By Michael J. Mazzone, Haynes and Boone One-rule-for-all is what the shale gas industry could face concerning a federal regulation limiting a gas extraction process known as hydraulic fracturing, or fracing. The Lone Star State, perhaps mindful of the risk of new federal disclosure regulations, was the first to establish proactively its own law on fracing chemicals in an attempt to satisfy claimed environmental concerns and possibly avoid a federal remedy. Earlier this year, the Texas Legislature approved a measure to require companies to disclose the contents of fracking fluids. While water (more increasingly recycled water) and proppants are the predominant ingredients, chemicals can equate to approximately one percent of fracing fluids. The new Texas law is clearly directed at addressing concerns asserted by some environmentalists and others. While environmentalists want federal rules, at the other end of the spectrum are those who argue disclosure rules should be a matter of contract between parties with direct stakes in the matter: landowners, mineral owners and lessors, operators, and oil field service companies. Governor Rick Perry signed the Texas Disclosure of Composition of Hydraulic Fracturing Fluids Act (H.B. 3328) on June 17 requiring the creation of a rule for the disclosure of additives and chemicals used in fracing. While the law is set to take effect Sept. 1, its initial mandate requires the Texas Railroad Commission (TRC) to first establish rules for disclosures of hazardous chemicals by July 2012, and all other chemicals by July 2013. The new disclosure requirements will only apply to the drilling of new wells. The rules to be created require the disclosure of all chemicals intentionally used in fracing operations, not just hazardous chemicals. However, the concentrations of chemicals will not need to be reported. Recognizing the competitive nature of the industry, companies will be allowed to petition the TRC, theoretically, to protect proprietary chemical formulas. Upon approval, the formulas will be safe from disclosure unless necessary for medical treatment. However, quite sensibly, the law stipulates that the assertion of a trade secret privilege can only be challenged by regulators with jurisdiction, the owner of the land on which the well is located and adjacent property-owners. Environmentalists with no property rights at stake may not challenge the assertion of the trade secret privilege. The new Texas fracing disclosure rules may serve as a model for other states like Arkansas, Wyoming, Michigan, Pennsylvania and California, where bills are being developed. While it won’t satisfy the extremes on both ends of the disclosure debate, it attempts to strike some middle ground. More importantly, it somewhat reflects the view that only persons with legitimate interests at stake should have a say in the disclosure of fracing fluid contents. Michael J. Mazzone, Haynes and Boone