The fiscal news from Baton Rouge continues to be bad. Besides a projected $319 million deficit for the current fiscal year that ends in seven weeks, there have been moves to privatize state services, a sell-off of state assets, layoffs, and now a massive oil spill that threatens the state’s seafood industry.
There are those who insist it didn’t have to be that way but 60 years ago, on June 5, 1950, everything changed. That’s the day that the U.S. Supreme Court ruled that all of the submerged land from the shores of coastal states belonged not to the states, but to the federal government.
It was a devastating decision that affected coastal states from Texas to Florida. An earlier decision, in 1947, had a similar affect on California. The ultimate cost to the states estimated as high as $300 billion, according to the late Mike Mansfield, former senator from Montana. Mansfield, writing in the May 4, 1953 Congressional Record, was critical of the decision by the Eisenhower administration to returned title of the submerged land back to the states.
Eisenhower’s action, which was approved by the House on April and by the Senate on May 5, reversed a proclamation by President Truman in 1945.
Truman, in his Continental Shelf Proclamation, said that federal government had jurisdiction over all the mineral resources in the lands beneath the oceans out to the end of the U.S. Continental Shelf. Immediately after he issued the proclamation, the federal government initiated litigation against the states, claiming sovereignty over all offshore resources. Truman reasserted that position on Jan. 16, 1953, just before leaving office when he issued an executive order that set aside the submerged lands of the Continental Shelf as a naval petroleum reserve.
The issue of tidelands mineral rights didn’t appear of major importance to either Louisiana or the federal governments other than shrimpers and oystermen, until technology progressed sufficiently to drill in offshore waters. In November of 1947, the first such well was completed in 16 feet of water in the Ship Shoal area in the Gulf of Mexico, about 12 miles south of Terrebonne Parish. After that, all bets were off.
Just as with California, litigation soon followed as the federal government filed suit against both Texas and Louisiana over control of more than four million acres of submerged land. Then, in the early fall of 1948 came one of the biggest negotiating blunders in the history of Louisiana politics that ultimately led to the landmark Supreme Court decision that will in all probability go unnoticed by most on its 60th anniversary on June 5.
The players included President Truman, Speaker of the U.S. House Sam Rayburn, Gov. Earl K. Long, Lt. Gov. Bill Dodd, and Plaquemines Parish boss Leander Perez. Lurking in the shadows was the man who would emerge central to the decision by Long to refuse a generous offer from Truman that would cost Louisiana upwards of $100 billion, according to Dodd. That man was 29-year-old Russell Long, Earl’s nephew and the son of Huey P. Long.
Dodd, in his book Peapatch Politics, laid out the details of a deal gone bad as a result of Russell Long’s political ambitions and Perez’s determination to protect his questionable control of mineral-rich Plaquemines Parish with Earl Long and Dodd caught in the tug-of-war between the federal government and Louisiana.
In 1948, Russell Long was a candidate for the U.S. Senate. Perez, who was also head of the Democratic State Central Committee, ran his own less sophisticated but equally prosperous version of Huey’s old Win or Lose Oil Company in Plaquemines and, according to Dodd, was not above a little blackmail and extortion to protect his fiefdom. Rayburn was Truman’s emissary who was instructed by the president to make what in hindsight was a more than generous offer to Louisiana to settle the federal lawsuit against the state.
In that fateful autumn of 1948, Rayburn called Dodd and Louisiana Attorney General Bolivar Kemp to a Washington meeting. Also in attendance in Rayburn’s office were Perez, Texas Attorney General Price Daniel, several representatives of the Department of Interior, as well as others.
Rayburn, without fanfare or ceremony, offered to settle the Tidelands dispute with Louisiana by offering the state two-thirds of all revenues accruing from mineral bonuses, leases, and royalties in the two-thirds of a three-mile band extended from the Louisiana coastline outward into the Gulf of Mexico. Rayburn also offered the state 37.5 percent of all revenues in the Tidelands outside the three-mile band. In addition, Rayburn said the federal government would drop its lawsuit against the state. It was a much better offer than the state had anticipated and everyone present except Perez was ready to jump at the offer.
Perez told Rayburn that he would recommend to Gov. Long that the offer be rejected, prompting Rayburn to explode. “This ain’t no compromise,” he said. “It’s a gift, and you better take it while the president is in the mood to give it to you.”
Perez, who as attorney for Plaquemines Parish’s various levee boards, was in a position to dictate how and to whom the levee boards leased their lands. Many of those leases went to corporations he and his family controlled, reaping him millions in much the same manner in which Huey Long had structured his Win or Lose Oil Co. With no intention of losing any of his power, he got to Earl Long first and convinced the governor that the state was being sold a bill of goods by Truman and Rayburn. He insisted, moreover, that the state would prevail in the federal litigation against the state even though California three years earlier had lost an identical lawsuit.
Perez, who was backing States’ Rights presidential candidate Strom Thurmond for president, controlled the state Democratic ticket and threatened to take Russell off the States’ Rights ticket, which would, in effect, hand the U.S. Senate seat to Shreveport Republican Clem Clarke. Earl wanted his nephew to win the election and eventually capitulated to Perez’s demands to reject Truman’s offer, prompting Baton Rouge Morning Advocate Editor Maggie Dixon, a close friend of the governor, to remark, “Earl is gonna trade our chances to be a tax-free state in order to elect that little tongue-tied nephew of his to the U.S. Senate.”
Dodd, in his book, speculated that the immediate loss to the state was $66.5 billion, not including billions more paid in bonuses and leases, plus the severance taxes that would have amounted to about a fourth of the total value of production. Dodd said the cost as of 1986, when he wrote his book, was “$100 billion plus,” with future losses as much as $10 billion a year.
Still, given the track record of the legislature to fritter away past “embarrassments of riches,” one would have to wonder how such an influx of revenue might have taken legislators from embarrassment to humiliation in emptying the state coffers.