Congressmen Garret Graves (R-LA) and Troy A. Carter, Sr. (D-LA) seek to extend Louisiana’s state authority from three to nine nautical miles offshore into the Gulf of Mexico through the Offshore Parity Act of 2024 (H.R. 10183). Introduced on November 20, 2024, the bipartisan legislation calls for extending the sovereignty of Louisiana, Mississippi and Alabama in the Gulf of Mexico, aiming to give Louisiana greater authority over resources such as energy and fisheries.
The proposed Offshore Parity Act amends the Outer Continental Shelf Lands Act (“OCSLA”) and the Magnuson-Stevens Fishery Conservation and Management Act, giving Louisiana, Mississippi, and Alabama equitable offshore authority and sovereignty currently exercised by Texas and Florida.
“Texas and Florida have nearly nine miles of state waters, while Louisiana, Mississippi and Alabama have just three,” Graves said regarding the Offshore Parity Act of 2024. “I’m not sure who was negotiating for us generations ago, but that is just ridiculous.”
Delving beyond the initial three-mile offshore boundary established by the 1800s “cannon shot rule” and the Submerged Lands Act of 1953, the Offshore Parity Act proposes that Louisiana, Mississippi, and Alabama’s authority to manage oil, gas, and other energy activities located on the state’s expanded submerged land extend for nine nautical miles.
The Submerged Lands Act authorized Texas and the Gulf Coast of Florida to have a jurisdiction of nine nautical miles off their coastlines but limited Louisiana, Mississippi, and Alabama’s coastline at three nautical miles. In 1969, Louisiana unsuccessfully attempted to challenge this restriction before the United States Supreme Court in United States vs. Louisiana, but because Louisiana could not prove it had jurisdiction over the waters extending three marine leagues from its coastline before it entered the Union, Louisiana’s state waters boundary would remain at three nautical miles.
According to Graves, “[o]ur bill fixes this disparity by giving all Gulf states the same nine miles of energy, fisheries and other resources to manage.” Namely, the Offshore Parity Act delegates authority to the States to grant and manage leases wholly located within the State’s expanded submerged land, and delegates authority to manage any lease of the State’s expanded submerged land, which is granted by the Secretary before the date of enactment of the Offshore Parity Act of 2024.
Under the Gulf of Mexico Energy Security Act of 2006 (“GOMESA”), part of the revenues from offshore oil and gas production in the Gulf of Mexico is shared among Texas, Louisiana, Mississippi, and Alabama. The Offshore Parity Act proposes that States collect rentals, royalties, and other sums, as determined by the State, from any lease granted by the State after the enactment date of the proposed legislation. However, the legislation limits States’ authority so as not to affect the disposition of revenue under any other provision of federal law from any lease of the State’s expanded submerged land granted before the enactment date of the proposed legislation.
If passed, the proposed expansion of state waters and related provisions could potentially result in modifications or negotiations over how revenue from these areas is distributed under GOMESA, as well as increases in state revenue and new sources of revenue not previously accessible before the proposed expansion.
According to Congressman Troy A. Carter, Sr., “[t]his is a critical step toward equality, ensuring Louisiana, Mississippi, and Alabama have the same authority over their waters as Texas and Florida. This bill will empower us to manage our energy resources, protect our coastal communities, and strengthen our fisheries—securing both economic and environmental benefits for our state.”
These issues are not solely a tug-of-war between these States and the federal government, but the new law could also have material consequences for oil and gas producers in this three-to-nine mile zone under new leases. Under the Outer Continental Shelf Lands Act, production from the outer continental shelf is not subject to severance or ad valorem (property) tax. If these gulf states obtain sovereignty over this three-to-nine mile zone, then producers in that area may need to take these potential state law tax obligations into consideration in bidding for or acquiring an interest in any new lease from the zone.