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Tuesday, April 23, 2013

Harvard and fracking Take 2: Law school study blasts FracFocus

A study published today by the Environmental Law Program at Harvard Law School has found that FracFocus fails as a compliance tool for the 11 states that rely on it.  

Legal Fractures in Chemical Disclosure Laws: Why the Voluntary Chemical Disclosure Registry FracFocus Fails as a Regulatory Compliance Tool says, in its summary:

In its current form, FracFocus is not an acceptable regulatory compliance method for chemical disclosures. The registry’s shortcomings – and opportunities for improvement – fall into three categories:

(1) Timing of Disclosures.  State laws attach penalties to a company’s late submittal of, or failure to submit, chemical disclosures.  However, FracFocus does not notify a state when it receives a disclosure from a company operating in that state.  Nor can most states readily determine when a disclosure is made.  As a result, states cannot enforce timely disclosure requirements.  

(2) Substance of Disclosures.  FracFocus creates obstacles to compliance for reporting companies.   For example, by not providing state-specific forms, FracFocus leaves companies to figure out how to account for state disclosure requirements not covered by the FracFocus form.  FracFocus staff does not review submissions, and states usually do not receive the form; factors that may encourage some companies to under-value careful reporting. Meanwhile, no state sets minimum reporting standards for FracFocus.  In fact, were FracFocus to disappear entirely, most states using the registry would have no backup disclosure methods readily identified and available to them.  

(3) Nondisclosures.  Trade secret protection is critical in order to reward development of unique products in the marketplace.  However, three characteristics of a robust trade secret regime prevent overly broad demands for this protection: substantiation by the company, verification by a government agency, and opportunity for public challenge.  FracFocus has none of these characteristics; operators have sole discretion to determine when to assert trade secrets.  As a result, inconsistent trade secret assertions are made throughout the registry.

Public confidence and the industry’s social license to operate cannot be won with the current disclosure regime.  As the report says:

States and the BLM are expending valuable resources issuing hydraulic fracturing disclosure requirements.  Companies are spending valuable time submitting disclosures.  We should make sure these systems work.  

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