safe Drinking Water
Act. The proposed legislation would have required comprehensive disclosure of the chemical
constituents of the Fracking mix, which then would be posted on a government-approved
website. The bill was introduced to both houses of the Congress on June 9, 2009 and reintroduced to both houses on March 15, 2011 (Senate Bill S. 1215, House Resolution H.R.
2766). Despite having a small vocal group of supporters the bill has not gained much
momentum. The gas industry vigorously opposes the legislation, and the bill stands little chance
of being passed in the near future.
The most recent developments of federal regulations in this arena has been through the Bureau of
Land Management (the BLM). The Department of Interior, through the BLM, is responsible for
regulating fracking operations on federal lands. In addition to federal lands such as National
Forests and National Wildlife Refuges, the BLM is responsible for Indian lands, municipal
water supplies of Washington DC and private water wells (when the federal government owns
rights to the minerals below the surface of a homeowners’ property).
In May 2013 the BLM proposed rules requiring drillers to disclose the chemicals used in the
fracking mix. These rules, however, do not impose comprehensive regulations and fail to
address important concerns, critics argue. For example, the rules allow companies to not
disclose chemicals deemed a trade secret; and, falling short of some state regulations that require
submission of such information to officials for review, companies are allowed to exercise their
discretion when it comes to trade secret information, operating on a "honor system," as it were.
Also, under the BLM’s proposed rules, rather than requiring companies to disclose information
on a regulated government website, companies could use Frackfocus( a seriously flawed
industry-sponsored website as described below). Finally, the proposed rules would only require
chemical disclosure after the fact, not predrilling, which negates the possibilities of water-table
baseline testing.
State Disclosure Rules
Because of the lack of federal regulations, states have increasingly enacted regulatory schemes
requiring Fracking chemical disclosure. States approach to the issue has been varied and is
constantly evolving. The following map reveals various states’ approach to and extent of
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chemical disclosure.
Source: http://www.nrdc.org/energy/files/Fracking-Disclosure-IB.pdf
As demonstrated in the above map, many states purport to require disclosure but do not require
disclosure of sufficient information (i.e., specific chemicals’ CAS numbers) to be effective. A
handful of states (including Montana, Wyoming and Pennsylvania) do require comprehensive
chemical disclosure. Some states (significantly the leading Fracking state North Dakota) have
limited disclosure requirements - only requiring chemical disclosure when using certain
hazardous substances. The trend has been toward increased state disclosure requirements, for
example, California and Alaska in the above map are shown to have no disclosure rule, however,
both states are in the midst of enacting comprehensive disclosure rules.
Fundamental problems persist among states that do have disclosure rules, critics maintain. Most
states allow for “trade secret” exemptions, often effectively neutering many positive effects of
the disclosure regime. Fracking operators claim the makeup of chemicals are protected
intellectual property secrets. States have dealt with Fracking operators claims of trade secrets in
various ways. Some states (including Wyoming and Arkansas) have addressed Fracking
operators claims of trade secrets in a way that protects legitimate secrets while ensuring the trade
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secret claim is not a pretense. Claims of trade secret proprietary info must be submitted to state
officials for review, to ensure trade secrets is not a pretense. Most states, however, allow
operators to claim trade secret exemptions from disclosure rules without providing for
independent review of claims.
State regulation of Fracking chemical disclosure has several issues. The regulations vary by
state, obfuscating compliance efforts by multi-state Fracking operators. There is at times nonrigorous enforcement of the disclosure rules by state law enforcement, perhaps partly because
states are incentivized by the economic opportunities Fracking operations bring to their state.
The states that do require listing of chemicals on state websites often result in hard to navigate
websites where consumers have difficulty accessing the information.
Industry attempt at self-regulation
Frackfocus is a centralized clearinghouse that allows companies to self-report chemicals used in
Fracking. Some Fracking operators, in the interest of transparency and goodwill, voluntary make
available chemical information through Frackfocus. Also, some states that require chemical
disclosure (as described above) direct drilling companies to submit the information to
Frackfocus, which is a user friendly website unlike many of the state chemical disclosure
websites.
Recently Frackfocus has come under fire as being inadequate. A Harvard study revealed the
many failings of the site. Frackfocus is funded by the oil and gas industry. It relies on the selfreporting of companies with little oversight or independent fact checking: Frackfocus does not
even review company submissions. By many accounts Frackfocus does not adequately inform
communities of potential dangers and may in fact undermine disclosure efforts by purporting to
do so when important information is not presented.
Another approach to the issue of Fracking chemical disclosure has been through shareholder
proposals. In recent years activist shareholders have submitted shareholder proposals to energy
companies suggesting more comprehensive Fracking chemical disclosures. ISS, the leading
shareholder voting recommendation service, recommends voting FOR these proposals. These
proposals have garnered little shareholder support. However, perhaps in response to public
opinion, several large Fracking operators have recently taken steps toward more comprehensive
disclosure (i.e. Fracking behemoths Halliburton and Baker Hughes) on their websites. These
efforts, while providing a veneer of goodwill, suffer from many of the failings of Frackfocus;
reliance on self-reporting, no independent review of accuracy, and trade secret exemptions.
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The future of Fracking chemical disclosure
As the Fracking industry continues to grow, in order to protect communities from environmental
and medical harm a more comprehensive chemical disclosure regime must be enacted. If, as is
currently the case, regulation is to be implemented on the state level, then states must require
more comprehensive disclosure of all chemicals, and close the trade-secret exemptions.
Additionally, fragmented state rules can be ineffective and not properly enforced. Industry selfregulation and shareholder activism has proven to be ineffectual. The economic incentives –
considering the possibility of community outrage if the contents of toxic Fracking mix is made
public - might hamper drilling efforts and affect profits.
The ideal way to regulate Fracking chemical disclosure is through comprehensive federal
regulation. This can be accomplished through the closing of the Halliburton loophole. The
FRAC act should be resurrected and passed by Congress.
Such an approach, requiring
comprehensive chemical disclosure pre-drilling at each Fracking site, would serve to optimally
protect communities and the environment.
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