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Regulatory: The fracking debate creates a fractured legal landscape

Government regulation threatens trade secret confidentiality

The Uniform Trade Secrets Act has been enacted in some form by almost all states. A uniform national law of trade secrets, however, is still at best a distant prospect. It is probably not surprising that the state courts sometimes produce conflicting bodies of precedent interpreting the Trade Secrets Act, but at least the decisional law shares a common conceptual framework. By contrast, no such uniformity exists where the law of trade secrets intersects with state regulation of industrial and commercial activity. State legislatures and governmental agencies have taken varied and conflicting approaches to the difficult challenge of balancing the public interest in regulatory oversight against preserving the confidentiality of trade secrets. For companies operating in numerous states, these conflicting approaches can create a trap for in-house counsel and jeopardize protection of trade secrets.

Nowhere is this challenge more apparent than in the state laws and regulations governing hydraulic fracturing, or fracking. In recent years, technological advances in hydraulic fracturing have resulted in dramatic growth of fracking as a method for oil and natural gas extraction, accompanied by growing public interest in the composition of fracking fluids. Demands for disclosure create a quandary for industry, who regard the composition of these fluids as highly valuable trade secrets. Wide variation in the applicable state laws and regulations only increases the risk. In-house counsel must tread carefully to protect the company’s interests as an owner of valuable trade secrets while reassuring regulators and the public of the safety of the company’s activities, all the while recognizing that a solution that works in one state may be entirely unworkable in another.


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Matthew Prewitt

Matthew Prewitt is a partner in the Chicago office of Schiff Hardin, where he concentrates in complex litigation and also co-chairs the firm's Trade Secrets Client Services...

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Contributing Author

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Katherine G. Cisneros

Katherine G. Cisneros is an associate in Schiff Hardin’s Chicago office.

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