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California oil companies voice trade secrets concern

California is the fourth-largest producer of oil in the United States. If oil companies can tap into a deposit in the Monterey Shale, another 15.4 billion barrels of oil could be unlocked. To get at this deposit, the companies would need to use a process called hydraulic fracturing, in which they shoot water, sand and chemicals into the ground to break up the rock that holds the oil.

However, California lawmakers are attempting to implement new rules regulating hydraulic fracturing, and this has oil companies voicing serious concerns about protecting their intellectual property.

California's Conservation Department wants oil companies to disclose the composition of their fracking fluids. The companies would have to disclose their formulas to regulators in the event of a chemical spill and to physicians if they need the information to treat a patient or respond to a medical emergency.

The oil companies, though, say that the composition of their fracking fluid is a trade secret that they should not be forced to disclose. They worry that disclosing their formulas to regulators could then make them available to the wider public. They say competitors could get a hold of the information, thus disrupting their ability to operate a profitable business.

California law allows the public to request access to government records. However, the state could grant the Conservation Department authority to notify companies when their information is requested. The companies would then have the ability to go to court to request an injunction against the release of the information.

The proposed rules are expected to be finalized sometime in the next 12 to 18 months.

Source: Fuel Fix, "California fracking rules plan stirs trade secrets fight," April 25, 2013

Our law firm represents businesses in trade secrets litigation. For more information, please visit our website.

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