Since 1945 Louisiana and other offshore oil producing states have not been treated the same as other states that produce natural resources on federal lands served by state resources. In 1945 Harry Truman took control of the OCS (lands more than 3 miles offshore on the "Outer Continental Shelf") as federal lands. The Supreme Court confirmed this position in rulings in 1947 and 1950. Then in 1953 Congress passed the Submerged Lands Act making it unanimous. It all means that the states do not share in the oil and gas severance taxes collected for OCS production.

Other states like New Mexico and Texas receive 50% of the severance taxes for minerals produced on federal lands contained within their boundaries. The reasoning behind the split is that services and infrastructure must be provided by the state to support production on the federal lands.

Even Texas and Florida got a better break than Louisiana as the Submerged Lands Act granted them ownership of minerals up to 3 "marine leagues" or 9 nautical miles from their shores. Of course this advantage has faded as production has moved farther out.

Louisiana bears these same expenses for oil produced outside the 3 mile limit and has also suffered significant environmental damage to its wetlands from oil and gas pipelines and canals. But Louisiana receives nothing to offset these costs.

In 1952 the federal government under Dwight Eisenhower recognized this situation and agreed to share the offshore severance tax with Louisiana on a 50%-50% basis. Then Governor, Earl Long, liked the deal, but Leander Perez a powerful Louisiana politician disputed the split arguing that Louisiana should receive 100%. He took the matter to the courts. Other coastal states joined in the case. The so called "Tidelands Case" was argued for 20 years and was ultimately decided in the Supreme Court in 1980 in favor of the Federal Government. Louisiana was denied any share at all.

Had Louisiana accepted the 50% share, the payments to date would have been $50-60 billion. That would have paid for a lot of coastal restoration, levees and flood protection. It would have also paid for schools, reduced the tax burden in the state and created a decidedly pro-business climate.

Currently payments would be $2-3 billion per year which could pay for all currently envisioned plans to restore the wetlands and provide Category 5 protection for the state.

Feeling the inherent unfairness of the situation now after Katrina more than ever, pundits have called for secession. More responsible (?) politicians recommend mass protests in Washington D.C. Gov. Kathleen Blanco has threatened to oppose future lease sales unless Louisiana's environmental concerns are met.  This is a developing story that could end up funding all the cost of recovery from Katrina and providing a bright economic future for Louisiana.