Wyo. Senator: Bill protects states' cash from feds

AP News
Posted: May 08, 2013 7:38 PM

CHEYENNE, Wyo. (AP) — Wyoming's senior U.S. senator said he plans to unveil legislation Thursday that would allow states to collect royalties directly from companies that produce minerals from federal lands.

Sen. Mike Enzi, R-Wyo., told The Associated Press on Wednesday that his bill would not only block the federal government from cutting the mineral payments states receive, but it also would allow states to avoid a 2 percent federal collection fee.

The U.S. Department of Interior recently informed 35 states that it would cut their share of royalties from the sale of minerals on federal lands by just over 5 percent this year. The federal agency said the $110 million in cuts were necessary under recent mandatory federal budget reductions.

As the nation's leading coal-producing state, Wyoming stands to take the biggest hit: losing more than $50 million in federal mineral royalty payments this year. New Mexico is second, facing a loss of about $25 million.

Enzi said he takes the position that the federal mineral royalty payments are legally state money that never should have been subject to federal cuts. He said he's working to round up co-sponsors for the bill.

"I thought the law was very clear to begin with," Enzi said of his position that the royalty payments to the states should be off-limits. However, he said the federal officials are being as "liberal as they possibly can," in applying the budget cuts to a range of federal programs.

Sen. Tom Udall, D-N.M., questioned Interior Secretary Sally Jewell about the cuts at a hearing Tuesday, telling her that he also regards the royalty payments as state money.

Udall said New Mexico state officials are upset about the loss of funding that goes to the state's education system. Jewell responded that her agency didn't have any choice in the spending cuts under the budget reduction law that took effect in March.

Although 35 states stand to lose some funding under the mineral royalty cuts, Enzi said 29 of them are facing the most substantial losses. If all senators from those states get on board, he said, "That's more than half of the senators that ought to be participating in this."

Enzi said Wyoming and other states can collect the mineral royalties directly from producers for less than the 2 percent fee the federal government charges.

"We know that we can collect it for substantially less than that, and it won't be much of a cost for the companies to write two checks instead of one," Enzi said.

Enzi said that if the bill comes up for a vote in the Senate, he sees it as a vehicle that could address other federal funding cuts unpopular in the West.

Enzi said he's anxious to roll back congressional action last year that cut more than $700 million in funds for abandoned mine lands in Wyoming. He said other senators should also support rescinding this year's budget cuts to a program that reimburses counties for the tax revenues they lose by having federal lands within their borders, as well as cuts to similar programs.

While Enzi is pushing to restore the federal funding cuts to Wyoming, he's also been a sharp critic of increasing federal spending and the growth in the national debt.

Last year, Enzi put out a statement saying that the national debt had reached the level of one year's annual economic production for the entire country. "You can't tax enough to pay off the debt," he said. "You have to stop spending or actually cut back — something we have never done."

However, Enzi said Wednesday that cutting mineral payments to states is not a proper place to realize federal savings. He said the original Mineral Leasing Act made it clear that states have the right to the royalty payments.

"The only reason there's a tax to begin with is because the states said, 'we'll allow the federal government to get some revenue out of it if they'll get half,'" Enzi said. "We didn't say, 'They'll get half plus whatever else they decide they'd like to take additionally.'

"And so, they're not sticking by the law that they instituted to begin with," Enzi said. "Yes, there's a federal debt, but this doesn't begin to pay off that federal debt. We ought to be working on that too, but not by stealing from the local governments."