The states of Alabama and Louisiana have each filed suit against the federal government. The suit is over how royalties from offshore drilling in the Gulf of Mexico are being calculated. It’s alleged that this could cost Alabama at least $7.5 million and the lawsuit attempts to block the change. Alabama’s lawsuit was recently combined with the similar suit filed by Louisiana. The cases are pending in federal court in Washington, D.C. The Department of the Interior notified the state last year that it was correcting old errors that caused Alabama to be overpaid royalties of $7.52 million since 1986. The state was told it had to pay the money back.
Alabama officials have disputed the debt and claim that the changes to how the money is divided were made outside the normal bureaucratic procedures. It’s stated in the Alabama lawsuit:
If upheld, this change would afford Mississippi the right to certain … revenues that have been paid to Alabama over the last 26 years (and that have been long since obligated and expended by the state for public purposes) and that otherwise would be distributed to the state of Alabama in the future.
Attorney General Luther Strange filed the suit for Alabama. The complaint contends the U.S. Department of Interior’s intention to collect the $7.52 million is “an abuse of discretion and is otherwise not in accordance with law.” Joy Patterson, speaking for the Attorney General, says that the Interior Department has given notice it intends to withdraw the demand for repayment. She says further that “If they do in fact withdraw the demand letter, that figure will be zero, unless and until they issue a new demand letter.” It appears the state doesn’t have an estimate about the amount of royalties Alabama would lose in the future under the changes. A section of the Outer Continental Shelf Lands Act requires all “bonuses, rents, royalties and other revenues” from federal leases in certain zones within three nautical miles of shore to go into a special account with the U.S. Treasury. A portion of those funds go to the Gulf Coast states each month. The Interior Department altered how those zone boundaries are drawn, which resulted in the change in the revenues Alabama would receive.
The case filed by Louisiana says the federal government is demanding that Louisiana repay $2.81 million. The Alabama case was filed on behalf of the state, the Alabama State Treasury and the Alabama Department of Conservation and Natural Resources. The Defendants are the top officials with the Interior Department, the Bureau of Ocean Energy Management and the Office of Natural Resources Revenue. In a response to Alabama’s lawsuit, federal government lawyers denied all of the allegations.
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