The U.S. Environmental Protection Agency announced Thursday for the first time that fracking — a controversial method of improving the productivity of oil and gas wells — may be to blame for causing groundwater pollution.

The draft finding could have significant implications while states try to determine how to regulate the process. Environmentalists characterized the report as a significant development though it met immediate criticism from the oil and gas industry and a U.S. senator.

The practice is called hydraulic fracturing and involves pumping pressurized water, sand and chemicals underground to open fissures and improve the flow of oil or gas to the surface.

The EPA found that compounds likely associated with fracking chemicals had been detected in the groundwater beneath Pavillion, a small community in central Wyoming where residents say their well water reeks of chemicals. Health officials last year advised them not to drink their water after the EPA found low levels hydrocarbons in their wells.

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