UPDATE, Sept. 11: A story in Roll Call by Geof Koss notes the decision to return "sequestered" 2013 mineral royalty payments doesn’t mean states will see the cash any time soon, in part because of how those funds will be disbursed. Read the story.
Aug. 27: The U.S. Department of Interior has announced it will return "sequestered" 2013 mineral royalty payments to oil and gas producing Western states during the 2014 fiscal year, "assuming no further legislative changes."
The decision, following a legal review, restores significant revenues to Western states: Wyoming ($40 million) New Mexico ($20.8 million and Utah ($6.2 million) alone will receive nearly $70 million in restored payments.
In all, 34 states will receive $110 million in mineral royalty payments, which are collected from companies extracting oil, gas and minerals from federal lands. Other Western states receiving royalty payments include Alaska, Arizona, California, Colorado, Idaho, Kansas, Montana, Nebraska, Nevada, North Dakota, Oklahoma, South Dakota, Texas, Utah and Washington. Read the letter sent to states.
Monday's decision by Interior follows previous outreach by the Western Governors' Association (WGA), and subsequently the Conference of Western Attorneys General (CWAG), that mineral royalties were not subject to the budget sequester. A previous letter sent to WGA (dated July 26, 2013) from Interior and the Office of Management and Budget asserted mineral royalties owed to the states were a “federal expenditure” and may be retained by the federal government under the sequester.
As CWAG noted in its letter on Aug. 2, 2013, that response represented "a profoundly flawed understanding of the relationship between our governments ...The revenues owed to the mineral-producing states are not a gift, a hand-out, or an entitlement but rather are the result of a compromise reached in 1920 that compensation is due to the states for mineral development within their boundaries." Read more.
In addition, Sen. John Barrasso (R-Wyo.) led a bipartisan letter of 10 western Senators and 12 western Representatives that was sent to the Office of Management and Budget and the Department of the Interior on May 16th. The letter argued that Federal budget law required Interior to return Mineral Leasing Act revenue sequestered in FY 2013 to the states in FY 2014.
States use the royalties to fund the likes of infrastructure, education, flood protection and a variety of other projects.