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An Analysis of the Legality and Viability of Mineral Leases Granted to W.T

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ATTORNEY-CLIENT PRIVILEGED COMMUNICATION An Analysis of the Legality and Viability of Mineral Leases Granted to W.T. Burton and James A. Noe During the Years 1934-1936 Ryan M. Seidemann Ethel S. Graham William T. Hawkins Steven B. Jones Frederic Augonnet 1 Prepared for the Louisiana State Mineral and Energy Board Louisiana Department of Justice Office of the Attorney General October 2013 1 At the time of this writing, all of the authors save Mr. Augonnet are employees of the Louisiana Department of Justice, Office of the Attorney General. Mr. Augonnet, at the time, was a Tulane University law student who undertook research and writing on this matter during an externship with the Office of the Attorney General in 2012. ATTORNEY-CLIENT PRIVILEGED COMMUNICATION Table of Contents List of Appendices ......................................................................................................................... vi List of Tables ................................................................................................................................. ix List of Figures ................................................................................................................................ xi Executive Summary ...................................................................................................................... xii I. Introduction ...................................................................................................................... 1 A. Cressionnie Complaint ......................................................................................................1 B. WVUE – Fox 8 News Reports ..........................................................................................2 C. Louisiana House of Representatives Resolution H.R. 88 of 2012 ....................................3 D. Louisiana State Mineral and Energy Board Resolution ....................................................4 II. What is Win or Lose Corporation? .................................................................................. 5 A. Huey P. Long ....................................................................................................................9 B. Oscar K. Allen ................................................................................................................10 C. James A. Noe ..................................................................................................................11 D. William T. Burton ...........................................................................................................13 E. Earle Christenberry .........................................................................................................14 F. Seymour Weiss ...............................................................................................................15 III. Historic Controversies ................................................................................................... 15 A. Review of all known legal cases filed, their outcomes, and their impact on any current or future action....................................................................................................16 1. State v. Noe, Docket No. 11,112, Nineteenth Judicial District Court .............................17 2. State v. Noe, Docket No. 11,126, Nineteenth Judicial District Court .............................19 3. United States of America v. Noe, Docket No. 20,070, Eastern District of Louisiana ....20 4. State v. Burton, Docket No. 22,664, Fourteenth Judicial District Court ........................22 ii ATTORNEY-CLIENT PRIVILEGED COMMUNICATION 5. State v. Grace, Docket No. 21,076, Nineteenth Judicial District Court ..........................25 6. Daspit v. State, Docket No. 23,833, Nineteenth Judicial District Court. ........................27 7. Roussel v. Noe, Docket No. 42,338, Sixteenth Judicial District Court; Docket No. 8939, First Circuit Court of Appeal ................................................................................27 B. Historic Attorney General Reviews of the Win or Lose Leases .....................................33 1. The 1936 Gardiner Letter ................................................................................................34 2. The 1941 Gensler Memorandum.....................................................................................34 3. The 1941 Perrault Memorandum and Analysis...............................................................36 4. The 1937 Wood Memorandum .......................................................................................39 5. The 1941 Gay Memorandum ..........................................................................................42 6. The 1941 Gensler Letter ..................................................................................................43 7. The 1943 Gladney Letter.................................................................................................46 C. Historic News Coverage of the Win or Lose Issues .......................................................49 IV. Implicated Leases........................................................................................................... 50 A. Which State leases are involved in the Win or Lose matter? .........................................50 B. Leases That Need No Examination.................................................................................54 1. Predating Leases ..............................................................................................................54 2. Lapsed Leases .................................................................................................................55 C. Leases Needing Examination – State Leases 309, 334, 335, 340, 341, and 344 .................56 V. Current Legal Theories .................................................................................................. 57 A. Malfeasance in Office .....................................................................................................59 B. Ethical Violations – Ethics Laws in 1936 .......................................................................60 C. Bid Collusion ..................................................................................................................64 D. Fraud ...............................................................................................................................69 iii ATTORNEY-CLIENT PRIVILEGED COMMUNICATION E. Were there Violations of the Bid Process in the 1930s with the Win or Lose Leases? ............................................................................................................................71 1. What were the steps and were they followed? ................................................................71 2. Were these leases the most advantageous leases to the State? ........................................76 a. Price Per Acre Analysis of State Leases 219 Through 506 (1929-1941) ............... 77 b. Size (Acreage) Analysis of State Leases 219 Through 509 (1929-1941) ............... 84 3. What size limitations existed on mineral leases at the time? ..........................................90 F. Public Bribery and Corrupt Influencing .........................................................................91 G. Extortion .........................................................................................................................95 H. Insider Trading ................................................................................................................98 I. Conspiracy ......................................................................................................................98 J. Lease Nullification for Immoral Object ........................................................................100 K. Injury to the Public Fisc ................................................................................................105 L. The Perez Cases ............................................................................................................106 VI. Mitigating Factors ........................................................................................................ 109 A. Evidence Problems........................................................................................................110 B. Good Faith of Third Parties ..........................................................................................112 C. The Texaco Litigation and its Implications for the Entire Win or Lose Matter ...........117 D. Returning All Contracting Parties to Their Original Positions .....................................120 E. Can the State Attack Retroactively Contracts That Have Run Their Course? .............123 VII. Discussion and Recommendations .............................................................................. 125 A. What Did The State Lose? ............................................................................................125 B. What could the State get if the Win or Lose assignments are invalidated? ..................128 C. Can the State get historic royalties if the leases are invalidated? .................................128 iv ATTORNEY-CLIENT PRIVILEGED COMMUNICATION D. Likelihood for success ..................................................................................................131 E. The fiduciary responsibilities of today’s State Mineral and Energy Board ..................134 Acknowledgments and a Note on Sources.................................................................................
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