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From President Truman to Governor Blanco: The Continuing Saga of Federal-State Revenue Sharing

Jonathan A. Hunter, Federal and Indian Oil & Gas Royalty Valuation and Management

Among the many products of the disastrous hurricane season of 2005 was a renewed discussion of the rights of the coastal states to revenues generated by offshore oil and gas exploration and production. Coastal states, and Louisiana in particular, asserted that it was essential that they receive additional revenue (1) to remedy the effects of oil and gas exploration on their infrastructure, and (2) most importantly, to combat coastal erosion, which increasingly has exposed the states to the catastrophic effects of hurricanes. However, while the coastal states' claim for additional federal revenue may have increased in intensity after the 2005 hurricane season, the fact that the states were seeking additional revenue was nothing new. This was simply the latest stage of a debate that has been going on since the origins of the offshore oil and gas industry in the United States.

The purpose of this paper is to review the federal-state relationship with regard to the allocation to the states of revenues generated by federal oil and gas leases. Although the primary focus of this paper will be on the offshore federal leasing program, this paper will also discuss the division of revenues from oil and gas leases of onshore federal lands.

§ 5.02 Offshore

[1] The Tidelands Litigation and The Enactment Of The Submerged Lands Act and the Outer Continent