ONRR: States to receive withheld fiscal 2013 revenue shares in 2014

Shares of federal oil, gas, and mineral revenue withheld from several western states in fiscal 2013 because of budget sequestration will be available for distribution to them in fiscal 2014, the US Office of Natural Resources Revenue said.

Section 35 of the 1920 Mineral Leasing Act mandated a state with significant federal acreage within its borders would receive about half of such revenue for road construction, schools, and other local needs as compensation for not being able to levy its own taxes.

The US Department of the Interior said it would withhold those payments as required under the 1985 Balanced Budget and Emergency Deficit Control Act soon after federal budget cuts under sequestration took effect earlier this year.

That law was amended since the last time funds were sequestered, requiring a legal review that DOI made a priority because it recognized the money’s importance to affected states’ budgets, ONRR Director Gregory J. Gould said on Aug. 26.

“Interior payments made under other legal authorities are pending final determination based upon completion of the review process. We will notify you of the remaining determinations as they become available,” Gould said in an Aug. 26 letter to treasurers in Wyoming and other affected states.

ONRR will continue to withhold 5.1% of each affected state’s MLA payments through the rest of fiscal 2013, which ends on Sept. 30, Gould continued.

Officials in the affected states welcomed the announcement. “As I've said all along, federal spending needs to be reduced, but there is a better way to do it than through indiscriminant, across-the-board cuts,” Utah Gov. Gary R. Herbert (R) said on Aug. 27.

“In particular, the federal government has no right to take money that rightfully and legally belongs to states,” he said.

Members of Wyoming’s congressional delegation also applauded the decision. “The sequester has been used to justify a lot of questionable policy decisions, but I’m pleased that Wyoming’s money will be returned next year,” US Sen. Michael B. Enzi (R) said on Aug. 27.

The delegation said it and other federal lawmakers from western states told in the White House Office of Management and Budget in a May 16 letter that when federal budget sequestration occurred in the 1980s, withheld mineral revenue had to be paid to the states the next fiscal year, and the same provision of law applies now.

Wyoming’s at-large US House member, Rep. Cynthia M. Lummis (R), also introduced a bill on May 16 to amend the MLA so states wishing to do so could collect their shares of federal mineral royalties directly and receive full property interest (OGJ Online, May 16, 2013).

The Energy Producing States Coalition, a group of members from 14 state legislatures, also welcomed ONRR’s announcement, but added on Aug. 29 that the situation won’t be satisfactorily resolved unless Lummis’s bill becomes law.

Contact Nick Snow at nicks@pennwell.com.

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