When the Bureau of Land Management (“BLM”) issued its Supplemental Notice of Proposed Rulemaking related to hydraulic fracturing on federal lands on May 16, 2013, it believed that it had struck a balance between industry and environmental groups on how propriety/trade secret information in fluids used during the hydraulic fracturing process would be protected from public disclosure. Based upon comments received on the proposed rule before the end of the comment period (August 23rd), it is clear that this will be a contentious issue if and when BLM moves forward with a final rule.

Both the original and revised proposed rule would require disclosure to BLM of chemicals used in the fracturing process after the fracturing process is complete. The revised rule, however, provides additional protection for trade secrets by allowing operators to submit an affidavit that undisclosed information about chemicals in hydraulic fracturing fluid should be exempt from disclosure. BLM would retain its authority to demand specific chemical details of any materials for which a trade secret exemption is sought under the new proposal. Additionally, in the revised rule BLM no longer proposes to require operators to provide an estimate of the chemical composition of flowback fluids.

Oklahoma Senator James M. Inhofe is among those who believe greater protection of trade secrets is necessary. Inhofe, a Republican on the Environment and Public Works panel, is against the rule but said the BLM should at least expand the proposal to extend privacy protections to service companies and chemical suppliers, in addition to project operators. “Service companies (and the chemical suppliers they work with) are predominantly the holders of hydraulic fracturing trade secret information because they are typically the ones that develop the innovative technologies and formulas used in the process,” Inhofe said.

Inhofe said service companies would only be able to claim disclosure protection by providing proprietary information to operators, which conflicts with normal practice and might violate non-disclosure agreements between service companies and chemical suppliers. The senator also wants BLM to require service companies and chemical suppliers to keep withheld trade secret information on file for six years.

As written, the disclosure requirements would apply to “chemicals used,” but Inhofe said BLM should amend the rule so companies must divulge only “intentionally added chemicals.” Otherwise, he said the industry would be forced to unnecessarily sample and analyze hydraulic fracturing fluid for trace impurities.