The House's top appropriator for the Interior Department yesterday said he is concerned by the Obama administration's request for an additional $20 million for offshore oil and gas permitting and inspections.

Rep. Mike Simpson (R-Idaho) said funding for the Bureau of Safety and Environmental Enforcement and its predecessor agencies has increased for several years in a row and that he is not sure whether another increase is warranted.

"How many years in a row will this agency ask for additional funds?" Simpson asked BSEE Director James Watson at a budget hearing yesterday before the Interior, Environment and Related Agencies Appropriations Subcommittee. "In this budget climate and until we see tangible results, this increase is difficult to consider."

BSEE and the Bureau of Ocean Energy Management -- which were formerly known as the Bureau of Ocean Energy Management, Regulation and Enforcement -- last April received a $58 million funding increase for the remainder of fiscal 2011, in part to help it hire new inspectors and implement a sweeping reorganization following the Deepwater Horizon disaster.

Congress late last year gave BSEE authority to raise an additional $52 million in fiscal 2012 through inspection fees but stipulated that half of the revenues must be spent to approve permits. The fiscal 2012 budget also gave the agency authority to recruit highly skilled employees at wages competitive with industry.

"Gentlemen, there are no excuses," said Simpson, who added that he felt both BSEE and the Bureau of Ocean Energy Management are moving in the right direction and doing a better job of accounting for appropriated money.

"There will be no blank check from this subcommittee," he said. "We expect results from appropriated dollars."

The agency's 2013 budget calls for more than $4 million in additional funding to hire, train and support new staff to conduct environmental inspections, safety audits and investigations and enforcement. An additional increase of $2.3 million would be used to launch an e-inspection service, as recommended by an offshore safety board.

Watson, who was testifying for the first time since replacing Michael Bromwich as director last December, faced little other criticism during a hearing that ran less than an hour.

Watson and BOEM Director Tommy Beaudreau discussed new requirements for oil spill response plans, next steps for Interior's regulation of air quality in the Arctic and the process of leasing new areas of the Atlantic Ocean for offshore wind farms, among other issues.

Oil production in the Gulf of Mexico was down significantly in fiscal 2011 compared to the previous year, due largely to the moratorium on deepwater drilling following the BP PLC spill. But a significant number of rigs have returned to the Gulf and the pace of permitting has increased since companies first demonstrated the ability to contain spills roughly a year ago.

Interior since February 2011 has permitted 61 new deepwater wells, six fewer than what were permitted annually in the year preceding the Deepwater Horizon spill.

Watson said oil and gas industry leaders have told him recently they are "increasingly optimistic" about their future in the Gulf. He pointed to the success of last December's offshore lease sale in the western Gulf -- the first since the Deepwater Horizon disaster -- as a sign that offshore oil and gas production will continue to expand in the United States.

But the expansion will not occur at the expense of safety, he said.

"Those who believe the pace of permitting should automatically be the same as before the Deepwater Horizon are ignoring the lessons of that disaster," he said. "I will commit to rooting out the inefficiencies and making the permitting as straightforward, predictable and understandable for the industry as possible, but not at the expense of safety."

Simpson said revenues from offshore oil and gas development have generally dipped over the past five years. But as energy demand increases, along with appropriations, he expects offshore revenue to rise accordingly.

Interior air permitting

Beaudreau also provided insight into how BOEM is responding to Congress' decision last December to transfer air quality oversight in the Arctic from U.S. EPA to Interior, which already polices air quality issues in the Gulf (Greenwire, Dec. 22, 2011).

He said his chief environmental officer and staff are still grappling over the differences between the Arctic and the Gulf in terms of air impacts and emission thresholds.

The agency's first task will be to review an exploration plan submitted by ConocoPhillips, the first that would fall under Interior's oversight.

"We believe we have the staff and the resources to make those air quality evaluations," Beaudreau said. "But longer-term, we will require additional expertise and a study that will evaluate comprehensively the potential impacts if additional development in the Arctic is to go forward."

Air quality issues were a stumbling block for Royal Dutch Shell PLC in early 2011 after an EPA appeals board ruled the agency had erred in issuing Clean Air Act permits for Shell's drilling project in the Arctic Ocean. A legal challenge by environmentalists now threatens to derail the company's bid to explore in the Beaufort and Chukchi seas this summer.

Beaudreau also defended BOEM's proposed five-year leasing plan against Republican attacks that it leaves resources in the Atlantic and Pacific oceans off the table. Those concerns are likely to be amplified today when Beaudreau testifies before the House Natural Resources Committee.

Rep. Ken Calvert (R-Calif.), who was among nearly 200 House members last fall to urge Interior Secretary Ken Salazar to expand leasing opportunities, said more domestic development is imperative amid rising gas prices.

Beaudreau said the agency is making 75 percent of known resources available, including the nation's most oil-rich waters in the central Gulf and Chukchi Sea.

"The central Gulf of Mexico truly is a frontier area," he said.

Republicans have argued that those areas are technically already available to development and that more resources would be surveyed and discovered in the Atlantic and Pacific oceans if companies were given the chance.