Watershed areas serving New York City and Syracuse will be excluded from a pending generic environmental review for high-volume horizontal drilling for natural gas in the Marcellus shale formation because of issues related to the protection of drinking water supplies, the New York Department of Environmental Conservation (DEC) said Friday.

Rather than be covered by the generic process, applications to drill in the two watershed areas will require a case-by-case environmental review to establish whether measures to mitigate potential impacts can be developed, the DEC said. The department said it will work closely with the New York Department of Health, local watershed communities and the cities to develop additional drilling requirements that may be applicable in the watersheds.

None of the 58 pending applications for horizontal drilling in the Marcellus are for sites in either of the watersheds, according to a DEC spokesman, who said the New York City watershed accounts for only about 8% of the state’s Marcellus shale land.

Because New York City (which receives about 90% of its water from the Catskills/Delaware watershed) and Syracuse (which utilizes the Skaneateles Lake watershed) use unfiltered drinking water from surface-water sources, their watersheds are subject to filtration avoidance determinations (FAD) that present distinct land disturbance and usage issues independent of the department’s ongoing review of the environmental safety of the high-volume hydraulic fracturing (hydrofracing) process, DEC said.

“The environmental safety protocols included in the SGEIS [supplemental generic environmental impact statement] must fully protect drinking water supplies and mitigate significant environmental risks wherever drilling might occur,” said DEC Commissioner Pete Grannis. “Even with those protections in place, in order to better assure the continued use of an unfiltered surface water supply, there must be an additional review process which may result in associated regulatory and other controls on drilling. DEC will be vigilant in ensuring environmental safeguards.”

“We firmly believe, based on the best available science and current industry and technological practices, that drilling cannot be permitted in the city’s watershed,” said New York Mayor Michael Bloomberg. “We are confident that the additional reviews now required for any drilling proposal in the watershed will lead the state to that same conclusion.”

But according to Brad Gill, executive director of the Independent Oil & Gas Association of New York, the DEC’s decision “adds another layer of regulation on an industry that is already overregulated.

“It is hard to understand why the state would make such broad assumptions about the potential environmental impact and then pile more burdensome regulations on an industry with such an outstanding record of safety. New York is in a severe economic crisis, and exploring the Marcellus will provide enormous relief to New York’s fiscally devastated landowners, communities, local governments and, indeed, the entire state. While the DEC’s announcement does not constitute a drilling ban, the result will be the same.”

New York City’s Department of Environmental Protection in December called for a prohibition on drilling in the Catskills/Delaware watershed, saying drilling and exploration in that area of the Marcellus Shale “are incompatible with the operation of New York City’s unfiltered water supply system and pose unacceptable risks for more than nine million New Yorkers” (see Daily GPI, Dec. 28, 2009). Drilling in the watershed would require invasive industrialization and create a substantial risk of chemical contamination and infrastructure damage, the department said.

A report from the city’s Independent Budget Office concluded that if the city were to fall out of compliance with its Environmental Protection Agency-approved FAD as a result of chemicals in runoff from drilling or other development now being contemplated in the Catskills/Delaware watershed, the city could be forced to spend $6-10 billion for a new water filtration plant (see Daily GPI, Dec. 23, 2009).

The DEC last year released proposed rules for companies that want to drill in the gas-rich Marcellus Shale (see Daily GPI, Oct. 2, 2009). In December the city called on DEC to rescind its draft SGEIS, which addresses the range of potential impacts of shale gas development using horizontal drilling and high-volume hydrofracing and outlines safety and mitigation measures that operators would have to follow to obtain permits. Days later the U.S. Environmental Protection Agency called on DEC to expand its investigation of the impacts of Marcellus Shale gas development (see Daily GPI, Jan. 4).

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