Time For The White House To Step In? Patchwork State Fracking Regulations Will Spawn FOIA And Trade Secrets Lawsuits

by Orrick - Trade Secrets Group

With a growing number of states demanding disclosure of its fracking recipes, the oil and gas industry is fighting to plug what it views as government-mandated leaks in its trade secrets pipeline.

Battles are brewing in state capitals and courts as the industry faces fourteen states (and counting) that now require disclosure of the chemicals they use for fracking (aka hydraulic fracturing), a liquid-based process of drilling and extracting oil and gas from shale rock below ground.  These regulations are intended to allow government agencies to evaluate the environmental and health impacts of fracking.  Some state agencies are mandating disclosure directly to the agency (California is considering this approach), while other agencies are taking a permissive approach and rely on information submitted to an industry-developed registry for fracking.

Once collected by a state agency, the receiving agency can generally disclose corporate fracking information to third parties.  These parties may include doctors in the case of a spill under California’s fracking bill, or any member of the public in response to state freedom of information act (FOIA) requests.  Environmental and public-health groups are advocating for a robust disclosure policy, while oil and gas companies argue that their fracking approaches are trade secrets and should not be subject to FOIA disclosures. (The issue is a little more nuanced than this, as some state FOIA statutes contain exemptions for trade secrets.)  This issue reached a head on April 17, when a Wyoming state court found that an industry fracking submission was exempt from FOIA.  Environmental groups are appealing to the Wyoming Supreme Court.

Though public and news media engagement in fracking is rising, the underlying issue — balancing the need for governmental regulation and the public’s right to know against the need to protect industry trade secrets — is not new.  The EPA has required disclosures of pesticides for licensing and other purposes over the last century, and has faced numerous challenges over the years.  For example, the Supreme Court case Ruckelshaus v. Monsanto, 467 U.S. 986 (1978), held that a constitutional takings analysis applies to government regulation involving disclosure of trade secrets.  Ruckleshaus does not say that every voluntary submission of trade secrets to the government is necessarily a compensable taking; rather, courts should analyze challenged regulations in light of the multi-factor test that has developed for a takings analysis.

Similarly, a large body case law has developed on so-called “reverse FOIA” cases, i.e. cases initiated by a private party to challenge a FOIA disclosure in the environmental, medical, and securities realms.  As a result, federal agencies like the FDA have developed regulations dealing with requests for trade secrets.  These cases are fact-specific, and the legal standards for evaluating them may differ from a particular state’s trade secret law.

We can expect a spate of litigation as a balance develops among government regulation, the public’s right to know, and the industry’s intellectual property rights.  The Obama administration is currently developing federal fracking regulations. Depending on how those regulations are interpreted and applied, they could eventually lead to a uniform body of law on the disclosure of trade secrets in this context.



Written by:

Orrick - Trade Secrets Group

Orrick - Trade Secrets Group on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.