Lawmakers scrap plan to hike fees for oil companies

A plan to hike fees on oil companies and give a financial boost to the federal agency that oversees offshore drilling is in jeopardy now that Senate leaders have scrapped a $1.1 trillion spending bill that would fund the government through next October.

The Bureau of Ocean Energy Management, Regulation and Enforcement had been slated to get a $51.4 million raise — to a total of $232.9 million for fiscal 2011 — under that big spending bill unveiled by Senate Democrats earlier this week. Under that plan, the agency would have been tapping $50 million in new inspection fees imposed on oil and gas companies and would have been given more time to review drilling proposals.

But Senate Majority Leader Harry Reid, D-Nev., yanked that omnibus spending package late Thursday, in the face of insurmountable Republican opposition, mostly on fiscal grounds. Now, congressional leaders are pursuing a short-term plan to keep the federal government up and running for the next month or two.

The pared-down measure, called a continuing resolution, likely will keep most agencies at their current funding levels.

For the ocean energy bureau, that means the administration will have less money than it wanted to hire new inspectors and engineers to step up offshore drilling oversight in the wake of the Deepwater Horizon disaster.

The Obama administration had asked Congress to give the agency an extra $100 million to hire more inspectors and buy more equipment; lawmakers responded earlier this year with about a quarter of that.

Lawmakers’ decision to pursue a short-term spending plan for the government — instead of the omnibus bill — also means that the controversial oil and gas inspection fee plan is off the table.

Industry officials had blasted the proposed inspection fees in the scrapped omnibus spending bill, which would have meant at least an additional $12,000 for offshore facilities with no wells and three times that for those with more than 10 wells. Fees also would be hiked for onshore oil and gas leases under the plan, which would have meant an additional $300 for each lease without active wells and $3,000 for onshore leases with more than 50 wells.

Con Lass, the senior federal relations director of the American Petroleum Institute, said that proposed fee schedule was out of line.

“It is … unwarranted to raise permit fees more than six times their current level,” Lass said. “Oil and natural gas production already provides billions of dollars each year to the federal treasury from royalties, rentals and bonus bids, a portion of which could pay to increase staffing and funding at BOEM.”

The spending bill also would have tripled — to 90 days — the amount of time the government has to review proposed offshore drilling projects. The White House asked for that change after the Deepwater Horizon disaster, but it is opposed by the oil and gas industry and allies in Congress, including Sens. Mary Landrieu, D-La., and Lisa Murkowski, R-Alaska.

Photo: AP/Isaac Brekken