On Sept. 15, Wyoming activated new rules requiring energy companies to identify the chemicals they inject underground to break up rocks in order to free trapped oil and gas. Critics suspect that the process -- known as hydraulic fracturing, or fracking -- can contaminate groundwater. Evidence has been elusive, though, in part because drilling companies have been allowed to keep their chemical recipes largely secret.

The new rules -- the nation's strictest -- were a surprisingly easy sell in Wyoming, where extractive industries almost single-handedly keep state coffers plump and exercise proportional political clout. At Democratic Gov. Dave Freudenthal's behest, the state's Oil and Gas Conservation Commission unanimously signed off on them in June. Though Halliburton protested some, most in the industry seemed unfazed. At the end of this month, the Associated Press reported that drillers even seemed "eager to comply."

Anticipating similar moves by President Obama's Environmental Protection Agency, which recently increased its scrutiny of fracking, Wyoming wrote the rules as a message to the feds: Your help is not needed here. Federal "meddling" has always irked Wyoming's leaders. But under Freudenthal, the state has favored a curious strategy for fending off federal regulators: Beat them to the punch with its own cutting-edge environmental policies.

In 2007, with a lawsuit pending over the U.S. Fish and Wildlife's decision not to list the greater sage grouse as endangered, Freudenthal ordered state officials, conservationists and industry reps to map the bird's vital habitat. Within those "core areas," the state has tightly restricted oil, gas and wind development, all thought to disrupt grouse breeding -- a significant improvement over the Bureau of Land Management's style of developing first and dealing with impacts later.

It's not a perfect plan -- core areas are strategically penciled to exclude the best gas patches, say critics, making places like the Powder River Basin sacrifice zones. And Freudenthal has called the grouse "one of the ugliest, stupidest birds I ever knew." Still, he's willing to defend it to protect Wyoming's natural gas industry. His office estimates that a listing would subject 83 percent of gas producers to new regulations. "What we live on in this state is mineral revenues," said Freudenthal energy advisor Aaron Clark in 2009, "and we would be subjecting a lot of that to the vagaries of the Endangered Species Act."

For now, the plan has kept federal regulation at bay. When the Interior Department this year again declined to protect the grouse, officials commended Wyoming's efforts. And Interior Secretary Ken Salazar has encouraged other states with sagebrush habitat to adopt the core-area model.

Wyoming hopes the feds will be similarly seduced by its new fracking law, as well as pioneering rules developed over the last two years for future carbon capture and sequestration projects. Shannon Anderson, a lawyer for the Powder River Basin Resource Council, a local environmental group, calls the latter "generally good rules." But they're less cautious than similar rules drafted by the EPA, which aim to protect drinking water by considering only deep, briny aquifers as potential carbon storage sites. Wyoming's rules could allow injections in shallow geologic formations, potentially even those that overlie drinking water sources. "They were designed to beat EPA and hopefully get them to follow, rather than dictate, Wyoming's approach," Anderson says.

It's encouraging to see Wyoming advance environmental regulation instead of relax it, as the previous governor did to ease coalbed methane development, and as the Bush-Cheney administration did with fracking. But local environmentalists caution that the new policies aren't necessarily evidence that Wyoming's gone green.

"All these rules are baby steps in terms of what we really need to accomplish to address the impacts we have in the state," Anderson says, adding that Wyoming is in "an already compromised position." Between 2001 and 2005, sage grouse populations near coalbed methane development in the Powder River Basin declined by 82 percent. Freudenthal refuses to moderate Wyoming's anti-wolf stance, jeopardizing the state's chances to manage the animals. And requiring frackers to disclose their chemicals won't protect groundwater if drillers remain exempt from the Safe Drinking Water Act. "The idea is to get these rules in place and stop Congress from passing (comprehensive legislation), which would actually protect public health and safety," Anderson says.

Imperfect as it may be, Wyoming's breakaway approach to environmental regulation is gaining favor among some surprising constituencies. Last month, Cathy Woollums, an executive of MidAmerican Energy Holdings Co., a coal-reliant utility behemoth, came to the Wyoming Legislature with an unexpected request: Regulate greenhouse gases. Congressional inaction is creating too much uncertainty in the utility business, she said. And, in any case, MidAmerican would rather answer to Wyoming than the EPA.