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Conference of Western Attorneys General calls decision to sequester Minerals Leasing Act revenues "profoundly flawed"

Posted Date: 
August 5, 2013
Western Governors Association

The Conference of Western Attorneys General (CWAG) sent a letter to President Barack Obama "strongly" objecting to the "decision to misuse the 2011 Budget Control Act to sequester revenues owed to states under the Minerals Leasing Act (MLA)."

The Western Attorneys General note that the states are "statutorily guaranteed" 48% of all rentals, royalties, and other receipts collected by the federal government for mineral activity on federal lands within state boundaries. The letter was sent Aug. 2 to President Obama, as well as Interior Secretary Sally Jewell, Agriculture Secretary Tom Vilsack and Office of Management & Budget Director Sylvia Mathews Burwell.

The CWAG letter follows a May request by the Western Governors’ Association (WGA) to the cabinet members to provide information justifying the position that MLA funds were legally subject to sequestration. In a response to WGA dated July 26, 2013, DOI and OMB took the position that mineral royalties owed to the states are a “federal expenditure” and may be retained by the federal government under the sequester.

The Western Attorneys General call that response "wholly unacceptable ... a profoundly flawed understanding of the relationship between our governments." As CWAG notes: "The revenues owed to the mineral-producing states under the MLA are not a gift, a hand-out, 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."

The Attorneys General go on to note that "the fact that the royalty payments make a stop in the federal treasury before being returned to the states does not convert the royalties into federal money or give the federal government any discretion to decide whether or how much money to return to the states."

The letter also notes that, despite the suggestion that "sequester is often described as a blunt instrument, intended to impose cuts indiscriminately ... in reality sequester is a much more refined tool (that allows) OMB discretion to identify which programs are subject to sequester and which are exempt." 

The Attorneys General conclude: "The failure of the federal government to exempt MLA payments to states from sequestration is arbitrary and capricious ... Reducing the federal budget deficit is a laudable and necessary goal; but it cannot be achieved on the backs of states and with disregard for the principles of federalism."

The letter is signed by Attorneys General from Alaska, Arizona, Colorado, Idaho, Montana, New Mexico, North Dakota, South Dakota, Utah and Wyoming.

Western Governors Association |