Rep. Edward Markey (D-MA) said he and Rep. Rush Holt (D-NJ) planned to introduce legislation Thursday to establish an escalating fee on the "tens of millions of acres of public lands" that oil and natural gas producers have under leases but which are not producing.

Appearing before the House Natural Resources Committee, Interior Secretary Ken Salazar said that such a fee was already part of President Obama's fiscal year (FY) 2012 budget for the department (see Daily GPI, Feb. 15). He said he supported the legislation and would work with Markey and Holt on the "specifics of the legislation."

In the onshore, "we have 41.2 million acres of land that we have leased for oil and gas production, but we only have 12.2 million that is currently producing," he told the House committee. With respect to the offshore, out of the 38 million acres that are leased to oil and gas producers, he reported that only 6.3 million acres are producing.

Odds are remote that a measure calling for a fee on nonproducing leases will clear Congress this year. The Obama administration proposed such a fee last year, and Markey has been unsuccessful in his attempts to push the so-called "use it or lose it" legislation through Congress in past years (see Daily GPI, April 1, 2010; Jan. 19, 2007).

Markey also pressed Salazar on whether Interior is examining the manner in which drilling wastes associated with hydraulic fracturing (hydrofracking) are being managed on federal lands.

"We are working with the EPA [Environmental Protection Agency]," which has "primary jurisdiction" over the use of hydrofracking fluids in the development of shale natural gas, said David Hayes, deputy assistant secretary of Interior. He said the department is in contact with the oil and gas industry on its hydrofracking practices, but he doesn't think the practice is a major threat to public lands.

"The federal estate in terms of gas shale is a small percentage of the overall resources, perhaps 15%. But we are looking to make sure the operators on public lands are not using hydrofracking in a way that is harmful to the environment," Hayes said.

In raising the question on hydrofracking, Markey cited a recent article in The New York Times (NYT), which was critical of drilling wastewater disposal (see Daily GPI, March 1).

Markey also questioned Salazar about a report issued Tuesday by the General Accountability Office (GAO) that concluded that one of the top ongoing challenges that Interior faces is the collection of oil and gas revenues. It "concluded that [the] American people may not be getting fair return on federal oil and gas resources. What reforms are you putting in place to ensure that American taxpayers receive the billions of dollars which they are owed?" Markey asked.

"We are working very hard to implement many of the GAO recommendations," Salazar said. He further noted that a study currently is under way with the Bureau of Land Management addressing the issue of a fair return on oil and gas resources.

Committee Chairman Doc Hastings was not impressed by Interior's approval Monday of its first permit for drilling in the deepwater Gulf since the blowout of BP plc's Macondo well and sinking of the Deepwater Horizon rig last April and subsequent drilling moratorium by the Obama administration (see Daily GPI, March 3). The chairman echoed critics at a Senate committee hearing Wednesday who pointed to the importance of getting back to work in the Gulf in view of the unstable world oil situation.

Hastings also expressed concern about the administration's $358.4 million budget request for the Bureau of Ocean Energy Management, Regulation and Enforcement. "We all share the goal of wanting to make U.S. offshore drilling the safest in the world, and I don't doubt that additional funds will be needed to hire more inspectors. But we need to make certain that this money will be used to actually improve safety and resume offshore drilling."

He further noted that the proposed "$60 billion in higher taxes and fees" on domestic oil and gas producers was not conducive to increased energy production.

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