The City Council will hold an emergency public hearing next week to address concerns that plans for natural gas drilling in the city’s upstate watershed could contaminate local drinking water.

Environmental groups have warned that a bill signed by Governor Paterson in July allowing for more drilling activity authorizes a technique known as “hydraulic fracturing” that they say has caused toxic chemical leaks at sites in New Mexico and Colorado. Earlier this month, Senator Clinton wrote a letter to the New York State Department of Environmental Conservation calling for regulations surrounding the expanded drilling operations to be reviewed and tightened based on such environmental fears.

Council Member James Gennaro, who is organizing the hearing, said yesterday that drilling also threatens to cost taxpayers billions of dollars if the city loses a waiver from the federal government that exempts it from filtering its drinking water. The city’s water supply is allowed to go unfiltered as long as periodic federal testing finds it to be clean. According to Mr. Gennaro, if the water supply were to be contaminated as a result of the drilling and the exemption taken away, the city would be forced to pay billions of dollars to construct and maintain a new filtration plant.

“This is an industrial activity which is completely inconsistent with a drinking water supply,” Mr. Gennaro said yesterday in an interview.

“It would be a direct attack on New York City’s water supply and the filtration avoidance status this watershed now enjoys,” Mr. Gennaro said.

Mr. Paterson has said that the new law will be subject to stringent environmental and public health safeguards.

According to a spokesman for the DEC, the state is planning a comprehensive environmental review, including input from the public, to determine the impact of the drilling.

The City Council hearing is scheduled for September 10.