(CNN) -- New York Gov. David Paterson has signed an executive order halting the controversial natural gas drilling process called hydraulic fracturing until July 1.
The process --- also known as "fracking" -- has come under scrutiny because of its alleged harmful effects on underground drinking water and the environment -- although industry leaders have insisted it's safe.
The governor's order -- which was signed Saturday -- prohibits horizontal hydraulic fracturing in New York until the state Department of Environmental Conservation completes a comprehensive review.
The outgoing governor also vetoed legislation that would have placed a moratorium on high-volume, horizontal hydraulic drilling and more conventional vertical drilling.
Interactive: See how fracking works
In November, the New York Assembly voted 93-43 to halt hydraulic fracturing temporarily so the state could investigate the safety and environmental concerns. The state's Senate passed a similar bill in August.
Can shale gas be produced safely?
In the past, Paterson has expressed concern about hydraulic fracturing, which involves cracking thousands of feet beneath the Earth's surface to get at valuable natural gas.
The proposed moratorium in New York was described as "misguided" by Kathryn Klaber, who represents a large natural gas industry coalition in the Northeast.
"Tightly regulated, environmentally sound natural gas development in New York can and will deliver a much-needed and long-lasting economic shot in the arm ... for the entire state, just as it is in Pennsylvania, West Virginia and elsewhere," said a written statement from Klaber, president of the Marcellus Shale Coalition.
Using hydraulic fracturing, drillers pump large amounts of water mixed with sand and chemicals into the shale formation thousands of feet underground under high pressure. Fracturing the shale around the gas well then allows the natural gas to flow freely.
The process has raised concerns about whether those chemicals are contaminating the underground water. Some residents near hydraulic fracturing drill sites along the Delaware River Basin -- in Delaware, New Jersey, New York and Pennsylvania -- have been able to set their water on fire.
Watch residents set water on fire
Several residents in rural Pennsylvania have filed a lawsuit against Cabot Oil & Gas Corp., blaming the company for the contamination.
The company has said the hydraulic fracturing process is "proven and safe," citing a 2004 hydraulic fracturing study by the Environmental Protection Agency that concluded the injection of hydraulic fracturing fluids "poses minimal threat" to underground sources of drinking water.
The EPA is reviewing its position and plans to issue its report in 2012.
Can the EPA regulate fracking?
New York City gets roughly half its water from the Delaware River Basin, which was recently named the country's most endangered river because of the threat of natural gas.
Last month, New York Mayor Michael Bloomberg called for a cautious approach to the drilling.
"The stakes are high," Bloomberg wrote in a November 17 letter to the Carol Collier, executive director of the Delaware River Basin Commission.
"The city has invested more than $1.5 billion in watershed protection programs that have resulted in improved water quality throughout our watershed, as well as to our releases downstream, which benefit all members of the commission, and the 15 million people who rely on the Delaware River watershed for clean drinking water," Bloomberg wrote.
Over the past few years, technological advances and increased profit margins have spurred increased use of hydraulic fracturing, according to the EPA. The U.S. Department of Energy estimates shale gas will make up more than 20 percent of the nation's total natural gas supply by 2020.
Currently, most natural gas is burned to produce electricity or heat and cool buildings. When burned, it emits about half the carbon dioxide as coal.
For that reason, most of the country's big environmental groups are cautiously supportive of increased shale gas development.
But, with the expansion of fracturing, there are increased concerns about its potential effects on the underground water table, public health and the environment.
Read Fortune magazine's special series on fracking
The concerns have prompted the EPA to look at the potential problems with fracturing, and public hearings to help decide how to conduct a study are almost finished.
The EPA -- which held public meetings this year in Binghamton, New York; Canonsburg, Pennsylvania; Fort Worth, Texas; and Denver -- plans to begin a study in 2011 and release initial results by late 2012.