The U.S. House of Representatives late Wednesday passed the so-called Protecting States' Rights to Promote American Energy Security Act, H.R. 2728.
The Chamber of Commerce, a federation representing the interests of more than 3 million businesses, said the legislation would prohibit federal regulation of shale natural gas development in states and tribal areas that already have regulations in place.
"Given the unique geologic and physical nuances across the country, state regulators can more effectively regulate energy production," Christopher Guith, a policy director for Chamber's energy initiative, said in a statement.
The Department of the Interior's Bureau of Land Management in March proposed regulations on hydraulic fracturing on federal lands. The BLM regulations, which have yet to be adopted, would make it mandatory for companies to disclose the chemicals they use in hydraulic fracturing and monitor water quality.
Rep. Bill Flores, R-Texas, the former chief executive of oil and gas company Phoenix Exploration Co. who introduced the bill, said the federal government's "unnecessary red tape" was standing in the way of economic opportunities.
The White House this week said it would veto the legislation if it wound up on President Obama's desk.