in the united states court of appeals for the · pdf filehalliburton energy services, inc. is...

1382705_1

IN THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 14-3467

DR. ALFONSO RODRIGUEZ,

Appellant,

v.

SECRETARY OF THE DEPARTMENT OF ENVIRONMENTAL PROTECTION

OF THE COMMONWEALTH OF PENNSYLVANIA, ET AL.,

Appellees.

__________________________________________________________________

On Appeal from the Judgment of the United States District Court

for the Middle District of Pennsylvania entered June 30, 2014

(Honorable A. Richard Caputo Presiding)

__________________________________________________________________

BRIEF OF AMICUS CURIAE HALLIBURTON ENERGY SERVICES, INC.

IN SUPPORT OF APPELLEES SECRETARY OF THE DEPARTMENT OF

ENVIRONMENTAL PROTECTION OF THE COMMONWEALTH OF

PENNSYLVANIA AND THE ATTORNEY GENERAL OF THE

COMMONWEALTH OF PENNSYLVANIA SEEKING AFFIRMANCE OF THE

DISTRICT COURT’S ORDER DISMISSING APPELLANT’S AMENDED

COMPLAINT

Michael M. Meloy (Pa. No. 39060)

Lynn R. Rauch (Pa. No. 52725)

Todd D. Kantorczyk (Pa. No. 93707)

MANKO, GOLD, KATCHER & FOX, LLP

401 City Avenue, Suite 901

Bala Cynwyd, PA 19004

Phone: (484) 430-5700

Fax: (484) 430-5711

[email protected]

[email protected]

[email protected]

Counsel for Amicus Curiae

Case: 14-3467 Document: 003111846723 Page: 1 Date Filed: 01/12/2015

i 1382705_1

CORPORATE DISCLOSURE STATEMENT

Halliburton Energy Services, Inc. is a wholly-owned subsidiary of Halliburton

Company, a publicly traded corporation. No publicly held corporation owns 10%

or more of the stock of Halliburton Company.


ii 1382705_1

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ................................................................................... iii

I. STATEMENT OF IDENTITY OF AMICUS CURIAE, ITS INTERESTS,

THE SOURCE OF ITS AUTHORITY, AND STATEMENT OF

CONTRIBUTIONS ................................................................................................................... 1

II. PROCEDURAL BACKGROUND AND STANDARD OF REVIEW .............. 3

III. SUMMARY OF ARGUMENT ..................................................................................... 4

IV. ARGUMENT ..................................................................................................................... 7

A. Protection of Trade Secrets is Critical to Innovation ................................. 7

B. Act 13 Utilizes the Same Balanced Approach to Protecting Trade Secrets

While Affording Health Professionals Access to Such Information As

Has Been Widely Used Across the Country ............................................11

C. Extensive Information Regarding Hydraulic Fracturing Fluids is Readily

Available ...................................................................................................14

D. The District Court Correctly Concluded that Appellant’s Alleged Injury

Would Not Be Redressed by a Favorable Decision .................................17

V. CONCLUSION ............................................................................................................... 23


iii 1382705_1

TABLE OF AUTHORITIES

Cases Page

Air Products and Chemicals, Inc. v. Johnson,

442 A.2d 1114 (Pa. Super. 1982) .................................................................... 9

Bimbo Bakeries USA, Inc. v. Botticella,

613 F.3d 102 (3d Cir. 2010) ............................................................................ 9

Coca Cola Bottling Co. v. Coca Cola Co.,

107 F.R.D. 288 (D. Del. 1985) ........................................................................ 8

CVD, Inc. v. Raytheon Co.,

769 F.2d 842 (1st Cir. 1985) ........................................................................... 8

Dallas Cowboys Cheerleaders, Inc. v. Scoreboard Posters, Inc.,

600 F.2d 1184 (5th Cir. 1979) ....................................................................... 23

Davis v. Michigan Dept. of Treasury,

489 U.S. 803 (1989) ...................................................................................... 18

Erie Telecomms. v. Erie,

853 F.2d 1084 (3d Cir. 1988) .......................................................................... 4

Felmlee v. Lockett,

351 A.2d 273 (Pa. 1976) ................................................................................. 9

Fowler v. UPMC Shadyside,

578 F.3d 203, 206 (3d Cir. 2009) .................................................................... 4

Heller v. Frankston,

475 A.2d 1291 (Pa. 1984) ....................................................................... 18, 19

In re Capital Cases/ABC Inc.,

918 F.2d 140 (11th Cir. 1990) ....................................................................... 23

Kewanee Oil Co. v. Bicron Corp.,

416 U.S. 470 (1974) ..................................................................................... 7,8


iv 1382705_1

Lloyd’s of London v. UPS of Am., Inc.,

762 F.3d 332 (3d Cir. 2014) ............................................................................ 4

Phillip Morris v. Reilly,

312 F.3d 24 (1st Cir. 2002) ..................................................................... 21, 22

Robinson Twp. v. Commonwealth,

83 A.3d 901 (Pa. 2013) ................................................................. 7, 19, 20, 21

Rodriguez v. Abruzzo,

2014 U.S. Dis. LEXIS 88610, Civil Action No. 3:12-cv-1458

(M.D. Pa., June 30, 2014) ......................................................................... 3, 17

Salsbury Laboratories, Inc. v. Merieux, Inc.,

908 F.2d 706 (11st Cir. 1990) ......................................................................... 8

Saulsbury v. Bethlehem Steel Co.,

196 A.2d 664 (Pa. 1964) ............................................................................... 18

Van Products Co. v. General Welding and Fabricating Co.,

213 A.2d 769 (Pa. 1965) ................................................................................. 9

West Shore School Dist. v. Pennsylvania Labor Relations Bd.,

570 A.2d 1354 (Pa. Commw. Ct. 1990) ........................................................ 19

Wexler v. Greenberg,

160 A.2d 430 (Pa. 1960) ................................................................................. 9

Constitutional Provisions

First Amendment to the Constitution of the United States ........................... passim

Fifth Amendment to the Constitution of the United States ............................ 19, 20


v 1382705_1

Statutes

29 U.S.C. §§ 651-678............................................................................................ 12

42 U.S.C. § 11043 ................................................................................................. 11

42 U.S.C. §§ 11043(a), (b), (c) ....................................................................... 10, 11

42 U.S.C. §§ 11001-11050 (2006) ........................................................................ 11

35 P.S. § 7311(b) ................................................................................................... 13

58 P.S. § 601.101-601.605 ...................................................................................... 2

1 Pa. C.S.A. § 1925 ............................................................................................... 18

12 Pa. C.S.A. §§ 5301-5308 ................................................................................... 9

58 Pa. C.S.A. § 3222.1(b)(2) ................................................................................ 14

58 Pa. C.S.A. § 3222.1(b)(3) ................................................................................ 15

58 Pa. C.S.A. §§ 3201-3274 .................................................................................. 2

58 Pa. C.S.A. § 3222.1(b)(10) ....................................................................... passim

58 Pa. C.S.A. § 3222.1(b)(11) ....................................................................... passim

225 ILCS § 732/1-77(l), (m) ................................................................................. 13

Regulations

29 C.F.R. § 1910.1200 .......................................................................................... 12

29 C.F.R. § 1910.1200(g)(2) ........................................................................... 12, 15

29 C.F.R. § 1910.1200(i) ...................................................................................... 11

29 C.F.R. § 1910.1200(i)(1)(ii) ............................................................................. 13


vi 1382705_1

58 Fed. Reg. 17574 (March 26, 2012) .................................................................. 12

2 Colo. Code Regs. 404-1:205A ........................................................................... 13

16 Tex. Admin. Code § 3.29(c)(4) ........................................................................ 13

Kan. Admin. Regs. § 82-3-1402(b) ...................................................................... 13

Mont. Admin. R. §§ 36.22.1016(3), (4) ................................................................ 13

Tenn. Comp. R. & Regs. § 0400-53-01-03(1)(f) .................................................. 13

Page

Other Authorities

Restatement (First), Torts § 757 ............................................................................. 9

Miscellaneous

Ground Water Protection Council, Modern Shale Gas Development

in the United States: A Primer (April 2009) ........................................................ 10

http://fracfocus.org ................................................................................................ 14

http://www.halliburton.com/public/projects/pubsdata/Hydraulic_Fracturing/

fluids_disclosure.html ........................................................................................... 15


http://fracfocus.org/

http://www.halliburton.com/public/projects/pubsdata/Hydraulic_Fracturing/

1

I. STATEMENT OF IDENTITY OF AMICUS CURIAE, ITS

INTERESTS, THE SOURCE OF ITS AUTHORITY, AND

STATEMENT OF CONTRIBUTIONS

Halliburton Energy Services, Inc. (“HESI”) is a leading provider of services

to the oil and gas industry and is the global leader with respect to hydraulic

fracturing services. Hydraulic fracturing is a process that utilizes induced pressure

to create small cracks or fissures in rock formations (typically thousands of feet

below the ground surface) that contain oil or natural gas so that the oil or natural

gas can be recovered from those formations. The hydraulic fracturing process is

highly technical in nature and represents an amalgam of different engineering and

scientific disciplines.

HESI helped pioneer the use of hydraulic fracturing in the 1940s. Since

then, HESI has stimulated hundreds of thousands of wells through the use of

hydraulic fracturing and has been responsible for numerous innovations in the field

of hydraulic fracturing, which were made possible by investment in extensive

research and development of innovative technologies, key aspects of which

constitute trade secrets. For example, HESI spent $588 million on research and

development in 2013 alone, including millions of dollars on developing fluid

additives to enhance the production of new and existing oil and gas wells. These

innovations have helped fuel job growth and have enhanced the nation’s energy

security, while achieving continuous environmental improvements. If HESI’s


2

trade secrets are made public, then HESI will be unable to recoup the investment in

dollars, time, and human resources it has made and it will lose any incentive to

continue to make such investments in research and development.

HESI is filing this brief as an amicus curiae because Appellant’s claims

represent a direct assault on the balanced statutory framework that the

Pennsylvania General Assembly adopted as part of comprehensive revisions to

Pennsylvania’s Oil and Gas Act (commonly referred to as Act 13)1 to enable health

professionals to obtain certain types of information in cases of medical need while

at the same time protecting the intellectual property held by HESI and similarly

situated entities. The statutory approach that Appellant attacks is the same well

accepted and balanced approach that has long been used in multiple federal and

state statutes in a variety of contexts.

HESI’s interests in this appeal are distinct from the interests of either

Appellant or Appellees. The intellectual property that Appellant seeks to

appropriate and then destroy through public disclosure belongs to HESI and

similarly situated entities, meaning that the consequences flowing from

Appellant’s claims fall directly on HESI. As a result, HESI has a direct and

significant property interest at stake in this litigation. Accordingly, the property

1 The revisions to the Pennsylvania Oil and Gas Act of 1984, 58 P.S. §§ 601.101 –

601.605, are contained in P.L 87, No. 13 which was signed on February 14, 2012,

and became effective on April 16, 2012. These revisions are codified at 58 Pa.

C.S.A. §§ 3201 -3274.


3

rights and interests of HESI and similarly situated entities are vital to consider in

the outcome of this appeal.2

All parties but Appellant have consented to HESI filing this brief as an

amicus curiae. HESI has therefore prepared a motion for leave to file this brief in

accordance with Rule 29(b) of the Federal Rules of Appellate Procedure, which

has been filed concurrently.

No party's counsel authored this brief in whole or in part. No party, nor its

respective counsel, contributed money to fund the preparation or submission of this

brief, and no person, other than HESI, contributed money to fund the preparation

or submission of this brief.

II. PROCEDURAL BACKGROUND AND STANDARD OF REVIEW

Appellant is seeking to overturn Judge Caputo’s decision to dismiss the

amended complaint filed by Appellant with the United States District Court for the

Middle District of Pennsylvania on January 31, 2014, challenging the

constitutionality of Sections 3222.1(b)(10) and 3222.1(b)(11) of Act 13, 58

Pa. C.S.A. §§ 3222.1(b)(10) and (11). See Rodriguez v. Abruzzo, 2014 U.S. Dist.

LEXIS 88610, Civil Action No. 3:12-cv-1458 (M.D. Pa., June 30, 2014).

2 Given its interests in the litigation, as part of the proceedings below, Judge

Caputo granted HESI leave to file a brief as an amicus curiae in support of the

motions to dismiss filed by Appellee Kane and Appellee Secretary of Department

of Environmental Protection. (Dckt. Doc. No. 54). Judge Caputo’s Memorandum

dismissing Appellant’s amended complaint expressly referenced HESI’s amicus

curiae brief. (Rodriguez v. Abruzzo at *15-16, fn. 3).


https://advance.lexis.com/api/document/collection/cases/id/5CJH-K9R1-F04F-40NJ-00000-00?context=1000516

https://advance.lexis.com/api/document/collection/cases/id/5CJH-K9R1-F04F-40NJ-00000-00?context=1000516

4

The District Court dismissed Appellant’s amended complaint after allowing

Appellant to amend his initial complaint to cure the deficiencies identified in the

District Court’s initial decision dismissing the matter on October 13, 2013.

Notwithstanding this second bite at the apple, Appellant failed to show that he is

entitled to pursue his claims.

HESI concurs that this Court’s review of Judge Caputo’s decision to dismiss

Appellant’s amended complaint is plenary. Certain Underwriters at Interest at

Lloyd’s of London v. UPS of Am., Inc., 762 F.3d 332, 334 (3d Cir. 2014), citing

Fowler v. UPMC Shadyside, 578 F.3d 203, 206 (3d Cir. 2009). Where review is

plenary, this Court may affirm a correct decision by the District Court on any

grounds supported by the record even if the District Court did not rely on those

grounds. See, e.g., Erie Telecomms. v. Erie, 853 F.2d 1084, 1089, fn.10 (3d Cir.

1988).

III. SUMMARY OF ARGUMENT

Lawmakers and the courts have consistently recognized that protection of

trade secrets is one of the cornerstones of a marketplace that is kept strong and

vibrant through innovation.3 These longstanding principles regarding the

protection of trade secrets have helped facilitate rapid and significant advances in

hydraulic fracturing.

3 Trade secrets and confidential proprietary information are referred to collectively

herein as “trade secrets” unless the context clearly indicates otherwise.


5

The two provisions of Act 13 that Appellant challenges—Sections

3222.1(b)(10) and 3222.1(b)(11)—obligate companies such as HESI to disclose

their trade secrets to health professionals who need this confidential information to

diagnose or treat an individual patient under certain enumerated circumstances.

Appellant implies that this framework is a new restriction that infringes on his

rights under the First Amendment of the United States Constitution and

significantly impairs his ability to practice medicine. As in the proceedings below,

however, Appellant ignores two critical points that undercut his constitutional

claims and support the District Court’s order dismissing his amended complaint.

First, Appellant fails to mention that Sections 3222.1(b)(10) and

3222.1(b)(11) are based upon the same well-accepted approach that has been

utilized across the country to balance the informational needs of health

professionals to diagnose and treat individual patients with the rights of entities in

any industry to protect their intellectual property by preventing public disclosure of

those trade secrets. Second, Appellant refuses to acknowledge that an extensive

amount of information regarding hydraulic fracturing fluids is readily available to

him through various channels, and that he has used (and apparently is using) this

publicly available information to “routinely” treat patients exposed to hydraulic

fracturing fluids consistent with his ethical duties without requesting access to

trade secret information through the processes described in Sections 3222.1(b)(10)


6

and 3222.1(b)(11). Against this backdrop, Appellant has not suffered the type of

injury necessary to support standing as the District Court properly concluded.4

Moreover, Appellant seeks nothing less than a fundamental recasting of the

provisions of Act 13 at issue – preserving on the one hand the mechanism for

Appellant to gain the intellectual property that he would otherwise have no right to

obtain, while eliminating on the other hand the obligations imposed by Act 13 to

protect this intellectual property once obtained. Appellant’s position regarding the

purported severability of Sections 3222.1(b)(10) and 3222.1(b)(11) reveals that his

efforts to invoke constitutional protections are simply a pretext to broadly

disseminate information concerning hydraulic fracturing at the expense of the

owners of valuable intellectual property rights. Specifically, Appellant argues that

the District Court can and should cleave the challenged statutory sections mid-

sentence so as to retain the words that require disclosure of trade secrets to health

care professionals, but invalidate and strike the clauses requiring those health care

professionals to treat this information as protected trade secrets. Appellant’s

argument, however, is contrary to well-established principles regarding

severability and relies upon a mischaracterization of the Pennsylvania Supreme

4 Indeed, as the District Court found, Appellant has not attempted to utilize the

provisions of Act 13 that he is challenging to obtain trade secret information. The

concerns that Appellant has raised to support his claims of injury are therefore

wholly speculative.


7

Court’s decision in Robinson Township v. Commonwealth of Pennsylvania, 83

A.3d 901 (Pa. 2013) (ruling on certain challenges to elements of Act 13).

The remedy that Appellant seeks is simply not available. In short, Appellant

has failed to state a claim upon which relief can be granted. Whether this

conclusion is viewed independently or in the context of Appellant’s lack of

standing because his claims are not redressable, the District Court properly

dismissed Appellant’s amended complaint.

IV. ARGUMENT

A. Protection of Trade Secrets is Critical to Innovation

Trade secrets are a form of intangible intellectual property, the value of

which would be lost through the uncontrolled disclosure that Appellant demands.

Protection of trade secrets is one of the cornerstones of a marketplace that is kept

strong and vibrant through innovation. The ability to harvest the fruits of

investment in research and development, and the continuing motivation for

industry to make such investments, is undercut if intellectual property is not

protected.

In the seminal case of Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470

(1974), the Supreme Court upheld the protection of trade secrets under state law

against claims that such protections were preempted by federal patent law. The

Court observed that “[t]he maintenance of standards of commercial ethics and the


8

encouragement of invention are the broadly stated policies behind trade secret

law,” and found that “the patent policy of encouraging invention is not disturbed

by the existence of another form of incentive to invention.” Id. at 481, 484-485.

The important role that protection of trade secrets plays in spurring innovation has

been widely recognized. See, e.g., Salsbury Laboratories, Inc. v. Merieux

Laboratories, Inc., 908 F.2d 706, 710 (11th Cir. 1990) (trade secret law seeks to

encourage innovation); CVD, Inc. v. Raytheon Co., 769 F.2d 842, 850 (1st Cir.

1985) (“the rationale behind state trade secret law is to encourage invention, and to

provide innovators with protection for the fruits of their labors”). Consistent with

these principles, trade secret protection has been historically provided for a variety

of products and technologies, including products that people routinely eat, drink,

and use in their homes such as Coca-Cola,5 KFC’s fried chicken, McDonald’s

special sauce, and WD-40.

In Pennsylvania, protection of trade secrets has long been recognized as a

key facilitator of economic development. For example, in evaluating whether an

employee had misappropriated trade secrets from his former employer, the

Pennsylvania Supreme Court recognized both the value of trade secrets and the

need for those who have been entrusted with them to maintain them in confidence:

5 The exact make-up of the “natural flavorings” listed on the Coca-Cola ingredient

label is a trade secret that is closely guarded by the Coca-Cola Company, which

keeps the formula locked in a vault. See Coca-Cola Bottling Co. v. Coca-Cola

Co., 107 F.R.D. 288 (D. Del. 1985).


9

Society as a whole greatly benefits from technological improvements.

Without some means of post-employment protection to assure that

valuable developments or improvements are exclusively those of the

employer, the businessman could not afford to subsidize research or

improve current methods.

Wexler v. Greenberg, 160 A.2d 430, 434-435 (Pa. 1960). See also Bimbo Bakeries

USA, Inc. v. Botticella, 613 F.3d 102 (3d Cir. 2010) (“… there is a generalized

public interest in ‘upholding the inviolability of trade secrets and enforceability of

confidentiality agreements’”).

Consistent with embracing the importance of trade secrets, the Pennsylvania

courts have traditionally recognized a cause of action where a person has disclosed

or used a misappropriated trade secret. See, e.g., Van Products Co. v. General

Welding and Fabricating Co., 213 A.2d 769 (Pa. 1965) (adopting Restatement

(First), Torts § 757 concerning liability for disclosure or use of a trade secret);

Felmlee v. Lockett, 351 A.2d 273 (Pa. 1976); Air Products and Chemicals, Inc. v.

Johnson, 442 A.2d 1114 (Pa. Super. 1982) (enjoining disclosure of information

related to enhanced oil recovery systems found to be trade secrets under §757

standard). Trade secrets are now also protected under the Pennsylvania Uniform

Trade Secrets Act (“PUTSA”), 12 Pa. C.S.A §§ 5301-5308, which, among other

things, provides for injunctive relief and monetary damages against persons who

have a duty to maintain the confidentiality of trade secrets but disclose them (or

threaten to disclose them) without permission.


10

The protection of trade secrets has had the desired effect when it comes to

hydraulic fracturing. The development and protection of innovative proprietary

technologies have yielded both increased efficiencies in oil and gas production as

well as significant environmental benefits as compared to nonproprietary

technologies.6 HESI itself has introduced a variety of new products for use in

hydraulic fracturing in the last few years that are a product of its multi-million

dollar research program, including innovative fluids that facilitate the recycling of

wastewaters for use in hydraulic fracturing operations and fluids with ingredients

sourced entirely from the food industry. Failure to protect proprietary information

would create substantial disincentives for a company like HESI to offer these types

of innovative products for use in a particular jurisdiction. Moreover, these

disincentives could have a chilling effect on future research and development,

meaning that innovative, more effective and environmentally-friendly products

would never be developed, resulting in lost opportunities to further the responsible

and efficient development of oil and gas resources.

6 See, e.g., Ground Water Protection Council, Modern Shale Gas Development in

the United States: A Primer (April 2009), at 56-57 (available at

http://energy.gov/fe/downloads/modern-shale-gas-development-united-states-

primer) (discussing the use of “sophisticated and state-of-the-art techniques to

accomplish an effective, economic and highly successful fracture stimulation”).


http://energy.gov/fe/downloads/modern-shale-gas-development-united-states-primer

http://energy.gov/fe/downloads/modern-shale-gas-development-united-states-primer

11

B. Act 13 Utilizes the Same Balanced Approach to Protecting Trade

Secrets While Affording Health Professionals Access to Such

Information As Has Been Widely Used Across the Country

Appellant implies throughout his brief that the provisions of Act 13 at issue

represent a new and novel abridgment of his constitutional rights. In fact, the

approach used in Act 13 facilitating access by health professionals to trade secrets

regarding chemicals in circumstances of medical need is fully consistent with the

manner in which this issue has been addressed for many years in other contexts.

As described below, Act 13 reflects an approach for balancing the needs for

protecting trade secrets with particular needs of health professionals that has long

been widely utilized across the country and in Pennsylvania itself.

At the federal level, two important fonts of authority govern disclosure of

information regarding various types of chemicals. In 1986, Congress passed the

Emergency Planning and Community Right-to-Know Act (“EPCRA”), 42 U.S.C.

§§ 11001–11050. EPCRA fundamentally redefined the obligations of those using,

storing or otherwise in possession of hazardous chemicals to provide information

about such chemicals to local emergency responders while maintaining protections

for trade secrets. See 42 U.S.C. §§ 11021-23 and 11042. At the same time,

EPCRA contains provisions enabling health professionals to obtain trade secret

information in the case of medical need subject to confidentiality protections. 42

U.S.C. § 11043. Indeed, the provisions of 42 U.S.C. §§ 11043(a) and (b), adopted


12

almost 30 years ago, are remarkably similar to Sections 3222.1(b)(10) and (11) of

Act 13, which Appellant argues are unconstitutional.

In addition to EPCRA, regulations adopted by the Occupational Safety and

Health Administration pursuant to the Occupational Safety and Health Act, 29

U.S.C. §§ 651-678, governing the manner in which hazards associated with

chemicals are communicated within the workplace serve a critical role in

facilitating the flow of information regarding such chemicals. See 29 C.F.R.

§ 1910.1200. First promulgated in 1983, these regulations are referred to as the

Hazard Communication Standard (“HCS”). See 58 Fed. Reg. 17574 (March 26,

2012).

One of the hallmarks of the HCS has been the requirement that employers

obtain material safety data sheets (now known as safety data sheets or “SDSs”) for

chemicals present in the workplace. An SDS must include a broad range of

information about a chemical including identification of hazards, ingredients, first-

aid measures, accidental release measures, exposure controls and personal

protection, physical and chemical properties, and toxicological information. See

29 C.F.R. § 1910.1200(g)(2). At the same time, the HCS includes long-standing

procedures to protect trade secrets from disclosure while simultaneously allowing

health professionals to obtain such trade secrets in the event of medical necessity,


13

subject to confidentiality agreements much like the provisions of Act 13 at issue

herein. See 29 C.F.R. § 1910.1200(i).

The foregoing provisions of EPCRA and the HCS belie Appellant’s claims

that the Pennsylvania General Assembly sailed into uncharted (and constitutionally

impermissible) waters in adopting the provisions of Act 13 that Appellant

challenges. Instead, the General Assembly borrowed the approach that has been

used nationally for more than a quarter-century to balance protection of intellectual

property and medical need. Perhaps even more telling is the fact that when the

General Assembly enacted the Pennsylvania Worker and Community Right-to-

Know Act in 1984, it coupled protection of trade secrets with conditional access by

health professionals in virtually the same manner employed in EPCRA and the

HCS as well as Act 13. See 35 P.S. § 7311(b).

Simply put, the approach used in Act 13 has been part of Pennsylvania law

for more than 30 years. The provisions of Act 13 in question likewise parallel the

manner in which other states have addressed the issue in the context of regulating

oil and gas operations.7 Whatever Appellant may allege concerning the purported

impact of Act 13 on his medical practice, the approach used in Act 13 is far from

7 Parallel approaches are found in, among other jurisdictions: Colorado (2 Colo.

Code Regs. 404-1:205A); Illinois (225 ILCS § 732/1-77(l), (m)); Kansas (Kan.

Admin. Regs. § 82-3-1402(b)); Montana (Mont. Admin. R. § 36.22.1016(3), (4));

Tennessee (Tenn. Comp. R. & Regs. § 0400-53-01-.03(1)(f)); and Texas (16 Tex.

Admin. Code § 3.29(c)(4)).


14

new, has been effectively implemented, and does not appear to have impeded the

health care profession’s ability to carry out its important mission.

C. Extensive Information Regarding Hydraulic Fracturing Fluids is

Readily Available

In his amended complaint and in his brief before this Court, Appellant

portrays his situation as one where absent the required disclosure of trade secrets to

health professionals provided by Sections 3222.1(b)(10) and (11), he would largely

be bereft of information concerning the chemical makeup of hydraulic fracturing

fluids. Information of the type covered by the challenged provisions of Act 13,

however, is but a discrete, limited slice of the universe of information that is

otherwise readily available regarding hydraulic fracturing fluids. As a result,

contrary to Appellant’s misleading assertions, the composition of hydraulic

fracturing fluids is not shrouded in mystery.

In Pennsylvania, well operators are required under Act 13 to post chemical-

specific information regarding the constituents in the hydraulic fracturing fluid

used to stimulate an unconventional well on a chemical disclosure registry known

as FracFocus. See 58 Pa. C.S.A. § 3222.1(b)(2). This information is publicly

available on a well-by-well basis.8 Although the precise identity or concentration

8 FracFocus can be accessed at http://fracfocus.org. FracFocus currently includes

lists of chemicals used in hydraulic fracturing operations for nearly 5,000 wells in

Pennsylvania dating back to 2008. The site also contains a variety of general

information about chemicals that are commonly used in hydraulic fracturing fluids.


15

of a chemical that qualifies as a trade secret does not need to be posted, Act 13

expressly provides that the chemical family or similar description associated with

that trade secret chemical must be posted. 58 Pa. C.S.A. § 3222.1(b)(3).

In addition to the detailed information available through FracFocus, each

chemical additive used in hydraulic fracturing fluids must have an SDS in

accordance with the requirements of the HCS described above. 29 C.F.R.

§ 1910.1200(g)(2). SDSs, which contain a wealth of information pertinent to

medical care, are readily available to the public and are even posted on the web

sites of certain chemical companies and service providers. See, e.g.,

http://www.halliburton.com/en-US/tools-resources/safety/material-safety-data-

sheet-search.page?node-id=hfci4043. Even when the identity of a particular

chemical ingredient or concentration in a chemical additive is protected as a trade

secret, the SDS must provide information “concerning the properties and effects”

of the chemical. 29 C.F.R. § 1910.1200(i)(1)(ii).

In his brief, Appellant states that he “routinely” treats patients exposed to

hydraulic fracturing fluid, asserting that he is “in fact ‘the’ medical doctor” who

does so. Appellant’s Brief at 2 (emphasis added). Appellant also states that his

practice is governed by “a strict code of medical ethics” pursuant to which

“Appellant is . . . ethically required to secure any information necessary to provide

competent treatment to his patients.” Appellant’s Brief at 8. Presumably,


16

Appellant’s characterization of his status among his colleagues in the medical

profession is grounded in Appellant’s belief that he has provided high quality

medical care to his patients consistent with all ethical obligations, including

obtaining all information necessary to provide competent treatment of his patients.

Because Appellant admittedly has not sought access to any trade secret information

associated with hydraulic fracturing fluid, the self-described high level of medical

care he has provided to date must be based upon publicly available information.

Appellant’s admitted ability to treat his patients without seeking disclosure of trade

secrets necessarily reflects the significant amount of information about hydraulic

fracturing fluids that is publicly available. It is also inconsistent with his assertions

that the unlimited opportunity to access and disseminate trade secret information

associated with hydraulic fracturing fluids is necessary for him to provide a high

level of medical care to his patients in accordance with his perceived ethical

obligations.9

The fact that Appellant can practice medicine without seeking to obtain trade

secret information about chemicals used in hydraulic fracturing not only illustrates

the extensive amount of information regarding hydraulic fracturing chemicals that

9 Notably, HESI has operated for the past decade a toll-free hotline for medical

emergencies, but – even though it has hydraulically fractured tens of thousands of

wells in that time – as of yet no doctor anywhere has requested access to trade

secret information to treat a patient.


17

is available to the public, but also supports dismissal of Appellant’s claims on

standing grounds. As summarized by the District Court, the absence of any request

or need for information about hydraulic fracturing fluid beyond what is available in

the public domain demonstrates that Appellant has not established an injury-in-fact

and therefore cannot satisfy standing requirements under Article III of the

Constitution:

Again, Plaintiff has failed to allege that he has not been able to

practice medicine adequately without the information or that he has

made any specific of [sic] attempt to obtain the information about

hydraulic fracturing fluid for the treatment of his patients. Therefore,

Plaintiff lacks standing in this case because he fails to sufficiently

allege that he has suffered an injury-in-fact.

Rodriguez v. Abruzzo at *15-16.

D. The District Court Correctly Concluded that Appellant’s Alleged

Injury Would Not Be Redressed by a Favorable Decision

In his brief, Appellant concedes that to obtain the relief he seeks, it is not

sufficient for a court to declare that Sections 3222.1(b)(10) and (b)(11) are

unconstitutional because such a decisions would leave Appellant with no

mechanism to obtain access to the trade secrets he purports to need to treat his

patients and which he wishes to disclose. Instead, Appellant states that a court

must take the additional step of rewriting Act 13 by cutting mid-sentence the

challenged sections so as to require the disclosure of trade secrets to health

professionals without any associated confidentiality protections. See Appellant’s


18

Brief at 4-5. The District Court, however, correctly recognized that it cannot

circumvent the intent of the Pennsylvania General Assembly and simply rewrite

Sections 3222.1(b)(10) and (b)(11) as Appellant has requested.

Here, the relief sought by Appellant would compel the District Court to

sever the portions of Sections 3222.1(b)(10) and (b)(11) that require disclosure of

trade secrets to health professionals from the portions that protect those trade

secrets. Severability is a question of state law. Davis v. Michigan Dept. of

Treasury, 489 U.S. 803, 818 (1989). Under Pennsylvania’s Statutory Construction

Act, severability is not appropriate where the valid provisions of a statute “are so

essentially and inseparably connected with, and so depend upon, the void provision

or application, that it cannot be presumed the General Assembly would have

enacted the remaining valid provisions without the void one;” or where the court

finds that the remaining valid provisions, standing alone, “are incomplete and are

incapable of being executed in accordance with the legislative intent.” 1 Pa.

C.S.A. § 1925. Moreover, while a general severability clause “must be given due

weight, it is not to be accepted judicially as conclusive if the unity of the general

legislative scheme is completely destroyed by a severance of its provisions.”

Saulsbury v. Bethlehem Steel Co., 196 A.2d 664, 667 (Pa. 1964); see also Heller v.

Frankston, 475 A.2d 1291, 1296 (Pa. 1984) (“While a statute may be partially

valid and partially invalid, that can only occur where the provisions are distinct and


19

not so interwoven as to be inseparable.”); West Shore School Dist. v. Pennsylvania

Labor Relations Bd., 570 A.2d 1354, 1358-59 (Pa. Commw. Ct. 1990).

Importantly, the Pennsylvania Supreme Court recently applied these

severability principles to an analogous section of Act 13 and held that

unchallenged subsections could not be severed from a single related, but invalid,

subsection when doing so would run contrary to the intent of the General

Assembly. See Robinson Township v. Commonwealth of Pennsylvania, 83 A.3d

901, 999-1000 (Pa. 2013). Specifically, after citing general severability principles

to dismiss the argument that Act 13 must be declared unconstitutional in its

entirety based on the invalidity of certain discrete sections of the statute, the

Pennsylvania Supreme Court turned its attention to the validity of Section 3215(b)

of Act 13 establishing setbacks for oil and gas operations. Section 3215(b) also

includes a subsection—3215(b)(4)—that requires a waiver of these setbacks under

certain circumstances that the Pennsylvania Supreme Court found to be

unconstitutional. Despite the fact that no party challenged any of the setbacks in

the balance of Section 3215(b), the Pennsylvania Supreme Court enjoined

application of the setbacks under established severability principles because the

Court concluded that the General Assembly intended that the setbacks and the

waiver provision act in tandem as part of a single statutory framework:

It would appear that the General Assembly did not intend for the

setback provision to operate without allowing industry operators to


20

secure waivers from the setbacks. Absent the enjoined Section

3215(b)(4), the remaining parts of Section 3215(b)—which the

citizens do not challenge on appeal—are incomplete and incapable of

execution in accordance with legislative intent . . . . [Accordingly] we

conclude that the remaining parts of Section 3215(b) are not

severable.

Robinson Township, 83 A.3d at 999.

Likewise, the mandated disclosure requirements in Sections 3222.1(b)(10)

and (b)(11) at issue here are similarly “incomplete and incapable of execution in

accordance with legislative intent” without the associated confidentiality

protections contained in those sections. The disclosure and confidentiality

protection provisions of Sections 3222.1(b)(10) and (b)(11) explicitly reflect the

General Assembly’s intent to balance the informational needs of health

professionals and the intellectual property rights of those required to provide trade

secrets to health professionals. Removing the confidentiality protections by

striking part of these sections mid-sentence as requested by Appellant destroys this

careful balance between those interests, thereby eviscerating the General

Assembly’s intent.

Despite the fact that the Pennsylvania Supreme Court explicitly held that the

interwoven subsections of Section 3215 of Act 13 were not severable, Appellant

brazenly asserts that the Pennsylvania Supreme Court has declared that all

provisions of Act 13 are severable. This is patently incorrect. Moreover, the

portion of the decision in Robinson Township cited by Appellant on page 17 of his


21

brief that purportedly supports his severability argument is wholly misplaced.

Specifically, the portion of the decision cited by Appellant related to the question

of whether individual provisions of Act 13 violated the prohibition in the

Pennsylvania Constitution against “special laws” that improperly favor a discrete

class and not the severability of particular provisions of Act 13. See Robinson

Township, 83 A.3d at 988. The Pennsylvania Supreme Court, citing general

severability principles, simply held that the proper analysis of this particular claim

“begins with the application of the law to the individual provisions challenged.”

Nothing in that statement provides authority for what Appellant is requesting here

– that the District Court cleave Sections 3222.1(b)(10) and (b)(11) mid-sentence

and remove any confidentiality protections in direct contrast to the General

Assembly’s intent.

Notably, it is precisely the confidentiality protections in Sections

3222.1(b)(10) and (b)(11) that allow the provisions that mandate disclosure of

trade secrets to health professionals to pass constitutional muster. Excising such

protections under the guise of the First Amendment as Appellant seeks would,

ironically, render the remainder of those sections unconstitutional as a violation of

the Takings Clause of the Fifth Amendment of the United States Constitution. See

Phillip Morris v. Reilly, 312 F.3d 24 (1st Cir. 2002). In Reilly, the First Circuit

ruled that the Massachusetts Disclosure Act – which forced tobacco companies to


22

submit their ingredient lists, including trade secrets, to the state and allowed the

state to publish those ingredient lists if the state found that doing so “could” reduce

risks to public health – violated the tobacco companies’ Fifth Amendment rights

because it allowed the state to “completely destroy valuable trade secrets” without

just compensation as required by the Takings Clause. Id. at 44. The First Circuit

further observed that if the Disclosure Act had “simply required the tobacco

companies to submit their ingredient lists for possible publication, it would be

unconstitutional.” Id. at 46.

The remedy Appellant seeks here – mandatory disclosure of trade secrets to

health professionals without any constraints on further dissemination – is even

more constitutionally infirm than the Disclosure Act at issue in Reilly. Granting

Appellant’s request to eliminate the confidentiality protections from Sections

3222.1(b)(10) and (b)(11) while allowing the mandated disclosure provisions to

stand would enable health professionals to obtain trade secrets and then disclose

them at will.10

Such an outcome would not only effectuate an unconstitutional

taking of private property, but, by definition, both destroy “the general legislative

10

There is little doubt that Appellant intends to disseminate trade secrets he

obtains to as wide an audience as possible. See Appellant’s Brief at 8

(“… Appellant is under an affirmative professional obligation to widely share

relevant medical information with, not only his patient, but with the wider medical

community and the public.”) See also Appellant’s Amended Complaint at ¶¶ 64

and 65, J. App. at A-54.


23

scheme” crafted by the General Assembly and utterly frustrate the legislative intent

underlying Sections 3222.1(b)(10) and (b)(11).

V. CONCLUSION

It is clear that Appellant’s references to First Amendment principles are

merely a pretext to advance a personal agenda that would allow Appellant to freely

vitiate the value of trade secrets regarding hydraulic fracturing that have been

employed to increase efficiencies in the production of oil and natural gas in

Pennsylvania, across the country and around the world while providing significant

environmental benefits as compared to nonproprietary technologies. Moreover,

despite the Appellant’s admission that he has provided quality medical care to his

patients relying on the extensive information already available to the public

regarding hydraulic fracturing fluids and without seeking access to trade secrets,

Appellant insists that the First Amendment requires that the District Court rewrite

Act 13 so as to eliminate the intellectual property rights of the holders of these

valid trade secrets. However, “[t]he First Amendment is not a license to trammel

on legally recognized rights in intellectual property.” In re Capital Cases/ABC,

Inc., 918 F.2d 140, 143 (11th Cir. 1990) (quoting Dallas Cowboys Cheerleaders,

Inc. v. Scoreboard Posters, Inc., 600 F.2d 1184, 1188 (5th Cir. 1979)). Because

the District Court cannot rewrite Act 13 in the manner sought by Appellant, HESI

urges this Court to affirm Judge Caputo’s order below dismissing Appellant’s


24

amended complaint and end his continuing efforts to invoke the First Amendment

to “trammel” upon trade secret protections.

Respectfully submitted,

Dated: January 12, 2015 /s/ Michael M. Meloy


Lynn R. Rauch (Pa. No. 52725)

Todd D. Kantorczyk (Pa. No. 93707)


401 City Avenue, Suite 901

Bala Cynwyd, PA 19004

Phone: (484) 430-5700

Fax: (484) 430-5711

[email protected]

[email protected]

[email protected]

Counsel for Amicus Curiae

OF COUNSEL

Steven Leifer

Thomas C. Jackson

Baker Botts LLP

1299 Pennsylvania Avenue, N.W.

Washington, D.C. 20004


25

COMBINED CERTIFICATIONS

I, Michael M. Meloy, Esquire, hereby certify that:

Bar membership. I am a member of the Bar of the United States Court of

Appeals for the Third Circuit.

Compliance with Fed. R. App. P. 29(d) and 32(a)(7)(B). The brief of

Amicus Curiae Halliburton Energy Services, Inc. complies with the type-volume

limitation described in Fed. R. App. P. 29(d) and 32(a)(7)(B) because this brief

contains 5,380 words, excluding the parts of the brief excluded by Fed. R. App. P.

32(a)(7)(B)(iii), as counted by the word-count feature of Microsoft Word 2010.

This brief complies with the typeface requirements of Fed. R. App. P.

32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this

brief has been prepared in a proportionally spaced typeface using Microsoft Word

2010 in 14 point Times New Roman font.

Virus Check. The electronic copy of this brief was scanned for electronic

viruses on January 12, 2015, before transmission to this Court using Microsoft

Security Essentials (Engine Version1.1.11302.0, Antivirus definition

1.191.2099.0).

Identity Between Electronic Copy and Paper Copies. The electronic

copy and paper copies of the foregoing brief are identical.


26

Service. I have on this date served the brief of Amicus Curiae Halliburton

Energy Services, Inc. electronically by the Notice of Docket Activity on the

following Filing Users:

Paul A. Rossi, Esquire

873 East Baltimore Pike, Suite 705

Kennett Square, PA 19348

Counsel for Appellant Alphonso Rodriguez, M.D.

Howard G. Hopkirk, Esquire

Senior Deputy Attorney General

Office of Attorney General – Litigation Section

15th Floor, Strawberry Square

Harrisburg, PA 17120

Counsel for Appellant Attorney General Kane

Joshua J. Voss, Esquire

Matthew H. Haverstick, Esquire

Mark E. Seiberling, Esquire

Lauren R. Ascher, Esquire

Conrad O’Brien

1500 Market Street, Centre Square

West Tower, Suite 3900

Philadelphia, PA 19102

Counsel for Appellant Secretary of the Department of

Environmental Protection of Pennsylvania

Respectfully submitted,

Dated: January 12, 2015 /s/ Michael M. Meloy



Counsel for Amicus Curiae Halliburton

Energy Services, Inc.


in the united states court of appeals for the · pdf filehalliburton energy services, inc. is...

Documents