UPDATE 4-US proposes new rules for fracking on federal lands

* Rules apply to public lands, a small portion of shale
drilling
* Industry raises concerns that rules add more red tape
* Environmental group: rules fall short on protecting public

(Adds comments from oil company head, EPA announcement)
By Ayesha Rascoe
WASHINGTON, May 4 (Reuters) - The Obama administration
unveiled long-awaited rules o n F riday to bolster oversight on
public lands of oil and natural gas drilling using fracking
technology that has ushered in a boom in drilling but also
triggered environmental protests.
Interior's proposal would update its decades-old fracking
regulations with new reporting standards and a requirement that
companies get approval before using the drilling technique. The
proposal also would require companies to reveal chemicals they
use in hydraulic fracturing after they complete the process.
In the past, drilling companies had resisted calls to fully
disclose the chemicals they use in fracking, which they regarded
as proprietary information. The industry also believes it should
be regulated by states instead of the federal government.
But critics, who say fracking has polluted drinking water,
want the federal government to tighten regulations, and say
drillers should reveal their chemicals before they inject them
underground along with water and sand in the fracking process.
Fracking has unlocked vast new reserves for the United
States but has provoked an intense backlash from some
environmental groups and some neighbors of drilling sites.
"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," Interior Secretary Ken
Salazar said in a statement.
The rules would not affect drilling on private land, where
the bulk of shale exploration takes place. Still, the
administration has said it hopes the rules could be used as a
template for state regulators.
"Most shale plays are out of the reach of Interior," said
Whitney Stanco, an analyst with the Guggenheim Washington
Research Group.
A Guggenheim analysis found that only about 5 percent of
shale wells drilling in the United States in the past decade
were located on federal lands.
The Obama administration has walked a fine line on natural
gas drilling, promoting the potential of the country's huge
shale gas reserves, while stressing the need to ensure drilling
is safe.
Interior estimated that its regulations would cost an annual
average of about $11,833 per well to implement. The department
will collect public input on the rules for 60 days, with plans
to finalize the rules by the end of the year.
As proposed, the rules "will undoubtedly insert an
unnecessary layer of rigidity into the permitting and
development process," Independent Petroleum Association of
America head Barry Russell said.
But not all producers greeted the rules with apprehension.
Chris Faulkner, chief executive of Breitling Oil & Gas, said
that regulations mandating more transparency for fracking have
been a long time coming.
"Those of us in the industry who have upheld high standards
and maintained clean track records will collectively breathe a
sigh of relief today, as after 40 years of fracking in the US,
there is now an industry standard," Faulkner said.

DISCLOSE WHEN?
Environmentalists and some lawmakers said the rules didn't
go far enough.
Interior's proposal on disclosure differs from a draft of
the rules that leaked to the media earlier this year, by
mandating disclosure after fracking is completed.
"Requiring the information before the fracking occurred
would have caused in our view delays that were not necessary,"
Salazar said on a conference call.
Democratic Congresswoman Diana DeGette, a vocal proponent of
expanding fracking regulation, called the measure "seriously
inadequate."
"We're all seeking common-sense solutions to ensure the
safety of natural gas production, but with all due respect,
requiring disclosure after fracking has already occurred seems
less common-sense and more 'closing the door after the horse has
left the barn,'" DeGette said in statement.
Some environmentalists said communities need to know what
chemicals may be pumped into the ground before drilling happens,
so water supplies can be monitored in real time, however.
"Unfortunately, these proposed rules from the Department of
the Interior fall far short of what's needed to protect public
health," said Jessica Ennis of Earthjustice.
Separately, the Environmental Protection Agency on Friday
laid out a draft framework for companies to get permits when
they use diesel in fracking, a practice many environmentalists
would like to see banned.
Fracking is exempt from Safe Drinking Water Act, except in
cases where diesel is used as a fracking fluid.

(Additional reporting by Emily Stephenson and Timothy Gardner
in Washington and Edward McAllister in New York; Editing by Dale
Hudson, Gerald E. McCormick, Eric Beech and Sofina Mirza-Reid)