The Systems Approach in FracFocus

Summary: In 2016, with version 3.0, FracFocus introduced an alternative disclosure format with the goal to reduce the masking of chemical identity by trade secrets while still protecting intellectual property. In this format, the reporting of trade-named products was decoupled from the listing of the chemicals in them. Advocates asserted that, because it would be difficult if not impossible for competitors to reverse engineer product formulas, companies would be more likely to disclose the full chemical list of products. Unfortunately, the change led to a decrease in transparency instead. First, because companies were not compelled to stop using trade secrets, their frequency is as high as in the traditional disclosure format. Second, the decoupling of products from their chemicals now prevented the public from exploring which companies are responsible for the most hazardous chemicals. Despite these failures of the original intent, the systems approach is currently used in roughly half of all disclosures and it is still erroneously described as a means to increase transparency.

Introduction

As we have touched on elsewhere, the controversy around trade secrets in a disclosure instrument revolves around striking a balance between the public’s right-to-know and the industry’s right to protect intellectual property. In this case, that intellectual property is the chemical formulas that makes up trade-named products. Industry argues that publicly disclosing all ingredients of products that require time and money to research will lead to a competitive disadvantage – as other companies can just use their research without cost. On the other hand, public advocates and health researchers point out that to understand the hazard profile of a fracking event, complete disclosure is necessary.

In the first years of FracFocus (2012-14), complaints surfaced about a number of issues with the registry (including its searchability and its lack of bulk access). The abundance of trade secrets was often highlighted¹. A 2014 report by an advisory council to the Department of Energy recommended full disclosure of chemicals and sketched out a FracFocus method, called the systems approach, to encourage more complete disclosure. We detail it below.

Industry advocates responded to a draft of that report by first asserting the industy’s interest in “highly transparent and detailed disclosure” but disagreed that FracFocus wasn’t already providing that. They stated that they were “concerned that the Draft seems to assert that a systems approach so reduces reverse-engineering concerns that it would eliminate the need to include trade secret protections at all. This is not the case.” And because of that, they voiced “concerns with the Draft’s proposed mandatory ‘systems approach’ to disclosure via FracFocus.” They recommended that it not be mandatory, but optional, to acknowledge “that in certain cases traditional trade secrets protection would still be required.”

In 2016 with version 3.0, FracFocus introduced the Systems Approach as an optional disclosure format and promoted it as a solution to the tension between hiding company secrets and the public’s right-to-know.

A walk through with one product

Under the traditional format, a disclosure form would list an additive, often identified by its trade name and supplier, followed immediately by a list of its constituent chemical ingredients, usually identified by name and Chemical Abstracts Service (CAS) Registry Number. For instance, if the corrosion inhibitor additive “HAI-404M” marketed by Halliburton was used, the traditional disclosure would list “HAI-404M” and then specify its components, such as 1-(benzyl)quinolinium chloride, isopropanol, and methanol, directly associated with that product name.

On the other hand, operators using the Systems Approach submit information in two distinct lists within a single disclosure form. One list contains the additives used, often identified by their function (e.g., “Corrosion Inhibitor,” “Friction Reducer,” “Biocide”) as well as a specific trade name and the supplier. The second list provides a comprehensive inventory of all chemical ingredients (with CAS numbers) used across all the additives injected during that specific fracturing job. Crucially, this second list does not link any individual chemical back to the specific additive(s) it was part of.

So, from the previous example, under the Systems Approach, the additive list might simply state “Corrosion Inhibitor” alongside the trade name HAI-404M and the supplier, Halliburton. The separate chemical ingredient list would include 1-(benzyl)quinolinium chloride, isopropanol, and methanol, but these would appear alongside potentially dozens of other chemicals derived from all other additives used in the same operation (e.g., components of friction reducers, scale inhibitors, etc.), without any indication of which chemical came from which additive. The FracFocus website describes this method as making it very difficult or impossible for an end user to connect the ingredients back to their respective trade names.

Looking at FracFocus disclosures

As described above, the Systems Approach was different from the traditional approach in one important way. Let’s look at how that appears on full FracFocus disclosures. The traditional disclosure shows the company’s product name connected to the individual chemical ingredients of the product, as illustrated here (click to expand forms):

But the Systems Approach format places the product names in a separate list (here, above the green line) from the chemical information (below the green line, click to expand forms):

Again, it is argued that, because disclosures often list dozens of chemicals, it would be very difficult for a company’s competitors to reverse-engineer which chemicals go with what products. This disconnection should thus give the companies the protection to unmask trade secrets without tipping off their competitors while theoretically allowing the public to see all chemicals of a fracking job.

Interestingly, well before the Systems Approach was introduced, some companies hacked their own version of it into the traditional disclosure format of FracFocus. To do that, those companies would name all of the products of a fracking job as the specific product name of every chemical, thus making it impossible to connect an individual product to an individual chemical. Thousands of disclosures take this form.

How successful is the approach?

To evaluate how effective the Systems Approach is at reducing trade secret masking, we can look directly at how frequently they occur through time. In an early but thorough analysis of the approach, Trickey et. al (2020²) examined FracFocus data between 2011 and 2018 and were able to compare “rates of withholding” (that is, trade secret use) before and after the introduction of the Systems Approach.

The authors found that in the first year of the new method, rates of withholding did indeed decrease, albeit slightly. (An earlier study³ also found significant decreases using the hacked version 2.0 disclosures). However, by the end of the study period, the rates were slightly higher with the new method. The authors concluded that there was little evidence to support the claim that the Systems Approach actually reduced trade secret use.

We can use recent Open-FF data to update this analysis⁴. Although the characterization of trade secret records by Trickey et al. differs somewhat from our treatment, the overall pattern from the earlier work holds through today.

As in Trickey et al., the first year of the Systems Approach in this updated analysis showed reduced trade secrets compared to the traditional format. After that, there is little difference between the two formats. (The divergence in 2025 may be an artefact of the small sample size of a partial year.) There is certainly no indication that the number of trade secrets have decreased in the Systems Approach disclosures.

(See footnotes⁵ below for another early study on a different measure.)

The fatal flaw

As a mechanism to reduce the use of trade secret masking, the Systems Approach essentially did nothing. Why didn’t the Systems Approach produce the intended effect of reduction of trade secrets?

On hind sight, one critical aspect of the Systems Approach is absent. While the format may encourage companies to unmask their trade secrets without fear of discovery, there is nothing to compel them to do so. That is, trade secret claims can still be made with the System Approach with no penalty. For example, the FracFocus data entry software does not question why a trade secret is being used in a Systems Approach disclosure. Also, we have no evidence that any regulatory office has prevented companies from using trade secrets in the Systems Approach. Virtually every major fracking state has significant trade secret presence in Systems Approach disclosures.

This failure of the Systems Approach in FracFocus is not caused by the design of the method. As we discuss below, in at least two other places, California and Colorado, the method has more promise, simply because all chemicals must be identified and trade secrets are not allowed; and at the same time, intellectual property rights are still protected. However, the implementation of System Approach in FracFocus depends completely on the industry’s voluntary behavior to unmask trade secrets. There seems to be no one compelling companies to take those steps.

But there is more to this failure: The use of the Systems Approach has led to an overall decrease in transparency. With the traditional format, the public could learn which products and which companies were responsible for hazardous chemicals identified in a fracking job. But by disconnecting all products from their chemical ingredients, the Systems Approach format makes it impossible for end users to make those connections for any chemical on a disclosure, not just the trade secrets. For example, the supplier of ethylene glycol, a chemical of concern on many lists, is unattributable in over 200,000 records. These non-trade secret records are predominantly in Systems Approach disclosures.

Since 2017, roughly half of disclosures published are in the Systems Approach format and 85% of those have at least one trade secret.

Open-FF blog series

Open-FF has recently analyzed patterns of trade secret use for many states. In many of these reports, we provide specific examples of the use of the Systems Approach. Visit this site to explore those reports.

Conclusions

While the intention behind the introduction of the Systems Approach was sound, the execution was insufficient. It is unfortunate that the method is still used and its deficiencies not appreciated or even understood.

Two states have implemented something like a systems approach, but with more promise. In both cases, the products are decoupled from their chemical components. California began prohibiting trade secret declarations in their state-run instrument in 2015. FracFocus disclosures from the same fracking jobs starting that year suddenly stopped declaring trade secrets. Whether that was due to an unmasking of trade secrets or the discontinuation of those materials from fracking jobs is unclear.

A 2022 law in Colorado prohibits trade secrets as well in their state-run instrument. The Colorado disclosure system has had a slow start but early disclosures show promise of greater transparency compared to FracFocus disclosures of the same jobs. Hopefully, the state will compel all companies to follow the law and we can begin to see full chemical disclosure.

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1. See the EPA analysis of early FracFocus data: https://www.epa.gov/sites/default/files/2015-03/documents/fracfocus_analysis_report_and_appendices_final_032015_508_0.pdf ↩︎
2. Trickey, Kevin, Nicholas Hadjimichael, and Prachi Sanghavi. “Public Reporting of Hydraulic Fracturing Chemicals in the USA, 2011–18: A before and after Comparison of Reporting Formats.” The Lancet Planetary Health 4, no. 5 (May 1, 2020): e178–85. https://doi.org/10.1016/S2542-5196(20)30076-0.
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3. Another analysis of very early Systems Approach disclosures found decreases in trade secret use: Konschnik, Katherine, and Archana Dayalu. “Hydraulic Fracturing Chemicals Reporting: Analysis of Available Data and Recommendations for Policymakers.” Energy Policy 88 (January 2016): 504–14. https://doi.org/10.1016/j.enpol.2015.11.002. ↩︎
4. There are no fields in FracFocus that explicitly identify the Systems Approach format. To distinguish this format, Open-FF examined all of each disclosure’s chemical records (that is, those records that have a valid CASRN or proprietary designation). If any of those records has a value in the TradeName field different from “Ingredient Container” (the generic value in version 4.0 indicating no TradeName associated with the record), we mark that disclosure as non-Systems Approach. As mentioned, disclosures often simulated a disconnect between products and their chemicals by naming many products in every chemical record – and would not be included in our Systems Approach classification described here. Only disclosures labeled as FracFocus version 3.0 or 4.0 are included in this analysis. ↩︎
5. Another study took a different tack:
   
   Hill, Christopher B., Om P. Yadav, and Eakalak Khan. “Hydraulic Fracturing Chemical Disclosure Policy and Data Analysis: Metrics and Trends in Transparency.” Environmental Science & Technology 55, no. 6 (March 16, 2021): 3918–28. https://doi.org/10.1021/acs.est.0c08151.
   
   This study used the mass of trade secret materials (using the field PercentHFJob – the percentage (by weight) of the total fracking fluid) to assess the effect of the Systems Approach format.
   
   First, the authors found that the mass of withheld chemicals decreased substantially between 2013 and 2019 – over 40%. (However, more recent analysis with Open-FF indicates that PercentHFJob has decreased across all chemicals generally – most likely a indication that the industry is learning to use chemicals more efficiently. It is not clear if Hill et al. took that into account.) The authors also found that systems approach disclosures on average had a lower mass of withheld chemicals than the traditional disclosures. These authors conclude that these and other changes in FracFocus had, in general, improved the trade secret situation.
   
   When Open-FF performed a similar analysis across more years, we found that the pattern was not persistent and if anything, the median mass of trade secrets was greater in the Systems Approach. ↩︎