In Wyoming, a Higher Burden for Chemical Disclosure Exemption?

In Powder River Basin Resource Council v. Wyoming Oil and Gas Conservation Commission, the Wyoming Supreme Court held that the Wyoming Oil and Gas Conservation Commission has the burden of justifying the use of trade secrets exemption from revealing the contents of hydraulic fracturing chemicals. The court also required the WOGCC, when deciding what a “trade secret” is, to apply the definition under the federal Freedom of Information Act.

The Background

In 2010, Wyoming was the first state to require reporting of chemicals used in fracking. However, a company can petition for a “trade secret” exemption from the law to shield itself from public disclosure of frac fluid ingredients. The state’s 2010 fracking chemical disclosure rule requires full disclosure of the ingredients under the Wyoming Public Records Act. WOGCC has granted more than a hundred such exemptions. Environmental and landowner groups challenged the WOGCC’s justification for granting those exemptions. The district court ruled for the WOGCC, upholding the agency’s decision that information be withheld and deferring determination of what constitutes a trade secret to the WOGCC. The plaintiffs appealed.

The Decision

The Supreme Court reversed. Under the Wyoming Public Records Act, the district court must independently determine the merits of the exemption rather than to rely on the WOGC’s determination. The district court must individually examine the information requests and apply the definition of “trade secrets” found in the FOIA, which includes a “secret, commercially valuable plan, formula, process, or devise that is used for the making, preparing, compounding, or processing of trade commodities and that can be said to be the end product of either innovation or substantial effort.” The Court also placed the burden on the WOGC to justify its use of trade secrets exemptions. The case was remanded and the district court was ordered to review the exemptions in light of the ruling.

The Implications

Although the Court did not decide the question of whether individual chemicals can constitute trade secrets, the definition of “trade secrets” to be applied in such determinations is narrower than the one previously applied by WOGCC. It requires that there be a “direct relationship between the trade secret and the productive process.” As such, it may result in a higher burden on companies that request trade secret protection. It is uncertain, however, whether this will lead to additional protections or have any impact on hydraulic fracturing operations in Wyoming.

Our musical interlude brings us as close to Wyoming as we could find, geographically at least.

Topics:  Chemicals, Disclosure Requirements, Fracking, Hazardous Substances, Oil & Gas, Trade Secrets

Published In: Civil Procedure Updates, Energy & Utilities Updates, Environmental Updates, Intellectual Property Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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