Federal regulators on Thursday unveiled rules to “improve safety and mitigate risk” of the nation’s sprawling natural gas distribution systems, and to reduce methane emissions, proposals that are drawing scrutiny by the industry, which cited significant concerns.

The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) issued the Notice of Proposed Rulemaking (NPRM). The NPRM is designed to strengthen the gas distribution pipeline rules by improving safety and mitigating risks through emergency response plans, integrity management plans and revamped operation manuals.

In proposing the updates, PHMSA cited the 2018 natural gas explosion in the Merrimack Valley north of Boston, which killed one man, Leonel Rondon, and injured dozens...