Utah AG lauds decision to pay mineral royalties to state

By Bryan Cohen | Aug 29, 2013

SALT LAKE CITY (Legal Newsline) -- Utah Attorney General John Swallow praised the U.S. Department of the Interior for deciding to refund more than $6 million in oil and gas royalties withheld under sequestration.

The decision came after Swallow and nine other attorneys general told the U.S. Department of the Interior that withholding the funds would constitute a violation of a legal and historical agreement.

"It is absolutely clear these royalties belong to Utah and should never have been kept by the federal government in the first place," Swallow said in a statement Tuesday.

"The sequester can be used for federal funds but simply cannot be used to grab money that rightfully belongs to the states."

Sequestration refers to a set of automatic federal spending cuts put into law by the Budget Control Act, signed by President Barack Obama in August 2011. The legislation raised the debt ceiling and was intended to put pressure on Congress to come up with a longer term plan for deficit reduction.

The $1.2 trillion in budget cuts, which were triggered March 1, will be spread over nine years and are equally divided between domestic and defense-related spending. The cuts are set to end in 2021.

On Aug. 2, members of the Conference of Western Attorneys General sent a letter to the President and members of the cabinet demanding the royalties be forwarded to the states.

The letter said the attempt to reduce the federal budget was both laudable and necessary, but the authors claimed the reduction cannot be achieved on the back of states and with disregard for the principles of federalism.

On Tuesday, Gregory Gould, the director of the Department of the Interior, sent letters to multiple state treasurers, including Utah Treasurer Richard Ellis, stating the funds would be disbursed.

As of July 31, the total royalties sequestered from Utah as part of the Mineral Leasing Act were $6,173,420.

Gould said the department would move quickly to begin sending the funds at the start of the next fiscal year, which begins in October.

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