Leander Perez, the late boss of Plaquemines Parish, was best known for his rants in favor of segregation.
In 1960, Time magazine said that “the symbol of Louisiana racism is a heavy man with pewtery hair, cold blue eyes, a cunning legal mind and a fanatic’s zeal.”
Perez also played a leading role in another of the worst moments in Louisiana history—one that cost the state billions in offshore oil and gas revenue.
The exact details might be up for debate, but the story, as relayed by louisianavoice.com and Peapatch Politics by former Lt. Gov. Bill Dodd, goes more or less like this:
In 1948, Sam Rayburn, a Democratic Congressman from Texas and an emissary of President Harry S. Truman, called a meeting in Washington, D.C., that included Perez and Dodd.
Rayburn proposed to settle a dispute with Louisiana over tidelands mineral rights. The state would receive 37.5% of all revenue outside of a three-mile threshold, and the feds would drop their lawsuit against the state. The offer was far more generous than anyone expected.
Perez, perhaps to protect his family’s royalties, told then-Gov. Earl Long to turn down the deal. Long, perhaps to keep his nephew, U.S. Senate candidate Russell Long, on the Perez-controlled States’ Rights ticket, acquiesced. Predictably, Louisiana lost in court, and over the intervening years, the state missed out on billions of dollars that could have gone to education, health care or restoring its fragile coastline.
“Due to overreaching by old-time Louisiana politicians,” says State Sen. Dan Claitor, a Baton Rouge Republican, “we came up on the short end of the stick.”
U.S. Sen. Mary Landrieu and others championed a 2006 law that gives Louisiana a 37.5% share on new development six miles or more into the Gulf of Mexico, a change state officials say is only fair, since state infrastructure supports those efforts.
Claitor authored a bill passed in the last session that seeks to chip away at another perceived inequity by expanding the state’s offshore jurisdiction. Act 336 would extend Louisiana’s gulfward boundary from three marine leagues from the coast to three marine leagues from the coastline.
The move would effectively place an additional six miles of new offshore areas under the state’s purview, from three miles to nine miles, according to the Legislative Fiscal Office note attached to the bill. The change would put Louisiana in line with Florida and Texas, Claitor says, and the fiscal note says it could be worth an additional $342 million to $480 million per year.
There’s one major sticking point, however. The state has no legal authority to do this. Claitor hopes the act is a starting point with the federal government, from which he sees two possible end games.
First, the legislation would put Louisiana in a position to litigate the matter before the U.S. Supreme Court, which would have original jurisdiction. Some legal observers might say the state was seeking to reargue something that’s already been decided: Current boundaries were set forth in the 1960 case, The United States of America v. States of Louisiana, Texas, Mississippi, Alabama and Florida, the legislation says.
But Claitor says advances in offshore drilling technology might warrant revisiting the issue. Perhaps recent history, including last year’s Deepwater Horizon explosion and oil spill, which he says “clobbered” the state, might give Louisiana a better chance to be heard. If the state did go to court, Attorney General Buddy Caldwell presumably would take the lead. His office didn’t respond to an interview request.
A legislative solution also is possible, Claitor says, given the greater political attention for states’ rights in recent years. He hopes Mississippi and Alabama, which he says are in the same boat as Louisiana, either join the effort or start ones of their own.
Don Briggs, head of the Louisiana Oil & Gas Association, says his organization neither strongly supported nor strongly opposed Claitor’s bill, though it did contribute some of the language. Briggs has mixed emotions about the act, and he says some of his members who might be impacted feel the same way.
“As one guy put it, ‘It’s like I dressed out for the football game, and I do not know what the rules are,'” he says.
Offshore operators have faced uncertainty since last year’s oil spill led to a deepwater drilling moratorium and a slowdown in shallow-water drilling. But companies are adjusting to the new regulations tied to the breakup of the former Minerals Management Service and the establishment of the Bureau of Ocean Energy Management, Regulation and Enforcement.
More potential changes bring still more uncertainty, Briggs says. If Louisiana has to negotiate with the feds, what does it give up? What will the state charge in royalties? Will operators also have to pay severance taxes to the state? What kind of regulatory body is the state going to put together to handle the deeper water? And what will be its rules?
“I’m confident with the permitorium [referring to the recent near-halt in federally issued offshore drilling permits] that they would prefer working with state regulators,” says Lou Buatt, assistant secretary of the Office of Coastal Management, when asked if state regulators might be friendlier to the industry than federal officials.
Buatt says the expansion would provide more opportunities for state renewable resource projects, such as wind energy, and says some of his counterparts in neighboring states have shown interest in the idea.
Louisiana’s odds of success might be slim, but the risk-reward ratio is favorable. It could be worthwhile, Claitor says, to spend a few million dollars litigating the issue for the chance at hundreds of millions per year in new money.
