With hydraulic drilling, water mixtures, sometimes containing chemicals like diesel fuel, are injected at high pressure into a drilled well for a few hours. The water pressure creates a fracture usually between 70 to 500 feet in the underground rock.

Sand or plastic beads are then placed into the fracture to keep it open, making it easier for oil or gas to flow to the well.

The U.S. Environmental Protection Agency decided to study the issue after a federal court ruled that the agency has authority over hydraulic fracturing and after environmental groups raised concerns about the drilling practice.

In a notice published in Wednesday's Federal Register, EPA said it has "preliminarily found that the potential threats to public health posed by hydraulic fracturing of (coalbed methane) wells appear to be small and do not appear to justify additional study."

The agency said it did not find "persuasive evidence" that drinking water wells had been contaminated by the thousands of coalbed methane wells that are fractured each year.

EPA said it found that the use of diesel fuel in fracturing fluids ran the risk of putting hazardous chemicals into underground drinking water.

However, the agency said the chemicals would be diluted in the underground water supplies and would not exceed safety standards. Otherwise, the diesel would be removed altogether through the drilling process.

The agency said it will take public comment through Oct. 28 on its draft report and initial decision not to study the matter further.

EPA said its position that hydraulic fracturing would not harm water supplies only applies to methane extracted from coal beds, and to traditional oil and natural gas drilling.