State environmental regulators are preparing to take another critical step toward allowing treated oilfield wastewater to be spread on Texas farmland, a proposal that supporters say could help the state's water supply needs and critics warn could expose communities and agricultural land to contaminants if not treated properly.

As the state faces an impending water supply crisis and state leaders explore different ways to expand the supply, they are looking at the billions of gallons of toxic wastewater produced every year from oil and gas operations.

Lawmakers have invested millions of dollars in studying the wastewater generated during oil and gas extraction and learning how to clean it.