The Obama administration said Friday it will for the first time require companies drilling for oil and natural gas on public and Indian lands to publicly disclose chemicals used in hydraulic fracturing operations.
The proposed "fracking" rules also set standards for proper construction of wells and wastewater disposal.
Interior Secretary Ken Salazar said the long-awaited rules will allow continued expansion of drilling while protecting public health and safety.
"As we continue to offer millions of acres of America's public lands for oil and gas development, it is critical that the public have full confidence that the right safety and environmental protections are in place," Salazar said.
The proposed rules will "modernize our management of well-stimulation activities, including hydraulic fracturing, to make sure that fracturing operations conducted on public and Indian lands follow common-sense industry best practices," he said.
The new rules, which have been under consideration for a year and a half, were softened after industry groups expressed strong concerns about an initial proposal leaked earlier this year. The proposal would allow companies to file disclosure reports after drilling operations are completed, rather than before they begin, as initially proposed. Industry groups said the earlier proposal could have caused lengthy delays.
Some environmental groups criticized the change as a cave-in to industry, but Salazar said the rules were never intended to cause delays, but to ensure that the public is "fully aware of the chemicals that are being injected into the underground" by companies seeking to produce oil and natural gas.
The Bureau of Land Management, which oversees drilling on public lands, estimates that 90 percent of the approximately 3,400 wells currently drilled on federal and Indian lands using hydraulic fracturing techniques.
The rules would not affect drilling on private land, where the bulk of shale exploration is taking place. A nationwide drilling boom in formations such as the Marcellus Shale in the Appalachian region and the Bakken in North Dakota and Montana, as well as in traditional production states such as Texas, Oklahoma and Louisiana, has led to 10-year lows in natural gas prices.
Still, Salazar said he hopes the new rules could be used as a model for state regulators.
"We hope our leadership is followed," he said at a news conference.
Industry groups and Republican lawmakers say federal rules are unnecessary, arguing that states already regulate hydraulic fracturing, in which water, sand and chemicals are in injected underground to break up dense rock that holds oil and gas.
The industry also has complained that disclosure of chemicals used in fracking could violate trade secrets, although Salazar said the rule would include exemptions for specific formulas. Some of the chemicals used in fracking include benzene, toluene, ethylbenzene and xylene, all of which can cause health problems in significant doses.
Critics say fracking chemicals have polluted water supplies, but supporters say there is no proof.
Tom Amontree, executive vice president for America's Natural Gas Alliance, an industry group, said the Obama administration "may not fully appreciate" significant regulatory steps taken by states such as Colorado, Texas and Wyoming to oversee hydraulic fracturing.
"State regulatory bodies have repeatedly proven that they have the understanding of their state's own unique geologic conditions, the on-the-ground expertise needed to oversee this important work, and most importantly, the ability to respond to rapid change," Amontree said. As drafted, the federal proposal would create reporting requirements and "regulatory impediments" that could substantially affect the ability of companies to drill on public lands, he said.
The proposed rules will be subject to public comment for 60 days, with a final order expected by the end of the year, said Bob Abbey, director of the land management bureau.
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