Settlement Reached in Wyoming Fracking Disclosure Lawsuit: Heavier Burden of Proof for Companies Claiming Trade Secret or Confidentiality Protections

As we’ve previously discussed, a patchwork of state regulations requiring disclosure of chemicals used in fracking have been enacted by several states in recent years.  One such regulation was by the State of Wyoming.  While environmental groups initially lauded Wyoming’s new rule, the applause was short-lived as the Wyoming Oil and Gas Conservation Commission began granting trade secret exemptions that prevented disclosure of this information to the public under the state public records act.  This led the environmental groups to sue the Commission.  After nearly three years of litigation, including an appeal to the Wyoming Supreme Court, the parties reached a settlement that was approved by the state district court late last month.

The settlement establishes new criteria that companies must meet to shield their trade secret or confidential commercial information from public disclosure in Wyoming.  For example, companies will now have to describe to the Commission the extent to which such information is known within the company, within the industry, or to the public and detail why the information has commercial value.  In implementing the settlement, the Commission will review the disclosure exemptions it previously granted for 128 chemical products that were challenged in the lawsuit.  Most companies that received trade secret or confidentiality exemptions from the Commission in the past will have 90 days after notification by the Commission to re-apply under the new criteria.  The Commission will then have 90 days after receiving a resubmission to issue its new determination.  Of course, any new applications will also be subject to the new submission requirements.

It’ll be interesting to see the results of the Commission’s review of the previously granted trade secret exemptions. Whether or not previously granted exemptions are revoked, the higher standard that is now in place will likely lead to increased costs and uncertainty for companies seeking to protect their information.  The stakes are even higher for companies operating in other states in addition to Wyoming, as a requirement to disclose in Wyoming could defeat confidentiality of the information elsewhere as well.  A ripple effect is also possible as other states may be watching Wyoming closely as a potential model for their own disclosure rules.