While representing about 5 percent of total US crude output, crude oil production on federal land has been increasing, from 284,900 barrels per day in 2008, up until the month of September that year, to 331,500 barrels per day in 2012, the Financial Times reports.
"We are proposing some common-sense updates that increase safety while also providing flexibility and facilitating coordination with states and tribes," U.S. Secretary of the Interior Sally Jewell said in a statement.
"As we continue to offer millions of acres of America's public lands for oil and gas development, it is important that the public has full confidence that the right safety and environmental protections are in place."
Companies have resisted disclosing the chemicals they use in the fracking process, which involves massive amounts of water, sand and chemicals injected at high pressure to fracture rock and release stored gas. The technique has unleashed a U.S. oil and gas boom.
Under the proposed regulations released Thursday companies wouldn't be required to carry out baseline water testing at sites before conducting hydraulic fracturing and it doesn't specifically outlaw the use of diesel in fracturing fluids, reports the Houston Chronicle.
The Natural Resources Defense Council called for the rules to be strengthened, saying they leave drinking water supplies for millions of Americans as well as millions of acres of wild lands, at risk.
"These rules protect industry, not people," NRDC President Frances Beinecke said in a statement. "They are riddled with gaping holes that endanger clean, safe drinking water supplies for millions of Americans nationwide. They also put the fate of millions of acres of America's last remaining wild places in jeopardy."
The American Petroleum Institute, in response to Interior's proposed new rules, maintained that federal regulation isn't necessary because "rigorous" state rules and state-based tools, such as the online fracking fluid registry FracFocus.org, already existed "to ensure responsible oil and natural gas development."
"States have led the way in regulating hydraulic fracturing operations while protecting communities and the environment for decades," said Erik Milito, API director of upstream and industry operations.
Referring to the production of oil and natural gas from shale as "the most significant development in U.S. energy in generations," Milito warned that "confusing the regulatory system" would hamper economic growth, job creation and the possibility of generating billions in revenue for federal, state and local governments.
Interior's Bureau of Land Management will accept public comments on the draft rules for 30 days.