By Rob Nikolewski │ New Mexico Watchdog

SANTA FE – After complaints from officials in Western states, including New Mexico, the Obama administration made an about-face Monday and announced it will return mineral and energy royalty payments seized earlier this year.

For New Mexico, that means $26 million will not be taken from the state’s coffers.

In a letter to New Mexico Treasurer James Lewis, the director of the U.S. Department of the Interior announced the decision. No specific reason was given for the reversal, but a combination of Democrats and Republicans on Capitol Hill — as well as governors such as Susana Martinez — complained loudly to the Obama administration.

As reported by New Mexico Watchdog in March, the federal government took the royalty payments from 35 states, claiming that the money was fair game because of sequestration cuts.

“I’m relieved that we were able to reverse this aspect of sequestration and restore $26 million back to our state this year and in years ahead,” said Sen. Tom Udall, D-New Mexico, in a statement. Together with senators from Wyoming, Udall planned to back a bill that would have protected the royalty payments that states like New Mexico obtain through energy and mining on federal land.

“Gov. Martinez is glad to hear the news today that the federal government has reversed themselves,” Martinez spokesman Enrique Knell said in a statement. “The federal government should never have cut these royalty payments to begin with, as they don’t represent the traditional type of programmatic cuts that the sequester was seemingly designed to enforce.”

“It’s obviously welcome news,” said Greg Korte, spokesman for the state’s Department of Finance and Administration, which also protested when the feds seized the money.

Three weeks ago, DFA reported the Department of the Interior had taken nearly $21 million and was about to take another $5 million from the state next month.

According to the statement released by Udall’s office, Interior will return the money beginning in October, which is the start of fiscal 2014.

Only Wyoming, which was scheduled to lose $53 million, took a bigger hit than New Mexico.

Click here to read the letter Treasurer Lewis received from Interior Monday.

Cross-posted from Watchdog.org