Wyoming District Court to Decide Fracking Fluids Trade Secrets Issue

trade secretsIn Powder River Basin Resource Council v. Wyoming Oil and Gas Conservation Commission, No. S-13-01202014 WY 37 (Wyo. Mar. 12, 2014), the Wyoming Supreme Court reversed and remanded a state district court’s decision that the chemical components of fluids used in hydraulic fracturing (a/k/a “fracking”), which energy companies must disclose to a state agency, are trade secrets and thus exempt from public scrutiny under the Wyoming Public Records Act (WPRA).

A group of environmental organizations requested that the Supervisor of the Wyoming Oil and Gas Conservation Commission publicly release the lists of ingredients of fracking fluids that companies had provided to the Commission as required by the Commission’s regulations. The Supervisor provided some information in response to the request, but redacted certain information from the materials on the ground that it was exempt from disclosure as trade secrets under the WPRA, Wyo. Stat. Ann. § 16-4-203(d). The redacted information included specific chemical compound names, chemical compound types, Chemical Abstract Service (CAS) numbers, and concentrations for each ingredient in a specific formula.

The Wyoming courts have not elaborated on the meaning of trade secrets as used in the WRPA. Therefore, in determining whether the fluid ingredients were exempt from disclosure, the Supervisor relied upon the definition of trade secrets in the Wyoming Uniform Trade Secrets Act.

When the environmental groups filed an action under the Wyoming Administrative Procedure Act (WAPA), Wyo. Stat. Ann. § 16-3-101, to challenge the Supervisor’s decision, the Wyoming District Court upheld the decision. It reviewed the definition of “trade secret” under three different statutes–the federal Freedom Information Act, the Restatement (Third) of Unfair Competition § 39, and the Uniform Trade Secrets Act (Wyo. Stat. Ann. §  40-24-101). The court concluded that information about the specific identities of hydraulic fracturing chemicals would constitute trade secrets under the definitions provided by any of those statutes. However, the court did not itself examine whether the specific information withheld by the Supervisor constituted trade secrets. Instead, the trial court applied the WAPA standard for judicial review of administrative actions and limited its inquiry to whether the Supervisor had acted reasonably.

On appeal, the Wyoming Supreme Court opined that the proper procedure by which a party may seek judicial review of the denial of a request for information under the Public Records Act is not to file an action under the WAPA, but to “apply to the district court for an order directing the custodian of the record to show cause why inspection should not be permitted.” In such a proceeding, the district court must independently determine whether the requested information is exempt under the Public Records Act, without deferring to the judgment of the records custodian. Accordingly, the Supreme Court remanded the matter to the district court with the following instruction:

[O]n presentation of an adequate application for an order to show cause, the district court should conduct appropriate proceedings and determine whether the information Appellants seek constitutes trade secrets or not, with the burden of showing that they do upon the custodian (here the Supervisor) and any intervenors.


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