Indiana’s Mandatory Disclosure Rule

–Professor Keith B. Hall, B.S. in Chemical Engineering, Louisiana State University; J.D., Loyola University School of Law. Professor Hall was a member of the firm Stone Pigman Walther Wittmann before joining the LSU Law Faculty as Assistant Professor and Director of the Mineral Law Institute.

Earlier this Summer, Indiana joined the growing list of states that have enacted legislation or regulations to require the disclosure of the additives used in hydraulic fracturing fluids on a well-by-well basis.  Specifically, the Indiana Department of Natural Resources adopted an emergency rule, effective July 1, 2012, that directs DNR’s Division of Oil & Gas to create a form on which operators will be required to report certain information regarding hydraulic fracturing operations.[i]

The form, which is now available from DNR’s website, requires the operator to report: the volume and source of base fluid; the type and amount of proppant; the trade name of each additive; the function of each additive (such as biocide, corrosion inhibitor, friction reducer, etc.); the maximum concentration of each additive in the fracturing fluid; and the maximum injection pressure.  The operator also must provide a copy of the Material Safety Data Sheet (MSDS) for each additive and a copy of any pressure recording charts or graphs used during the hydraulic fracturing operation.  Copies of each MSDS will be posted on-line.

Unlike some states, Indiana does not explicitly require that companies provide the CAS (Chemical Abstracts Service) number for each compound used in the fracturing fluid, and thus does not explicitly require that operators identify the specific compounds in the fracturing fluid.  As a practical matter, though, this might not represent a difference from other states’ rules.  Compounds that are not trade secrets often are identified on the MSDS sheets.  Because Indiana requires operators to provide MSDS sheets, compounds that are not trade secrets generally will be identified under Indiana’s rules.

If a compound is a trade secret, it probably will not be identified on an MSDS and the disclosure of such a compound generally will not be required under Indiana law.  But this does not mean that other states will be requiring public disclosure in circumstances in which Indiana does not.  The states that generally require operators to provide CAS numbers for compounds in fracturing fluid make exceptions for compounds that qualify as trade secrets and do not require that companies provide the CAS numbers for those compounds.  Thus, those other states come to the same result as Indiana — compounds that constitute trade secrets generally do not have to be publicly disclosed.  Accordingly, the practical effect of Indiana’s disclosure rules might be very similar to the disclosure rules in other states than might appear at first.

Indiana DNR’s website has a page that includes a listing of all additives (by trade name), along with a link to the MSDS for that additive.[ii]

Other states that require disclosure of the composition of fracturing fluid include Arkansas, Colorado, Louisiana, Maryland, Montana, Ohio, Oklahoma, Texas, West Virginia, Michigan, New Mexico, Pennsylvania, Utah, and Wyoming.  Some states have established disclosure databases on their own websites, and the information companies submit is made available to the public on those websites (states differ on whether the identity of compounds that qualify as trade secrets have to be disclosed to regulators, while being exempted from public disclosure, or whether such compounds also are generally are exempted from disclosure to regulators).  Other states have directed that operators post the information on the FracFocus website, which similarly is accessible by the public.

Preferred citation: Professor Keith B. Hall, Indiana’s Mandatory Disclosure Rule, LSU J. Energy L. & Res. Currents (February 7, 2013), http://sites.law.lsu.edu/jelrblog/?p=208.