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N.M. Delegation: $26 Million In Mineral Royalty Payments Returning to State

WASHINGTON, D.C. – Today, U.S. Senators Tom Udall and Martin Heinrich and U.S. Reps. Ben Ray Luján, Michelle Lujan Grisham and Steve Pearce announced the U.S. Department of the Interior will return $26 million in mineral royalty payments to the state of New Mexico as a result of the N.M. lawmakers’ call for the state to be rightfully paid under the Mineral Leasing Act (MLA). 

In fiscal year 2013, administration officials unilaterally made the decision that state’s share of royalties under the MLA would be subject to sequestration – automatic, across-the-board federal government spending cuts. The New Mexico delegation uniformly opposed the move, which would cost 35 states a total of $109 million, including $26 million from New Mexico in 2013, and similar amounts in future years. The delegation, along with lawmakers from other Western states, led a bipartisan call for the administration to return the payments. In a May 16 letter, they also noted the hardship that states and local communities would experience if the sequestered revenues were not returned. 

Today, the Interior Department responded to the delegation’s request by announcing it will return the fiscal year 2013 royalty payments beginning on October of this year, which is the start of fiscal year 2014. As long as sequestration is in place, it is expected that future funds will still be subject to sequester in the year they are collected, but they will be returned the following fiscal year – in effect, refunding the funds to states after a delay. At the end of the fiscal year, the amount to be refunded to New Mexico is expected to be $26 million.

"This is extremely good news for New Mexico -- I'm very pleased that the administration has seen reason and will return the revenue owed to states from energy production on federal lands," Udall said. "These funds are the result of an existing agreement for mineral development. They provide a vital source of funding for public education and other functions New Mexicans rely on, and the federal government shouldn't be using them to balance its books. I'm relieved that we were able to reverse this aspect of sequestration and restore $26 million back to our state this year and in years ahead.”

“I’m pleased the Department of Interior heeded our call to return $26 million in mineral royalty payments to New Mexico that were withheld due to sequestration,” Heinrich said. “Our federal lands and natural resources provide significant revenue that fund infrastructure, education, and flood protection projects, which are especially critical for rural communities across New Mexico. I will work to ensure every dollar is returned and continue to protect these much-needed funds that belong to our state.”

“Returning these funds to New Mexico and other states that receive mineral royalty payments is the right course of action and will have an important impact in communities across New Mexico,” Luján said. “These payments represent a significant source of funding that help support vital programs and critical investments that make a difference in the lives of the people of New Mexico.”

“This is great news for our state,” Lujan Grisham said. “The Department of Interior’s announcement reaffirms what I said previously: these mineral royalties belong to New Mexico, and they should stay in New Mexico. I’m proud to have fought for New Mexico, and I’m pleased that these mineral royalty payments will once again be able to support our schools, hospitals and infrastructure.”

“I’m pleased that the Department of the Interior has decided to return the mineral royalties withheld earlier this year,” Pearce said. “It is unacceptable that a unilateral decision in Washington can so easily cut off millions of dollars that are the lifeblood of western states like New Mexico. New Mexico’s classrooms and communities should not suffer at the whim of D.C. bureaucrats—the Administration’s reckless handling of this issue led to delays and uncertainty that are sure to impact our economy.”

Udall, a member of the Senate Appropriations Committee, questioned Department officials about the issue during an Appropriations subcommittee hearing while asking that they reevaluate their decision and solve the issue administratively. For full video of the exchange, click here

The full text of the letter from the Department of the Interior can be viewed here.