Gas-drilling oversight reconsidered; burden may not fall to county

Who's going to pay to ensure local water wells are not polluted by Marcellus Shale drilling?

State officials said this week they are still trying to figure that out, but Broome County may be off the hook. The state's proposal that would require local health departments to oversee gas drilling is being reconsidered in light of an order by Gov. David Patterson.

That order, signed in April, prohibits state mandates on municipalities without assessing their full economic impact, including costs and benefits.

Claudia Hutton, head of public affairs for the state Department of Health, said the governor's policy has led to rethinking a regulatory proposal by the DEC that would leave oversight of water quality testing in drilling zones to local health departments.

"We're very mindful of the governor's concerns about the impact of costs to local governments," she said. "We haven't made a decision about how we're going to handle this."

The change in thinking comes as Broome County struggles with revenue shortfalls that have increased the proposed property tax rate increase in 2010 from 3.79 percent to 6.58 percent.

Officials added $28,000 to this year's budget -- yet to be adopted -- to pay for additional staffing in the health department to oversee Marcellus regulation. The actual cost could go well beyond that, depending on the rate of natural gas development.

The budget line has not been removed because the issue has not been resolved, said Leigh Ann Scheider, a spokeswoman for Broome County.

The state is now looking for other ways to oversee impact on aquifers from Marcellus drilling, not just in Broome but in potential drilling zones around the state. The Marcellus, the nation's largest natural gas field, runs under the Southern Tier and throughout the Appalachian basin.

Marcellus drilling permits are not being issued in New York until the state finalizes regulations to handle the type of water-intensive drilling used to stimulate natural gas production in the bedrock. That is expected early next year, after which Marcellus production is expected to soar.

Some of the most promising parts of the formation are under Broome, attracting multinational energy companies that have offered local landowners between $2,500 and $5,000 an acre, plus royalties for rights to drill.

The draft of the DEC's regulatory overhaul -- called the Supplemental Generic Environmental Impact Statement -- outlines risks to water, including turbidity, methane contamination and, to a lesser degree, the potential for hazardous chemicals to breach well-bore casings or spill while being handled or disposed of on the surface.

To deal with those threats, the state is calling for a testing program of private wells in drilling zones. Testing would begin before drilling starts, and continue for a year after it ends.

Some advocates, including Assemblywoman Donna Lupardo, D-Endwell, have called for the industry to pay for increased regulatory oversight through permit fees. Industry officials, including Mark Scheuerman, of Fortuna Energy, support the idea, as long as fees are used for processing permits and regulatory staffing.

State lawmakers, however, tried unsuccessfully to steer increased fees into the general fund. Although that idea was defeated, a new proposal has not emerged.

The state has yet to determine how much Marcellus regulation will cost overall.

"These are concerns that we have heard as we hold hearings, and they are being considered," said Morgan Hook, a spokesman for Paterson. "The governor takes very seriously that executive order, especially given the state's fiscal conditions, and the trickle-down to local governments."