May 31, 2011
Cyrus Reed, 512-740-4086 or
Donna Hoffman, 512-477-1729 or 512-299-5776
At the 11th Hour Texas House & Senate Pass
“Fracking” Disclosure Bill
The Texas House and Senate failed to pass a “sunset” bill making changes in the Railroad Commission of Texas (the state agency that regulates oil and gas activity); failed to pass any additional protective measures related to oil and gas regulation; and failed to find a better funding mechanism for the agency other than continued reliance on general revenue. Moreover the Texas Legislature passed SB 1134, which delays the implementation of new TCEQ rules on air emissions from oil & gas operations. But
the Legislature did pass the first state statute in the
nation to require the disclosure of chemicals and additives
used in the hydraulic fracturing (“fracking”) process
for the production of oil or natural gas. The legislation passed literally at the 11th hour (to be precise the House adopted the conference committee report at 11:20 PM on the last day to adopt conference reports without suspension of the House rules).
The fracking fluids disclosure bill, HB
3328, was sponsored by State
Representative Jim Keffer (R-Eastland) in the House, and – eventually – by State Senator Troy Fraser (R-Horseshoe Bend) in the Senate. The bill requires that – by July of 2012 – all Texas oil and gas producers using “fracking” technology
to disclose on a publicly accessible website the volumes
and maximum concentrations of base fluids, proppants, chemicals
and additives regulated by the Occupational Safety and Health
Act (OSHA) used in each well.
In addition, in a key victory for the
public, those same operators will be required to develop a list of non-OSHA chemicals and report them well-by-well on a website, though the volume and concentrations will not be revealed. Unfortunately due to last minute lobbying by some industry players, the rules for that list are not required until July of 2013.
The bill does allow operators, suppliers and service companies to ask that certain chemicals or additives not be disclosed by declaring them trade secrets. But it also gives landowners, adjacent landowners, and state agencies the ability to challenge those trade secrets through a process at the Railroad Commission and Attorney General’s Office.
While several other states – such as Wyoming, Colorado and Arkansas – have adopted limited disclosure requirements through rulemaking, the Texas law would require that the disclosure of the fluids used to “frack” shale rock to produce oil or gas occur well-by-well on a publicly accessible website, and importantly it requires disclosure of chemicals that are not regulated by OSHA. While
HB 3328 is not what the Sierra Club would consider “model” legislation,
it is a significant step forward.
HB 3328, which is expected to be signed by the Governor, started out as a much more prescriptive and complete disclosure bill, with Rep. Keffer (who chairs the House Energy Resources Committee) intent on passing model legislation. After a series of negotiations, Keffer was able to get a scaled down version out of his committee, but he was forced to water the legislation down slightly by accepting an amendment developed by the Texas Oil and Gas Association to get it out of the House. Despite these changes, the legislation did include an amendment by State
Rep. Lon Burnam (D-Fort Worth) that was supported by the Sierra Club that maintained a requirement that both OSHA chemicals and non-OSHA chemicals be accessible to the public well-by-well through a website.
After initially sponsoring a companion bill on fracking disclosure in the Senate, State
Senator Jane Nelson (R-Flower Mound) learned that Senate Natural Resources Committee Chairman Fraser had decided to be the lead sponsor for HB 3328 in the Senate. That change, which came after Sen. Fraser had expressed some reservations about dealing with such a major issue late in the session, understandably made many folks nervous about the bill’s prospects.
Sen. Fraser, however, did pass the bill out of his committee the same version of the bill that had passed on the House floor and then invited comment to a select few on an “alternative” bill, which was much more prescriptive but did not include non-MSDS chemicals. When HB 3328 came to the Senate floor, however, Sen. Fraser made relatively few changes, none of which fundamentally changed the bill. However, in a surprise move, Senator
Glen Hegar (R-Katy) added an amendment that was a version of the sunset bill for the Railroad Commission of Texas that he and Rep. Keffer had been unable to reach agreement on. It was a bold move to try and force an agreement on the Railroad Commission sunset issues, but ultimately the sunset language was taken off the disclosure bill, allowing passage of the new disclosure requirements but with delayed implementation deadlines that were favored by Sen. Fraser.
When the conference committee report for HB 3328 was adopted on the House floor, however, Rep.
Keffer announced that it is his intent that the Railroad
Commission adopt all of the new disclosure rules by next
summer (the summer of 2012) so disclosure can begin. The
Sierra Club intends to be heavily involved in the process
at the Railroad Commission to develop and adopt the new disclosure
rules, and the Club will work to assist public involvement
in the process. Rest assured that the oil and gas industry
will be active on the Railroad Commission’s rulemaking as