Two Gulf Coast states are suing the federal government over offshore drilling royalties.
Alabama officials say about $7.5 million is at stake for that state. Alabama's legal challenge recently was combined with a similar complaint from Louisiana, and the cases are pending in federal court in Washington, D.C., the Birmingham News reported.
The U.S. Department of the Interior notified Alabama last year that it was correcting old errors that caused the state to be overpaid royalties of $7.52 million since 1986, and the state has to pay it back.
Alabama officials are disputing the debt. They say it is tied to recent changes in how drilling royalties are divided, and that those changes were made outside of the normal government procedures.
"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," states the lawsuit, filed earlier this year by Alabama Attorney General Luther Strange.
A spokeswoman for the Alabama attorney general said Wednesday that the Interior Department has given notice it intends to withdraw the demand for repayment.
"If they do in fact withdraw the demand letter, that figure will be zero, unless and until they issue a new demand letter," said Joy Patterson. The state does not have an estimate about the amount of royalties Alabama would lose in the future under the changes.
In a response to Alabama's lawsuit, federal government lawyers denied all of the allegations.
Louisiana's case says the federal government is demanding that state repay $2.81 million.