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House Panel Votes Down Hike in Inspection Fees, Clips EPA's Wings

The House Appropriations Committee Tuesday was poised to vote out a $27.5 spending bill that makes deep cuts in funding for the Interior Department and Environmental Protection Agency (EPA) for fiscal year (FY) 2012.

The measure, which was forwarded to the committee from the Subcommittee on Interior, Environment and Related Agencies, included $9.9 billion in funding for Interior in FY 2012, which is $720 million below the level for the current fiscal year and $1.2 billion below President Obama's request; and $7.1 billion for the EPA -- $1.5 billion less than last year and $1.8 billion below the president's request for the agency (see Daily GPI, July 8). The bill is expected to reach the House floor at the end of the month or the beginning of August.

Rep. James Moran (D-VA) offered an amendment to restore the president's proposal to raise inspection fees on onshore and offshore production, but it was defeated 29-20. The president proposed raising onshore and offshore fees by nearly $100 million.

"This [amendment] is the right thing to do," Moran said, adding that he was only asking for that part of the president's request to be included in the bill.

"I have no problem charging [oil and gas companies] what it costs the federal government to do these inspections," said Interior-EPA Subcommittee Chairman Michael Simpson (R-ID). But he noted that the matter should be left to the authorizing committees of jurisdiction, which believe that the fees should come out of royalties.

Moran called the appropriations bill a "virtual 'dump truck'" of provisions for corporate interests, such as oil producers, cattle grazers and miners. He said the bill was more of a "wish list" for special interests than a spending measure. The Democratic Senate will be passing its own appropriations version, which is not likely to include deep cuts. The two then will have to be reconciled.

The decision to cut funding for the EPA by 18% in FY 2012 was decried by Democrats on the appropriations panel, but Republicans justified their action by saying they were trying to rein in the "out of control" regulation by the agency. "This legislation by regulation must come to an end," said one lawmaker. Republicans specifically cited the EPA's "obstruction" of Outer Continental Shelf (OCS) permitting.

Congress is fed up with this "dubious legislation by regulation," said committee Chairman Harold Rogers (R-KY).

The spending bill incorporates House legislation (HR 2021), which was passed 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.

Simpson said the measure provides additional funding for Interior's Bureau of Ocean Energy Management, Regulation and Enforcement to hire new inspectors and move forward with offshore oil and gas permitting and leasing.

Simpson said the cut to the EPA budget was justified. "Earlier this year I said that the scariest agency in the federal government is the EPA. I still believe that. The EPA's unrestrained effort to regulate greenhouse gases, and the pursuit of an overly aggressive regulatory agenda, are signs of an agency that has lost its bearing."

Also on Capitol Hill Tuesday, a spokesman said the Senate Energy and Natural Resources Committee does not plan to mark up Thursday legislation aimed at overhauling offshore oil and natural gas drilling.

The OCS Reform Act of 2011 was one of two offshore-related measures stricken from the agenda. It did not make the short list of bills to be considered "mainly because we're still working on [the legislation]. It's not ripe enough," said Bill Wicker, spokesman for committee Chairman Sen. Jeff Bingaman (D-NM). Also, the committee "would not have gotten anything else done" if the OCS reform legislation were on Thursday's agenda, he said.

The OCS reform bill (S. 917) "is a very worthy piece of legislation," and "we don't want to battle the clock" on it. The Senate energy panel also put aside the "Oil and Gas Facilitation Act of 2011." The two bills are likely to be marked up together later this month, Wicker said.

The facilitation bill, among other things, calls for a comprehensive inventory of OCS resources and the phase-out of mandatory OCS deepwater and deep gas royalty relief for future leases.

At the Thursday mark-up, the committee plans to focus on measures that will create jobs, Wicker said. The majority of the bills to be considered will be public lands measures (19), on which the committee will vote en banc.

While Congress moves forward with legislation, the deficit reduction and debt ceiling talks between the Obama administration and congressional leaders are capturing the most attention. With the federal government facing possible default on its debt obligations in three weeks, the most divisive issue on Capitol Hill is whether to raise taxes for specific groups, such as oil and gas producers. Republicans are opposed to this while Democrats support it.

The Independent Petroleum Association of America (IPAA) Monday called on House and Senate leaders to reject any proposals that would impose a tax increase on a specific industry.

"Much has been said about the elements of a compromise to address the forthcoming expiration of the statutory debt ceiling and the challenges of reducing the federal deficit. Among the issues that have been raised are targeted tax increases on specific industries," wrote IPAA President Barry Russell in his letter to the House and Senate leaders.

"President Obama targeted the oil and natural gas exploration and production industry in many of his recent statements. As the most active advocate for America's independent producers, the Independent Petroleum Association of America requests that these proposals to target a specific industry for tax increases be rejected," he said (see Daily GPI, July 1).

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