Alaska Lawmakers Pushing Back Against Federal Royalty Cuts

Alaska is joining 10 other states in opposing cuts to federal royalty payments.

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When resources are extracted from federal lands, states are usually entitled to 50 percent of the royalties. But because of sequestration, their portion is being reduced by 5 percent.

Despite being energy rich, Alaska doesn’t get much money from this royalty-sharing scheme because there isn’t a lot of drilling happening on federal lands. Last year, Alaska only received $16 million in federal receipts, while Wyoming received close to a billion dollars. So, the cut isn’t expected to have much of an effect on the state’s budget. Even so, Alaska is standing by the other members of the Energy Producing States Coalition in pushing back against the royalty reduction.

State Sen. Cathy Giessel is the chair-elect of the coalition, and she compares what the federal government is doing to theft.

“If there’s a contract in place between two individuals, and one individual is not honoring that contract and is retaining money that is owed to the other person, does that not equate to stealing?”

Giessel adds that a policy of reducing states’ royalty shares would hurt Alaska more if the federal government increased activity at NPR-A or if it opened ANWR up to drilling.

The Office of Natural Resources Revenue, which handles the royalty payments, says that they understand the “hardships” sequestration is causing states, but that they need to enforce the cuts to comply with federal law.

Bills that would restore the 50-50 split in royalty payments were recently introduced in the U.S. House and the Senate.