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Fracking Ruling

A worker uses hand signals to communicate with a co-worker over the sound of massive pumps March 29, 2013, at an Encana Oil & Gas hydraulic fracturing and extraction site outside Rifle, Co. A judge ruled Tuesday that federal regulators lack the authority to set rules for hydraulic fracturing.

The Wyoming Supreme Court on Wednesday reversed the ruling of a Casper judge who found that ingredients used in fracking fluids are exempt from public disclosure.

The justices' unanimous decision was contrary to the argument of state regulators, who contended such ingredients qualified as so-called "trade secrets" and were not subject to public information requests under the Wyoming Public Records Act.

The Supreme Court stopped short of deciding the question of whether or not the components used in fracking fluids qualify as trade secrets, a designation intended to prevent the public disclosure of companies' valuable technology to competing firms.

It left that question to be resolved by the district court. The justices directed the lower court to reconsider environmentalists' public disclosure requests and determine on a case-by-case basis whether the ingredients sought deserve privacy protections.

The decision was applauded by the environmentalists and landowners who brought the case. They said the public has the right to know what substances are being used to frack oil and gas wells.

"If fracking operators don’t want to reveal what chemicals they use, they will have to prove that the chemicals are trade secrets, which means they shouldn’t be able to capriciously keep secrets from the public about dangerous chemicals," said Katherine O’Brien, the plaintiff's attorney.

In 2010, Wyoming became the first state in the country to require oil and gas companies to disclose the ingredients used in fracking fluids to state regulators.

But the Wyoming Oil and Gas Conservation Commission, which is charged with regulating the industry, denied requests from environmentalists and landowners' groups to publicly disclose the components used in the fluids, arguing they were trade secrets.

Natrona County District Court Judge Catherine Wilking sided with the state after the Wyoming Outdoor Council and Powder River Basin Resource Council challenged the commission's ruling. The two groups appealed to the Supreme Court.

The high court's opinion reversed Wilking's decision. Wyoming's public records law requires state agencies to explain why a request for information is denied. The oil and gas commission did not do that, meaning the district court did not have enough information to decide whether the commission's ruling was right or wrong, the justices wrote.

The Supreme Court sent the case back to Natrona County, saying the lower court could allow the plaintiffs the opportunity to amend their requests or dismiss the case altogether, which would enable the groups to bring a new suit.

"We think it sends a clear message to the oil and gas commission that these trade secret exemptions should be narrowly tailored and infrequently used," said Shannon Anderson, an organizer at the Powder River Basin Resource Council and one of the plaintiffs in the case. "We don’t want the formulas, the concentrations and amounts, but we do think the public has the right to know the chemicals used."

The decision is especially notable, as the court defined a trade secret under the state's public records law for the first time, Anderson said. The justices ultimately relied on the federal definition of the term, which applies a narrower meaning and fewer exemptions to public records law than what was sought by state attorneys.

"I think that is a big decision," Anderson said.

Lisa McGee, program director at the Wyoming Outdoor Council, noted the ruling was preliminary. The district court will ultimately decide if a list of fracking fluids should be disclosed to the public. But the high court's ruling was nonetheless welcome, she said.

"The practical implication of the decision is that the Wyoming Supreme Court values transparency and the Public Records Act," McGee said. "It found there should be a very narrow trade secret definition and err on the side of disclosure."

Gov. Matt Mead, who supported Wilking's original decision last year, said the state would wait for the outcome of the district court case.

"I believe our first-in-the-nation disclosure requirements are well-done, as evidenced by the fact that several states followed Wyoming’s lead in this area," the governor said in a statement. "A value of having state rules is that we can be nimble to make changes to the rules or to their implementation if such action is deemed necessary."

Grant Black, supervisor of the oil and gas commission, noted that he was new to the issue, having only begun in his position last year.

But he echoed Mead's comments, saying the commission would study the district court's final decision to see if it needs to amend the disclosure rule  to comply with the judge's ruling. 

"It is just an important issue," Black said. 

Halliburton, an oil field services company that intervened on behalf of the state, did not return requests for comment. 

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Reach energy reporter Benjamin Storrow at 307-266-0535 or benjamin.storrow@trib.com. Follow him on Twitter @bstorrow

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