Alabama, Louisiana Sue Federal Government Over Offshore Drilling Royalties

Alabama is suing the federal government  over changes to how it calculates royalties from offshore drilling in the Gulf of Mexico. The state is attempting to block the changes, which could cost it at least $7.5 million. The lawsuit has been combined with a similar complaint from Louisiana; both cases are pending in federal court in Washington, D.C.

The U.S. Department of the Interior notified the state last year that old errors caused Alabama to be overpaid $7.52 million in royalties, which the agency said would have to be paid back. State officials dispute the debt and allege the changes were outside the normal bureaucratic procedures. Louisiana, in its claim, says the Department of the Interior is asking it to repay $2.81 million.

The royalties are paid to the Gulf Coast states as part of a section of the Outer Continental Shelf Lands Act that apportions revenues from federal offshore leases in certain zones. The change occurred when the agency redrew the zone boundaries.

A state of Alabama spokeswoman said the Department of the Interior gave notice it would withdraw the demand for funds. The federal government, in response to the Alabama lawsuit, denied all allegations.