Petro-Hunt, L.L.C. v. U.S.
| Citation | 365 F.3d 385 |
| Decision Date | 31 March 2004 |
| Docket Number | No. 02-30786.,No. 02-30760.,02-30760.,02-30786. |
| Parties | PETRO-HUNT, L.L.C.; Hunt Petroleum Corp.; Kingfisher Resources, Inc., Plaintiffs-Appellees, v. UNITED STATES of America, et al., Defendants, United States of America, Defendant-Appellant. Petro-Hunt, L.L.C., Hunt Petroleum Corp.; Kingfisher Resources, Inc., Plaintiffs-Appellants, v. United States of America, Aspect Resources L.L.C.; Bayou Petroleum Co.; First Texas Hydrocarbons, Inc.; Oscar C. Forland; Gulf Coast Oil & Gas Co.; Justiss Oil Company, Inc.; M.B. Exploration, L.L.C.; Northstar Energy L.L.C.; Palmer Petroleum, Inc.; Howell R. Spear; John P. Strang; Wheless T.D.L. Exploration Company, L.L.C.; Ocean Energy Resources, Inc., formerly known as UMC Petroleum Corp.; Devon S.F.S. Operating, Inc., formerly known as Santa Fe Snyder Corp.; J. Bradley Jeffreys; Energy Arrow Exploration L.L.C.; Caruthers Producing Company, Inc., Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
J. Ralph White (argued), Montgomery, Barnett, Brown, Read, Hammond & Mintz, New Orleans, LA, for Petro-Hunt, L.L.C.
Matthew Joseph Randazzo, III, John Mason McCollam, Jonas Peyton Baker, Gordon, Arata, McCollam, Duplantis & Eagan, New Orleans, LA, for Hunt Petroleum Corp. and Kingfisher Resources, Inc.
John Smeltzer (argued), John A. Bryson, U.S. Dept. of Justice, Environment & Natural Resources Div., Washington, DC, for U.S.
David L. Smelley, Hargrove, Pesnell & Wyatt, Shreveport, LA, for Palmer Petroleum Inc.
James Fleet Howell, Shreveport, LA, for Wheless T.D.L. Exploration Co. LLC.
Appeals from the United States District Court for the Western District of Louisiana.
Before EMILIO M. GARZA and DENNIS, Circuit Judges, and VANCE*, District Judge.
Petro-Hunt, L.L.C., Hunt Petroleum Corporation, and Kingfisher Resources, Inc., (collectively "Plaintiffs") filed a declaratory judgment action seeking to quiet title to mineral rights in approximately 180,000 acres of federally owned land within the Kisatchie National Forest. Plaintiffs claim those rights as successors in interest to 96 mineral servitudes that were created before the United States purchased the land in the 1930s. The district court granted summary judgment in favor of Plaintiffs on the grounds of res judicata and denied Plaintiff's request for attorneys' fees. The United States timely appeals the district court's grant of summary judgment and Plaintiffs cross-appeal on the issue of attorneys' fees. Because we reverse district court's summary judgment ruling and remand for further proceedings not inconsistent with this opinion, we need not reach the merits of Plaintiffs' cross appeal regarding attorneys' fees since plaintiffs are no longer prevailing parties.1
In order to give the proper context to our discussion of the merits of this factually dense case, we begin with a brief discussion on Louisiana mineral law, the servitudes in question, and the applicability of certain Louisiana laws to property owned by the United States.
Louisiana law governing mineral servitudes does not recognize a separate mineral estate in oil and gas.2 Mineral rights can be owned separate from the surface land only in the form of a mineral servitude.3 Hence, any attempt to sell or reserve the ownership of oil and gas results in the creation of a mineral servitude, and the holder of that servitude has the right to enter the property and extract the minerals.4 Louisiana law has long provided that a mineral servitude is extinguished by prescription resulting from ten years' nonuse.5 The period of prescription on mineral servitudes begins to run on the date a servitude is created,6 and is interrupted only by "good faith operations for the discovery and production of minerals."7
Because the rule of prescription reflects a public policy favoring "the timely return of outstanding minerals to the owner of the land,"8 the rule may not be abrogated by contract.9 The Louisiana Supreme Court has declared that "it is against the public policy of this state to allow... servitudes to remain alive for a longer period than 10 years without use," and that any contracts to the contrary are void as against public policy.10
In 1932, five Louisiana lumber companies — Good Pine Lumber, Trout Creek Lumber, Tall Timber Lumber, Bodcaw Lumber, and Grant Timber — entered an agreement to pool the mineral rights on their respective land holdings in central Louisiana.11 As part of the pooling agreement, the companies created a joint venture called the "Good Pine Oil Company" and separately conveyed to that company the rights to explore and develop their property for the production of oil, gas, and sulphur.12 Of these conveyances, six that Bodcaw Lumber and Grant Timber made to Good Pine Oil between November 12, 1932, and May 3, 1934, are relevant to this case. All of these six conveyances involved multiple parcels of land, many of which were non-contiguous, and thus resulted in multiple mineral servitudes.13
Each of the six deeds conveying mineral rights to Good Pine Oil contained a clause providing that the ten year period of liberative prescription applied. Five of the deeds expressly stipulated that "none of said [mineral] rights in any of said lands shall be prescribed unless there shall elapse a full period of ten (10) years in which there shall be no exercise of any of the foregoing rights or user of any of the lands aforesaid under and by virtue hereof." The sixth contained strikingly similar language. Because the prescriptive period described in these instruments is equivalent to the liberative prescription period of ten years, the contract provision applying a prescriptive period of ten years is enforceable.
In the late 1930s, the United States acquired approximately 180,000 acres of land in three Louisiana parishes (Grant Parish, Natchitoches Parish, and Winn Parish) from Bodcaw Lumber and Grant Timber for inclusion in the Kisatchie National Forest. The United States acquired the lands under the Weeks Forestry Act14 through nine acts of sale and two judgments in condemnation.15 Each of these eleven conveyances came after the six transactions in which Bodcaw Lumber and Grant Timber conveyed mineral rights on the lands to Good Pine Oil. Consequently, at the time of acquisition, the approximately 180,000 acres of land that the United States acquired was burdened by 96 separate mineral servitudes in favor of Good Pine Oil.
The eleven instruments of transfer (nine deeds and two judgments) conveying the lands to the United States addressed the pre-existing mineral servitudes in different ways. All but one of the instruments contained language stating that the conveyances were "subject to" one or more of the mineral deeds granting rights to Good Pine Oil. Most of these transfer instruments contained an additional clause stating that the "mention" of the earlier mineral reservation was "made solely for the purpose of limiting vendor's warranty to the United States in present sale, and the recital of the said Mineral Sale shall in nowise extend or enlarge the same in point of time."
Five of the instruments (four deeds and one judgment) also contained additional mineral reservations in the name of Bodcaw Lumber or Grant Timber, which were to become effective upon the prescription of the relevant servitudes held by Good Pine Oil. For example, the February 11, 1936 deed conveying 24,943.93 acres owned by Bodcaw Lumber "specially reserved" unto Bodcaw Lumber "all of the oil, gas and other minerals ... subject to the sales to Good Pine Oil Company, Incorporated, for a period of ten years after the expiration of the rights of the said Good Pine Oil Company, Incorporated, under the laws of the State of Louisiana." This deed further provided that this "specially reserved" right would be extended beyond ten years if the right were exercised in a particular fashion, and that if the original ten year period or any extended period terminated for nonuse, "a complete fee in the land [would] become vested in the United States." The other four instruments also contained clauses granting reversionary mineral interests to Bodcaw Lumber or Grant Timber upon the prescription of the Good Pine servitudes.16 Each of the instruments stated that at the termination of the reservations, the United States would hold the land in "complete fee."
In 1940, well after the mineral and land transactions described above were complete, the Louisiana Legislature passed Act 315 to eliminate the rule of prescription for mineral rights on lands held by the United States:
[W]hen land is acquired by conventional deed or contract, condemnation or expropriation proceedings by the United States of America ..., and by the act of acquisition, verdict or judgment, oil, gas, and/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 and/or other minerals or royalties, still in force and effect, said rights so reserved or previously sold shall be imprescriptible.17
The purpose of the Act was to facilitate the federal government's purchase of large tracts of land for National Forests, National Parks, military installations, and like purposes.18 The United States was having difficulty acquiring such tracts in Louisiana because landowners who wished to retain mineral rights were reluctant to sell their land for fear of losing mineral reservations through prescription.19 By making mineral servitudes on federal land "imprescriptible" — and thus "prevent[ing] the federal government from acquiring mineral rights by prescription" — Act 315 also served Louisiana's interest in taxing and regulating minerals on federal land, powers that would be in doubt should ownership of the minerals be vested...
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