The state of Wyoming will receive more than $40 million in federal funds withheld because of across-the-board cuts known as sequestration, according to the Department of Interior’s Office of Natural Resources Revenue.

The money is a result of fees from leases on federal land used for oil and natural gas drilling and coal and other mineral extraction. The federal Mineral Lease Act provides the framework for the lease payments to states, but the sequestration law carries language that stipulates the payments must be withheld.

However, a legal review of sequestration by the Interior Department gives the agency authority to release the money to Wyoming and 34 other states, said Patrick Etchart, a spokesman for the Office of Natural Resource Revenue.

The Interior Department was pushed into investigating the matter after the Western Governors Association, congressional delegations, attorneys general and state treasurers across the nation balked at the decision to withhold the money from states.

Wyoming had the most at stake. The state will receive at least $40.9 million of the total $82.5 million that will be released. Wyoming Deputy State Treasurer Sharon Garland said Wyoming’s current dollar figure doesn’t include fourth-quarter earnings owed to the state, so the figure is expected to increase.

Gov. Matt Mead, the Wyoming congressional delegation, former state Attorney General Greg Phillips and state Treasurer Mark Gordon worked together to get the funds released despite what was outlined in the Budget Control Act — the law that laid out sequestration — said Renny MacKay, spokesman for Mead.

“I was tickled when I heard the news,” Gordon said. “It goes to show what can happen in a state like Wyoming where the governor, congressional delegation and attorney general can all work together and get things done.”

The nationwide cadre of lawmakers and elected officials that worked to get the money out of the grips of the Interior Department used a legal review of a 1985 deficit reduction law on which the Budget Control Act is based.

A provision in the 1985 bill outlined a payment freeze of Mineral Lease Act money by the federal government to the states.

Since sequestration was nearly a replica of the 1985 law, the same freeze was enacted when the across-the-board cuts went into effect more than five months ago.

A federal appeals court in 1988 acknowledged that the 1985 law’s intent was to reduce the deficit when parts of it came under review, but ruled that the payments owed to states didn’t play a role in that reduction.

The court went so far as to say that freezing the payments could be considered a “sham” by critics.

Wyoming Sen. John Barrasso, a Republican, led a bipartisan group of 10 senators and 12 House members to try to wrest the money back from the federal government in May. The group, which includes fellow Wyoming Republicans Sen. Mike Enzi and Rep. Cynthia Lummis, sent a letter to the Obama administration’s director of the Office of Budget and Management in May to explain that keeping the money from Wyoming and other states was unwarranted.

After waiting for a response during the summer, the Wyoming congressional delegation was thrilled to see that the money is coming back.

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“Today’s decision is good news for the people of Wyoming,” Barraso said in a statement. He said the raft of payments “is nothing less than that which is required under federal budget law.”

Sequestration has been used for a lot of “questionable” policy decisions, Enzi said in a statement. The revenue is vital to Wyoming communities and shouldn’t have been taken in the first place, he said.

“We all knew that taking Wyoming’s rightful share of mineral royalties was wrong from the start.” Lummis said in a statement. “Thanks to the careful legislative research of Senator Enzi in particular, we prevailed in this case. Unfortunately, until we cut the middle man out if these transactions, we will always be vulnerable to the federal sharks swimming around Wyoming’s revenue.”

Officials say there are still problems to be fixed in the payment plan.

The Interior Department usually makes quarterly payments to states. But because of language in the Budget Control Act, states will have to wait until the end of each fiscal year for the next 10 years to receive the money. The issue could be solved if Congress can develop a plan to replace sequestration, but until then the money will be withheld until at least Oct. 1 of coming years.

States are still unsure whether they will receive interest for the withholding of the payments.

The Interior Department is reviewing the law to see whether it can disperse that money, Etchart said.

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