By Timothy Gardner

WASHINGTON (Reuters) - The Obama administration is inching ahead with a plan that would allow wastewater from fracking to be shipped on barges, fueling a debate whether it is safer than other transportation modes or risks polluting drinking water.

The Coast Guard last month quietly sent to the White House's Office of Management and Budget a proposal to allow the barging of fracking wastewater. If the plan is pushed forward, it would become a proposed rule open for public comment and could be finalized sometime in the near future.

Energy analysts say action on the barge issue could be a hint at how the Obama administration will approach fracking regulation in the coming years.

The wastewater is a mix of liquids, including fracking fluid sent down drilling wells to crack rocks and release gas, and so-called produced water from ancient formations deep within the earth that rushes to the surface when natural gas wells start to yield gas.

Environmental groups worry the fracking waste could make water unfit for drinking if spilled into rivers by barge accidents or leaks.

While the OMB will not comment on what is in the plan or give an estimate on when it could become a rule, the Coast Guard said late last year it hoped to complete a policy that would allow drillers to ship the waste via barge.

Companies such as Texas-based GreenHunter Water LLC want to ship the waste by barge for recycling or for dumping into disposal or injection wells. Greenhunter says barges are a safer method of transport than trucks and trains, the current methods used to move the waste material that the industry calls brine.

Trucks now routinely carry the waste from Pennsylvania, the center of the natural gas drilling boom in the eastern United States, for disposal at injection wells in Ohio, where gas drilling is in its early stages.

James McCarville, executive director of the Port of Pittsburgh Commission, favors using barges to move the waste.

"We move commodities on the waterways that are much more complex in terms of their makeup and we have a record of safely moving them," he said.

Examples of products routinely plowing the U.S. inland waterways are petroleum products like gasoline, industrial acids and other chemicals.

DUMPING GROUND

Fracking fluid also contains chemicals added by drillers, while produced water can be laced with heavy metals and radium or other radioactive materials.

"Safe? I beg to differ," said Melissa English, the director of development at Ohio Citizen Action, an environmental group.

She said the Ohio River, one waterway where companies want to barge the waste, is already polluted from a number of industries. If a barge spills the waste from fracking, it could be dangerous for cities that depend on the river for drinking water.

Cincinnati and other large cities have high-tech systems that could clean the water, but smaller communities lack that kind of infrastructure, she said.

In addition, encouraging investments in barging could solidify Ohio's growing role as waste depository.

"It would increase the pace at which Ohio becomes the fracking waste dumping ground for other areas of the country - not real appealing," English said.

One concern is that publicly operated water treatment centers may not be equipped to handle so-called technologically enhanced, naturally occurring radionuclide materials, known as TENORMs, which have accumulated in water drawn out of shale formations.

CLUES ON REGULATION INTENT?

Kevin Book, an energy policy analyst at ClearView Energy Partners in Washington, said if OMB moves forward with the rule it could offer clues on how the Obama administration will regulate fracking wastewater in the future.

The Environmental Protection Agency signaled in 2011 that it could issue rules under the Clean Water Act to regulate radioactive materials and other pollutants from fracking wastewater.

"The pending brine rule may offer a first glimpse of whether - and how - the Obama administration's interagency gas group could address TENORMs," said Book.

(Reporting by Timothy Gardner; editing by Ros Krasny and Kenneth Barry)