Albany, NY - Gov. David Paterson proposed a 3 percent tax on natural gas exploration companies that use high-volume hydraulic fracturing, or hydrofracking, to capture gas in the Marcellus or Utica Shale formations.

The state Department of Environmental Conservation is reviewing proposed regulations on hydrofracking, a technique that environmentalists say could pollute drinking water and damage Upstate New York.

Paterson is not counting on the state receiving revenue from the tax in the 2010-11 fiscal year, according to his budget. He expects New York to collect $1 million from the tax in the 2011-12 fiscal year.