Central Pines Land Co. v. U.S.
| Decision Date | 28 November 2001 |
| Docket Number | No. 00-31024,00-31024 |
| Citation | 274 F.3d 881 |
| Parties | (5th Cir. 2001) CENTRAL PINES LAND CO; TOWER MINERALS COMPANY INC; JACK E LAWTON, JR; EVELYN GAY LAWTON DUHON; LINDA LEW LAWTON DROST; D S & T INC; DROST & BRAME INC, Plaintiffs-Appellants-Cross-Appellees, v. UNITED STATES OF AMERICA, Defendant-Appellee-Cross-Appellant, v. TEXACO EXPLORATION & PRODUCTION INC; SONAT EXPLORATION CO; CHESAPEAKE OPERATING INC; C H C GERARD; UNION PACIFIC RESOURCES CO, Defendants-Appellees |
| Court | U.S. Court of Appeals — Fifth Circuit |
[Copyrighted Material Omitted]
[Copyrighted Material Omitted] Appeals from the United States District Court for the Western District of Louisiana
Before HIGGINBOTHAM, BARKSDALE, and STEWART, Circuit Judges.
The law of mineral rights in Louisiana differs from that of common law states. In Louisiana, these rights do not exist as a separate, perpetual estate in land, but can only be held separate from the surface land in the form of a mineral servitude.1 The servitude gives its holder the right to enter the property and extract the minerals.2 Louisiana law has consistently recognized that a mineral servitude may expire, or prescribe, after 10 years of non-use.3 While parties cannot contract to extend the prescriptive period, they may shorten the term of the servitude.4
Louisiana Act 315 of 1940 created a special rule for prescription of mineral servitudes when the surface property is owned by the United States:
When land is acquired by conventional deed or contract, condemnation or expropriation proceedings by the United States of America, or any of its subdivisions or agencies from any person, firm, or corporation, and by the act of acquisition, order, or judgment, oil, gas or other minerals or royalties are reserved, or the land so acquired is by the act of acquisition conveyed subject to a prior sale or reservation of oil, gas, or other minerals or royalties, still in force and effect, the rights so reserved or previously sold shall be imprescriptible.5
The current form of Act 315 extends this treatment of the United States to the State of Louisiana and its subdivisions.6
Today we deal with the applicability of Act 315 to certain privately-held mineral servitudes on land now owned by the United States in Vernon Parish, Louisiana. Appellants sought declaratory relief and to quiet title in the servitudes when the United States began leasing mineral rights on this land.7 The holders of the mineral servitudes appeal the district court's grant of summary judgment in favor of the United States, holding that Act 315, as a matter of federal common law, cannot be applied retroactively to prevent prescription of mineral servitudes when the United States obtained the surface estate before 1940. The United States cross-appeals the district court's grant of summary judgment applying Act 315 prospectively, rendering mineral servitudes imprescriptable if the United States obtained the surface estate after the adoption of Act 315. We conclude that summary judgment was appropriately granted in both instances and affirm.8
In 1929 Gulf Lumber Company conveyed to S.H. Fullerton mineral rights in a 100,000 acre tract located in Vernon Parish, Louisiana. This created a mineral servitude which was eventually transferred to Wm. T. Burton Industries (Burton). Through a series of later mesne conveyances, Appellants Central Pines Land Co., Tower Minerals Company, Inc., Jack E. Lawton, Jr., Evelyn Gay Lawton Duhon, Linda Lew Lawton Drost, D, S, & T, Inc., and Drost & Brame, Inc. acquired all of the rights of Burton.
The parties have adopted the designations of three parcels of the land as Groups A, B, and C. In four transactions between 1933 and 1938, the U.S. Forest Service acquired the Group A and B lands pursuant to the Weeks Forestry Act.9 The Forest Service, between 1941 and 1952, granted to the U.S. Army all of the Group A and B lands for use as military training grounds.
Burton acquired complete title to the Group C lands in 1937, thereby terminating the 1929 servitude with respect to these lands. Burton sold those lands to the United States in a series of transactions between 1942 and 1981. In each of these transactions, Burton reserved mineral rights, creating a new mineral servitude. Appellants are the successors in interest to these mineral rights in the Group C lands.
Between 1952 and 1970, the United States, through condemnation, instituted a mineral moratorium which prevented the owners of the mineral servitude from entering portions of the Group A and B lands and exercising their rights. This moratorium did not affect all of the lands burdened by the servitude, although exactly which lands were affected is disputed. In 1967, in an attempt to clarify which lands were covered by the moratorium, the Army and Forest Service divided the land into two areas of "Intensive Use" and "Limited Use." All access was prohibited on Intensive Use land, which was used for artillery practice and as a bombing range. The Limited Use area was under the control of the Forest Service between 1967 and 1978.
During the moratorium Burton was paid a small fee in compensation on a per acre basis for the part of the servitude that was inaccessible for mineral operations. The moratorium was terminated on March 31, 1978. The last drilling on the servitude occurred in 1964 and was performed by Pan American Corporation pursuant to a lease with Burton. Burton's last well was drilled in 1956 and was dry.
In 1992, the U.S. Bureau of Land Management began granting mineral leases allowing exploitation of minerals under Group A and B lands. Appellees Texaco Exploration & Production, Inc., Sonat Exploration Co., Chesapeake Operating, Inc., C.H.C. Gerard, and Union Pacific Resources Co. are the current lessees of these mineral rights. Appellants filed this suit seeking to quiet title to the mineral servitudes on the entirety of the Group A, B, and C lands and a declaration that any leases granted by the United States were invalid. Both parties moved for summary judgment.
The district court granted summary judgment to the Government holding that Act 315 could not be applied retroactively to render the 1929 servitude, which still covered the Group A and B lands, imprescriptible.10 After determining that the pre-1940 Louisiana law of prescription, with a 10-year prescriptive period, would apply, the district court held that there was no suspension of prescription by obstacle after the moratorium ended in 1978. The district court also held that the moratorium, even when in effect, was not sufficient to suspend prescription because it did not cover all the land subject to the servitude. As a result, the 10-year prescriptive period had run, and the servitude on the Group A and B lands, had prescribed for non-use. The district court also granted summary judgment to Appellants, holding that Act 315 could be applied prospectively to the Group C servitude and that it was therefore imprescriptible.
We review the district court's grant of summary judgement de novo.11
We address first the issue of the applicability of Act 315 both retroactively and prospectively. We reach four distinct legal conclusions: 1) federal common law governs this decision; 2) Act 315 cannot be borrowed as the rule of decision for application to pre-1940 transactions, because it is hostile to the interests of the United States in the operation of default legal rules in place at the time of contract, but it may be applied prospectively; 3) we will use residual Louisiana law as the federal rule of decision for pre-1940 transfers; and 4) precisely because it is no longer hostile to a federal interest in application of default rules in place at the time of contract, Act 315 can be borrowed as the federal rule for the Group C servitudes. We will explain each conclusion in turn.
The parties dispute whether the Supreme Court's decisions in Clearfield Trust Co. v. United States12 and United States v. Little Lake Misere Land Co.13 require application of federal common law to this case. We are persuaded that Little Lake controls and that federal common law must both govern the choice-of-law determination and supply the rule of decision.
When a federal court sits in diversity, Erie R.R. Co. v. Tompkins14 requires the application of state substantive law absent a congressional grant of authority to fashion federal common law. This principle applies to other statutory grants of jurisdiction, such as 28 U.S.C. § 1346(f),15 upon which the district court's jurisdiction rested in this case, though in actual practice with less force. Rejecting a narrow view of Erie and the Rules of Decisions Act,16 the Supreme Court has held that even without an explicit statutory grant of authority, the fashioning of federal common law may still be appropriate when duties and rights of the United States are at issue.17 After all the Rules of Decisions Act itself ends with the qualifying phrase "in cases where [state laws] apply."18 Little Lake recognized that federal common law governed when a transaction of the United States "aris[es] from and bear[s] heavily upon a federal regulatory program."19 Factual similarity between Little Lake and this case counsels us to pause and explore Little Lake in detail.
In Little Lake, the United States sued to quiet title in two adjacent parcels in Cameron Parish, Louisiana that it acquired under the Migratory Bird Conservation Act.20 Both parcels were obtained by the United States before Louisiana adopted Act 315. While no mineral servitude existed before the Government acquired these parcels, in both the 1937 act of sale and the 1939 judgment of condemnation, the "seller," Little Lake Misere, reserved mineral rights.
In the transactions at issue in Little Lake, the default prescriptive period of 10 years was shortened by the terms of the reservation. The mineral servitudes were to continue
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...interests in "obtaining the mineral rights via the default rule of prescription in place before Act 315." Central Pines Land Co. v. United States , 274 F.3d 881, 891 (5th Cir. 2001). Instead, the court held that the ten-year prescriptive period of residual (pre-Act 315) Louisiana law should......
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Petro-Hunt, L.L.C. v. United States
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Klamath Irrigation Dist. v. United States
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