New York City Comptroller William C. Thompson, Jr. today submitted comments to the New York State Department of Environmental Conservation expressing his concerns about the issuance of natural gas drilling permits within or near the City’s watershed.

“It is clear that there will be crippling implications for the City’s water and sewer rate payers if natural gas drilling does not proceed in a responsible and appropriately regulated manner,” Thompson said in his comments.

New York City’s water supply delivers water to more than eight million people in the city and one million more in neighboring counties. The Marcellus Shale underlies the portion of the City’s water supply which provides 90 percent of the region’s drinking water, which does not require filtration due to its high quality. It is expected that gas companies will use horizontal drilling combined with high volume hydraulic fracturing to extract the gas, a technique that is extremely water-intensive and involves significant quantities of toxic chemicals and waste.

Thompson emphasized that hydraulic fracturing is markedly different from prior methods of extraction. Additionally, because hydraulic fracturing involves large quantities of toxic chemicals and waste water, Thompson stressed the need for sufficient regulatory control and staffing to protect against the risks of these chemicals and associated waste water throughout the drilling and gas extraction lifecycle.

Further, the Comptroller questioned whether natural gas drilling will affect the City’s Filtration Avoidance Determination that was renewed by the U.S. Environmental Protection Agency for 10 years in 2007. Without the Determination, the City would need to construct a filtration plant costing between $6 billion and $10 billion.

Thompson noted that, at current interest rates, financing a $10 billion plant would add about $730 million per year in debt service expense. This debt service alone would require a 30 percent increase to the City water and sewer system budget and rates, not including the cost of operating the plant.

The Comptroller’s full submission is below:

As New York City’s Comptroller, I am the City’s Chief Fiscal Officer and have oversight and approval responsibilities for the debt of the New York City Municipal Water Finance Authority. I therefore wish to provide the following comments and concerns regarding the issuance of drilling permits within or near the City’s watershed.  It is clear that there will be crippling implications for the City’s water and sewer rate payers if natural gas drilling does not proceed in a responsible and appropriately regulated manner.

The New York City water system provides approximately 1.237 billion gallons per day of water to approximately 9 million people, of whom more than 8 million reside in the City of New York.  Approximately 90 percent of this water arrives from two water systems in upstate New York (Catskill and Delaware), which sit atop a section of the Marcellus Shale formation.  Technological advances and economic conditions have made this formation extremely desirable for natural gas drilling. It is expected that gas companies will use horizontal drilling combined with high volume hydraulic fracturing to extract the gas.  Unfortunately, this technique is extremely water-intensive and involves significant quantities of toxic chemicals and waste.

The City, with the cooperation of State and local communities, has already invested hundreds of millions of dollars over the past decades to protect the watersheds. I am now deeply concerned about the potential harmful effects that horizontal drilling and hydraulic fracturing will have on this precious resource. My office is encouraged by the NYS Department of Environmental Conservation’s (“DEC”) acknowledgement that the 1992 Generic Environmental Impact Statement (“GEIS”) currently governing the State’s oil and gas drilling regulatory program must be updated so the State can effectively evaluate new natural gas drilling permit applications. Accordingly, I urge the DEC to closely consider the following comments and concerns regarding the Draft Scope document which identifies topics to be addressed in the draft Supplemental GEIS (“SGEIS”) specific to well permit issuance involving horizontal drilling and high-volume hydraulic fracturing.

First, we emphasize that hydraulic fracturing is markedly different from prior methods of extraction.  The 1992 GEIS based its regulations on the assumption that the maximum amount of water that one well would require during the drilling process would be 80,000 gallons. Today that figure is between 1,000,000 and 6,000,000 million gallons. Therefore, we stress that the SGEIS should re-examine all aspects of horizontal, hydraulic fracturing-based drilling fundamentally, not merely as modifications to 1992 protocols.   Particular emphasis should be paid to the experiences of various Western states in which gas companies have a substantial large-scale history of employing the latest hydraulic fracturing drilling techniques. 

Second, because hydraulic fracturing involves large quantities of toxic chemicals and waste water, the SGEIS should ensure that permitting is coupled with sufficient regulatory control and staffing to protect against the risks of these chemicals and associated waste water throughout the drilling and gas extraction lifecycle. For example, all chemicals that will be used should be disclosed; transportation and storage of chemicals and wastewater should be addressed in a detail appropriate to the toxicity and risk; and specific clean-up procedures must be defined in the event of accidents or spillage of chemicals either at the drill site or during transport to or from the drill site. The SGEIS should also require gas companies to remove the majority of the “fracking” fluids from each well prior to plugging, with State testing before plugging to ensure compliance.  An effective monitoring and enforcement program, developed collaboratively with State and local entities, is critically important to the protection of our drinking water.

Lastly, but significantly, the SGEIS must examine whether natural gas drilling will affect the City’s Filtration Avoidance Determination (“FAD”) that was renewed by the US Environmental Protection Agency (“EPA”) for 10 years in 2007.  Without the FAD, the City would need to construct a filtration plant estimated to cost between $6 billion and $10 billion. At today's interest rates, financing a $10 billion plant would add about $730 million per year in debt service expense.  This debt service alone would require a 30 percent increase to the City water and sewer system budget and rates, not including the cost of operating the plant. It is critical that the regulations of the SGEIS conform with and uphold the strict environmental standards and procedures necessary to comply with the FAD. The New York State Department of Health (“DOH”), which has lead responsibility for administering the FAD on behalf of the EPA, should also be closely involved in the SGEIS processes.

Notwithstanding City ownership of and/or conservation easements on a significant amount of its Catskills-Delaware watershed, new drilling in portions of the Marcellus Shale formation poses a significant new risk to New York City’s clean drinking water supply.  We know that the Governor and State environmental and health agencies are sensitive to this risk. We look forward to continued participation with them, and other stakeholders, as the SGEIS process advances.

Thank you for the opportunity to provide these comments regarding this critically important matter and I look forward to working with stakeholders to ensure the highest possible protection for New York’s drinking water. 

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