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Governor Threatens to Block Energy Leases Off Louisiana
Seeking more money from Washington for hurricane relief, Gov. Kathleen Babineaux Blanco entered uncharted legal territory with a threat on Monday to block oil and gas leases worth hundreds of millions to the federal treasury unless the state received its "fair share" of the revenues.
"It's time to play hardball, as I believe that's the only game Washington understands," Ms. Blanco said Monday night as she opened the second special legislative session she has called since Hurricanes Katrina and Rita.
Oil and gas companies pay for the right to extract natural resources from the Gulf of Mexico. Louisiana collects royalties, as well as severance taxes on resources extracted within three miles of its border. Those programs add hundreds of millions of dollars a year to the state treasury. Louisiana receives no share of the leasing fees on oil and gas reserves beyond the three miles, which are in federal waters.
The federal government negotiates those leases, which give more influential states like Florida and Texas extended state waters, effective every August.
Ms. Blanco, a Democrat, said Monday that she sought to split the leasing fees 50-50. "If no effort is made to guarantee our fair share of royalties," she said, "I have warned the federal government that we will be forced to block the August sale of offshore oil and gas leases."