Tag Archives: confidentiality clause

Article – Settlement Confidentiality: A ‘Fracking’ Disaster for Public Health and Safety

The safety of hydraulic fracturing (“fracking”) is being debated without all the information.  This is a scary proposition for those who live near live near fracking sites.  Best industry practices may be slow to develop, or not developed at all, because of confidentiality clauses in settlement agreements keep the potential dangers secret.

Confidentiality prevents the public from knowing about systemic wrongful conduct. It can also prevent regulators and government agencies from performing their duty to enforce the law and protect the public. The purpose of the court is to evenly administer justice to all so that all are protected by the law. When violations are hidden by confidentiality, the legal system itself is thwarted from fulfilling one of its fundamental purposes: to protect the citizenry from wrongful conduct.

An interesting point is made in this article that perhaps confidentiality clauses have a much broader impact in fracking cases.  Adverse effects of fracking have far-reaching implications that could affect communities, regions, or even entire states.  Then once a confidential settlement is reached others who may be impacted in the area could be in the dark about the potential hazards.

Colorado public policy should be revisited to limit confidentiality settlements in fracking cases.

Sign for Fracking Site in Colorado - Photo taken by CoCommonLaw
Sign for Fracking Site in Colorado – Photo taken by CoCommonLaw

Confidentiality clauses in settlement agreements have become so commonplace they seem like benign contractual terms. In reality, confidentiality clauses have formidable power to silence even the most outspoken plaintiffs, including a woman once known in Colorado as the “Erin Brockovich of Garfield County.” Because settlement agreements generally operate as simple contracts, requiring no judicial input or approval, litigants have virtually unbridled power to condition settlement on one or both parties’ silence. As a result, settlement confidentiality has muzzled virtually every plaintiff in hydraulic fracturing (“fracking”) suits, aided the Catholic Church’s alleged child molestation cover-ups, and helped shield manufacturers from public scrutiny of hundreds of deaths and injuries stemming from tire failures.

Despite such risks and a trend in U.S. law and policy toward openness and disclosure of potential public safety dangers, the confidentiality clause remains a staple for civil settlements. Whereas other scholarship focuses on whether to continue permitting settlement confidentiality or proposes changes that restrict court-approved confidentiality clauses, this article (1) explores conventional arguments for and against settlement confidentiality, using fracking claims as a case study; (2) concludes courts must reject the secrecy-as-bargain status quo but accept the reality that confidentiality is sometimes necessary; and (3) proposes a uniform rule courts should adopt to regulate, when public interest requires, confidentiality clauses in both court-approved settlements and private settlements courts are later asked to enforce.

— R. Kyle Alagood, Settlement Confidentiality: A ‘Fracking’ Disaster for Public Health and Safety,available at  SSRN.