A Texas law that requires operators to publicly disclose chemicals used in hydraulic fracturing is, in a sense, ground-breaking. After all, no other states have approved legislation that mandates the revelation of such information. On the surface, the law may appear to impose unwanted regulatory requirements on exploration; however, there has barely been a whimper from the industry.

There is an explanation.

The version of the law signed by Gov. Rick Perry on June 17 affords operators, along with the companies that make drilling fluids, the right to shield information that is considered to contain trade secrets. In other words, drillers and the companies that produce the chemical concoctions that are pumped into wells are given the leeway to make their own calls about what information is deemed proprietary and what is not.

Before the measure actually becomes law, the signed legislation must go through a rule-making process under the auspices of the Texas Railroad Commission, the agency that regulates the state’s oil and gas industry. The waiting period for the law’s enactment is expected to be about a year.

In a state where oil and gas reign supreme, the industry-protective grasp of the law may seem to be a major setback for environmentalists and land owners. However, if passionate objections exist, they are pooled at the bottom of a relatively calm well.

Cyrus Reed, conservation director of the Lone Star Chapter of the Sierra Club, has concerns about the proprietary protections that are embedded in the law. Yet, his perspective does not have an entirely negative spin. "It's a glass-half-full type of situation, but it's a good first step," he told Oilandgasinvestor.com.

"It's certainly a pro-industry position allowing [operators] to declare some of this information as trade secrets. There are cases where you do want some trade-secrets provisions. It's not unreasonable to have some. We just want to make sure that companies don't abuse that."

The Sierra Club is the nation’s largest and most influential grassroots environmental organization.

From the oil and gas industry’s vantage point, the disclosure requirement presents an opportunity to subdue the public’s concerns about chemicals used in hydraulic fracturing. Justin Furnace, president of the Texas Independent Producers and Royalty Owners Association (TIPRO), said that mandatory disclosure will have a long-term reach in developing trust between drillers and the public.

"The majority of the industry realizes what a public-relations issue hydraulic fracturing has become. When you have a safety record such as ours and a record of safely hydraulically fracturing wells for over 60 years in this state, putting your best foot forward in terms of disclosure shows that it truly is a safe process and that there's no mystery to it," said Furnace.

Reed thinks that the disclosure requirement could lead to better regulation. At least that has been the case from an historical point of view, he said.

"Twenty years ago, refineries and chemical companies resisted having information about any of their emissions or chemicals revealed. But all of that eventually came out under the public's right to know. The result in the U.S. has been that we've had significant reductions in the release of certain chemicals. I think putting a spotlight on this stuff is generally good," said Reed.

Under the law, operators will be required to disclose the chemical makeup of drilling fluids on the website fracfocus.com. Some companies that drill in the United States voluntarily post such information on the site, but no states other than Texas have a law that requires public disclosure.

The website, a project of the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission, has a feature that allows interested parties to search for oil or gas wells by location. Regulatory information on a state-by-state basis is also included.

Both Reed and Furnace will be keeping a close watch on the Texas Railroad Commission, which will ultimately shape the details of the law. The agency has said it will roll out a timetable for enacting the law sometime in July. During the review process, stakeholders will have an opportunity to make comments that could influence the Railroad Commission’s interpretation of the law. The comments will be published in the Texas Register, a weekly publication that records the rule-making procedures of state agencies.

Furnace said that the end result of the Railroad Commission’s law-crafting process will determine the industry’s level of satisfaction with the law.

"That's yet to be determined in my mind," he said. "We'll see what happens in terms of the processes and procedures that the Railroad Commission will outlay in the next year. What happens there will determine what segments of the industry may take issue (with the final version of law)."

Despite the landmark legislation on chemical disclosure, Reed still has concerns about other issues regarding hydraulic fracturing. “There were several bills introduced (in the Texas Legislature) that didn’t go anywhere. They would have given specific authority to the Railroad Commission to regulate the salt-water disposal lines. It’s not clear how that’s regulated or what to do if you have a problem,” he said.

The original version of the law, House Bill 3328, which was sponsored by state Rep. Jim Keffer, R-Eastland, chairman of the House Committee on Energy Resources, would have required companies to reveal much more information in terms of chemicals, additives and fluids regulated by the federal Occupational Safety and Health (OSHA), and those not regulated by OSHA, Reed said. Keffer's original bill would have also required service companies to file annual reports that revealed the chemical compositions of drilling fluids.

From an environmental and safety perspective, the original bill was "significantly stronger," Reed said. "The bill that passed was the result of a lot of negotiation, so it was weakened. But it did maintain the ability of the public find out information on a well-to-well basis."

Furnace contends that the adoption of the disclosure law suggests that environmental and business concerns can find common ground on certain issues, even on contentious subjects like hydraulic fracturing.

"I think this one in particular shows that the industry truly does put its money where its mouth is. We know this process to be safe. We've done it too long and have been too successful at it. So as much as anything, it's a way for the industry to show that we believe what we've been saying -- and that's what the statute confirms," he said.

The Railroad Commission expects to begin the process of crafting the legislation into a law sometime in July. The agency will accept comments from interested parties during the vetting process and may schedule public hearings.

Details about the bill can be found on Gov. Perry's official website.

Contact the author, Mike Madere, at mmadere@hartenergy.com.

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