Fracking disclosure rules – the gift that keeps on giving

December 16, 2011

Colorado, gas wells

Let’s face it. The oil and gas industry has taken some nasty hits this year, what with bad press in the New York Times, lawsuits, and that whole EPA mess up in Pavillion, Wyoming. For as long as anyone can remember the public has been clamoring for fracking disclosure rules. So the COGCC and COGA (CO Oil & Gas Association) got together and dreamed up a public relations campaign wrapped up in fracking disclosure rules and presented it in time for Christmas.

Just look at these headlines:

Colorado approves disclosure of fracking fluids

Colorado oil and gas regulators impose new hydraulic fracturing chemical disclosure rule

State now requires disclosure of fracking

Sounds pretty tough. Environmentalists read those and think, boy we got ‘em by the balls now.

Of course that’s the whole idea. To make the public think they got a terrific deal. They called it “groundbreaking”. I’m pretty sure it’s working.

To make it look good the COGCC and COGA did have to write up some actual regulations requiring the operators to report chemicals and concentrations and post them at the chemical registry website FracFocus.org. But the new rules don’t go into effect until April 2012. And the folks at FracFocus don’t have to make the database searchable until January 1, 2013. According to my calculations, that gives industry lawyers a little over a year to figure out how to circumvent those new rules. By then the public will have forgotten all about fracking disclosure rules – well, except for a few diehards and zealots, but no one listens to them anyway.

In another stealth move, Operators aren’t required to file their reports until 60 days after conclusion of a frack job, which means they can get the job done first without pesky inquiries from the public. In that way they are relieved of any responsibility for public health or environmental concerns during the fracking process. Way to cover their own asses.

If I didn’t know any better, I would have thought these rules were drawn up by the legal firm Loopholes R Us. But I do know better. Clearly these rules were hammered out by the COGCC and COGA during late night sessions in back rooms. The result is a work of art – in the contractual sense. In my own read through, I found the Final Modified Staff Proposal breathtaking.

The much maligned “trade secret loophole” is a little complicated to fully explain here, which is precisely the beauty of it. So many subsections, so many different ways to legally interpret. To sum it up, they conjured up a magical Form 41 for the industry, which means they can claim trade secret on a chemical or concentration and they don’t have to file a disclosure report. And the COGCC won’t take any action to verify the claim. The trade secret protection can be challenged. But only through proper legal channels. And the claimant has to prove harm from the unknown chemical or concentration. But how can you prove harm from an unknown chemical?

You can’t. Anyone can appreciate the perfection in that.

As a special added bonus, the COGCC will act as a legal buffer between the claimant and the industry. Vendors and Operators won’t have to lift a finger. Now that’s government and industry walking hand in hand, then pausing to stick their tongues down each others’ throats.

I call this next one the “ultimate absolution loophole”. It’s a favorite.

(4) Inaccuracies in information. A Vendor is not responsible for any inaccuracy in information that is provided to the Vendor by a third party manufacturer of the hydraulic fracturing additives. A Service Provider is not responsible for any inaccuracy in information that is provided to the Service Provider by the Vendor. An Operator is not responsible for any inaccuracy in information provided to the Operator by the Vendor or Service Provider.

What it all boils down to is, if there’s a problem no one is responsible. You’d have to agree, that’s pretty darn good.

There are loads more loopholes in the language. For the most part, it’s all about “shall” and “may”. Chemicals “shall” remain confidential. Vendors “may” disclose chemicals to the public. In legal terms, “shall” means “must” and “may” means “not if you don’t want to”. Brilliant.

After the whole kerfuffle over hydrogen sulfide emissions last summer, I wondered if the fracking disclosure rules would address it in any way. I assumed they wouldn’t mention it specifically because, as everyone knows by now, H2S exists only in the public’s mind and then it dissipates harmlessly into the atmosphere. But I did find a cloaked reference to it in Subpart c: Disclosures Not Required. I refer to this as the “H2S absolution loophole”.

Rule 205A will not require suppliers, service companies or operators to disclose chemicals which are not disclosed to them, were not intentionally added to the hydraulic fracturing fluid, or occur incidentally or are otherwise unintentionally present. This part of Rule 205A is similar to the proposed Texas disclosure rule and is intended to ensure that requiring disclosure of all chemicals will not impose unfair or unreasonable burdens on companies.

Man, they thought of everything.

But the greatest show of true genius is actually invisible. And no one in the media figured it out. There’s no enforcement. Isn’t that incredible? They made up all these rules and they didn’t outline any enforcement provisions. While the rules require that records must be kept, the only hint of enforcement is that the COGCC can request the records and the Vendors or record keepers have three business days to comply. All of which means, if they are so inclined, the Vendors can just dummy up reports for each frack job and no one will be the wiser.

Finally – and perhaps they meant this as a joke and forgot to take it out of the final draft – the base fine is $1000. Yup. You read that right. One thousand dollars. Which is less than the cost of hiring an employee to file the reports in the first place.

Guess the joke’s on us.

Amazing psyops. Someone was paying attention at that conference back in November. My only concern is that this PR campaign arrived so close on the heels of the psyops planning meeting. The public might get suspicious.

Nah. That won’t happen. People are stupid.

Read the Final Modified Staff Proposal (To access the PDF, click on “Hydraulic Fracturing Disclosure Rulemaking”, then click on “Final Modified Staff Proposal”)

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