Louisiana Gov. Promises to Play Hardball on Royalties in Special Session

Louisiana Gov. Kathleen Blanco (D) threatened again Monday to block future oil and gas drilling leases off the Gulf of Mexico unless the federal government gives Louisiana half of the royalties it receives from those leases.

In the second special legislative session she has called since Hurricanes Katrina and Rita, Blanco said she would not shy away from what experts said could be a protracted legal battle over whether she has the power to block leases.

The Interior Department's Minerals Management Service is required to seek comment on offshore leases from affected governors, but it is not clear what happens if a governor declines to approve them. The government issues drilling permits every August.

Louisiana received $32 million of the $5.7 billion the federal government made last year from oil and gas production in Louisiana's share of the Gulf of Mexico. The state legislature approved a constitutional amendment in November that said 100 percent of any future royalties Louisiana receives from OCS drilling will go toward coastal restoration and hurricane protection (Greenwire, Feb. 2).

Monday's threats follow a letter Blanco wrote last week to the MMS asking for half of the royalties.

MMS spokesman Gary Strasburg said Blanco's challenge was not especially threatening. "It's not an issue of whether or not the governor approves of what we're doing, because if she voices an objection, we'll note that and continue with our negotiations one way or another," he said.

Blanco's request, which she has been making since last February, has new urgency in light of the state's need for wetlands protection and new levees, officials said.

"There's a very clear connection between our role providing one-quarter of the oil and gas produced in this country and our vulnerability to hurricanes," said Louisiana Recovery Authority director Andy Kopplin. "The governor's point is that we need a greater share of the revenues from offshore oil and gas to help us restore and protect our coastline" (Gary Rivlin, New York Times, Feb. 8).

A New Orleans Times-Picayune editorial: "Coastal energy producing states like Louisiana aren't getting a fair shake compared to inland states that get 50 percent of the revenue from minerals extracted from federal lands within their boundaries. Louisiana has an especially poor deal. While Texas and Florida get 100 percent of the revenue from production 9 miles in the Gulf, Louisiana has control over only the first three miles and gets 27 percent of the revenues from drilling from 3 to 6 miles out. After that, Louisiana gets nothing" (Feb. 5). -- DK

Reprinted from Greenwire with permission from Environment & Energy Publishing, LLC. www.eenews.net 202/628-6500.

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