Powder River Basin Res. Council v. Wyo. Oil & Gas Conservation Comm'n

• Decision Date: 12 March 2014
• Docket Number: No. S–13–0120.,S–13–0120.
• Parties: POWDER RIVER BASIN RESOURCE COUNCIL, Wyoming Outdoor Council, Earthworks, and Center for Effective Government (formerly OMB Watch), Appellants (Petitioners), v. WYOMING OIL AND GAS CONSERVATION COMMISSION, Appellee (Respondent), and Halliburton Energy Services, Inc., Appellee (Intervenor).
• Court: Wyoming Supreme Court

320 P.3d 222

POWDER RIVER BASIN RESOURCE COUNCIL, Wyoming Outdoor Council, Earthworks, and Center for Effective Government (formerly OMB Watch), Appellants (Petitioners),

v.WYOMING OIL AND GAS CONSERVATION COMMISSION, Appellee (Respondent),andHalliburton Energy Services, Inc., Appellee (Intervenor).

No. S–13–0120.

Supreme Court of Wyoming.

March 12, 2014.

Representing Appellants: Timothy J. Preso and Laura D. Beaton^* of Earthjustice, Bozeman, Montana; Shannon Anderson, Sheridan, Wyoming. Argument by Mr. Preso.

Representing Appellee Wyoming Oil and Gas Conservation Commission: Peter K. Michael, Interim Attorney General; Eric A. Easton, Senior Assistant Attorney General. Argument by Mr. Easton.

Representing Appellee Halliburton Energy Services, Inc.: Steven L. Leifer of Baker Botts L.L.P., Washington, D.C.; John A. Masterson and Alaina M. Stedillie of Lewis Roca Rothgerber, LLP, Casper, Wyoming. Argument by Mr. Leifer.

Before KITE, C.J., and HILL, VOIGT,^†BURKE, and DAVIS, JJ.

DAVIS, Justice.

[¶ 1] Appellants Powder River Basin Resource Council, Wyoming Outdoor Council, Earthworks, and Center for Effective Government appeal from a district court order affirming the Wyoming Oil and Gas Conservation Commission (Commission) Supervisor's denial of a public records request. Recently-adopted regulations require companies engaged in hydraulic fracturing to disclose the chemical compounds used to the Commission. Appellants sought disclosure of the chemicals in several companies' hydraulic fracturing products from the Commission, but the Supervisor, custodian of the records, found that information to be exempt from public disclosure as trade secrets under the Wyoming Public Records Act (WPRA). Rather than simply requesting that the district court issue an order to show cause which would require the Supervisor to justify his decision at an evidentiary hearing under the WPRA, Appellants sought review of his decision under the Wyoming Administrative Procedure Act (APA). The district court affirmed the Supervisor's decision, finding his decision to be reasonable and legally correct.

[¶ 2] We hold that Appellants were required to follow the procedures set forth in the WPRA, which they did not do. The WPRA requires the district court to independently determine whether information must be disclosed or not, rather than to review a decision of the Supervisor as an administrative decision.

[¶ 3] This appeal also raises the question of how trade secrets are defined under the WPRA, a question that can be answered as a matter of law on this record, and one we find to be appropriate to address in the interest of judicial economy. We decide that the Supervisor and the courts should apply the definition developed in federal case law under the Freedom of Information Act (FOIA). We decline to determine whether individual chemical ingredients can be trade secrets because that is not solely a question of law and it cannot be decided on the record before us. We reverse and remand for further proceedings consistent with this opinion.

ISSUE

[¶ 4] Appellants present a single issue on appeal:

Whether the Supervisor of the Wyoming Oil and Gas Conservation Commission acted arbitrarily and unlawfully in denying Appellants' request for public records documenting the identities of chemicals used in hydraulic fracturing operations in the state.

[¶ 5] Although varying in tone and tint, the Commission and Halliburton Energy Services, Inc. (Halliburton) restate essentially the same issue, asking us to apply the APA. However, the denial of Appellants' WPRA request does not fall under the APA. We therefore restate the issue to be determined as follows:

Did the district court err in determining that the information sought in Appellants' public records request concerning the identity of certain chemicals used in hydraulic fracturing fluids are exempt from public disclosure as trade secrets under the WPRA?

FACTS

[¶ 6] In 2010, in response to concerns about the effect of hydraulic fracturing on groundwater in the state, the Commission amended its rules and regulations to require companies engaged in fracking to disclose the identity of chemicals used for well stimulation. Rules, Wyo. Oil & Gas Conservation Comm'n, Ch. 1–5 (2010). The amended rules were intended to provide the Commission with information about the chemicals and to make fracturing activities more transparent to the public. They mandate that operators submit “[t]he chemical additives, compounds and concentrations or rates proposed to be mixed....” to the Commission before initiating and after completing any well stimulation. Id. at Ch. 3 § 45(d) (emphasis in original). Companies engaged in fracturing must include the type of chemical (the ingredient's purpose), the chemical compound name, CAS number, and the concentration of each chemical. Id. A CAS number is a unique identifier assigned to every chemical described in public scientific literature. A person who knows the CAS number for a chemical can identify it by looking it up on the Chemical Abstracts Service website.¹

[¶ 7] The Commission adopted rules intended to balance its need for the information, the public's interest in identifying chemicals which may find their way into groundwater, and the industry's need to protect proprietary information in order to maintain competitive advantage. The rules provide the following mechanism for determining whether information provided to the Commission will be deemed confidential and not available to the public:

[B]y written letter to the Supervisor justifying and documenting the nature and extent of the proprietary information, confidentiality protection shall be provided consistent with Wyo. Stat. Ann.. § 16–4–203(d)(v) of the Wyoming Public Records Act for the following records: “trade secrets, privileged information and confidential commercial, financial, geological or geophysical data furnished by or obtained from any person.”

Rules, supra, Ch. 3 § 45(f).

[¶ 8] After the above rules were promulgated, the Supervisor ² established a more specific policy and procedure for reviewing trade secret protection requests submitted by operators. Operators are required to submit written trade secret protection requests with two attachments; the first providing justification for deeming all or part of the formulation of a product to be a trade secret, and the second containing the product name, the product type, the CAS number for each chemical component of the product, and the concentration of the chemicals in the product. If the Supervisor finds the information to be a trade secret, the second attachment is detached from the letter requesting trade secret status and protected from public disclosure by the Supervisor, while other information not entitled to trade secret status is published on the Commission's website and thus made available to the public.

[¶ 9] On November 15, 2011, Appellants submitted a public records request seeking chemical information not publically available from the Commission. Relying upon the WPRA, the Appellants requested:

1) All records, including electronic records, WOGCC has in its possession that list or identify the type, chemical compound name, and/or Chemical Abstract Services (CAS) number of chemicals or other constituents that have been or will be injected through hydraulic fracturing or other well stimulation operations in Wyoming since September 15, 2010, by the following companies and that have not been disclosed on the WOGCC website: CHEM EOR; CESI Chemical, Inc.; NALCO Company; CalFrac Well Services; Multi–Chem Group; Baker Hughes; Kroff Well Service; Halliburton Energy; BJ Services Company; Core Lab Reservoir Optimization; SNF, Inc.; Spectrum Tracer Services; Water Mark Technologies; and Weatherford. In responding to this request, please include records provided to WOGCC by any subsidiary or agent companies.

2) All records, including correspondence, memoranda, reports, and WOGCC staff notes that are not otherwise available on the WOGCC website that discuss WOGCC's determinations regarding applicability of public disclosure exemptions, including trade secret or confidential business information exemptions, for the companies listed above.

[¶ 10] The Supervisor responded to this request on January 10, 2012, referring Appellants to information on the Commission website and providing copies of, inter alia, correspondence relating to the confidentiality requests submitted by various operators. The Supervisor redacted certain information from the documents, including the identity of chemicals he found to be exempt from disclosure as trade secrets under the WPRA, Wyo. Stat. Ann. § 16–4–203(d). The redacted information includes specific chemical compound names, chemical compound types, CAS numbers, and concentrations for each ingredient in a specific formula.

[¶ 11] The Supervisor's response complied with the provisions of Wyo. Stat. Ann. § 16–4–203(e), which requires justification for his refusal to disclose documents under the trade secret exception to the WPRA. He acknowledged that this Court had not addressed the meaning of trade secrets in the context of the WPRA, but relied upon the definition of trade secrets in Wyoming's Uniform Trade Secrets Act, Wyo. Stat. Ann. § 40–24–101(a)(iv). The Supervisor also described the multi-part test he applied in making determinations as to trade secret protections:

Other states have addressed similar public records exceptions. The state of New York addressed the disclosure of confidential information/trade secrets, and adopted a multi-part requirement for consideration as [a] trade secret. The Oil and Gas Conservation Commission has utilized this as a model to evaluate requests for trade secret status:

a. The extent to which the information is known outside the business of the person submitting the information;

b. The extent to which it is known by the person's employees and other[s] involved in the business;

c. The...