Sequestration frustration

Well, that didn’t take long.

A “careful consideration” of legal questions related to mineral leasing money divided between the federal government and Western states lasted all of a day.

The states lost.

It turns out the states’ share of federal mineral leasing money is subject to sequestration after all, according to authorities with the U.S. Department of Interior. So, beginning in October, Colorado will receive more than $5.7 million in mineral leasing money — minus about $250,000 in administrative fees. But don’t expect similar funds next year, the feds said.

Readers who’ve tried to follow the saga of the mineral leasing funds can be forgiven if they find their heads spinning. The bad news has been followed by good news which was almost immediately chased by bad news from the federal money handlers in Washington.

The mineral leasing funds are royalties paid by companies that extract oil and gas, coal and other minerals from federal lands. Just over half of that revenue goes to the federal government, with the remaining share paid to the state in which the mineral extraction occurs.

Even though the money to the states is a pass-through, and it has nothing to do with the federal government’s general fund, the Interior Department determined earlier this year that the money was subject to the federal budget sequestration, and therefore it wouldn’t be paid to the states.

Early this month, the attorneys general of 10 Western states wrote President Barack Obama and Secretary of Interior Sally Jewell, arguing that because the funds in question were set aside for the states under a law dating back to the 1920s, and were never included as part of the federal government’s general budget funds, they were not legally subject to sequestration.

On Monday, the Interior Department appeared to relent, at least temporarily. In a letter sent to Colorado State Treasurer Walker Stapleton, the Office of Natural Resources Revenue within Interior said that the $5.7 million due Colorado for 2013 would be available to the state beginning Oct. 1. As for future funds, the letter said that, “a legal review regarding the availability of sequestered funds in subsequent years requires careful consideration of the relevant provisions in light of the current statutory framework.”

Apparently, that legal review was completed quickly and — surprise! — it turns out the mineral leasing funds are subject to sequestration after all, at least according to Interior Department officials.

Several members of Colorado’s congressional delegation are looking at ways to ensure the money is paid, not just next year, but in the future.

Legislation or court action may be required. Whether it is mineral leasing funds, money due the state from the old Naval Oil Shale Reserve near Rifle or payments in lieu of taxes — which provides money to states to make up for property taxes on federal lands — this administration has made it clear its intention is to find ways to withhold these funds rather than pay them to the states.


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