Friday, January 3, 2014

Trade Secrets and Fracking Chemicals, Nov-Dec MEC Meetings

 
 
Happy 2014 .Once again we have some wonderful notes to share from Diana . I so appreciate all her hard work in putting this together .  
I have highlighted some things that scare me and intend to watch closely.
 
 
These notes combine the Mining & Energy Commission meetings of Nov. 21-22 and Dec. 5-6, 2013
Chair, James Womack (Lee County Commissioner).  Members absent:  Nov. Charles Taylor (City of Sanford); Dec. George Howard
 
Trade Secrets and Chemical (non)disclosure “might” become separate rules in January: Who determines Trade Secret?  Who keeps it?  Any public right to know?; Rules Committee takes up Wastewater Management rules on testing, reuse, and final disposal options;  Rules adopted for Closure of Oil and Gas Wells when a well fails or is abandoned; Setbacks determined from houses (500-ft.), surface waters (100-ft.), wells (500-ft.), and more.
 
1.  Trade Secrets, Jim Womack 
Womack is insistent that Trade Secrets rule should be separate from Chemical Disclosure rule; others members not so sure.  Would need extensive cross-referencing between the two rules. NC should “allow” Trade Secrets to be claimed in areas of technology, seismic exploration, and some of the fracking chemicals. Womack expects to have his Trade Secrets rule drafted by end of December [Nothing posted on website as of Jan 2, 2014].
 
(a) Who will determine if “claim” is really a Trade Secret?  DENR [or MEC if Legislature grants that authority] could review request with qualified panel of experts, then approve/disapprove application and keep no records. Permittee will have to sign an affidavit that this information is NOT in public domain or under patent; the company has and follows their own internal trade secret process; the company must notify DENR if “trade secret” enters the public domain; the chemical must NOT be on the list of regulated chemicals in the Safe Drinking Water Act (also includes concentrations); and company must sign a statement that it conforms to conditions for seeking protection as established by NC General Statute 66-152.  Jane Lewis-Raymond said load the “Trade Secret” requirements at the front-end so companies don’t want to “claim” a Trade Secret…they get to make that decision.  Charles Holbrook said if a company has a concoction that is working well in another state, won’t this encourage more wildcatters, rather than entice the new technology innovator?  Vik Rao said companies will be willing to show how they protect trade secrets within their company, so it is fair to both parties.
 
(b) Who will “keep” Trade Secret chemical compositions of frack fluid for emergency access? Although the Dept. of Environment & Natural Resources (DENR) keeps other Trade Secrets, they specifically WILL NOT take these.  [Is this an attempt to distance Governor McCrory and DENR from public outrage when future spills, leaks, or other contamination occurs?] To work around this curious DENR refusal, options include an escrow repository, or a “lock box” managed by an outside IT entity to hold the Trade Secrets. Discussions about the “lock box” approach would require permittee to pay this IT company to keep records for life of well (or longer), respond to legitimate requests for access, and unlock information when compound or process loses its Trade Secret status.  Vic Rao said “lock box” gives public assurance that even if company goes out of business, the Trade Secret chemical compositions remain accessible, and could be available for either an emergency response or court order.  Amy Pickle says rule needs to spell out entire procedure for DENR review of Trade Secret; how DENR can access the lock box and the criteria for access; and criteria to provide this info to health care professionals and courts.  Marva Price said electronic lockbox may have retrieval problems in future, changes in technology. 
 
(c) Does public have any right to know Not much. Jane Lewis-Raymond said can’t presuppose what could harm the public; even new technologies might seek Trade Secret protection.  In November two members of Womack’s Trade Secret Study Group, Dr. David Levine, Elon College, and Tyler Mulligan, School of Government, said that existing regulations are adequate and Public Records law do not “require” public disclosure of trade secrets.  Question remains as to whether a “special” exemption is needed for this industry’s trade secrets.  Rule states Business Court as jurisdictional remedy.  However, as Therese Vick stated in public input, after an accident the injured party would have to hire an attorney and pay the $1,000 Business Court filing fee, and might not have standing in court. Therefore, tough for public to challenge, and this also gives special treatment to Oil & Gas industry. 
 
[See DENR white paper: “Protection of Trade Secrets & Proprietary Information”: http://portal.ncdenr.org/c/document_library/get_file?uuid=2d8d9aca-0dab-4c42-b45a-847d7c3a88a0&groupId=8198095
 
2.  Chemical Disclosure; Jim Womack 
In December, Womack presented a reorganization/rewrite of the rule formerly written and passed by Howard’s Environmental Standards Committee.  Womack reorganized subsections, added and tightened some definitions, made deletions, refined the required “disclosures” and what is not required to be disclosed, trade secrets protection, among other changes.  This was first time MEC members saw Womack’s version.  George Howard and Amy Pickle have been asked to work together to rewrite rule, incorporating Womack’s stuff, after discussion that Womack wanted to limit to 30-minutes.  Womack again stressed he wants separate “Trade Secret” rule and for DENR to not take ownership of these secrets.  In November, George Howard said the bone of contention is that the earlier version of the rule, drafted by his committee, required that the CAS (Chemical Abstract Number) on all Trade Secret chemicals would be available to DENR in a disaster [DENR refuses this responsibility].  Amy Pickle said the rule limits public challenge...the public may or may not have the expertise, and this is not the same thing as “having the right” to the information.  Womack said the industry has not lost a case regarding trade secret chemicals [surprise!] because they have deep pockets and public is at a disadvantage.
 

3.  Water and Waste Management Committee; Chair, Dr. Vikram Rao  
Wastewater Management rules included discussion of production waters and testing of specific chemicals in flowback waters that is kept onsite.  Monitoring wells were removed from rule draft.  Committee requires a test of “what” is in the flowback before it is disposed of offsite.  Rao prefers reverse osmosis treatment on site, then concentrated residual can either be (a) reused for same fracking purpose, or (b) treated and removed to another water treatment site for further processing [if it exists], or (c) permitted for transportation to another state [deep well injection].  Stakeholders had excellent input.   Both pits and closed loop systems would be OK in NC to encourage reuse of water for multiple fracks at well pad.  Womack had been to PA’s Marcellus shale region (14,060 wells).  Said they pump water from the Susquehanna River and build water pits at a higher elevation than the watershed to create a central reservoir.  He said he was shocked at the amount of water pipeline he saw...they try to bury it.  Rao said PA uses surface water only and does not recycle water.  NC might encourage well operators to share a water supply and reuse water.  Ken Taylor said if they create a central “water supply reservoir” in NC, need to get dam permits, and might need interbasin transfer permit, too.  Holbrook mentioned that a freshwater pit liner is not the same as a process water pit liner, which must protect groundwater.  Rao said there are wildlife animal protection provisions in the rule.  
 
Wastewater Management rule set (19-pages) submitted to Rules Committee for January review.
 
4.  Oil and Gas Administration Committee; Chair, Charles Holbrook
Requirements for Closure of Oil & Gas Wells rule set was discussed and approved by MEC in November.  The three classes of well closure and rules for each include “Permanent” (well cannot be operated and is not capable of producing gas; “Shut-in Status” (shut-in pending future development, like infrastructure, or operator completing multiple wells); and “Temporary abandonment(operator wants to come back and re-enter hole, and waiting period prior to production could be short).
 
Well Spacing Standards were finalized for submission to Rules Committee for January review. 
 
Staff is creating first draft of Site Construction Standards for January discussion.
 
Coordinated Permit” work continues under Dr. Ken Taylor, which will get at the proper sequencing of when each part happens in the process.  “Permitting” rules have gaps until other rules, such as chemical disclosure, etc., are written.   Drafts of rules will remain on website as they move through the process. 
 
Regarding local government permits:  Womack said part of state coordinated permitting must also be addressed by local governments for code enforcement, so permissions must be granted, but should be complimentary to State.  Amy Pickle said MEC does NOT have the authority to address land use restrictions in local government arena.  Womack said “we” would be blocking local economic development since local health departments can shut this industry down for health and safety risks...therefore the Legislature is not willing to “stop activity” because of local government powers, except for health and safety.  Hmmmm.
    
            Requirements for Closure of Oil & Gas Wells rule set was adopted in November 2013 by the MEC.               
 
5.  Environmental Standards Committee; Chair, George Howard 
Howard not in attendance for Dec meeting.  Setback Rules were moved to Rules Committee in Nov.  The principal setbacks are as follows: Measured from center of wellhead or production facility, tank, or tank battery and/or edge of pit closest to these features:
    500-ft. from occupied dwelling and high occupancy buildings
    100-ft. from edge of public road, highway, utility, railroad right-of-way
    100-ft. from stream, river, watercourse, pond, lake
    300-ft. from wetland and trout streams
    500-ft. from water well for human consumption or household
    100-ft. from edge of mapped 100-year floodplain and floodway
    New pits, tanks, tank batteries shall not be within 75 feet of oil/gas wellhead
    Tanks or tank batteries shall not be within five feet of another tank
    Compressors and mechanical separators shall not be within 5-ft. of oil and gas wellhead; 75-ft. of tank, and 500-ft. of occupied dwelling
Allows for variances, but still no authority in MEC to do this.  Womack: Need quick decisions on variances, perhaps DENR could grant.   
 
6.  Rules Committee; chair, Amy Pickle
Requirements for Closure of Oil & Gas Wells moved to MEC for December discussion. 
Setback rules moved to MEC in December, but discussion postponed since George Howard was absent.
 
 
Diana Hales, retired

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