NOT SO FAST: CO and Nine Other States May Sue Obama Administration for Payment of Mineral Lease Royalties

Photo: U.S. Geological Survey

Another day, another law disregarded by the Obama camp.  Colorado Attorney General John Suthers and representatives from nine other states have signed a letter to the Obama Administration demanding the administration pay up on mineral lease revenues owed to the states under the 1920 Mineral Leasing Act.  This nearly century-old contract requires a certain percentage of the royalties collected by the federal government to be returned to the states where the minerals were produced.

The administration now is trying to trim these payments under the guise of sequestration, saying that these royalties are subject to across the board spending cuts at the federal level.  Suthers and the other attorneys general have pointed out that these payments are established by statute, and not subject to arbitrary reductions.  The Grand Junction Sentinel quoted the letter this weekend:

“The revenues owed to the mineral-producing states under the (Mineral Leasing Act) are not a gift, a handout, 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.”

In a federal minerals lease, operators obtain the right to extract minerals on certain federal lands, and in exchange for that right, must give the federal government a certain percentage of the output, either in product or a cash equivalent.  Those royalties, then, are disbursed to several recipients in accordance with the Mineral Leasing Act.  In 2012, $2.1 billion in royalties were paid to states through the Office of Natural Resources Revenue.  Colorado received $157.8 million last year – not exactly pocket change.

The Grand Junction Sentinel also reported in the same article that the attorneys general may combine resources and present a legal challenge if their non-judicial approach is unsuccessful.  We are not holding our breath, as the Mineral Leasing Act would not be the first law that Obama set out to completely disregard this year.

 
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