U.S. Administration Preparing a New Energy Bill -- Interior Official

The Bush administration is preparing a legislative proposal to take care of energy issues not addressed in last year's energy bill, a senior Interior Department official revealed yesterday.

The legislative proposal would be the vehicle for Interior's attempt to force the oil and gas industry to pay more for processing oil and gas drilling permit applications, Interior budget director John Trezise told reporters following a Senate Interior Appropriations Subcommittee hearing yesterday.

The administration included in Interior's fiscal year 2007 budget request a proposal to repeal a last-minute provision from last year's energy bill that limits the Bureau of Land Management's ability to increase charges for oil and gas drilling permit applications. Repeal of that provision could bring in an additional $20 million annually.

Interior officials are discussing the issue with the White House Office of Management and Budget, which Trezise said is working with other departments to craft the energy proposal. OMB officials did not return phone calls for comment.

Energy Department spokesman Craig Stevens said DOE is not looking at any similar legislative strategy and officials there have not been talking with representatives from other departments on a new energy bill.

DOE is focused on getting congressional approval of its "Advanced Energy Initiative" in DOE's fiscal 2007 budget, Stevens said, though he noted that House Majority Leader John Boehner (R-Ohio) is planning for House action on an energy bill this spring. DOE would be interested in working on that. "We'll be happy to sit at the table," he said.

Yet the department is not without its own specific legislative proposals. DOE's fiscal 2007 budget seeks congressional repeal of the $1.5 billion research and development program for ultra-deepwater and unconventional natural gas and other petroleum resources that was included in last year's Energy Policy Act (E&E Daily, Feb. 7). Under the ultra-deepwater program, some $550 million of that $1.5 billion was intended to be dedicated direct spending. It came under fire from congressional Democrats who contended it would give additional funds to profitable oil and gas companies (Greenwire, July 28, 2005).

As for the Interior plan, BLM last July proposed to raise the permit application fee to $4,000. Independent producers attacked the plan, calling it an unfair cost piled upon existing lease bids and other fees that could stymie some energy development plans. Shortly thereafter, Sen. Orrin Hatch (R-Utah) added the amendment to the energy bill blocking the cost recovery plan for 10 years.

Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-N.M.), the prime mover of the energy bill, told outgoing Interior Secretary Gale Norton earlier this month that no changes would be made to the policy.

"I'm sure you are aware repeal of those provisions probably won't take place up here," Domenici said. "I hope that you will take action to ensure that their intended purpose, getting permits out the door, is realized as soon as possible."

Interior's Office of the Inspector General and the Government Accountability Office both have said improving BLM's cost recovery program is a needed step to address the workload from the rising number of federal lands energy permits. The number of BLM-approved oil and gas drilling permits rose from 1,803 in fiscal 1999 to nearly 6,400 in fiscal 2004, GAO said.

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