States Earn Record $2.2 Billion in Royalty Receipts

A record $2.2 billion was distributed to 34 states during Fiscal Year 2006 as part of their share of federal revenues collected by the Department of the Interior’s (DOI) Minerals Management Service (MMS).

The MMS is the federal bureau within DOI responsible for collecting, auditing, and disbursing revenues associated with mineral leases on federal and American Indian lands. Disbursements are made to states on a monthly basis as royalties, rents, bonuses, and other revenues are collected by MMS.

The $2,210,258,105 distributed to states during the Fiscal Year (FY) that ended Sept. 30, 2006, is an increase over FY2005 payments of approximately $1.7 billion. The disbursements represent the states’ cumulative share of revenues collected from mineral production on federal lands located within their borders, and from federal offshore oil and gas tracts adjacent to their shores on the outer continental shelf.

States use this revenue to support critical infrastructure projects, to fund local education, and to provide assistance to local counties where the energy production occurs.

During FY2006, the state of Wyoming again led all states by receiving more than $1 billion as its share of revenues. New Mexico’s share was $573 million, while the state of Utah received $173 million. Other energy-producing states sharing revenues included Colorado with $147 million; California with more than $57.5 million; Montana with $38.2 million; Louisiana at $33.2 million; Alaska at $25.7 million; and Texas, which received $22 million in FY2006. All figures are approximate.

For the majority of onshore federal lands, states receive 50 percent of the revenues while the other 50 percent goes to various funds of the U.S. Treasury, including the Reclamation Fund for water projects. Alaska receives a 90 percent share as prescribed by the Alaska Statehood Act. States may also receive appropriations from the offshore royalty-funded Land and Water Conservation Fund to help with park and land acquisitions.

In addition, coastal states with producing federal offshore tracts adjacent to their seaward boundaries receive 27 percent of those mineral royalties. Remaining offshore revenues collected by the MMS are deposited in various accounts of the U.S. Treasury, with the majority of those revenues going to the General Fund.