Just last Thursday, September 1st, Montana enacted hydraulic fracturing disclosure regulations.  In permit applications, well operators must provide information on the estimated volume of fracturing fluid that will be used, the trade or generic names of principal components of the fluid and their respective volumes, and the amount of principal components of the fluid. Specific disclosures are required on a well-by-well basis after completion.  The well operator must provide the Montana Department of Natural Resources and Conservation (MDNRC) with the volume and type of fluid used in fracturing, the type and volume of each additive, and the name of each chemical, by Chemical Abstracts Number.  MDNRC may wave some or all of this duty to report if the operator lists this information on FracFocus.  In both the permit application and completion report, the operator must also provide information on the well design and maximum pressure used during fracturing. 

The Louisiana Department of Natural Resources also proposed similar regulations requiring hydraulic fracturing operators to disclose the volume of hydraulic fracturing fluid, the type, trade name, supplier and volume of additives, and a list of chemical compounds contained in the additive, along with its maximum concentration.  Trade secret chemicals must be identified by its chemical family.  These disclosures must be made to either the Office or Conservation or FracFocus.

LDNR held a public hearing last Tuesday, August 30th, and comments received were favorable.  The regulations are expected to be enacted, with its current language, becoming effective in October. These proposed regulations come as a result of growing public awareness of hydraulic fracturing, and recommendations made in the STRONGER review.  Arkansas regulations and the recent Texas statute served as models for these amendments.

Recent efforts for a chemical reporting regulations were less successful in California, where legislators had hoped to enact the most stringent reporting rules in the nation.  News broke last week that the bill had stalled.  The bill, AB 591, calls for every oil and gas company engaged in hydraulic fracturing to report all chemicals and the amount of water used in fracturing operations, and to safely dispose of fracturing fluid.  Although recent amendments were proposed to AB 591 to safeguard confidential information and trade secrets, they came too late to meet legislative deadlines, and the bill stalled.  The bill could still be attached to another bill that heads to the floor for a vote, but the more likely scenario is that the bill will be reconsidered next year.

What is the significance of these recent legislative developments on hydraulic fracturing?  They are par for the course for a seasoned environmental attorney.  Parallel disclosure provisions exist in environmental statutes such as the Clean Air Act and the Clean Water Act, as well as state environmental statutes.  Compliance counseling can draw on experiences with these statutes to provide insight in this new regulatory arena. 

For the oil and gas industry, disclosure legislation could lead to unchartered territory.  In some states, production companies must learn to work with state environmental agencies, where before they primarily dealt with oil and gas agencies.

State-level regulation also means a high level of change for companies operating in multiple jurisdictions.  Companies will be best-suited to have an environmental management system (EMS), with robust matrixes or charts for tracking new compliance obligations.