Opposition mounting to federal withholding of mineral payments

Kelly Sloan, The Business Times

Scott Tipton, US Congressman

A Colorado lawmaker has joined in what’s become a growing chorus of opposition to a move by the federal government to withhold a portion of mineral lease payments to states because of budget cuts implemented under sequestration.

“They have it wrong, and the president ought to know this. They are rolling back on last year’s revenues that have already been collected, and it is inappropriate, in my opinion, for them to try and cut those,” said U.S. Rep. Scott Tipton, a Republican whose 3rd Congressional District in Western Colorado includes a substantial number of federal mineral leases on public lands.

The Western Colorado Governor’s Association has questioned the legality of withholding funds the group argues are guaranteed under statute to qualifying states. Colorado Attorney General John Suthers also has questioned the move.

Under the Federal Mineral Leasing Act, 49 percent of royalties derived from federally owned lands within a given state are directed to that state. The remainder goes to the federal government. But the U.S. departments of Interior and Agriculture announced payments would be withheld to comply with the 5.1 percent in budget cuts required under sequestration.

Tipton said that funding not only goes to states, but is passed down to local communities affected by energy and mineral development. “This is another example of government in Washington saying it needs the money more than the people at home do,” he said. “We will continue to push to keep our revenues coming off those mineral rights and get them back to the areas of impact.”

In a letter to Agriculture Secretary Tom Visack, the Western Governors Association said it was “deeply troubled” by the decision to hold back 2012 mineral royalty funds to meet the requirements of sequester-induced budget cuts.

The associated stated in the letter the funds aren’t normal government expenditures, but “statutorily guaranteed” mineral royalty, bonus bid, rental and other receipts.

The association added: “Any comparison between a mineral receipt transfer and an appropriated expenditure is fundamentally flawed.”

The association demanded a written explanation of the legal justification for sequestering these funds.

The Colorado chapter of the free-market policy and advocacy group Americans For Prosperity wrote to Colorado Attorney General John Suthers requesting his opinion on the legality of the federal actions.

Suthers replied in a letter his office had conferred with and advised the governor’s office on the issue and had requested information from the federal government to justify and support its decision. Suthers said in the letter he hadn’t yet received the requested information, but “given the lack of articulated authority to sequester funds, I believe the sequester is unlawful, especially as it relates to royalty payments due to the states.”

Mark Waller, a state representative running for the Republican nomination for Colorado attorney general, decried the move during a campaign stop in Grand Junction. “This is another example of the federal government saying that we don’t care about western issues.”

Waller said he foresees three possible options for the attorney general: “The issue might be ripe for litigation if they in fact do withhold the royalty payments. Or the state could file an amicus brief. Or the AG can just be a voice for the constituents and call out the federal government.”

Kelly Sloan is a Grand Junction resident, freelance journalist, small business owner and Centennial Institute fellow on energy and economic policy. He specializes in public policy and political communications.
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Posted by on Jul 24 2013. Filed under Business News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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