AG Sues Feds for Unpaid Oil and Gas Royalties

April 26, 2017 – New Mexico Attorney General Hector Balderas sued the federal government on Wednesday over unpaid oil and gas royalties, while also announcing a new investigation into “anti-competitive practices” in the cattle industry

Balderas and California Attorney General Xavier Becerra jointly filed suit in U.S. District Court in California against the U.S. Department of the Interior for postponing implementation of a rule that updates how federal royalties on oil, gas and coal extraction is calculated. The rule took effect in January, but in February the Interior Department delayed it until a legal challenge by industry groups is resolved.

The attorneys general say that decision is blocking payment of about $18 million in royalties owed to their states, including $4.9 million for New Mexico.

The rule, approved through a five-year public process, closed loopholes, such as prohibiting coal companies from paying royalties on the value of inventory sold to sister companies rather than on the value of a final sale to end users. Last year, Interior estimated the rule would generate up to $85 million in new federal revenue annually.

The suit says postponing a rule already in effect with no public outreach or explanation is illegal.

Industry spokesmen, however, say the Interior Department’s action is prudent to ensure it’s in the public’s best interest.

“The attorney general’s suit seems premature and misguided, since the DOI has yet to make a final decision on how to move forward,” said New Mexico Oil and Gas Association spokesman Robert McEntyre. “It’s in everyone’s interest to have a regulatory environment that encourages further development of New Mexico’s natural resources.”

Meanwhile, Balderas also announced the launch of a multi-pronged review of “unfair and anti-competitive practices” in the cattle industry that are harming the state’s ranchers, farmers and consumers.

The attorney general has received complaints that four “mega meat-packing corporations” that control about 80 percent of the U.S. market are manipulating prices, keeping payments to cattle growers low while earning high prices for their own packaged beef.

The investigation will determine if those companies broke antitrust rules and hold them accountable if they did, Balderas told reporters at the New Mexico Cattle Growers Association in Albuquerque. Their actions are squeezing local ranchers and cattle growers while hurting consumers, Balderas said.

Balderas declined to name the four companies, but background information from his office mentioned Cargill Inc., JBS, Tyson Foods and the National Beef Packing Co.

About 7,000 cattle farms and 350 dairy farms operate in New Mexico, managing about 1.4 million dairy and beef cows around the state.

Cattle Growers Association deputy director Alicia Briggs said the group welcomed the attorney general investigation.

“We’re thankful his office is stepping in,” Briggs said. “Ranching families are finding it harder and harder to live off ranch income alone.”

By Kevin Robinson-Avila, Albuquerque Journal
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