Mississippi River Fuel Corporation v. Cocreham

• Decision Date: 12 February 1968
• Docket Number: 23403.,No. 23402,23402
• Citation: 390 F.2d 34
• Parties: MISSISSIPPI RIVER FUEL CORPORATION et al., Appellants, v. Roland COCREHAM, Collector of Revenue of the State of Louisiana, Appellee. TEXAS GAS EXPLORATION CORPORATION, Appellant, v. Ashton J. MOUTON, Collector of Revenue of the State of Louisiana, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

390 F.2d 34 (1968)

MISSISSIPPI RIVER FUEL CORPORATION et al., Appellants, v. Roland COCREHAM, Collector of Revenue of the State of Louisiana, Appellee.

TEXAS GAS EXPLORATION CORPORATION, Appellant, v. Ashton J. MOUTON, Collector of Revenue of the State of Louisiana, Appellee.

Nos. 23402, 23403.

United States Court of Appeals Fifth Circuit.

January 8, 1968.

Supplemental Order February 12, 1968.

Clyde R. Brown, C. McVea Oliver, Monroe, La., Clarence L. Yancey, Thomas A. Harrell, Shreveport, La., for Miss. River Fuel Corp. and others.

Clarence L. Yancey, Shreveport, La., for Texas Gas Exploration Corp.

Emmett E. Batson, Baton Rouge, La., Joseph G. Hebert, George C. Schoenberger, Jr., Jess Johnson, Jr., New Orleans, La., Edwin L. Weisl, Asst. Atty. Gen., Roger P. Marquis, Atty., Dept. of Justice, Washington, D. C., for Cocreham.

Emmett E. Batson, Baton Rouge, La., for Mouton.

Before RIVES and WISDOM, Circuit Judges, and CONNALLY, District Judge.

Supplemental Order in No. 23403 February 12, 1968.

ON PETITION FOR REHEARING

PER CURIAM:

Humble Pipe Line Co. v. Waggonner, 1964, 376 U.S. 369, 84 S.Ct. 857, 11 L.Ed.2d 782, holds that the United States has exclusive jurisdiction over Barksdale Air Base. The fact that in Humble the tax in question was an ad valorem tax on pipelines and equipment and not a severance tax, as in the cases now before the Court, was irrelevant to the decision. Except with the consent of the United States, the State's taxing power cannot operate within the confines of a federal enclave. Here the critical fact is that the incidence of taxation, the reduction of fugitive oil and gas to possession and ownership, takes place within the exclusive jurisdiction of the United States. The severance of the oil and gas is the subject of the tax; not the ownership.

With deference we suggest that the dissenting judge's error lies in the assumption that the State "owned" oil and gas under Barksdale; that the State had "never consented for the United States to acquire ownership of the oil and gas underlying the Barksdale Base". But under Louisiana law, the State, in a proprietary sense, did not "own" the oil and gas. Nor was there any question of the United States' acquiring "ownership" for which the consent of the State might be necessary. Louisiana considers oil and gas fugitive in nature. Like wild animals, these minerals are owned by no one — until they are reduced to possession. What a surface owner acquires in Louisiana when he acquires title to land is a right to explore for oil and gas and reduce these minerals to possession and ownership. These are the rights the United States acquired when the State transferred the land that is now Barksdale Air Base. For the State to have retained an interest in the minerals it would have had to reserve a mineral servitude, that is, a use, or the retention of the right to explore for minerals and to develop the mineral interest. See Frost-Johnson Lumber Company v. Salling's Heirs, 1922, 150 La. 756, 91 So. 207. See also Federal Land Bank v. Mulhern, 180 La. 627, 157 So. 370, 95 A.L.R. 948; Rives v. Gulf Refining Company, 133 La. 178, 62 So. 623; Dixon v. American Liberty Oil Company, 226 La. 911, 77 So.2d 533; Gueno v. Medlenka, 238 La. 1081, 117 So.2d 817.

The argument that in its sovereign capacity Louisiana has the power to impose a tax on the severance of oil and gas in a federal enclave collides with the Supremacy Clause. As Humble holds, a State may not legislate for a federal enclave within the exclusive legislative jurisdiction of Congress.

It is therefore ordered that the petitions for rehearing filed in the above entitled and numbered causes are hereby denied.

RIVES, Circuit Judge (dissenting):

Upon further consideration, I am convinced that the Legislature of the State of Louisiana has never given "consent" for the acquisition by the United States of the oil and gas underlying the Barksdale Air Force Base or of the right to reduce that oil and gas to possession free from the State's severance tax.

Only by "consent" of the State could the federal government acquire ownership of the gas and oil or the unfettered right to reduce them to possession. Without the State's consent, the United States has power to purchase or condemn the land for public use. Kohl, et al. v. United States, 1875, 91 U.S. 367, 371, 372, 23 L. Ed. 449. In that event, however, its possession is simply that of an ordinary proprietor, and it does not have exclusive jurisdiction or the power to exercise exclusive legislation provided by Art. 1, § 8, cl. 17 of the United States Constitution. Paul v. United States, 1963, 371 U.S. 245, 264, 83 S.Ct. 426, 9 L.Ed.2d 292. Humble Pipe Line Co. v. Waggonner, 1964, 376 U.S. 369, 84 S.Ct. 857, 11 L.Ed. 2d 782, held invalid the State's ad valorem tax on pipelines and equipment. It did not decide the question of whether the State's "consent" extended so far as to permit acquisition by the United States of the oil and gas or of the unfettered right to reduce them to possession. The critical question present in this case is the extent of the State's "consent."

The "consent" of the Louisiana Legislature was for the United States to acquire the "land" and to "have the right of exclusive jurisdiction over the property so acquired." La.Acts 1892, No. 12, §§ 1, 2; Acts 1942, No. 31, § 1; La. Rev.Stat.1950, Tit. 52, § 1. In Louisiana, acquisition of the "land" does not pass title to the oil and gas underneath the surface. In 1930, when this land was acquired by the United States, that principle was well established. As was said by the learned district judge in the present case:

"It is too well settled in the law of Louisiana to permit of argument that the oil and gas beneath the soil is not subject to ownership until it has been reduced to possession. See Frost-Johnson Lumber Company v. Salling\'s Heirs, 150 La. 756, 91 So. 207 (1922) and cases cited therein. While plaintiff argues strenuously that several cases both before and after Frost-Johnson establish the fact that the owner of the land also owns the oil and gas beneath it, its argument is not persuasive. Plaintiff apparently confuses the ownership of the oil and gas with the landowner\'s right to reduce the oil and gas to possession. This latter right does not confer ownership of the oil and gas prior to its severance from the land."

Mississippi River Fuel Corp. v. Cocreham, E.D.La.1965, 247 F.Supp. 819, 822.

After discussing each of the cases relied on by plaintiff, the district judge re-stated the same principle of law:

"In line with these well settled principles of Louisiana law, by which, under Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), this Court is bound, it is now once again held that ownership of the land itself does not carry with it ownership of the minerals thereunder but merely confers upon the landowner the right to reduce those minerals to possession. In other words, the minerals are not owned until they are reduced to possession." 247 F.Supp. at 823.

The oil and gas were simply not a part of the property "purchased by consent of the legislature of the state" within the meaning of those words as used in Art. 1, § 8, cl. 17 of the Constitution.

The State Constitution, Art. 4, § 12 gave the Legislature and the State agencies and political corporations power to donate the land to the United States. The same Constitution, Art. X, § 21, as pointed out by the district judge (247 F.Supp. at 821), provided for a severance tax on gas and oil as follows:

"`Taxes may be levied on natural resources severed from the soil or water, to be paid proportionately by the owners thereof at the time of severance; * * * Such natural resources may be classified for the purpose of taxation and such taxes may be predicated upon either the quantity or value of the products at the time and place of severance. No severance tax shall be levied by any Parish or other local subdivision of the State.

"`No further or additional tax or license shall be levied or imposed upon oil, gas or sulphur leases * * *.\'"

The severance tax so authorized by the constitution has been levied by the Legislature continuously, both before and since 1930 when the United States acquired the land. La.Acts 1922, No. 140; Acts 1932, No. 72, § 1; Acts 1935, 2nd Ex.Sess., No. 24, § 1; Acts 1940, No. 145; La.Rev.Stat.1950, Tit. 47, §§ 631-677.

Oil and gas are part of the natural resources of the State of Louisiana from which it derives a large part of its State revenue. The State has never consented for the United States to acquire ownership of the oil and gas underlying the Barksdale Base, nor has it given the federal government the unfettered right to reduce to possession that oil and gas, nor, a fortiori, oil and gas which may be drained from underneath adjacent lands.

It cannot be disputed that if the Legislature of Louisiana had expressly reserved to the State all rights to and jurisdiction of oil and gas as a part of its natural resources, that reservation would not have operated to deprive the United States of the enjoyment of the land for the purposes for which it was acquired but would have been a valid and effective reservation. James v. Dravo Contracting Co., 1937, 302 U.S. 134, 146, 58 S.Ct. 208, 82 L.Ed. 155. Both the State and the United States dealt with full knowledge of the law of Louisiana. That law with respect to oil and gas in place underneath the surface of the ground, and to the State's right to levy a charge on their severance from the soil resulted in such a reservation just as clearly as if it had been expressed by the Legislature at the time it gave its consent for the United States to acquire the land.

The conduct of the parties seems to recognize that the State did not part with its right to levy a tax on the severance of oil and gas from the soil. The United States acquired the land included in the Barksdale Base by acts or deeds of donation from three...