Gov. Peter Shumlin signed the fracking ban into law Wednesday afternoon, making Vermont the first state to ban the practice, the Burlington (Vt.) Free-Press reported.
Hydraulic fracturing is the practice of injecting water and chemicals under high pressure into underground shale to release natural gas.
"We don't know that we don't have natural gas in Vermont," Shumlin said. "This bill will ensure we do not inject chemicals into groundwater in a desperate pursuit for energy."
The bill also bans the importation and storage of waste water associated with fracking.
While the anti-fracking movement has hailed the ban, a natural gas industry representative called it "poor policy."
An American Petroleum Institute official wrote to Shumlin last week raising legal questions about the bill, numbered H.464.
"We are informed that H. 464 may be subject to constitutional challenge under both the commerce clause and the supremacy clause," Rolf Hanson, senior director of state government relations for the American Petroleum Institute, said in the letter to Shumlin.
However, Michael Duane, an assistant attorney general, said his office reviewed the bill and said, "we believe that the risk of H.464 being found unconstitutional is low."
Duane said the bill does not interfere with interstate commerce laws, as the ban covers in-state and out-of-state natural gas companies equally and that as hydraulic fracturing wastes are not considered "hazardous wastes" by the federal government, federal supremacy is not an issue.
Shumlin said the fracking ban is the latest in a list of legislation that makes Vermont a leader on environmental issues.