N.M., California AGs file suit over mineral royalties
Trump changes could cost state $5 million annually, lawsuit claims
New Mexico is at risk of losing out on millions of dollars in federal royalties as a result of the Trump administration’s attempted repeal of a new mineral-extraction rule, according to a lawsuit filed by state Attorney General Hector Balderas.
In filing the lawsuit Wednesday in U.S. District Court in California, Balderas was joined by California Attorney General Xavier Becerra, who says his state also faces the possibility of lost royalties.
The attorneys general are seeking a court order compelling the U.S. Interior Department to reinstate the rule on how royalties are set for oil, gas and coal extracted from federal land. States share in the royalties.
Balderas and Becerra argue the new rule more fairly accounts for changes to the energy industry over the past
three decades and allows states to be fairly reimbursed for the market value of extracted natural resources. The rule is estimated to increase royalty collections nationwide by up to $85 million annually.
Should the rule take effect, New Mexico would receive roughly $5 million more in royalties each year, the lawsuit says.
“I will stand up to President [Donald] Trump to get the desperately needed funds we are owed for our oil and gas production,” Balderas said in a statement. “Ensuring a fair return on New Mexico’s energy resources is critical in these times of severe budget constraints in order to properly fund education in our state.”
Since 2008, New Mexico has received an annual average of $470 million in royalties from federal mineral extraction, according to the lawsuit.
Robert McEntyre, a spokesman for the New Mexico Oil and Gas Association, said the lawsuit is premature and that the group supports review of the rule by the Interior Department.
“We think it [the review] is a responsible and prudent action to take right now, especially as we are just starting to see the industry rebound and jump-start operations,” McEntyre said.
The Interior Department, under the Obama administration, finalized the rule in July to update a 1980s-era regulation and model for valuing oil, gas and coal royalties extracted on federal lands. The rule took effect in January, but the Trump administration announced in February it was postponing implementation.
This month, the administration said it sought to repeal the rule. It also published notice in the Federal Register on “whether the rule is needed and what, if any, revisions should be made of it,” the lawsuit states.
Balderas and Becerra argue the Interior Department failed to conduct required public outreach, follow federal procedures or explain why the rule was being temporarily suspended after it had taken effect.
The department cited pending litigation in issuing a stay of the rule. The American Petroleum Institute, Colorado-based TriState Generation and Transmission and Cloud Peak Energy in Wyoming have filed lawsuits challenging the rule.