House appropriators Thursday will review the Obama administration's proposal to significantly boost funding for offshore drilling oversight and complete a restructuring of the Interior Department's former Minerals Management Service.

The administration's fiscal 2012 request seeks to implement sweeping reforms that establish new safety regulations -- including well integrity standards, worst-case spill estimates and mandatory spill response and containment plans -- as well as the creation of three new agencies designed to "de-conflict" the agency's environmental oversight from revenue collection.

The Bureau of Ocean Energy Management, Regulation and Enforcement seeks $358.4 million, a net increase of $133 million over current funding levels. Lease rentals, cost-recovery fees and increased inspections would be expected to offset about $225 million of the request.

Sen. Jack Reed (D-R.I.), chairman of the Senate Appropriations subcommittee that oversees Interior's budget, last week said he believes the increase in inspections fees -- which would raise $65 million, up from $10 million currently -- are "businesslike" and will not unduly burden companies that have generated several billion dollars in revenues from Gulf of Mexico drilling (E&E Daily, March 10).

Rep. Mike Simpson (R-Idaho), who chairs the counterpart House subcommittee, has said he agrees industry should pay a greater portion of its oversight costs but has not indicated whether he supports the specific fees Interior has proposed.

The agency request follows recommendations from the president's Oil Spill Commission that industry fees should "provide adequate leasing capabilities and regulatory oversight for the increasingly complex energy-related activities being undertaken on the OCS."

The report also argued that industry "should do significantly more and provide the funds necessary for regulation [which] would no longer be funded by taxpayers, but instead by the industry that is being permitted to have access to publicly owned resources."

The increased funding is critical for Interior to hire new inspectors, invest in new technologies, implement a "risk-based" inspection program and expand offshore transportation resources, Interior officials said.

BOEMRE needs additional support from Congress if it hopes to resume a permitting rate similar to before BP PLC's oil spill last year in the Gulf, Interior Secretary Ken Salazar has said.

"So much of it depends on this budget," Salazar told reporters after defending the White House's fiscal 2012 request before the Senate Energy and Natural Resources Committee earlier this month (E&ENews PM, March 2). "If we don't get the horsepower to be able to process permits under what is now a greater degree of scrutiny, we may never return to a pre-Macondo rate of permitting."

BOEMRE late last month issued the first deepwater drilling permit since the spill, and late Friday issued a second deepwater permit for a well that was suspended under a now-lifted moratorium.

Schedule: The hearing is Thursday, March 17, at 1 p.m. in B-308 Rayburn.

Witness: Michael Bromwich, director of BOEMRE.