Frack 2, Scene 1

In 2006, in the midst of the Rocky Mountain energy boom, Grand Junction and Palisade, Colo., lost a long battle to keep natural gas drilling off the forested mesa that supplies the two communities' drinking water. 

Now, the drilling boom has moved out East, and the political landscape of the oil and gas fight appears to have undergone a tectonic shift.

New York City's 1,900-square-mile watershed supplies about 9 million people, and the state has so far resisted public pressure to ban gas development there. But in late October, Chesapeake Energy Corp., reportedly the only company with holdings in the city's watershed, announced that it won't drill them. CEO Aubrey McClendon told the New York Times that developing the 5,000-acre swatch, a fraction of Chesapeake's 1.5 million acres in the region, wasn't worth the backlash: "Why go through the brain damage of that, when we have so many other opportunities?"

Chesapeake is the largest leaseholder in the Marcellus Shale -- a vast natural gas deposit beneath West Virginia, Ohio, Pennsylvania and New York -- where companies have rushed to secure holdings in recent years. Drillers there, like their Western counterparts, rely on hydraulic fracturing, or "fracking" -- blasting water, sand and potentially toxic chemicals into the rock to crack it open and release gas up the well. Fracked gas wells and drilling fluids -- the composition of which has long been guarded by industry as proprietary -- have been implicated in multiple instances of water contamination. Yet oversight has been left to the states: In 2004, the Environmental Protection Agency decided, based on a questionable study, that it need not regulate fracking, and in 2005, Congress formally exempted it from regulation under the Safe Drinking Water Act.

But thanks in part to the Marcellus' proximity to major population centers (which, ironically, also makes its gas more valuable) concerns about pollution have moved into the national spotlight. Major media outlets have blitzed fracking with negative coverage. In late September, McClendon and John Pinkerton, the CEO of Range Resources Corp., another company with Marcellus holdings, called on the industry to be more transparent about the chemicals it uses. Chesapeake, which keeps a log of its fracking chemicals on its Web site, has even endorsed New York state's proposal to require drilling companies to register their products and disclose the compounds used.

Congress is also beginning to move. In late October, Obama signed a bill containing a measure that calls for the EPA to re-study the environmental effects of fracking, using "the best available science" and "a transparent, peer-reviewed process." And another bill -- Colorado Rep. Diana DeGette's FRAC act, introduced in June -- would eliminate fracking's exemption from the drinking water law and require companies to disclose the composition of drilling chemicals. Though that measure appears to have stalled, it's received a lot of attention from industry and the media. Co-sponsors in the House had snowballed to 37 as of press time -- nine of them from New York state. A twin measure in the Senate now has five.

But the bill has sparked opposition in the West, particularly in DeGette's home state of Colorado, which relies heavily on natural gas revenue and recently passed its own tough new environmental rules for the industry, including one that requires disclosure of drilling chemicals. Grand Junction and surrounding Mesa County have adopted resolutions against the FRAC Act, as have many of the state's other gas-patch communities and counties. Even Democratic Gov. Bill Ritter effectively came out against DeGette's measure this summer when he called for more study before more regulation. 

Ritter's stance isn't surprising: Like many Western leaders, he often favors a homegrown approach to managing natural resources. Plus, he may need to placate industry if he wants to be re-elected in 2010. Challengers seeking the Republican nomination -- including state Senate Minority Leader Josh Penry of Grand Junction, who just dropped from the race -- have been quick to blame the state's economic woes in part on Ritter's gas rules; they came into effect just as the bottom dropped out of natural gas prices and dozens of drilling rigs around the state went idle. "Our state now has the worst reputation in the country as a place for the natural gas companies to do business," the Republican front-runner, former U.S. Rep. Scott McInnis of Grand Junction, said in a recent press release. "Colorado's loss in jobs and revenue is a gain for other states, including Pennsylvania."

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