Bennet, Udall Author Bill to Protect States’ Mineral Royalties from Sequester

August 30, 2013

Mineral Leasing Revenues Help Communities Provide Critical Services 

Bill Follows Announcement That Payments Will Continue to be Delayed in Future

Colorado U.S. Senators Michael Bennet and Mark Udall today announced that they will introduce a bill to ensure that royalty payments owed to Colorado and other states, mostly from the Western part of the country, under the Mineral Leasing Act of 1920, will be delivered to states immediately for FY 2013. The bill, entitled the State Mineral Revenue Release Act, will also ensure that royalty payments will be delivered to states as scheduled in the future and not subjected to the sequester.

The mineral leasing revenues are dispersed to communities in Colorado and other states that depend on the funds to help run local governments and schools and provide other critical community services. The bill will be formally introduced when the Senate returns on September 9.

As part of the automatic budget cuts commonly referred to as “sequestration,” the Interior Department cut more than $109 million in mineral royalties to states, including $8.4 million for Colorado. A recent decision from the Department of Interior ensures that states will receive the royalties they were shorted from FY 2013 at the end of the fiscal year, but also that revenue in future years will be subject to the same treatment. The Bennet-Udall bill removes the Mineral Leasing Act budget account from the sequester completely, thereby ensuring Colorado receives its full payment at the appropriate time, not the beginning of the next fiscal year.

“The sequester is bad policy to begin with, and we should work to fix it in a comprehensive way.  But these mineral leasing revenues are not federal spending and shouldn’t be covered under the law. Colorado communities are legally entitled to these dollars, and this bill ensures those resources will no longer be withheld in the future.” Bennet said. “Our state relies on these resources to help provide crucial services like quality education and safe roads for our residents.  The Department of Interior has already agreed they have no right to keep this money in perpetuity; this bill gives Colorado communities the money as its generated from mineral development, not at the end of each fiscal year.”

“Colorado's energy industry creates jobs and boosts the economies of communities across the state, but it also affects roads, schools and local government programs. The Department of the Interior's moves to cut federal mineral royalty payments, needed to help address these effects, were wrongheaded and will only hurt hardworking Colorado families,” Udall said. “Sequestration should never have been applied to federal mineral royalty payments, and this important bill clarifies that such cuts are illegal. Congress must find a bipartisan way to replace sequestration, but this bill will provide Colorado communities much-needed certainty in the meantime.”

In May, Senators Bennet and Udall joined with a bipartisan group of senators urging the administration to release the mineral royalties to help communities address the effects of energy and mineral production in addition to providing other crucial services. In a letter to OMB Director Sylvia Burwell, the senators called on the administration to follow the precedent set by the FY 1986 sequester, which directed revenues sequestered in revolving trust and special fund accounts to be made available in subsequent fiscal years.  In a letter from the Department of Interior earlier this week, the Administration indicated the royalties will be restored to states, but not until the end of the fiscal year.

The Grand Junction Daily Sentinel, Pueblo Chieftain, and the Denver Post have both called for a solution that keeps mineral leasing revenues with the states.

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