Central Pines Land Co. v. United States

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 00-31024

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,

versus

UNITED STATES OF AMERICA,

Defendant-Appellee-Cross-

Appellant,

versus

TEXACO EXPLORATION & PRODUCTION INC; SONAT EXPLORATION CO;

CHESAPEAKE OPERATING INC; C H C GERARD; UNION PACIFIC RESOURCES CO,

Defendants-Appellees.

Appeals from the United States District Court

for the Western District of Louisiana

November 28, 2001

Before HIGGINBOTHAM, BARKSDALE, and STEWART, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

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

1

Frost-Johnson Lumber Co. v. Salling’s Heirs, 91 So. 207, 245 (La. 1920).

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

2

Id.

3

See Leiter Minerals, Inc. v. California Co., 132 So.2d 845, 851 (La.

1961) (citing provisions of the Louisiana Civil Code and case law recognizing the

10-year prescriptive period). The Mineral Code now governs prescription of

mineral servitudes and retains the 10-year prescriptive period. La. Rev. Stat.

§ 31:21.

4

See Leiter Minerals, 132 So.2d at 852 (“If a servitude is established for

10 years or less, it will remain in force for the time so stipulated regardless

of whether it is used by the servitude owner. In such a case no question of

prescription arises ....”).

5

1940 La. Acts 315.

6

La. Rev. Stat. § 31:149.

2

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

7

Jurisdiction in the district court was based on 28 U.S.C. § 1346(f),

which provides exclusive original jurisdiction to federal district courts for

actions under 28 U.S.C. § 2409a to “quiet title to an estate or interest in real

property in which an interest is claimed by the United States.” 28 U.S.C. §

1346(f).

8

Judge Stewart concurs in the judgment only.

3

I

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.

9

16 U.S.C. § 515.

4

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

5

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.

II

10

The Louisiana Supreme Court has held that Act 315 should be applied

retroactively. Whitney Nat. Bank v. Little Creek Oil Co., 33 So. 2d 693, 696

(La. 1947).

6

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.

A

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

11

Starkman v. Evans, 198 F.3d 173, 174 (5th Cir. 1999).

12

318 U.S. 363 (1943).

13

412 U.S. 580 (1973).

7

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]

14

304 U.S. 64 (1938).

15

See, e.g., Little Lake, 412 U.S. at 591 (“The federal jurisdictional

grant over suits brought by the United States is not in itself a mandate for

applying federal law in all circumstances.”).

16

28 U.S.C. § 1652 (“The laws of the several states, except where the

Constitution or treaties of the United States or Acts of Congress otherwise

require or provide, shall be regarded as rules of decision in civil actions in

the courts of the United States, in cases where they apply.”).

17

Clearfield Trust, 318 U.S. at 575.

18

28 U.S.C. § 1652.

8

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

... as long [after an initial ten-year period] as oil,

gas, sulphur, or other mineral is produced ... or so long

thereafter as [Little Lake] shall conduct drilling or

reworking operations thereon with no cessation of more

than sixty (60) days consecutively until production

results; and, if production results, so long as such

mineral is produced.21

19

Little Lake, 412 U.S. at 592. See also Texas Indus., Inc. v. Radcliff

Materials, Inc., 451 U.S. 630, 641 (1981) (noting that federal common law governs

when the “rights and obligations of the United States” are at issue).

20

16 U.S.C. § 715 et seq.

21

Little Lake, 412 U.S. at 583.

9

Furthermore, if the initial ten-year period ended and no production

was occurring, or if operations subsequently ceased for more than

60 days, it was provided that

the right to mine, produce and market said oil, gas,

sulphur or other mineral shall terminate ... and the

complete fee title to said lands shall thereby become

vested in the United States.22

The result of this language was that after 10 years had elapsed from

the date of the transfer, any 60 day period of non-production would

terminate the mineral servitude.

Little Lake Misere argued that state law should apply and

therefore that Act 315 rendered the mineral servitudes

imprescriptible. This Court agreed, basing our decision on a prior

case involving Act 315, United States v. Nebo Oil,23 where we held

that retroactive application of Act 315 did not violate, among other

things, the Contract Clause of the U.S. Constitution. The Supreme

Court reversed, holding that federal law governed the choice-of-law

decision and refusing to borrow Act 315 as the federal rule of

decision because the Court found it was “hostile” to the federal

interests at stake.24

The Court held that application of federal common law was

required under Clearfield Trust because “the right of the United

22

Id.

23

190 F.2d 1003, 1007-11 (5th Cir. 1951).

24

Little Lake, 412 U.S. at 597 (finding application of Act 315

retroactively “plainly hostile to the interests of the United States”).

10

States to seek legal redress for duly authorized proprietary

transactions ‘is a federal right.’”25 The Court explicitly noted

that Little Lake involved “the interpretation of a land acquisition

agreement (a) explicitly authorized, though not precisely governed,

by the Migratory Bird Conservation Act and (b) to which the United

States is a party.”26

The parties in this case dispute whether or not there is such

a federal right at issue. Central Pines argues that since the

servitude in this case was not created by the land acquisition

agreement, but rather by the 1929 deed between Gulf Lumber and S.H.

Fullerton, there is no federal right at issue. The Government

points out that Central Pines relies on the presence of the United

States as a party to the acquisition in order to obtain the benefits

of Act 315 but then denies that this participation by the United

States (as opposed to the United States being a party to the

creation of the mineral servitude) is relevant for the Clearfield

Trust determination.

Whether or not the United States bargained over the creation

of the servitude, the acquisition subject to the existing servitude

created a federal interest in the potential prescription of the

mineral servitude conveyed by the 1929 deed via the rule of

25

Id. at 593 (quoting Henry J. Friendly, In Praise of Erie–And of the New

Federal Common Law, 39 N.Y.U. L. Rev. 383, 410 (1964)).

26

Id. at 594.

11

prescription in place at the time of contract.27 This is evidenced

by the bargaining over this “mere expectancy,” apparently invalid,

whereby the vendor attempted to reserve it to himself rather than

let it pass to the United States upon prescription for non-use.28

Appellants misconceive the thrust of Little Lake. While the Court

stated that it was interpreting the land acquisition agreement,29

the parties did not dispute the meaning of the terms of the

agreement, but rather the application of Act 315 and its effect on

the interests of the United States. The same is true here–the

parties do not dispute the meaning of the 1929 deed, but instead

disagree over the application of Act 315.

Turning to the federal interest at stake in Little Lake, we

find fundamental similarities. Appellants insist that the federal

right at issue in Little Lake was a contractual right of the United

States. True, but a contractual right to what? The term at issue

27

This “interest” is not recognized as a vested property interest as a

matter of Louisiana law. See Nebo Oil, 190 F.2d at 1006-08 (rejecting Contract

Clause challenge to Act 315 because such rights are not vested). The Supreme

Court held that this was not relevant to the federal choice-of-law determination.

Little Lake, 412 U.S. at 602 (“It is also of no import that, under Louisiana law

as it might be articulated in 1973, the United States acquired from respondents

only the reversion to a mineral interest of indefinite duration, a ‘hope’ or

‘expectancy’ revocable at any time by after-enacted legislation.”).

28

In the 1936 and 1938 transfers, the following language was used: “This

sale is made subject to the sale of oil, gas .... Subject to the above mineral

sales and rights of any and all persons thereunder [the rights of Burton] there

are specifically reserved to the vendor [Gulf Lumber Company] for a period of

twenty-five (25) years from December 31, 1936, the right to mine ....”

Appellants claim that this attempted reversion of the possibility of prescription

of the servitude belonging to Burton was invalid. See infra note 42.

29

Little Lake, 412 U.S. at 594 (“We deal with the interpretation of a land

acquisition agreement.”).

12

in Little Lake in effect set the prescriptive period for the

reserved mineral servitude. The Government’s contract “right” was

to obtain the mineral rights after the contractual prescriptive

period had elapsed. Similarly, in this case the Government’s right

is to obtain the mineral rights after the default prescriptive

period has elapsed. This right, as in Little Lake, is

federal—though arguably weaker because it arises from a default

rule.

Appellants urge us to find that Little Lake did not overrule

our prior decision in Nebo Oil, and that Nebo Oil held that Act 315

may be retroactively applied to mineral servitudes such as these,

where the United States was not a party to the creation of the

servitude. However, Nebo Oil holds only that the “mere hope” or

“expectancy” in the prescription of mineral rights is not protected

by the Contract Clause of the U.S. Constitution,30 and that the

retroactive application of Act 315 does not violate the Due Process

Clause of the Fourteenth Amendment or dispose of United States

property in violation of Article IV, Section 3, clause 2.31 Nebo

30

U.S. Const. Art. I, § 10, cl. 1.

31

Nebo Oil, 190 F.2d at 1008. This Court has examined the

constitutionality of Act 315 numerous times, in fact. In the saga of Leiter

Minerals, Inc. v. United States, 329 F.2d 85 (5th Cir. 1964) (Leiter Minerals

II), which generated two opinions from this Court, one from the Supreme Court,

and an advisory opinion from the Louisiana Supreme Court, we held that Clearfield

Trust did not require the application of federal common law to a factually

indistinguishable dispute about the retroactive application of Act 315. Id. at

90. However, the Supreme Court vacated our opinion as moot. United States v.

Leiter Minerals, Inc., 381 U.S. 413 (1965). We reaffirmed the holding of Leiter

Minerals II in Little Lake, 453 F.2d at 362, which, of course, was subsequently

13

Oil also does not hold that the rights protected by the Contract

Clause are coextensive with those federal interests that a) require

application of federal common law under Clearfield Trust and b)

preclude the borrowing of state law as the rule of decision. The

Government does not claim that the Contract Clause prohibits Act 315

from being applied retroactively, presumably because our prior

opinion in Nebo Oil would render such an argument meritless, but

instead that Clearfield Trust and Little Lake foreclose application

of Act 315 as a matter of federal common law. Thus, we need not

decide that Nebo Oil has been implicitly overruled by Little Lake

en route to finding that Act 315 cannot be applied retroactively to

the servitudes at issue under Little Lake.

B

Having determined that a federal rule of decision should be

fashioned, we must decide whether to borrow state law. We have

stated that

[b]asic considerations of federalism, as embodied in the

Rules of Decision[s] Act, prompt us to begin with the

premise that state law should supply the federal rule

unless there is an expression of legislative intent to

the contrary, or, failing that, a showing that state law

conflicts significantly with any federal interests or

policies present in this case.32

reversed by the Supreme Court on Clearfield Trust grounds. Little Lake, 412 U.S.

at 590-91 n.8.

32

Georgia Power Co. v. Sanders, 617 F.2d 1112, 1115-16 (5th Cir. 1980)

(internal citation omitted) (citing Wallis v. Pan Am. Petroleum Corp., 384 U.S.

63, 68, 86 (1966)); see also, Atherton v. FDIC, 519 U.S. 213, 218 (1997) (“Such

14

Refusing to apply state law is appropriate when national uniformity

is required,33 as well as when state law conflicts with federal

interests.34 The application of state law may in some instances so

strongly conflict with federal interests that it can be rejected

without further analysis.35 However, if state law only arguably

interferes with federal interests, then the state’s interests in

application of its own rules must be weighed.36 This allocation of

what is “national” to the preemptive federal order and what is

“state” to that domain is the implementing process for maintaining

the symmetry of Clearfield Trust and Erie.

Again Little Lake bears most heavily on this analysis. In

Little Lake, after determining that federal common law should govern

the case, the Court decided that Louisiana law could not be borrowed

as the rule of decision. Noting that “specific aberrant or hostile

a conflict is normally a precondition” to the application of a special federal

rule. (internal quotation marks omitted)); O’Melveny & Myers v. FDIC, 512 U.S.

79, 85-86 (1994) (“Our cases uniformly require the existence of such a conflict

as a precondition for recognition of a federal rule of decision.”).

33

See Clearfield Trust, 318 U.S. at 367 (holding that uniform federal rule

should apply in action by United States on a guaranty made on a federal check);

United States v. Standard Oil Co., 332 U.S. 301, 305-06 (1947) (selecting uniform

federal rule governing recovery of United States for injury to U.S. serviceman

by third-party tortfeasor).

34

See, e.g., United States v. Kimbell Foods, Inc., 440 U.S. 715, 718

(1979) (holding that state law should be adopted as federal rule for establishing

priority between competing federal and private liens since uniform federal rule

was not necessary to protect federal interests).

35

See Georgia Power Co., 617 F.2d at 1118 (citing Little Lake, 412 U.S.

at 580).

36

Id. (citing United States v. Yazell, 382 U.S. 341, 351-53 (1966)

(holding that federal interest in collection of loan must yield to state interest

in family law represented by law of coverture)).

15

state rules do not provide appropriate standards for federal law,”

the Court held that Act 315 “[a]s applied to a consummated land

transaction under a contract which specifically defined conditions

for prolonging the vendor’s mineral reservation ... deprives [the

United States] of bargained-for contractual interests.”37

Appellants focus upon the Court’s repeated reliance on the

contractual terms at issue in Little Lake to distinguish the facts

of this case.38 The 1933 deed in this case contains no specific

mineral reservation and merely states that the United States takes

subject to the 1929 servitude. The 1936 and 1938 transfers were

subject to what Appellants allege are invalid attempts by the vendor

to reserve the interest in possible prescription of a third-party’s

mineral rights.39 Thus, none of the pre-1940 transfers contain

specific contractual terms setting the duration of the servitude.

In fact, they could not have such terms, because the United States

was not contracting with the party that held the servitude.

The Little Lake Court described the explicit contractual terms

in that case in contradistinction to terms that are “less detailed

37

Little Lake, 412 U.S. at 596-97 (citing De Sylva v. Ballentine, 351 U.S.

570, 581 (1956)).

38

Id. at 597 (referring to “specifically defined conditions,” “bargained-

for contractual interests,” and “explicit terms”); see also id. at 602 (“After-

the-fact modification of explicit contractual terms would be adverse to the

United States and contrary to the requirements of the Migratory Bird Conservation

Act.” (emphasis added)).

39

See supra note 27, infra note 42.

16

and specific.”40 The Court noted, in dicta, that without a

contractual term setting out the conditions under which the United

States would obtain the mineral rights, “it might be said that the

Government acknowledged and intended to be bound by unforeseeable

changes in state law.”41 Appellants claim that all three of the

pre-1940 transactions are “less detailed and specific” than the

terms in Little Lake. Since the United States was not contracting

with the party that held the mineral rights in these transactions,

it could not explicitly bargain or contract for the termination of

those rights.42

Nevertheless, there is a conflicting federal interest—that in

obtaining the mineral rights via the default rule of prescription

in place before Act 315. Appellants argue that there is no conflict

because there is no independent federal interest in acquiring

mineral rights by prescription—if there were, then the laws of the

remainder of the states, which allow for a separate perpetual

mineral estate would be in “conflict” with this federal interest.

40

Little Lake, 412 U.S. at 602.

41

Id. at 602-03.

42

Appellants ask us to, at a minimum, distinguish the 1933 deed from the

others because it does not contain specific language about the fate of the

mineral rights after prescription for non-use. The 1936 and 1938 transfers all

contain attempted “reversions” by which the surface land owner attempted to

reserve the mineral rights in the event of prescription. Appellants allege that

this attempt was invalid as a mater of Louisiana law. We do not need to reach

any of these questions, as we find that even the 1933 deed, in its contemplation

of the existence of mineral rights, is sufficiently detailed and specific to

satisfy Little Lake. Since we believe that the federal interest here is

comparable to the contractual interest in Little Lake, we decline to read the

Supreme Court’s dicta in Little Lake so broadly.

17

This misconceives the problem, failing to address it at the proper

level of abstraction: the application of default legal rules in

place at the time of contract. Appellants’ putative parade of

horribles about the invalidation of the property law of the states

in which perpetual mineral estates are allowed is only a parade.

The federal interest here is arguably not as powerful as the

federal right to enforce explicit contractual terms, which was

present in Little Lake, and therefore this case invites balancing

of state and federal interests to determine whether the state rule

should apply.43 An assessment, however, of the state interests in

the retroactive application of Act 315 has already been performed

by the Supreme Court in Little Lake. The main justification offered

for Act 315 is that it was meant to facilitate federal land

acquisitions by allowing vendors to retain their mineral rights

indefinitely, as they could in other states.44 The Court noted that

this justification has no bearing on retroactive application of Act

315, because an acquisition cannot be facilitated by a law not yet

in existence.45 The Court also rejected the other justifications

offered by the Louisiana Supreme Court in its advisory opinion in

43

See Little Lake, 412 U.S. at 599 (“Conceivably, our conclusion might be

influenced if Louisiana’s Act 315 of 1940, as applied retroactively, served

legitimate and important state interests the fulfillment of which Congress might

have contemplated through application of state law.”)

44

Id.

45

Id.

18

Leiter Minerals, Inc. v. California Co.46: subjecting federal

mineral interests to Louisiana mineral conservation laws and

clarification of the taxability of the mineral interests held by

private parties when the United States owned the surface land.47

We believe that any state interest in the retroactive

application of Act 315 does not outweigh the federal interest in

this case. Therefore the borrowing of state law as the federal rule

of decision is here inappropriate. We now turn to the content of

the federal rule of decision and conclude that, while we may not

borrow current Louisiana law in the form of Act 315, residual (pre-

1940) Louisiana law should provide the federal rule of decision for

pre-1940 transactions.

C

The Court in Little Lake concluded that although Act 315 could

not provide the federal rule of decision, a decision of whether or

not to choose pre-1940 Louisiana law (10-year prescriptive period)

or to fashion a new rule of federal common law was unnecessary

because the terms of the land acquisition contract controlled.48

Those express terms limited the length of the servitude.

46

132 So.2d 845 (La. 1961).

47

Little Lake, 412 U.S. at 599-601.

48

Id. at 604 (“Neither rule is the law of Louisiana yet either rule

resolves this dispute in the Government’s favor. The contract itself is

unequivocal....”).

19

In this case there are no express terms governing the

prescription or termination of the 1929 servitude in the 1933, 1936,

or 1938 transfers. As a result, this Court must decide whether to

apply residual (pre-Act 315) Louisiana law or to fashion a different

rule of federal common law. The nature of the federal interest we

have identified requires the selection of residual Louisiana law.

Just as the express terms of the contract determined the outcome of

Little Lake, so should the pre-1940 default rule of prescription

provided by Louisiana law determine the outcome of this case. Thus,

a 10-year prescriptive period is the appropriate federal rule of

decision.

D

The Government cross-appeals the district court’s determination

that Act 315 can be applied prospectively to post-1940 transfers.

The Government’s position is that we should not borrow Act 315 as

the federal rule of decision for the post-1940 transfers under our

Clearfield Trust analysis. Both parties appear to accept that if

the choice-of-law decision for pre-1940 application of Act 315 is

federal, so is the choice-of-law decision for post-1940 transfers.

An interest in the application of the pre-Act 315 legal rule

cannot be in conflict with the prospective application of Act 315.

After its adoption, Act 315 provides the background rule that the

United States bargained under. Without “significant conflict”

20

between the application of state law and the federal interest

asserted, state law should be borrowed as the rule of decision.49

The only other federal interest on which the Government could

rely—the interest in adding funds to the Treasury—has been

recognized by the Court to be insufficient.50 As a result, unless

Act 315 is constitutionally infirm, it renders the servitudes on the

Group C lands, which were created after 1940, imprescriptible.

III

The Government argues that Act 315 unconstitutionally

discriminates against the United States and therefore cannot be

applied retroactively or prospectively. The district court held

that the doctrine of intergovernmental immunity posed no bar to the

application of Act 315. While we are sympathetic to the

Government’s argument, we are foreclosed from considering the

constitutionality of Act 315 as discriminatory against the United

States by our prior decision in United States v. Little Lake Misere

Land Co.51 This decision was reversed by the Supreme Court in

49

See O’Melveny & Myers 512 U.S. at 85-86 (“Our cases uniformly require

the existence of such a conflict as a precondition for recognition of a federal

rule of decision.”).

50

United States v. Burnison, 339 U.S. 87, 91-92 (1950).

51

453 F.2d 360 (5th Cir. 1971) (“As to the contention that Lousiana’s Act

315 is hostile to the United States, we note the same principle applies to

acquisitions by the State of Louisiana ... and that the act really does nothing

more than place citizens of Louisiana in the same position as citizens of other

states whose land has been purchased or condemned by the United States. We hold,

therefore, that Act 315 is not unconstitutional.”).

21

Little Lake, but the Court did not address our holding that Act 315

was not invalid as discriminatory against the United States.52

It is well-established in this circuit that one panel of this

Court may not overrule another.53 While easily confused with

traditional stare decisis, “our rule that one panel cannot overturn

another serves a somewhat different purpose of institutional

orderliness.”54 This Court stated in United States v. Kirk55 that

“[i]t is the practice of this Circuit for three-judge panels to

abide by a prior Fifth Circuit decision until the decision is

overruled, expressly or implicitly, by either the United States

Supreme Court or by the Fifth Circuit sitting en banc.”56 Kirk

itself demonstrates that our panel opinion in Little Lake binds us

on the issue of Act 315's alleged discrimination against the United

States, despite its reversal by the Supreme Court.57 In Kirk, the

52

Cf. Little Lake, 412 U.S. at 606-08 (Rehnquist, J., concurring) (arguing

that Act 315 does impermissibly discriminate against the United States).

53

Barrientes v. Johnson, 221 F.3d 741, 780 n.30 (5th Cir. 2000).

54

Montesano v. Seafirst Commercial Corp., 818 F.2d 423, 425-26 (5th Cir.

1987).

55

528 F.2d 1057 (5th Cir. 1976).

56

Id. at 1063. See also Causeway Med. Suite v. Ieyoub, 109 F.3d 1096,

1103 (5th Cir. 1997) (“Accordingly, for a panel of this court to overrule a prior

decision, we have required a Supreme Court decision that has been fully heard by

the Court and establishes a rule of law inconsistent with our own.”).

57

In order to hold differently on the issue of Act 315's alleged

discrimination against the United States, we would have to overrule Kirk, which

we cannot do, of course.

This case illustrates the important difference between our treatment of a

panel opinion after vacatur by the Supreme Court and our treatment when a

judgment is reversed on other grounds. While our prior opinion in Leiter

22

defendant argued that a jury instruction, which had previously been

approved by this Court in United States v. Rogers,58 was improper.

The decision in Rogers, however, had been reversed by the Supreme

Court on other grounds.59 Nevertheless, this Court in Kirk held

that the decision of the Rogers panel was still binding, because the

Supreme Court had not explicitly or implicitly overruled our panel

opinion.60

IV

Having concluded that Act 315 cannot be applied retroactively

to the transfers of the Group A and B lands, we must decide whether

or not the servitudes affecting those lands have prescribed under

the residual rule of Louisiana law that allows prescription after

10 years of non-use. Appellants argue that various acts of the

Minerals II did not bind the Little Lake panel because it was vacated, the

opinion in Little Lake binds us because only the judgment was reversed on other

grounds. Little Lake, 453 F.2d at 362 (reaffirming principles of Leiter Minerals

II in face of Government’s argument that it had no precedential value); Ridley

v. McCall, 496 F.2d 213, 214 (5th Cir. 1974) (stating that vacated opinions have

no precedential value); Durning v. Citibank, N.A., 950 F.2d 1419, 1424 n.2 (9th

Cir. 1991) (“A decision may be reversed on other grounds, but a decision that has

been vacated has no precedential authority whatsoever.”).

58

488 F.2d 512 (5th Cir. 1974), rev’d on other grounds, 422 U.S. 35, 41

(1975). The Supreme Court held that an improper communication between judge and

jury had occurred, necessitating reversal. 422 U.S. at 40-41.

59

Rogers, 422 U.S. at 36.

60

Kirk, 528 F.2d at 1063. The fact that then Justice Rehnquist agreed

that Act 315 discriminated against the United States does not change our

determination that our opinion in Little Lake is still binding. Two justices in

Rogers concurred and reached the merits of the question, arguing that our

decision should be overruled. Rogers, 422 U.S. at 43-48 (Marshall, J.,

concurring).

23

United States operated to legally suspend prescription, such that

the 10-year period has not run. We are persuaded that no obstacle

existed after the moratorium ended in 1978 and that in any event an

obstacle must cover the entirety of the land subject to the

servitude before it can suspend prescription as a matter of

Louisiana law. We therefore affirm the district court’s holding

that the servitudes on the Group A and B lands have prescribed for

non-use.

A

Appellants first claim that the doctrine of contra non valentum

agere nulla cirrut praescriptio61 should apply to suspend

prescription when the owner of the servient estate “impedes” or

“hinders” the servitude owner’s access to the servitude. The

Government argues that the controlling provisions of the Mineral

Code (formerly of the Civil Code) govern the suspension of

prescription by obstacle.

Under Louisiana law, an obstacle will suspend prescription if

the servitude owner is “prevented from using [the servitude] by an

obstacle that he can neither prevent or remove.”62 This is nearly

identical to the corresponding provision of the Civil Code that

61

“Prescription does not run against one unable to act.” See Cartwright

v. Chrysler Corp., 232 So. 2d 285, 287 (La. 1970).

62

La. Rev. Stat. § 31:59.

24

governed until the adoption of the Mineral Code in 1975.63 The

district court held, and we agree, that since a) the Mineral Code

of 1975 generally applies retroactively and b) the two provisions

are identical, the Mineral Code should be applied as the law of

prescription in this case.64

The Louisiana Supreme Court has stated that statutory

prescription is an “example” of the doctrine of contra non

valentum.65 Nevertheless, Appellants urge that the general

Louisiana law of contra non valentum be applied as an addition to

the statutory and case law on prescription of mineral servitudes.

This extension of contra non valentum is not supported by the case

law cited by the Appellants. In Plaguemines Parish Commission

Council v. Delta Development Co.,66 Plaquemines Parish sued to

regain title to mineral interests, arguing that they had been

wrongfully expropriated by corrupt public officials. The defendants

argued that those interests had prescribed under the 10-year period

applicable to claims of breach of fiduciary duty. The court invoked

contra non valentem because the defendants’ concealment prevented

63

See La. Civ. Code. art 792 (1870) (“If the owner of the estate to whom

the servitude is due, is prevented from using it by any obstacle which he can

neither prevent nor remove, the prescription of non-usage does not run against

him as long as this obstacle remains.”).

64

See La. Rev. State. § 31:214 (stating that Mineral Code is to be applied

retroactively unless it would “divest already vested rights, or [] impair the

obligation of contracts”).

65

McDonald v. Richard, 203 La. 155, 165 (La. 1943).

66

502 So.2d 1034 (La. 1987).

25

67

the plaintiffs from discovering their claim. Similarly, in Nathan

v. Carter68 the defendants’ fraud and misrepresentation prevented

plaintiff from discovering a cause of action for wrongful death.

The Louisiana Supreme Court applied contra non valentem on these

facts.69 The Appellants present no evidence of fraud, concealment,

or bad faith on the part of the Government. Delta Development and

Nathan are therefore inapposite.

B

A look at even an abbreviated chronological account of the use

of the servitude persuades us that it has prescribed. The last

active drilling on the servitude land was in 1964 and was performed

by Pan American as a lessee of the servitude. The 10-year period

of non-use required for prescription of a mineral servitude can be

interrupted when the holder of the mineral servitude, in good faith,

engages in operations on the land.70 These operations, however,

must be more than mere “[p]reparations for the commencement of

actual drilling or mining operations, such as geological or

geophysical exploration, surveying, clearing of a site, and the

hauling and erection of materials and structures necessary to

67

Id. at 1060-61.

68

372 So.2d 560 (La. 1979).

69

Id. at 562-63.

70

Mire v. Hawkins, 186 So. 2d 591, 595-96 (La. 1966); see also La. Rev.

Stat. Ann. § 31:29(1). Interruption differs from suspension. See infra note 74.

26

conduct operations .... ”71 It is undisputed that the Appellants

did not interrupt the prescriptive period by drilling at any time

after 1964.

An obstacle to the use of a servitude will suspend

prescription.72 Since Appellants present no evidence of use of the

servitude since 1964 the only way they can prevail is by

demonstrating that an obstacle created by the Government denied them

access to the servitude lands for a total length of time of

approximately 22 years from March 20, 1964, when Pan American

plugged its well,73 to the filing of this lawsuit in 1996.74

The moratorium on entry to the lands comprising the Fort Polk

artillery range (most of the Group B lands and 40-50% of the Group

A lands) ended on March 31, 1978. In the time since, neither

Appellants nor their predecessor, Burton, engaged in any drilling,

so they must show that there was some other obstacle that suspended

the prescriptive period. Appellants claim that after the moratorium

71

La. Rev. Stat. § 31:30.

72

La. Rev. Stat. § 31:59.

73

A lessee’s use of the servitude suffices to interrupt prescription as

against the servitude owner. Taylor v. Dunn, 97 So. 2d 415, 419 (La. 1957).

74

An obstacle causes the prescriptive period to be suspended, whereas use

of the servitude causes the prescriptive period to be interrupted. The

difference is as follows: suspension merely “stops the clock,” which begins to

run again when the obstacle is removed. Interruption, by contrast, “resets the

clock” so that when operations cease, a full 10 years must elapse until

prescription. See Louviere v. Shell Oil Co., 440 So.2d 93, 97 n.8 (La. 1983);

La. Civ. Code arts. 3466, 3472. This distinction is not very important to this

case, because use (which would constitute an interruption) has not occurred since

1964. Appellants need only to show that obstacles to their (and Burton’s) use

of the servitude existed over an approximately 22 years in aggregate.

27

was lifted the U.S. Army instituted a de facto moratorium that

prevented them from making use of the servitude, but do not offer

sufficient evidence to survive summary judgment on this issue.75

Burton had notice of the end of the moratorium,76 and the Army

allowed others to enter the lands for the purpose of performing

geological surveys, including Shell Oil, which did so on the basis

of a permit granted by Burton.

There is also no evidence that Burton or Appellants drilled or

even attempted to enter the servitude lands after the moratorium

ended. Nor did they request permission to do so from the Army.

Shell Oil shot seismic lines on the servitude lands under a permit

from Burton after the moratorium had ended. The record provides us

with no evidence that, after the moratorium ended, the United States

created an obstacle to use of the servitude lands. Thus, we have

no difficulty concluding that Appellants failed to create a genuine

issue of material fact on the question of obstacle. As a result,

we find that the mineral servitude terminated by prescription at

some time before 1996.

C

75

Appellants’ main evidence on this point is the impression of one John

Camp, an agent of Burton’s, that, despite explicit statements to the contrary

about whether drilling would be allowed, the Army conveyed the message that

“there ain’t going to be no drilling on this reservation.”

76

The moratorium payments that had been made by the Army to Burton ended

as of March 31, 1978. This provided notice to Burton that use of the servitude

would now be allowed.

28

Even assuming that a de facto moratorium prevented the

Appellants from accessing the servitude after 1978, Appellants must

still explain why a partial obstacle is sufficient to suspend

prescription. The moratoriums (both real and alleged) indisputably

did not cover all of the Group A and B lands, but rather most of the

Group B lands and 40-50% of the Group A lands. All that remains is

to determine Louisiana law on partial obstacles and the suspension

of prescription.

In Hanszen v. Cocke,77 the Louisiana Court of Appeals held that

litigation over one portion of land subject to a mineral servitude

did not suspend prescription of the servitude because other portions

of it were still available for exploitation.78 The litigation in

that case is analogous to the alleged de facto moratorium in this

case: each forecloses operations on only a portion of the land

burdened by the servitude. Appellant replies that Hanszen was

incorrectly decided and we may refuse to follow an intermediate

state appellate court when its decision does not represent the

likely result in the state’s highest court.79

This argument relies on a questionable reading of the Louisiana

Supreme Court’s decision in Boddie v. Drewett,80 a case overruled

77

246 So. 2d 200 (La. App. 1st Cir. 1971)

78

Id. at 206.

79

Hulin v. Fibreboard Corp., 178 F.3d 316, 328 (5th Cir. 1999).

80

87 So. 2d 516 (La. 1956).

29

ten years later in Mire v. Hawkins.81 In Boddie the court held that

a drilling order of the Department of Conservation prohibiting

drilling on the entirety of a 12 acre tract of land subject to a

mineral servitude constituted an obstacle that suspended

prescription. The court refused to hold that the drilling of a dry

hole in good faith outside the tract burdened by the servitude but

inside the drilling unit constituted use that would interrupt the

prescriptive period.82 However, this was precisely the theory the

court elected to adopt in Mire, overruling Boddie and declaring that

the Department of Conservation’s drilling orders could not be

obstacles that would suspend the prescriptive period.83 However,

operations anywhere within the drilling unit would be a use of the

servitude (thus interrupting prescription) even if these operations

were not on the tract subject to the servitude.84 Nothing in Boddie

or Mire explicitly addresses whether or not a partial obstacle is

sufficient to suspend prescription.

Appellants, however, argue that one of the holdings of Boddie

is that a partial obstruction is sufficient to suspend prescription.

This can be deduced, they believe, from the fact that the drilling

order in Boddie only affected certain “sands” (geological formations

81

186 So. 2d 591 (La. 1966).

82

Boddie, 87 So. 2d at 518.

83

Mire, 186 So. 2d at 289.

84

Id.

30

at particular depths) rather than all sands.85 Since the Mire Court

reversed on other grounds (that Department of Conservation orders

cannot be obstacles), Appellants argue that this holding of Boddie

remains good law.

We disagree. The Department of Conservation’s order in Boddie

covered the only useful “sand” under the tract in question, meaning

it was not a partial obstacle in any real sense. Moreover, this

partial obstacle argument is not addressed by the Louisiana Supreme

Court in Boddie, and we will not question Hanszen’s interpretation

of Louisiana law on this basis. Thus, following Hanszen, no

obstacle sufficient to suspend prescription has ever existed over

the Group A and B lands.

We AFFIRM.

85

Boddie, 87 So. 2d at 519.

31