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Court hears challenge to fracking chemical trade secret exemption

The Wyoming Supreme Court heard a case Wednesday challenging the state’s process for exempting fracking chemicals from public disclosure. Wyoming was the first state in the nation to adopt a disclosure law, but it included what some say is a massive loophole: companies can petition for what’s called a trade secret exemption. They’ve done that more than a hundred times since the law went into effect in 2010.

Landowner and environmental groups suing the state say industry is using the exemption to avoid disclosing what chemicals they use. Companies say it’s necessary to protect their competitive advantage. Wyoming Public Radio’s Stephanie Joyce was at the Court for oral argument of the case and joins us now.

BOB BECK: What is, exactly, Stephanie, is the problem with the exemptions the state has been granting?

STEPHANIE JOYCE: Well, the argument that the Powder River Basin Resource Council and the other groups who brought suit are making is that the state is just granting these exceptions, without asking for any kind of justification. The Oil and Gas Conservation Commission has granted well over a hundred exemptions -- and I couldn’t independently verify this, but according to the groups -- said no to just one.

They’re not arguing that everything should be disclosed, but they’re arguing that right now, industry is just calling anything a trade secret that they don’t want to disclose.

In one particular case that the Resource Council pointed to, the Supervisor actually wrote a company asking for more information, didn’t get a reply, and still granted the exemption. So, they’re concerned that this basically undermines the law.

Here’s Tim Preso, the attorney for those groups:

PRESO: If the kinds of justifications that have been offered to date are good enough, the rule is pretty much meaningless.

BECK: And what do the state and industry have to say about that?

JOYCE: As you can imagine, they strongly disagree. Assistant attorney general Eric Easton said during his argument that the law was really never intended to result in the public knowing everything. He said it was really intended to inform regulators, and that not having public disclosure really doesn’t do anything to its value as a law. He says if the regulators know, then they can act if there’s a problem. That the public at large doesn’t need to know, if the knowing would require revealing proprietary technology.

And I think that came as a bit of a surprise to some of the landowners who were at the hearing. One woman who I spoke with, Marilyn Ham, she’s a member of the Powder River Basin Resource Council, and she said that’s definitely not how she remembered the state promoting the rule.

HAM: Initially, the law was kind of touted, although that’s not what we heard in there, allowing the public more information about what’s being put in their groundwater, or what could end up in their groundwater, I should say.

BECK: So what are the arguments from industry exactly for why these chemicals need to be kept secret?

JOYCE: So, the company that was actually party to the case was Halliburton, and their attorney argued in front of the court that they pour millions and millions of dollars into research for these chemicals, and that if they were required to disclose them that it would be easier for their competitors to reverse engineer their products. So, basically he said that they would have to stop using those products, which he claimed are the more environmentally friendly ones, in Wyoming, if the Court forced them to disclose them.

BECK: So, during this type of a Supreme Court hearing, you have justices that can ask questions, what were they focused on during the discussion?

JOYCE: Yeah, so they had some tough questions for both sides. Justice Kite in particular had a lot of questions, mostly for the state. She really wanted the state to justify its assertion that the law wasn’t intended to provide information to the public. She also questioned an analogy that has been used quite a bit and that the state’s attorney used in his argument that compares chemicals to the ingredients in Coca Cola or bread. Justice Kite pointed out that in fact, the ingredients for those products are readily available -- it’s the process or formula that’s secret. And said it might not be the most appropriate analogy. She also wanted the state and Halliburton to explain why some companies are already disclosing much more information voluntarily, and asking for fewer exceptions than other companies.

So those were a lot of questions for the state and for Halliburton. But there were plenty of questions for the other side as well. Several justices asked what the Powder River Basin Resource Council would like to see as a justification, pointing out that it might be a little bit of a Catch-22 to make industry to disclose more in order to be able to justify keeping their products secret, since that might actually reveal the product.

BECK: A lot of talk about fracking, a lot of talk about these chemicals nationally. This appears to be a significant case.

JOYCE: This is certainly a significant case. Wyoming was the first in the nation to have a disclosure law. It isn't the only one that has this exemption provision. At least one other state right now -- Alaska -- is considering adding that provision to their law. So I think there’s going to be a lot of other states that are looking to this as an example for how they might pursue their own situations like this in the future.

BECK: So what happens next, when can we expect a ruling?

JOYCE: So, these were just the oral arguments. The justices took the case under advisement and will make a written ruling, sometime probably next year.

BECK: Thanks for joining us, Stephanie Joyce.

JOYCE: My pleasure, Bob.

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