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House Panel Strips Proposed Oil, Gas Fee Hikes from FY 2012 Budget

Oil and natural gas producers got a dose of good news Wednesday when the House Appropriations Committee released its fiscal year (FY) 2012 spending bill for the Interior Department, Environmental Protection Agency (EPA) and related agencies.

President Obama's proposals to increase onshore and offshore fees for producers were absent from the $27.5 billion appropriations measure, which is $2.1 billion less than this year's level and $3.8 billion below the president's request for FY 2012, which begins Oct. 1.

The spending bill excludes the president's "ill-conceived proposal" to increase offshore oil and gas fees by $55 million, which "could harm American businesses during this economic downturn and put brakes on future domestic energy," said the statement released by the GOP-led House Appropriations Committee.

Interior's Bureau of Ocean Energy Management, Regulation and Enforcement would receive $154 million for FY 2012, which is $72 million below the current level due to the transfer of royalty fee management to the Office of the Secretary. The funding is sufficient for the agency to hire new safety and environmental inspectors, the committee said.

The budget for the Bureau of Land Management (BLM) does not include the president's proposal to increase onshore oil and gas fees by $38 million. The House appropriations panel has set aside $1 billion for BLM in FY 2012, which is $63 million less than the current level.

The measure also sets the parameters for EPA approval of exploration permits. It mirrors the legislation (HR 2021) passed in the House last month that would force the EPA to act on exploratory air permits within a six-month time frame and would limit the ability of opponents to use the EPA's Environmental Appeals Board to invalidate the permits for offshore exploration (see Daily GPI, June 24). Sen. Lisa Murkowski (R-AK) has introduced a companion bill in the Senate.

The panel proposes to cut FY 2012 funding for the EPA to the bone -- to $7.1 billion, which is $1.5 billion, or 18%, below the current year's funding and $1.8 billion less than what Obama requested for the agency. Funding for EPA is below its FY 2006 level by $468 million.

Some of the proposed EPA cuts would impact: the Clean Water and Drinking Water State Revolving Fund; grants for state implementation of environmental programs; funding to regulate greenhouse gases; EPA operations/administration; and EPA regulatory programs.

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