Wyo. Supreme Court decision on fracking leaves much to speculation

In 2010, the Wyoming Oil and Gas Conservation Commission (WOGCC) became the first government regulatory agency in the nation to require oilfield service companies to declare and file a list of chemicals making up their hydraulic fracturing fluids.  Wyoming’s system was eventually modeled by other states, and used as part of the federal government’s efforts to regulate fracking.

The rules provide that any operator engaged in hydraulic fracturing file with the WOGCC a list of chemicals and chemical compounds they use in a particular project.  Under most circumstances, filings with any governmental agency would be considered public documents and subject to disclosure under Wyoming’s Public Records Act.  However, recognizing the highly proprietary nature of the ingredients and formulas, and the need to protect the millions of dollars invested in research and development by the companies, Wyoming’s fracking disclosure rules designed an exception.  Companies were still required to fully disclose to the WOGCC, but they could request protection from disclosure by submitting a letter justifying and documenting the request to treat the information as a trade secret or confidential commercial information.  The WOGCC’s oil and gas supervisor would then review and determine whether to grant the request.

In March of 2012, after submitting requests for protected information and having them denied, the Powder River Basin Resource Council, Wyoming Outdoor Council, Earthworks and OMB Watch filed suit against the WOGCC in the Seventh Judicial District Court in Casper.  The suit did not take issues with the fracking rules themselves, or the idea that chemicals could be kept from public disclosure.  Instead, the suit challenged the way the oil and gas supervisor granted confidentiality, and whether the written justifications were sufficient as to a selected number of justifications.  Halliburton Energy Services intervened in the suit in defense of the supervisor.

In March, 2013, the district court agreed with the decisions of the supervisor, finding that he had correctly applied the rules and that sufficient evidence existed to support the findings.  The district court’s decision was quickly appealed to the Wyoming Supreme Court.

In a unanimous opinion issued March 12, 2014, the Wyoming Supreme Court sent the case back to the district court for additional work, citing the lack of a sufficient record for the Supreme Court to review and determine the propriety of the supervisor’s actions and the district court’s decision.

While the decision was widely hailed as a victory by the environmental organizations involved, as well as their peers, the true decision and its impact are far more mundane.

In its ruling, the Supreme Court did not address the merits of the fracking rules, nor even consider or comment on the concept or the rules themselves.  The Supreme Court also did not consider or make any ruling on whether fracking fluid ingredients could be classified as trade secrets, or and it did not order any chemicals or formulas to be released.  In fact, the court did not even get to the issue of whether the supervisor properly evaluated the claims of the service companies and correctly applied the rules.  The case was actually returned to the district court on purely procedural grounds.

The problem was that the method chosen by the environmental organizations to review the supervisor’s decisions was not correct.  As the challenge was made and pursued under the wrong standard, the Supreme Court was unable to review the supervisor’s decisions on their merit.  The only decision the Supreme Court made was to return the case to the district court with directions on the correct procedure to use.

Despite its decision on the procedural issue, the court specifically adopted the definition of “trade secret” found in the federal Freedom of Information Act, a ruling that will aid the district court in this and other such challenges.

So what impact does this case have on hydraulic fracturing?  None, really.  Though the case did set a definition of “trade secret” for future use, this case didn’t change or add anything to Wyoming’s jurisprudence.

So what’s next?  Normally there would be a setting for a hearing, the usual legal filings, and then a hearing before the district court to take evidence, followed by a decision.   But on April 2, 2014, the district court approved the request of the parties for a 30-day stay of proceedings so the parties “may pursue settlement negotiations.”  While what happens next in Wyoming may be a mystery, hydraulic fracturing will remain a topic certain to start arguments.  States and local communities continue to move against the practice – even when their actions are only symbolic – and all sides are watching the EPA, whose proposed fracking disclosure rules are now out for public comment.

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