Experienced California Oil, Gas & Real Estate Representation

States may receive more federal royalty money

On Behalf of | Apr 13, 2019 | Oil And Gas Transactions |

California is a land ripe with many natural resources which result in some of its land being leased out for the sole purpose of harvesting these resources. Some land may be leased from private individuals or corporations while other land may involve leases with the federal government. When the federal government is involved, it may end up paying the state of California royalties.

The amount of money paid by the federal government to the state for leases involving the extraction of natural gas and oil has been the subject of legal action and political policy over the past couple of years. As reported by Courthouse News Service, effective January 2017, the federal government was supposed to increase the amount of money it paid to states for these royalties per an order dated July 2016.

The order was enacted by one administration and not popular with the subsequent administration leading to efforts to block it from being instituted. A federal judge even ruled that the federal government illegally prevented the order from being executed. Twelve days after that decision, the federal government issued a repeal of the rule entirely. New Mexico joined forces with California to instigate legal action in the matter and have the rule remain in effect.

A judge recently ruled in the matter and blocked the repeal of the original rule. Some reasons for this decision included a lack of other options being considered or offered and a lack of opportunities for public comment from being provided by the federal government.