Interior returns ‘sequestered’ 2013 mineral royalty payments to states

The U.S. Department of Interior has begun returning “sequestered” 2013 mineral royalty payments to oil and gas producing Western states. On Wednesday, October 30, the state of California received a letter, signed by Interior Secretary Sally Jewell, stating “we are disbursing the FY 2013 Funds that were sequestered.”

In all, 34 states will receive a combined $110 million in mineral royalty payments, which are collected by the Department of the Interior from companies extracting oil, gas and minerals from federal lands. California will receive a total of $4.9 million in sequestered royalties for Fiscal 2013.

Western states receiving the most sequestered royalties include: Wyoming ($40 million), New Mexico ($20.8 million) and Utah ($6.2 million). 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 when the decision to return the payments was first announced.

The return of sequestered royalties follows extensive 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 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.”