Petition for Writ of Certiorari — Mississippi River Transmission Corp. v. Secretary, Louisiana Department of Revenue & Taxation

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(\\ Supreme ¢c urt, U.S,

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No. 95-___

OS 2S CNT TF i995

In The |

Supreme Court of the United State

October Term, 1995

MISSISSIPPI RIVER TRANS)» :SSION CORPORATION,

MURPHY EXPLORATION AND PRODUCTION

COMPANY, PENNZOIL EXPLORATION AND

PRODUCTION COMPANY, TOTAL MINATOME

CORPORATION, NORAM ENERGY CORP. AND

ROSEWOOD RESOURCES, INC.,

Petitioners,

SECRETARY, LOUISIANA DEPARTMENT OF

REVENUE AND TAXATION,

Respondent.

On Petition For A Writ Of Certiorari To The

Court Of Appeal, First Circuit, State Of Louisiana

‘

PETITION FOR A WRIT OF CERTIORARI

CHarces M. Darina, IV J. EDGERTON PIERSON, Jr.

Kirk K. VAN TINE Counsel of Record

BakKER & Botts, L.L.P. Pike HALt, Jr.

The Warner J. Davip GARRETT

1299 Pennsylvania Ave., BLANCHARD, WALKER,

NW O’QuIn & Roserts

Washington, D.C. 20004 (A Professional Law Corp.)

(202) 639-7700 Post Office Drawer 1126

CLAuDIA WILSON FROST Shreveport, LA 71163

jy NE NENNINGER BLAND (318) 221-6858

Macey REASONER STOKES KertH A. JONES

Ba<er & Borrts, L.L.P. Beck, REDDEN & SECREST

9* Louisiana 1331 Lamar Street

Fi uston, TX 77002 Houston, TX 77010

713) 229-1234 (713) 659-8140

Counsel for Petitioners

August 17, 1995

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED

Whether the State of Louisiana can constitutionally

impose a severai ¢ tax on oil and gas extracted from

Barksdale Air Force Base lands notwithstanding this

Court’s ruling in Humble Pipe Line Co. v. Waggonner, 376

U.S. 369 (1964), that Barksdale is a federal enclave subject

to the exclusive legislative jurisdiction of the United

States under Article I, Section 8, Clause 17 of the Consti-

tution of the United States.

PARTIES TO THE PROCEEDING AND

RULE 29.1 STATEMENT

Petitioners:

1. Mississippi River Transmission Corporation. Mis-

sissippi River Transmission Corporation is now the

wholly-owned subsidiary of NorAm Energy Corp., and

during the pendency of the proceedings below was the

parent of MRT Exploration Company. MRT Exploration

Company sold all of its interest in the leases in question,

including all of its rights in and obligations arising pur-

suant to these proceedings, to Mississippi River Trans-

mission Corporation; thereafter MRT Exploration

Company was sold.

2. Murphy Exploration and Productiori Company.

Murphy Exploration and Production Company is a

wholly-owned subsidiary of Murphy Oil Corporation.

During the pendency of the proceedings below Murphy

Oil Corporation transferred all its interest in the leases in

question, including all of its rights in and obligations

arising pursuant to these proceedings, to its wholly-

owned subsidiary, Murphy Oil USA, Inc., which was

merged into Murphy Exploration and Production Com-

pany, also a wholly-owned subsidiary of Murphy Oil

Corporation.

3. Pennzoil Exploration and Production Company.

During the pendency of the proceedings below, all of the

assets, rights, duties and obligations of Pennzoil Produc-

ing Company were merged into its parent company Pen-

nzoil Company. Thereafter Pennzoil Company assigned

iii

PARTIES TO THE PROCEEDING AND

RULE 29.1 STATEMENT - Continued

all of these same assets, rights, duties and obligations to

its wholly-owned subsidiary Pennzoil Exploration and

Production Company.

4. TOTAL MINATOME CORPORATION. Texas Gas

Exploration Corporation, an original petitioner in these

proceedings, after a name change was merged into

TOTAL MINATOME CORPORATION. TOTAL is a corpo-

ration incorporated under the laws of France which has

the wholly-owned subsidiary TOTAL America, Inc., a

Delaware corporation, which has the wholly-owned sub-

sidiary TOTAL American Holding, Inc., of which TOTAL

MINATOME CORPORATION is a wholly-owned subsid-

iary.

5. NorAm Energy Corp. During the pendency of the

proceedings below, Arkla, Inc., an original petitioner,

changed its name to NorAm Energy Corp. NorAm

Energy Corp. does not have any subsidiaries which are

not wholly-owned.

6. Rosewood Resources, Inc. Rosewood Resources,

Inc. is the wholly-owned subsidiary of The Rosewood

Corporation.

Respondent:

Respondent is the Secretary of the Louisiana Depart-

ment of Revenue and Taxation and is charged by statute

with administering the severance taxes imposed under

Louisiana law.

TABLE OF CONTENTS

Page

QUERGEIOIN PRS CT ERs «enna cob sk Sieve oo akan eee i

PARTIES TO THE PROCEEDING AND RULE 29.1

PEIGR AEE 6 FRE VOR ehh oon c co 48s be suede ease naae ii

SABC CF AAMC Bile ss preview veVasewes debesnee iv

TAD. OP Ase ee 2 bvdnsanniedariaisaneebee Viii

CPE He isd nc s dhvgeweces bee Wviesbbatans 2

bt kt ae 8 PA Pere re eee en er 2

STATUTORY AND REGULATORY PROVISIONS

SE VOOR OOS «> 0 sidan chLyhd hue MUNG EWEN ase eeR so SA0s 2

DEAS EMCEE COP RUE MON 605i sc ccissbantedioan 4

A. GRE. RCMIOUING 5k in ois vp viccn cc cnweesas 4

ee rere er. Terre 7

C. Prior Proceedings In This Case.......... 12

D. Presentation Of Federal Question To

CAE EN a dsc ka dhe beer Shs ens 15

REASONS FOR GRANTING THE PETITION....... 15

I. The Decision Of The Louisiana Court Conflicts

With The Decision Of This Court In Humble,

Decisions Of The United States Court Of

Appeals For The Fifth Circuit And Federal Dis-

tae Cee Te as ios be vc haewieee 18

A. The Louisiana Court Of Appeal Erred In

Deciding That The Louisiana Severance

Tax Was An Income Tax Under The Buck

BE C4 Ea ASEAN Coon KAS Oe EER eS 18

SN ac AY 9 MTR AAT ae a Dil

TABLE OF CONTENTS - Continued

Page

B. Congress Did Not Retrocede To Louisiana

The Power To Levy Severance Taxes

Within The Barksdale Enclave With Its

1976 Amendment To The MLAAL........ 24

lI. The Decision Of The Louisiana Court Of

Appeal Unsettles The Settled Law In The

Important Area Of Federal Enclave Jurisdic-

eo Ee EEE PE RT ETT eT Pe OO ee ne Fe OP ang DPE 27

APPENDIX A Opinion, Louisiana Court of

Appeal, First Circuit (December

29, 1994), reported at 648 So.2d

DS Breen GU ee re Be ae la

APPENDIX B Per Curiam Decision on Appli-

cation for Writ of Certiorari,

Supreme Court of Louisiana

(May 19, 1995), reported at 654

SM SI A 6 ods he ecdvnd esos ewnens 17a

APPENDIX C Written Reasons For Judgment,

19th Judicial District Court of

Louisiana In and For the Parish

of East Baton Rouge (January

SE is Or oo <6 cas akn bounces 19a

APPENDIX D Supplemental Written Reasons

For Judgment, 19th Judicial Dis-

trict Court of Louisiana In and

For the Parish of East Baton

Rouge (January 21, 1990)......... 26a

APPENDIX E Judgment, 19th Judicial District

Court of Louisiana In and For

the Parish of East Baton Rouge

(Sepeemmer 15; 1995)... ccc cccssees 28a

TABLE OF CONTENTS - Continued

APPENDIX F

APPENDIX G

Page

Memorandum Opinion, United

States District Court for the

Western District of Louisiana

(May, 1990 unpublished) .......... 33a

Constitutional and Statutory

SRO 6 iva. nc eakcaweedanayes es 54a

Mineral Leasing Act for

Acquired Lands §§ 3, 8 and 9... 54a

The Federal Coal Leasing

Amendments Act of 1975, § 12... 56a

Buck Act §§ 2(a) and 6(c)....... 56a

Constitution of the State of

Louisiana of 1921, Article X,

GR SM Bei ci ec ias vie taes acd 57a

Constitution of the State of

Louisiana of 1974, Article VII,

DOs uc Coo ae ease bee e keke is oe 58a

Louisiana Revised Statutes,

Titled 47:

2 PSR rea 59a

| GRRE Sa pita dor wth era ak 60a

8 Ae aes Soper rrsos tie 60a

§ 633(7)(a) [Prior to 1973

Wik oc. het ide 6la

§ 633(7)(a) [Subsequent to

1973 amendment] ............. 62a

§ 633(8) [Prior to 1973

DUI. 8 5 02 i Ss ade 63a

hr TE te

Vii

TABLE OF CONTENTS - Continued

Page

§ 633(8) [Subsequent to 1973

I SiGe hi ao hd 6 cpa 63a

es ret un gue veoh kee s 64a

Ove BM. BOO Pw 12s o .d5 one sces 65a

Viii

TABLE OF AUTHORITIES

Page

CONSTITUTION OF THE UNrTED StaTEs OF AMERICA

Article I, Section 8, Clause 17

‘ene kee Riess Dewees 2, 4, 5, 6, 7, 8, 14, 15, 16, 17

ine: Ti, Caan oe ee ee 3.15

CONSTITUTION OF THE STATE OF LOUISIANA OF 1921

Plage Hh, TORO Se eek eee 3, 10

POT A, DO FG sooo ovo 3, 10, 22

CONSTITUTION OF THE STATE OF LOUISIANA OF 1974

Aiea VE, See 6 oe ee 3, 10

STATUTES OF THE Unrtep STaTEs

Buck Act, Pub. L. No. 819, 54 Stat. 1059 (1940)

(codified as amended at 4 U.S.C. §§ 105-110)

en ep eae 3, 8, 9, 12, 13, 14, 15, 16, 18, 19, 20, 21, 22

Mineral Leasing Act of 1920, Pub. L. No. 146, 41

Stat. 437 (1920) (codified as amended at 30

US Ie ee. 10

Mineral Leasing Act for Acquired Lands, Pub. L.

No. 382, 61 Stat. 907 (1947) (codified as

amended at 30 U.S.C. §§ 351-359)............. passim

The Federal Coal Leasing Amendments Act of

1975, Pub. L. No. 94-377, 90 Stat. 1083 (1976)

depend RewEeaaur 6 hawere kee eae 3, 11, 16, 23, 24, 25, 26

on BA... BMGs 6 ke i cdtavss enctnceis ikea kek 2

8 USK. GU,.. SS ee are 6

TABLE OF AUTHORITIES - Continued

Page

AcT OF THE LoursiIANA LEGISLATURE

BEE Bit PU NOOR 6 0.5 19.046 Fo die ¥cinne cs a, 4 5, %, 18

La. Revisep STATUTES

Oe PE ii cin Wn 5 ay bib a rkco b 0.949 O40. vine Hid 1-9 48D: 3

MS MING 64 Vk bod obdons ¢ 04 ¢heeucceo chew oeeus 2m

Re ES Finis 60 os 0 4s coed kod (hse deasdapeeen a, a2

I oo ieee SER SER NGA US CEA STU Roane 4oee? 3

Cases

Burns v. State, 439 P.2d 702 (N.M.), cert. denied, 393

aE Ey ESCs Vein a Se gk ade bees ciesecess 21

City of Portsmouth v. Fred C. Gardner Co., 211 S.E.2d

Pd gd ts ROT EE om LEME Pe A ae 21

Commonwealth Edison Co. v. Montana, 453 U.S. 609

CEN Fk hike Fh 6 + 56s vs ed R eR ARE CeC) bata ene reqaeay 5

Hancock v. Train, 426 U.S. 167 (1976) ..............4.. 8

Howard v. Commissioners of Sinking Fund of

Louisville, 344 U.S. 624 (1953) .......... cece eee 20, 21

Humble Pipe Line Co. v. Waggonner, 376 U.S. 369

i ) Speen DA ee rey Meee rey eee T OY POET T passim

James v. Dravo Contracting Co., 302 U.S. 134 (1937) ..8, 17

Jefferson County v. Acker, 850 F. Supp. 1536 (N.D.

Fe TA REACH TIS Rh BS a do Ne CRSA HERA 009 10> 21

Kiker v. City of Philadelphia, 31 A.2d 289 (Pa.), cert.

GPE Fae TCT OE CIPD) « vec ccenncdeaeit ces ees 21

TABLE OF AUTHORITIES - Continued

Page

Lord v. Local Union No. 2088, Int’l Brotherhood of

Elec. Workers, 646 F.2d 1057 (5th Cir. Unit B),

reh’g denied, 654 F.2d 723 (Sth Cir. 1981), and cert.

dented, 456 US. TAB: Capes «0 ose sede thenensses 8, 26

Mississippi River Fuel Corp. v. Cocreham, 382 F.2d

929 (5th Cir. 1967), reh’g denied, 390 F.2d 34 (5th

Cir.), and cert. denied, 390 U.S. 1014, and cert.

Gentad, FIO WS. TEs CHG cs cknkdeewstawokuaye passim

Mississippi River Fuel Corp. v. Fontenot, 234 F.2d

898 (5th Cir.), cert. denied, 352 U.S. 916 (1956)..... 27

Morse v. Johnson, 282 A.2d 597 (Me. 1971)........... 21

Mouton v. Sinclair Oil and Gas Co., 410 F.2d 717 (5th

Cir. 1969), cert. denied, 398 U.S. 957 (1970)...5, 9, 19, 27

MRT Exploration Co. v. McNamara, 731 F.2d 260

Cs - CBs vc bd vow e ee veces kvaceaeecrsieesay 6

Murphy Corp. v. Fontenot, 73 So.2d 180 (La. 1954),

cert. dented, DAB US. G51 CIPS) cvevccdevsaveusess: 27

Olson v. Department of Revenue, 726 P.2d 1162

(RGR. "TOO sec ods euneacedes shadvectiederi vat 21

Paul v. United States, 371 U.S. 245 (1963).......... 8, 26

Rountree v. City & County of Denver, 596 P.2d 739

(ete. TOF). sc ccccugddunsdignesensdileasusGaess 21

Shell Oil Co. v. Mouton, 410 F.2d 715 (5th Cir.

SOGF Esc cccngecatysveseks 6s bdtateline 5, 9, 19, 27

Shell Oil Co. v. Secretary, Revenue and Taxation, No.

91-8635, Civil District Court, Orleans Parish,

SOUND, <00.4.00050 4d enseeevaneels ddtubonsaeiencct 28

Surplus Trading Co. v. Cook, 281 U.S. 647 (1930)....... 7

Tarver v. Wilson, Civ. No. 90-0043 (W.D. La. May

Bde SOON +c hencnwisnweoede 9, 14, 16, 19, 23, 24, 26, 27

TABLE OF AUTHORITIES - Continued

Page

United States v. City & County of Denver, 573

F. Supp. 686 (D. Colo. 1983) ...........-....55. 20, 21

United States v. Lewisburg Area Sch. Dist., 139 F.2d

, Sku BS. | POPTT Sere Te eT eee Terie 8, 20, 21

OTHER REFERENCES

S. Rep. No. 1625, 76th Cong., 3d Sess. 3, 5 (1940) .... 20

The Federal Coal Leasing Amendments Act of

1975, H.R. Rep. No. 681, 94th Cong., 2d Sess. 21

(1975), reprinted in 1976 U.S.C.C.A.N. 1943, 1957.... 11

The Federalist No. 43 (James Madison).............. 17

No. 95-___

In The

Supreme Court of the United States

October Term, 1995

MISSISSIPPI RIVER TRANSMISSION CORPORATION,

MURPHY EXPLORATION AND PRODUCTION

COMPANY, PENNZOIL EXPLORATION AND

PRODUCTION COMPANY, TOTAL MINATOME

CORPORATION, NORAM ENERGY CORP. AND

ROSEWOOD RESOURCES, INC.,

Petitioners,

SECRETARY, LOUISIANA DEPARTMENT OF

REVENUE AND TAXATION,

Respondent.

On Petition For A Writ Of Certiorari To The

Court Of Appeal, First Circuit, State Of Louisiana

PETITION FOR A WRIT OF CERTIORARI

Mississippi River Transmission Corporation, Murphy

Exploration and Production Company, Pennzoil Explora-

tion and Production Company, TOTAL MINATOME

CORPORATION, NorAm Energy Corp. and Rosewood

Resources, Inc. (herein “Petitioners”) respectfully pray

that a Writ of Certiorari issue to review the decision of

the Louisiana Court of Appeal, First Circuit (writ denied

by the Supreme Court of Louisiana), entered in this case

affirming the judgment of the 19th Judicial District Court

of Louisiana in and for the Parish of East Baton Rouge.

OPINIONS BELOW

The opinion of the Louisiana Court of Appeal, First

Circuit, is reported at MRT Exploration Company v.

McNamara, 648 So.2d 1108 (Appendix A, p. 1a), and the

denial by the Louisiana Supreme Court of Petitioners’

application for a writ of certiorari is reported at MRT

Exploration Company v. McNamara, 654 So.2d 1083 (Appen-

dix B, p. 17a). The Louisiana district court’s opinions are

attached as Appendix C (its Written Reasons for Judg-

ment, p. 19a) and Appendix D (its Supplemental Written

Reasons for Judgment, p. 26a), and its Judgment is

attached as Appendix E (p. 28a).

JURISDICTION

The Louisiana Court of Appeal, First Circuit, issued

its opinion on December 29, 1994 (Appendix A, p. 1a). On

May 19, 1995, the Louisiana Supreme Court denied Peti-

tioners’ application for a writ of certiorari that raised the

question presented to this Court (Appendix B, p. 17a).

The jurisdiction of this Court is invoked under 28 U.S.C.

§ 1257.

STATUTORY AND REGULATORY

PROVISIONS INVOLVED

Constitutional Provisions

United States Constitution, Article I, Section 8,

Clause 17 provides:

The Congress shall have power [t]o exercise

exclusive Legislation in All Cases whatsoever,

over such District (not exceeding ten miles

Square) as may, by Cession of particular States,

and the Acceptance of Congress, become the

Seat of the Government of the United States,

and to exercise like Authority over all Places

purchased by the Consent of the Legislature of

the State in which the Same shall be, for the

eo Te ee ee

Erection of Forts, Magazines, Arsenals, dock-

Yards, and other needful Buildings.

United States Constitution Article VI, Clause 2 pro-

vides:

This Constitution, and the Laws of the

United States which shall be made in Pursuance

thereof; and all Treaties made, or which shall be

made, under the Authority of the United States,

shall be the supreme Law of the Land; and the

Judges in every State shall be bound thereby,

any Thing in the Constitution or Laws of any

State to the Contrary notwithstanding.

Constitution of the State of Louisiana of 1921, Article

X, Sections 1 and 21.

Constitution of the State of Louisiana of 1974, Article

VIL, Section 4.

Federal Statutory Provisions

Buck Act, Pub. L. No. 819, 54 Stat. 1059 (1940) (cod-

ified as amended at 4 U.S.C. §§ 105-110)

Mineral Leasing Act for Acquired Lands, Pub. L. No.

382, 61 Stat. 907 (1947) (codified as amended at 30 U.S.C.

§§ 351-359)

Federal Coal Leasing Amendments Act of 1975, Pub.

L. No. 94-377, 90 Stat. 1083 (1976)

Louisiana Statutory Provisions

Louisiana Revised Statutes, Title 47, §§ 31, 631, 632,

633(7)(a), 633(8) and 633(9).

1892 La. Acts No. 12.

(The full text of the above referenced pertinent statu-

tory provisions is set forth in Appendix G, p. 54a, et seq.)

STATEMENT OF THE CASE

In this case the State of Louisiana seeks to revisit, in

slightly altered guise, the issues decided against it in

Humble Pipe Line Co. v. Waggonner, 376 U.S. 369 (1964) and

Mississippi River Fuel Corp. v. Cocreham, 382 F.2d 929 (5th

Cir. 1967), reh’g denied, 390 F.2d 34 (Sth Cir.), and cert.

denied, 390 U.S. 1014, and cert. denied, 390 U.S. 1015 (1968).

In Humble, Louisiana had assessed ad valorem taxes on

oil drilling equipment and pipelines owned, used, and

kept by lessees of the United States within the confines of

Barksdale Air Force Base (“Barksdale”). This Court held

that the entirety of Barksdale is a federal enclave subject

to the exclusive jurisdiction of the United States pursuant

to Article I, Section 8, Clause 17 of the United States

Constitution and thus is beyond the reach of the State’s

power to tax. Subsequently, the Fifth Circuit in Cocreham,

applying Humble, held that Louisiana lacks power to

impose severance taxes on oil and gas extracted from

Barksdale. Here, Louisiana once again seeks to impose its

severance tax upon Barksdale production, arguing that

minor amendments to two statutes (one state and one

federal) served implicitly to confer the taxing power that

it previously lacked. The Louisiana courts below agreed,

holding that although Barksdale undeniably remains a

federal enclave, the state now is free to assert its taxing

power without apparent restriction.

A. Factual Background!

In 1930, the City of Shreveport, the State of Louisiana

and the Bossier Levee District ceded approximately

22,000 acres of land comprising Barksdale Air Force Base

to the United States for a military post, flying field and

bombing range. At the time of conveyance of Barksdale to

the United States, Louisiana law provided that the United

States “shall have the right of exclusive jurisdiction over

the property . . . for all purposes, except the administra-

tion of the criminal laws . . . and the service of civil

process.” Humble, 376 U.S. at 371; see 1892 La. Acts No. 12

(“the Louisiana cession statute”) (Appendix G, p. 65a).

1 Petitioners and the State stipulated to the facts in the

Louisiana district court. (Appendix A, p. 2a).

The Louisiana cession statute specifically provided that

any land ceded to the United States would be “exempt

from all State, parochial, municipal or other taxation.”

1892 La. Acts No. 12 (Appendix G, p. 65a).

Petitioners are successors in interest to protective oil

and gas leases granted by the United States in 1951 and

1961 pursuant to Public Land Order Nos. 701 and 2178

covering parcels of land within Barksdale known as Par-

cel 1, Parcel 3, Parcel 4 and the Miss Murphy Parcel. After

the 1968 Cocreham decision and until September 1982, the

Louisiana Department of Revenue and Taxation recog-

nized that the provisions of Article I, Section 8, Clause 17

of the Constitution of the United States; the decision of

this Court in Humble, and the repeated decisions of the

United States Court of Appeals for the Fifth Circuit,”

prohibited the State of Louisiana from levying its sever-

ance tax upon oil and gas severed from lands within the

confines of Barksdale. However, by letter dated Septem-

ber 30, 1982, the Department reversed its position and

advised the Petitioners with interests in the Parcel 3 and

Miss Murphy tracts that, in its opinion, Louisiana sever-

ance tax was due on oil and gas produced from federal

lands, less the royalty interest of the United States. The

State apparently changed its position in reliance on a 1973

amendment to the severance tax statute which changed

the method of calculation of the amount of the tax on oil

(but not gas) from quantity based to value based and a

1976 amendment to the Mineral Leasing Act for Acquired

Lands of 1947.3

2 See Mississippi River Fuel Corp. v. Cocreham, 382 F.2d 929

(5th Cir. 1967), reh’g denied, 390 F.2d 34 (5th Cir.), and cert. denied,

390 U.S. 1014, and cert. denied, 390 U.S. 1015 (1968); Shell Oil Co.

v. Mouton, 410 F.2d 715 (5th Cir. 1969); Mouton v. Sinclair Oil and

Gas Co., 410 F.2d 717 (5th Cir. 1969), cert. denied, 398 U.S. 957

(1970).

3 The State also initially relied upon Commonwealth Edison

Co. v. Montana, 453 U.S. 609 (1981); however, that case did not

Petitioners timely paid the State of Louisiana, under

protest, the amount of severance tax claimed due for the

production severed from lands covered by the Parcel 3

and the Miss Murphy leases. On December 29, 1982,

Petitioners with interests in those tracts brought suit

(Trial Court Docket No. 262,958) in the 19th Judicial Dis-

trict Court of Louisiana for recovery of the amounts paid

under protest.* In 1987, the State proposed a severance

tax assessment against Petitioner Rosewood on produc-

tion from Parcel 1 and Parcel 4. On October 15, 1987,

Rosewood paid the State, under protest, the entire

amount of the State’s proposed assessment and thereafter

timely filed its proceedings (Trial Court Docket No.

323,597) for recovery of the amounts paid under protest.

The Louisiana district court consolidated the two law-

suits for a decision on the briefs and the joint stipulation

of facts. (Appendix C, p. 20a). All severance taxes purpor-

tedly due with respect to production from such parcels

subsequent to the referenced payments have been paid

under protest and, pursuant to Louisiana law, are to be

disbursed upon a final decision herein.

involve leases granted on a federal enclave and, therefore, is not

pertinent.

4 Petitioners in Trial Court Docket No. 262,958 also filed

suit in United States District Court for the Western District of

Louisiana seeking a declaratory judgment that under the

“exclusive jurisdiction” of federal enclaves established pur-

suant to Article I, Section 8, Clause 17 of the United States

Constitution, the decision of this Court in Humble, and the

repeated decisions of the United States Court of Appeals for the

Fifth Circuit, the State of Louisiana was prohibited from impos-

ing its severance tax. In March 1983, the district court held that

under the provisions of the Tax Injunction Act of 1937, 28 U.S.C.

§ 1341, it lacked jurisdiction to decide the federal question

involved. The Fifth Circuit affirmed the district court’s dis-

missal of the proceedings for lack of jurisdiction. MRT Explora-

tion Co. v. McNamara, 731 F.2d 260 (5th Cir. 1984).

B. Legal Background

The United States Constitution grants the federal

government exclusive legislative jurisdiction over federal

enclaves. See U.S. Const. art. I, § 8, cl. 17 (giving Congress

the power “[t]o exercise exclusive Legislation in all Cases

whatsoever . . . over all Places purchased by the Consent

of the Legislature of the State in which the Same shall be,

for the Erection of Forts, Magazines, Arsenals, dock-

Yards, and other needful Buildings”).5

This Court has specifically held that Barksdale Air

Force Base is a federal enclave subject to the exclusive

legislative jurisdiction of the United States. Humble, 376

U.S. at 373. By virtue of its cession and the provisions of

the Louisiana cession statute, Louisiana reserved to itself

only the rights to enforce its criminal laws and to serve

process on persons within Barksdale. The Louisiana ces-

sion statute expressly provided that property ceded to the

United States was exempt from all state and local power

of taxation. (Appendix G, p. 65a).

Despite a property’s status as a federal enclave, a

state may nevertheless exercise jurisdiction in areas that

(i) it expressly reserved at the time the United States

acquired the land; or (ii) the United States, via an act of

Congress, has specifically retroceded jurisdiction back to

> As this Court has unequivocally held:

The question is not an open one. It long has been

settled that where lands for such a purpose are pur-

chased by the United States with the consent of the

state legislature, the jurisdiction theretofore residing

in the state passes, in virtue of the constitutional pro-

vision, to the United States, thereby making the juris-

diction of the latter the sole jurisdiction.

Surplus Trading Co. v. Cook, 281 U.S. 647, 652 (1930).

the state.® In the Louisiana cession statute, Louisiana did

not reserve the power to tax; rather it explicitly relin-

quished it.? Thus, only the second means of exercising

state legislative jurisdiction to tax property within a fed-

eral enclave — specific retrocession by Congress - is

potentially available to the State in this case. Humble, 376

U.S. at 374. The Louisiana Court of Appeal relied on one

such congressional retrocession of jurisdiction, the Buck

Act, 4 U.S.C. § 105 et seq., which allows state imposition

6 See James v. Dravo Contracting Co., 302 U.S. 134, 147-48

(1937) (holding that a state may qualify its cession of jurisdic-

tion by reservations not inconsistent with the use of the prop-

erty by the United States); United States v. Lewisburg Area Sch.

Dist., 539 F.2d 301, 307 (3d Cir. 1976) (“Where there is a purchase

by the United States for an art. 1 § 8 cl. 17 purpose and a cession

by the state of exclusive jurisdiction, this jurisdiction can still be

qualified either by the state, at the time when the land is pur-

chased and the jurisdiction ceded, or by consent of the United

States to the exercise of certain state laws within the enclave.”);

Paul v. United States, 371 U.S. 245, 263 (1963) (“The cases make

clear that the grant of ‘exclusive’ legislative power to Congress

over enclaves that meet the requirements of art. I, § 8, cl. 17, by

its own weight, bars state regulation without specific congres-

sional action.”); Lord v. Local Union No. 2088, Int'l Brotherhood of

Elec. Workers, 646 F.2d 1057, 1062-63 (5th Cir. Unit B) (“Congress

is not in the habit of ceding jurisdiction by implication.”), reh’g

denied, 654 F.2d 723 (Sth Cir. 1981), and cert. denied, 458 U.S. 1106

(1982); see also Hancock v. Train, 426 U.S. 167, 179 (1976)

(“Because of the fundamental importance of the principles

shielding federal installations and activities from regulation by

the States, an authorization of state regulation is found only

when and to the extent that there is ‘a clear congressional man-

date,’ ‘specific congressional action’ that makes this authoriza-

tion of state regulation ‘clear and unambiguous.’ ”) (footnotes

omitted).

7 1892 La. Acts No. 12, as in effect at the time of cession of

Barksdale to the United States, specifically provided that the

ceded land would be “exempt from all State, parochial, munici-

pal or other taxation.” (Appendix G, p. 65a).

of “income taxes” within federal enclaves, as authority

for its decision that the Louisiana severance tax on oil

and gas severed from lands located within the Barksdale

enclave constituted an “income tax” under the Act.

In Humble, this Court concluded that an ad valorem

tax on the value of equipment and property sought to be

imposed by Louisiana within the confines of Barksdale

did not constitute an income tax under the Buck Act. 376

U.S. at 374. Accordingly, it held Louisiana’s attempt to

levy the ad valorem tax within the enclave violated the

exclusive legislative jurisdiction of the United States. The

Fifth Circuit has repeatedly held that the Buck Act does

not allow a different result for Louisiana’s severance tax

on oil and gas production. In Cocreham, the Fifth Circuit

held that the State lacked the power to impose the same

severance tax involved in this suit upon oil and gas

extracted from one of the same leases involved in this

suit. 382 F.2d at 938. Rejecting the State’s very argument

here that Congress had retroceded any power to impose

severance taxes in the Buck Act, the Fifth Circuit held

that “the Louisiana severance tax is simply not an income

tax” under the Buck Act. Id. at 940.

The Fifth Circuit has reaffirmed this holding in two

subsequent decisions. See Shell Oil Co. v. Mouton, 410 F.2d

715, 716 (5th Cir. 1969); Mouton v. Sinclair Oil and Gas Co.,

410 F.2d 717, 718 (5th Cir. 1969). As recently as 1990, in a

case where the Louisiana Department of Revenue was the

moving party, the United States District Court for the

Western District of Louisiana applied the Cocreham hold-

ing to prohibit the State from imposing the severance tax

on minerals extracted pursuant to a Barksdale lease on

Parcel 2, a tract contiguous to three of the tracts at issue

here. Tarver v. Wilson, Civ. No. 90-0043 (W.D. La. May 22,

1990) (Appendix F, p. 33a).

In 1973, subsequent to this Court’s decision in Hum-

ble and the Fifth Circuit’s decision in Cocreham, but prior

to the federal court’s decision in Tarver, the Louisiana

Legislature amended tie Louisiana severance tax on oil.

While that 1973 legislation modified the procedure for the

determination of the amount of severance tax due with

respect to oil and condensate (but not for natural gas)

from an amount calculated at a rate of so many cents per

barrel of production (a volume based calculation) to a

percentage of the value of the oil produced (a value based

calculation), the incidence of taxation, the severance of

minerals from the soil, did not change.

The Louisiana severance tax, including the 1973

amendment, was enacted by the Louisiana Legislature

pursuant to the grant of authority established in Article

X, Section 21 of the Louisiana Constitution of 1921°

authorizing the imposition of severance taxes on minerals

severed from the soil within the State. That constitutional

grant of authority to levy a severance tax upon minerals

severed is distinct and separate from the provision in

Article X, Section 1 of the Louisiana Constitution of 1921°

authorizing the legislature to impose income taxes.

The other statute relied upon by the Louisiana courts

below is the Mineral Leasing Act for Acquired Lands

(“MLAAL”), 30 U.S.C. §§ 351-59 (Appendix G, p. 54a),

and the 1976 amendments to that Act (Appendix G, p.

56a). Congress enacted the MLAAL in 1947 to promote

and encourage mineral development on the acquired

lands of the United States. The MLAAL parallels the

Mineral Leasing Act of 1920, which regulates government

leases on federal lands which are not “acquired” lands.

As enacted in 1947, the MLAAL was expressly not

applicable to mineral leases granted by the United States

for certain enclaves, including “such deposits in such

8 Article X, Section 21 of the Louisiana Constitution of 1921

is identical in all pertinent aspects to Article VII, Section 4(B) of

the Louisiana Constitution of 1974.

9 The portion of Article X, Section 1 of the Louisiana Consti-

tution of 1921 entitled “Income taxes” is identical in all perti-

nent aspects to Article VII, Section 4(A) of the Louisiana

Constitution of 1974.

NT ee renee rn ne

acquired lands as are . . . set apart for military or naval

purposes.” MLAAL, § 3; 30 U.S.C. § 352 (Appendix G, p.

54a. In 1976, however, many years after the leases

involved in this case were granted under authority other

than the MLAAL (the leases at issue were granted pur-

suant to Public Land Orders No. 701 and 2178), Congress

amended Section 3 of the MLAAL to eliminate the mili-

tary exclusion.!° (Appendix G, p. 56a). Thus, after the

1976 amendment, certain military lands could be leased

pursuant to the terms and provisions of the MLAAL.

10 The amendment was part of the Federal Coal Leasing

Amendments Act of 1975, Pub. L. No. 94-377, 90 Stat. 1083

(1976), and was enacted to ensure that the uniform rules and

regulations of the MLAAL would govern the development of

coal and lignite mined from Camp Swift in Austin, Texas, a

federal enclave set apart for military purposes, provided those

lands were leased to a governmental entity which produces

electrical energy for sale to the public and such governmental

entity is located in the state in which the lands are located.

Specifically, the legislative history with respect to the Coal Leas-

ing Act provides:

Present law does not permit the Secretary to lease

the minerals underlying acquired military property,

thus precluding the development of significant

reserves known to exist under Camp Swift in Texas.

These reserves are desired for electrical power gener-

ation by the city of Austin, Texas. Section 12 of the

1975 amendments would amend the Mineral Leasing

Act for Acquired Lands (30 U.S.C. 352) to permit

leasing to a government entity of coal or lignite under

acquired lands, provided the Secretary of Defense

concurs.

Federal Coal Leasing Amendments Act of 1975, H.R. Rep. No.

681, 94th Cong., 2nd Sess. 21 (1975), reprinted in 1976

U.S.C.C.A.N. 1943, 1957.

C. Prior Proceedings In This Case

On January 18, 1990, the Louisiana state district court

issued its written reasons for judgment in which it

upheld the validity of the severance tax as applied to oil

and gas severed from lands within Barksdale. (Appendix

C, p. 25a). The state district court issued its final judg-

ment based on these reasons on September 15, 1993,

dismissing Petitioners’ suit. (Appendix E, pp. 29-31a).

The Louisiana district court concluded that imposi-

tion of the severance tax on oil and gas produced from

the lands within Barksdale did not conflict with the

United States Constitution. (Appendix C, p. 25a). The

court properly observed that Barksdale is a federal

enclave, subject to the exclusive legislative jurisdiction of

the United States. (Jd. at 22a). The court nonetheless held

that Louisiana had the right to impose its severance tax

on minerals extracted from the lands within Barksdale

because the tax met the definition of an “income tax”

under the Buck Act, as to which “income tax” the United

States had retroceded taxation power to the State. 4

U.S.C. §§ 106, 110(c) (Appendix G, p. 56a-57a).

The district court recognized the Fifth Circuit

Cocreham opinion by Judge Wisdom, which held that the

State’s attempt to impose the same severance tax upon

minerals severed pursuant to the very same mineral lease

currently at issue was not an income tax under the Buck

Act, and, therefore, the state was prohibited from legislat-

ing in this regard. Cocreham, 382 F.2d at 939-40. In doing

so, the Louisiana court even acknowledged that the

Cocreham court had followed this Court’s opinion in Hum-

ble, which involved ad valorem taxes on the value of

personal property of the lessee of the United States

located within Barksdale. Id. at 938 (“While there are

differences between the taxes involved, we think that

Humble did not rest on the peculiar attributes of the ad

valorem tax. It rested instead on the general principle

that a state lacks authority to levy any tax in an area

under the exclusive jurisdiction of the United States.”).

However, the state district court relied on its inter-

pretation of the 1973 amendment to the severance tax

statute as its basis for adopting the State’s assertion that

Cocreham no longer controlled. The district court held that

by that amendment, Louisiana had changed its severance

tax into an income tax qualifying under the Buck Act. The

district court ignored in its analysis both the fact that

Louisiana had not similarly changed the severance tax on

gas and the fact that legislation establishing the severance

tax and the 1973 amendments to the severance tax on oil

had been enacted pursuant to the provisions of the Loui-

siana Constitution authorizing imposition of severance

taxes, not the provisions authorizing the imposition of

income taxes.

The state district court also concluded that the state

had the right to impose a severance tax on the minerals

pursuant to the MLAAL, as amended in 1976. (Appendix

C, p. 23a). The Louisiana court stated that although ini-

tially the MLAAL did not specifically apply to lands like

Barksdale set aside for military purposes, the 1976

amendment’s removal of this exclusion brought these

Barksdale leases, which were granted in 1951 and 1961

subject to Pubic Land Orders Nos. 701 and 2178 (not

under the authority of the MLAAL), under the MLAAL.

The court apparently embraced the State’s argument that

Section 8 of the MLAAL, providing that nothing in the

Act shall be construed to affect the right of states to

exercise “any right which they may have with respect to

properties covered by leases issued under this Act,” con-

stituted an implicit retrocession to the states of the right

to tax minerals extracted from beneath federal enclaves.

(Appendix C, p. 24a).

The Louisiana Court of Appeal affirmed the district

court’s judgment, agreeing with the lower court that the

amendment to the Louisiana severance tax brought it

within the definition of an “income tax” under the Buck

Act and was therefore valid. (Appendix A, p. 10a). The

| - Soe TES AP rae 5 aes p

court rejected Petitioners’ contention that the Fifth Cir-

cuit’s decision in Cocreham was dispositive, adopting

without further analysis the lower court’s opinion that by

amending the severance tax to change the basis for calcu-

lating the amount of severance tax due on oil and con-

densate to a percentage of the value of the oil and

condensate produced, the Louisiana Legislature had

transformed the severance tax into an “income tax” for

purposes of the Buck Act. The Louisiana Court of Appeal

expressly recognized, however, that the basis for calculat-

ing the amount of the severance tax on gas remained

based upon the number of cubic feet of gas produced -

not the value thereof. The Louisiana Court of Appeal also

affirmed the state district court’s holding that the

MLAAL applied to these leases and that the 1976 amend-

ment to the MLAAL “strengthened” the State’s right to

impose severance taxes on the oil and gas. (Appendix A,

p. 13a). Neither the district court nor the Court of Appeal

gave any effect, however, to the federal district court's

opinion in Tarver.

In a per curiam opinion, the Louisiana Supreme

Court denied Petitioners’ application for a writ of cer-

tiorari on the issue presented to this Court, that is,

whether the severance taxes sought to be imposed on oil

and gas extracted from lands lying within the confines of

Barksdale Air Force Base, a federal enclave, violate Arti-

cle I, Section 8, Clause 17 of the United States Constitu-

tion. (Appendix B, p. 18a)."?

11 The Louisiana Supreme Court denied Petitioners’ appli-

cation for a writ of certiorari on the issue presented to this

Court, (Appendix B, p. 18a), however it reversed and remanded,

per curiam, on the state’s reconventional demand (i.e.,

counterclaim) as to whether Louisiana state law permitted the

state to impose severance taxes for the 1979-82 period in light of

the Louisiana Court of Appeal’s opinion upholding the imposi-

tion of the tax.

D. Presentation Of Federal Question To Lower

Courts

As reflected in the foregoing and the opinions of the

Louisiana courts, the Louisiana trial court and Louisiana

Court of Appeal each acknowledged the presentation of

the constitutional issue founded upon Article I, Section 8,

Clause 17 of the United States Constitution and its

Supremacy Clause (Appendix A, p. 5a; Appendix C, p.

20a), as well as the ancillary federal questions involving

the interpretation of the Buck Act (Appendix A, p. 8a;

Appendix C, p. 22a), and the MLAAL, as amended

(Appendix A, p. 11a; Appendix C, p- 23a).

REASONS FOR GRANTING THE PETITION

Article I, Section 8, Clause 17 of the United States

Constitution embodies the Framers’ understanding that a

federal military enclave “should be exempt from the

authority of the particular State.” The Federalist No. 43

(James Madison). Whether states have legislative jurisdic-

tion to impose severance and other similar taxes in such

federal enclaves is a matter of substantial constitutional

and practical importance. This Court appeared to have

resolved that question in Humble, but the decision below

ignores Humble and has reopened the question once

again. Review should be granted in order to lay to rest

the doubts the Louisiana courts’ decisions raise concern-

ing the continuing vitality of Humble and, additionally, to

bring Louisiana into conformity with federal law.

The ruling below also directly conflicts with deci-

sions of the Fifth Circuit and the United States District

Court for the Western District of Louisiana. Under the

ruling, Petitioners must pay a form of state tax that those

federal courts have held to be invalid as a matter of

federal constitutional law.

The principal holding below - that the Louisiana

severance tax constitutes an “income tax” which the state

may impose pursuant to the Buck Act - is contrary to

both Humble and Cocreham, as well as the recent decision

of the federal district court in Tarver. In Humble, this

Court broadly held that the United States has exclusive

jurisdiction over Barksdale pursuant to Article I, Section

8, Clause 17 of the Constitution, and consequently, that

“Louisiana is without jurisdiction to levy an ad valorem

tax on privately owned property situated in the tract.”

376 U.S. at 370. The Fifth Circuit in Cocreham correctly

understood this to mean that Louisiana is preciuded from

“levying and collecting a tax on oil and gas severed from

the land by a third party under a lease from the United

States.” 382 F.2d at 931. In so holding, the court explicitly

rejected the State’s argument that the Louisiana severance

tax was really an income tax which the State was entitled

to impose under the Buck Act. Id. at 940. Louisiana subse-

quently amended its severance tax so that the amount of

the tax on oil (but not gas) is measured by value rather

than quantity, but this merely confirmed the essential

similarity between the Louisiana severance tax and the ad

valorem tax at issue in Humble. Each tax is measured by

the value of the item subject to tax and, as the Fifth

Circuit stated in Cocreham, “the Louisiana severance tax is

simply not an income tax.” Id.

The secondary holding below - that a 1976 amend-

ment to the Mineral Leasing Act for Acquired Lands

empowers Louisiana to impose severance taxes with

respect to the extraction of oil and gas from Barksdale — is

also in direct conflict with the decision of the district

court in Tarver v. Wilson, Civ. No. 90-0043 (W.D. La. May

22, 1990). These conflicting decisions create inconsistent

state and federal rules for precisely the same federal

enclave. Louisiana could have taken an appeal to the

Fifth Circuit from the adverse decision in Tarver, but it

deliberately chose not to do so and presumably will not

do so in any other similar cases.

Preserving the exclusive jurisdiction of the United

States over federal enclaves and keeping their affairs free

of impermissible state intrusion is of vital importance to

the country, as the Framers concluded in drafting Article

I, Section 8, Clause 17 of the United States Constitution.

To balance the competing need for the establishment of

federal enclaves and to protect their functions from

unauthorized state interference with the need to allow

the states the ability to preserve their private rights, the

Framers required a state’s concurrence in the establish-

ment of enclaves and allowed the states to condition their

cession of jurisdiction with any stipulation they chose.12

The need for exclusive federal legislative jurisdiction

retains validity and vitality, especially in the area of state

taxation. This Court has steadfastly maintained that absent

(i) a reservation by the state of a right to tax in the cession

of land and jurisdiction to the federal government, or (ii) a

specific retrocession of jurisdiction in an act of Congress, a

State lacks power to tax property within an area of exclu-

sive federal jurisdiction. See, e.g., Humble, 376 U.S. at 374;

James v. Dravo Contracting Co., 302 U.S. 134, 148-49 (1937).

It is undisputed in this case that Louisiana’s cession in

1930 of the property that became Barksdale Air Force Base

expressly ceded the State’s authority to tax. Thus, only a

'2 As Madison explained:

The necessity of a like authority [to that over seats of

government] over forts, magazines, etc., established

by the general government, is not less evident. The

public money expended on such places, and the pub-

lic property deposited in them, requires that they

should be exempt from the authority of the particular

State. Nor would it be proper for the places on which

the security of the entire Union may depend, to be in

any degree dependent on a particular member of it.

All objections and scruples are here also obviated, by

requiring the concurrence of the States concerned, in

every such establishment. . . .

The Federalist No. 43 (James Madison).

specific retrocession by Congress of the jurisdictional

power to impose the taxes at issue could vest Louisiana

with such authority. See Humble, 376 U.S. at 374 (“When

Congress has wished to allow a State to exercise jurisdic-

tion to levy certain taxes within a federal enclave it has

specifically so stated. . . . ”); Mississippi River Fuel Corp. v.

Cocreham, 390 F.2d 34, 35 (5th Cir. 1968) (“Except with the

consent of the United States, the State’s taxing power

cannot operate within the confines of a federal enclave.”).

The Louisiana Court of Appeal’s decision destabil-

izes a settled area of law, conflicts with Louisiana’s ces-

sion statute, this Court’s decisions, decisions of the

United States Court of Appeals for the Fifth Circuit and

other federal court decisions, and sanctions a significant

state intrusion into an area of exclusive federal jurisdic-

tion, in contravention of the United States Constitution.

I THE DECISION OF THE LOUISIANA COURT

CONFLICTS WITH THE DECISION OF THIS

COURT IN HUMBLE, DECISIONS OF THE UNITED

STATES COURT OF APPEALS FOR THE FIFTH CIR-

CUIT AND FEDERAL DISTRICT COURT DECI-

SIONS. :

A. The Louisiana Court Of Appeal Erred In Decid-

ing That The Louisiana Severance Tax Was An

Income Tax Under The Buck Act.

Under the terms of the Louisiana cession statute

(1892 La. Acts No. 12), which was applicable to the 1930

cession of the Barksdale enclave, and the limited retroces-

sion by Congress in the Buck Act, the severance tax here

in issue could only be assessed if it constitutes an

“income tax,” as that term is defined under the Buck Act.

Recognizing that this was the only avenue by which it

could validate Louisiana’s assessment, the Louisiana

Court of Appeal concluded that the Louisiana severance

tax was an “income tax” for purposes of the Buck Act.

(Appendix A, p. 10a). The court’s holding contravenes

this Court’s decision in Humble and unequivocally con-

flicts with three decisions of the Fifth Circuit, including

Cocreham, as well as the decision of the United States

District Court for the Western District of Louisiana in

Tarver.'3

In Cocreham, the Fifth Circuit held that the Louisiana

severance tax, as applied to production from properties

subject to one of the very same leases at issue here, did

not meet the definition of an income tax under the Buck

Act, stating that “[w]Je are not free to expand the technical

and precise language that Congress has used.” 382 F.2d at

940. The Fifth Circuit steadfastly adhered to this position

in two subsequent cases involving the same issue. Shell

Oil, 410 F.2d at 716; Sinclair Oil and Gas, 410 F.2d at 718.

Indeed, the Fifth Circuit rebuked the State for attempting

to revisit issues of which the court had already “clearly

and concisely disposed”: “[T]he Collector seeks in effect

to relitigate this question of law which we have already

settled on the identical question of law, involving the

identical federal military establishment.” Shell Oil, 410

F.2d at 716-17.

Although acknowledging the direct relevance of

Cocreham and its progeny, the Louisiana Court of Appeal

here nevertheless dismissed this line of federal appellate

authority in affirming the Louisiana district court.

(Appendix A, p. 5a-7a). It concluded that it was not

bound by Cocreham because a 1973 amendment to the

Louisiana severance tax on oil (but not gas) changed the

method of calculation of the amount of the tax thereby

13 See Mississippi River Fuel Corp. v. Cocreham, 382 F.2d 929

(Sth Cir. 1967), reh’g denied, 390 F.2d 34 (5th Cir.), and cert. denied,

390 U.S. 1014, and cert. denied, 390 U.S. 1015 (1968); Shell Oil Co.

v. Mouton, 410 F.2d 715 (5th Cir. 1969); Mouton v. Sinclair Oil and

Gas Co., 410 F.2d 717 (5th Cir. 1969); Tarver v. Wilson, Civ. No.

90-0043 (W.D. La. May 22, 1990) (Appendix F, p. 33a).

making, in the Court of Appeal’s opinion, the severance

tax an income tax under the Buck Act. (Appendix A, p.

10a). The amendment to the Louisiana severance tax,

however, does not serve to distinguish Cocreham because

the fundamental nature of the severance tax did not

change for purposes of its characterization under the

Buck Act; the incidence of taxation, the severance of the

minerals, remained precisely the same.

Congress enacted the Buck Act in 1940 to allow the

states to assess income taxes on private persons residing

in federal enclaves or receiving income from transactions

occurring or services performed in such areas. See S. Rep.

No. 1625, 76th Cong., 3d Sess. 3, 5 (1940); Humble, 376

U.S. at 374; Cocreham, 382 F.2d at 939-40. The Act defines

“income tax” as “any tax levied on, with respect to, or

measured by, net income, gross income, or gross

receipts.” 4 U.S.C. § 110(c) (Appendix G, p- 57a). Whether

a particular state tax meets the definition of an income

tax under the Buck Act is a question of federal law.

Howard v. Commissioners of Sinking Fund of Louisville, 344

U.S. 624, 628-29 (1953); United States v. Lewisburg Area Sch.

Dist., 539 F.2d 301, 310 (3d Cir. 1976). The legislative

history of the Buck Act indicates that the term “income

tax” encompasses state taxes which are plainly assessed

on income, even though not denominated “income taxes”

by the state. S. Rep. No. 1625, 76th Cong., 3d Sess. 5

(1940) (noting committee’s intent to “include therein any

State tax (whether known as a corporate-franchise tax, or

business-privilege tax, or by any other name) if it is

levied on, with respect to, or measured by, net income,

gross income, or gross receipts”); United States v. City &

County of Denver, 573 F. Supp. 686, 691 (D. Colo. 1983)

(“[I]t seems apparent that the variations contemplated by

the Congress were variations in the name or the form of

the State tax, but not variations in the substance of the

tax.”) (emphasis supplied).

The “income tax” exception to exclusive federal juris-

diction granted by the Buck Act applies to individuals,

not to property, as demonstrated by its text and the fact

that Congress enacted it to equalize income tax liability

among federal employees residing on and off federal

enclaves. See United States v. Lewisburg Area Sch. Dist., 539

F.2d 301, 309 (3d Cir. 1976); see also United States v. City &

County of Denver, 573 F. Supp. 686, 691 (D. Colo. 1983)

(“The historical context in which the Buck Act was

enacted indicates that Congress was legislating with

respect to taxes on salaries, wages, commissions and

other forms of income.”).

The great majority of cases determining that a state

tax meets the Buck Act definition of an income tax

involve taxes levied on taxpayers, on their salaries, or on

their wages, but not on their property.'* By comparison,

even after the 1973 amendment, the Louisiana severance

tax is still not “levied on, with respect to, or measured by,

net income, gross income, or gross receipts.” 4 U.S.C.

4 See, e.g., Howard v. Commissioners of Sinking Fund of

Louisville, 344 U.S. 624, 627-28 (1953) (occupational tax or license

fee found to be tax upon individual’s earnings); United States v.

Lewisburg Area Sch. Dist., 539 F.2d 301, 304 (3d Cir. 1976) (occupa-

tion tax imposed on individuals); Jefferson County v. Acker, 850 F.

Supp. 1536, 1537 (N.D. Ala. 1994) (“privilege, license or occupa-

tional tax” imposed upon individuals in certain professions);

Rountree v. City & County of Denver, 596 P.2d 739, 740 (Colo. 1979)

(employment or occupation tax “on every natural person who

performs sufficient services in Denver to be paid $250 per month

by a ‘salary, wage, commission or other compensation basis’ ”);

Morse v. Johnson, 282 A.2d 597, 598 (Me. 1971) (traditional state

individual income tax); Olson v. Dep’t of Revenue, 726 P.2d 1162,

1164 (Mont. 1986) (withholding taxes from wages); Burns v. State,

439 P.2d 702, 703 (N.M.) (tax on wages), cert. denied, 393 U.S. 841

(1968); Kiker v. City of Philadelphia, 31 A.2d 289, 291 (Pa.) (tax on

salaries, wages, commissions and other compensation), cert.

denied, 320 U.S. 741 (1943); City of Portsmouth v. Fred C. Gardner

Co., 211 S.E.2d 259, 261 (Va. 1975) (city license tax upon contrac-

tors engaging in business in that city).

§ 110(c) (Appendix G, p. 57a). Rather, the amended Loui-

siana severance tax remains a tax on the mineral itself,’

not on a private taxpayer, a factor specifically relied upon

by the Cocreham court in deciding that the Louisiana

severance tax was not an income tax under the Buck Act.

See Cocreham, 382 F.2d at 940 (“Congress has authorized

the states to impose an income tax on private persons in

federal enclaves ... .”) (emphasis supplied). Although

the Buck Act “income tax” determination is governed and

controlled by federal law, it should still be noted that the

Louisiana severance tax, and its amendment, were

enacted pursuant to the provisions of the Louisiana con-

stitution authorizing the imposition of severance taxes, a

provision separate from the constitutional provisions

authorizing the imposition of income taxes. Notably, Peti-

tioners are liabile for and pay Louisiana income taxes,

wholly separate and apart from these severance taxes, for

income attributable to the sale of the production here at

issue.

Thus, the Louisiana severance tax remains today a

tax on property, the oil and gas severed from the land. As

demonstrated by this Court’s opinion in Humble, a tax on

the value of property is not equivalent to a tax on income

under the Buck Act. 376 U.S. at 374. In Humble, this Court

expressly recognized the Buck Act as an exception to the

United States’ exclusive legislative jurisdiction in federal

enclaves, but nevertheless struck down Louisiana’s ad

15 See La. Const. of 1921, art. X, § 21 (Appendix G, p.

57a-58a) (“Taxes may be levied on natural resources severed

from the soil or water... . ”), La. R.S. 47:631 (“Taxes as autho-

rized by Section 21 of Article X of the Constitution of Louisiana,

are hereby levied upon all natural resources severed from the

soil or water, including . . . minerals such as oil, gas. . . . ”)

(Appendix G, p. 60a). The Louisiana statutes provide that any

unpaid tax shall become a lien on the mineral, not the mineral

owner, and follows the mineral. La. R.S. 47:632 (Appendix G, p.

60a).

valorem property tax, a tax on the value of the mineral

lessee’s equipment and improvements within the con-

fines of Barksdale, as precluded by the terms of Louisi-

ana’s cession and the United States Constitution. Id. The

Louisiana Court of Appeal’s reasoning thus creates an

irreconcilable conflict with a decision of this Court, a

conflict made obvious by the decisions of the Fifth Circuit

in Cocreham and its progeny.'6

The Louisiana Court of Appeal’s attempt to distin-

guish Cocreham is also directly contrary to Tarver, the

federal district court opinion that postdates the amend-

ment to the Louisiana severance tax statute and the 1976

amendment to the MLAAL, and which concerns leased

land within Barksdale contiguous to the tracts at issue

here. Tarver involved an attempt by the State of Louisiana

to impose the severance tax on minerals extracted from

Parcel 2, which is contiguous to Parcels 1 and 3 and the

Miss Murphy parcel. Chief Judge Tom Stagg for the West-

ern District of Louisiana specifically rejected the State’s

argument that changes in the method of calculation of the

tax suddenly rendered the tax an “income tax” under the

Buck Act. The federal district court stated that it “cannot

believe that the change in the method for calculation of

the amount of the tax on the oil severed from a quantity-

based tax to a value-based tax alters the Fifth Circuit's

conclusion that the tax is not an income tax.” (Appendix

F, p. 49a). The court observed that the amended tax

continues to be levied on natural resources, not on indi-

vidual taxpayers, and that the tax is not based upon

‘© The Fifth Circuit recognized that any differences

between the ad valorem tax involved in Humble and the Louisi-

ana severance tax were unimportant for purposes of its deci-

sion. See Cocreham, 382 F.2d at 938 (“Just as the state could not

tax personal property located on Barksdale Field, it cannot

impose a severance tax when the incidence of taxation, the

severance of minerals from the soil, takes place on a federal

enclave, outside the jurisdiction of the State of Louisiana.”).

income at all. Tarver represents yet another federal

authority with which the Louisiana Court of Appeal’s

opinion conflicts.

Finally, even though acknowledging the direct rele-

vance of Cocreham and its progeny, the Louisiana Court of

Appeal did not even attempt to reconcile its holding with

the fact that the severance tax on natural gas produced

from the Barksdale lands was not amended (as is signifi-

cant to these proceedings) subsequent to Cocreham, and

the amount of that tax continues to be calculated upon

the volume of gas produced, rather than its value. By

dismissing this problem on the alternative basis that “we

find that the Louisiana Severance Tax may be imposed as

a result of the 1976 amendment to the Mineral Leasing

Act for Acquired Lands,” (Appendix A, p. 11a) the court

implicitly concedes that even under its reasoning the tax

on natural gas is not an income tax under the Buck Act.

B. Congress Did Not Retrocede To Louisiana The

Power To Levy Severance Taxes Within The

Barksdale Enclave With Its 1976 Amendments

To The MLAAL.

The 1976 amendment to the MLAAL did not retro-

cede to a state any power previously ceded by a state to

the United States. Yet in this case, the Louisiana Court of

Appeal accepted Louisiana’s argument that the 1976

amendment to the MLAAL granted it the authority to

levy the severance taxes here in issue. The State’s argu-

ment, accepted by the Louisiana Court of Appeal, was

that the savings clause in Section 8 of the MLAAL, which

provides that nothing contained in the Act shall affect

any right that a state may have to levy and collect taxes,

constituted a congressional retrocession of authority to

the states in 1947. Once Congress removed the exclusion

of certain military and naval enclaves from the scope of

the MLAAL in 1976, the State argued, it regained the

power to levy severance taxes on oil and gas severed

from land within the enclave. This argument was

accepted by the Louisiana Court of Appeal, affirming the

Louisiana district court’s finding that “[t]he power of the

states to impose severance taxes on minerals extracted by

lessees of the United States was strengthened by” the

1976 amendment to the MLAAL. (Appendix C, p. 24a).

This finding directly conflicts with all applicable prece-

dent.

This Court has specifically recognized congressional

retrocession of power as a necessary step preceding any

constitutional state intrusion into a federal enclave, in

particular the Barksdale enclave. Humble, 376 U.S. at 374.

The MLAAL does not, either as originally enacted or as

amended, confer any legislative or enforcement power to

any state within any federal enclave. Rather, in particular

with respect to state taxation powers, the MLAAL is

expressly and emphatically neutral:

Nothing contained in the Act shall be con-

strued to affect the rights of the State or other

local authorities to exercise any right which

they may have with respect to properties cov-

ered by leases issued under this Act, including

the right to levy and collect taxes upon improve-

ments, output of mines, or other rights, prop-

erty, or assets of any lessee of the United States.

(MLAAL, § 8; 30 U.S.C. § 357; Appendix G, p. 55a,

emphasis supplied). Thus, Section 8 of the MLAAL sim-

ply preserves to the states any existing right which they

may have retained to tax the properties of a lessee of the

United States in a federal enclave.

As this Court found in Humble in 1964, in ceding to

the United States the property constituting Barksdale Air

Force Base, Louisiana did not preserve any right to levy

and collect taxes inside the enclave. 376 U.S. at 374.

Rather, it specifically ceded any such power to the United

States. The only power Louisiana now has to levy taxes

on the Bark:dale enclave is pursuant to the specific retro-

cession of power by Congress, as in the Buck Act, as

recognized by this Court in Humble. Thus, the Louisiana

district court’s conclusion that “the power of the states to

impose severance taxes on minerals extracted by lessees

of the United States was strengthened” by the 1976

amendment to the MLAAL was meritless. Louisiana had

no such “power” to “strengthen” as to the Barksdale

enclave because it had specifically and explicitly ceded

all such power to the United States in 1930.

Moreover, no implicit retrocession can be imputed to

the 1976 amendment to the MLAAL. Nothing on the face

of the amendment indicates a specific intention to restore

power previously and explicitly ceded by a state to the

United States. The law is clear that any such retrocession

of power to a state must be specific. As stated by this

Court in Paul v. United States, 371 U.S. 245, 263 (1963),

“It]he cases make clear that the grant of ‘exclusive’ legis-

lative power to Congress over enclaves . . . , by its own

weight, bars state regulation without specific congres-

sional action.” Accord Humble, 376 U.S. at 374; Lord v.

Local Union No. 2088, Int'l Brotherhood of Electrical Workers,

646 F.2d 1057, 1062-63 (5th Cir. Unit B,), reh’g denied, 654

F.2d 723 (5th Cir. 1981), and cert. denied, 458 U.S. 1106

(1982).

In concurring with the Louisiana district court's

holding that the MLAAL, as amended, “strengthened”

Louisiana’s power to impose a severance tax, the Louisi-

ana Court of Appeal again reached a result plainly incon-

sistent with this Court’s decision in Humble, and

diametrically opposed to Fifth Circuit decisions, includ-

ing Cocreham, and the recent decision of the United States

District Court for the Western District of Louisiana in

Tarver. Humble unequivocally held that the Louisiana

state and local governments were prohibited from impos-

ing taxes upon the value of the properties of a lessee of

the United States located upon the Barksdale federal

enclave, absent a specific retrocession of taxation powers

by the United States. The MLAAL cedes no such power.

Rather, it merely provides that it does not affect any right

a state may have. Thus, the 1976 amendments to the

MLAAL did not have the effect of legislatively overruling

the holding of this Court in Humble.

II THE DECISION OF THE LOUISIANA COURT OF

APPEAL UNSETTLES THE SETTLED LAW IN THE

IMPORTANT AREA OF FEDERAL ENCLAVE

JURISDICTION.

Prior to the opinion of the Louisiana Court of

Appeal, the law as established by Humble was clear,

incontrovertible, and recognized by all federal courts.

What the Louisiana court has attempted to do is unsettle

the law.

The attempts by the State of Louisiana to renege on

its ceding of exclusive jurisdiction over the Barksdale

Federal enclave have continued now for more than 40

years. From the issuance of this Court’s opinion in Hum-

ble until this decision, those attempts have been uni-

formly rebuffed by all federal courts. As to the Barksdale

severance taxes involved here, there have been no less

than six such attempts, documented through decision of

the Louisiana Supreme Court,!” decisions of the United

States Court of Appeals for the Fifth Circuit,1® and

through a recent final decision of the United States Dis-

trict Court for the Western District of Louisiana.!9 Indeed,

17 See Murphy Corp. v. Fontenot, 73 So.2d 180 (La. 1954), cert.

denied, 348 U.S. 831 (1955).

18 See Mississippi River Fuel Corp. v. Fontenot, 234 F.2d 898

(Sth Cir.), cert. denied, 352 U.S. 916 (1956); Mississippi River Fuel

Corp. v. Cocreham, 382 F.2d 929 (5th Cir. 1967), reh’g denied, 390

F.2d 34 (5th Cir.), and cert. denied, 390 U.S. 1014, and cert. denied,

390 U.S. 1015 (1968); Shell Oil Co. v. Mouton, 410 F.2d 715 (5th

Cir. 1969); Mouton v. Sinclair Oil and Gas Co., 410 F.2d 717 (5th

Cir. 1969), cert. denied, 398 U.S. 957 (1970).

'9 See Tarver v. Wilson, Civ. No. 90-0043 (W.D. La. May 22,

1990); Appendix F, p. 33a.

litigation over the severance taxation of Barksdale pro-

duction continues even now.?°

This Court obviously thought it had put the jurisdic-

tional issues to rest in Humble, for its decision there was

clear and unequivocal. As is apparent from the Louisiana

Court of Appeal’s opinion, however, it did not. This

Court now confronts the anomalous situation where con-

tiguous parcels subject to identical mineral leases from

the United States in a federal enclave have been dispar-

ately treated: the production from four parcels having

been held subject to Louisiana’s taxing power by the

Louisiana Court of Appeal here, and the production from

another parcel, Parcel 2, having been held not subject to

such taxation by a federal district court applying the

Supremacy Clause of the United States Constitution, this

Court’s opinion in Humble, and consistent Fifth Circuit

precedent.

Only this Court can rectify the situation. It should do

so, reiterating its holding in Humble that the jurisdiction

of the federal government in this enclave is primary,

controlling and exclusive, and that Louisiana state sever-

ance taxes cannot be levied on production from lands

within the Barksdale federal enclave. See Humble, 376 U.S.

at 372-73.

20 Litigation continues with respect to oil and gas severed

from Parcels 1 and 4 within Barksdale as reflected by the deci-

sion entered on July 10, 1995 by the Civil District Court for the

Parish of Orleans, State of Louisiana in those proceedings styled

Shell Oil Co. v. Secretary, Revenue and Taxation, No. 91-8635,

which decision is appealable to the Louisiana Fourth Circuit

Court of Appeal, a circuit different from the circuit from which

the decision complained of herein was decided.

CONCLUSION

Accordingly, this Court should issue a writ of cer-

tiorari to the Louisiana Court of Appeal, First Circuit, and

reverse the judgment of that court and the Louisiana

district court.

Respectfully submitted,

Cuarves M. Daruina, IV J. EDGERTON Pierson, Jr.

Kirk K. VAN TINE Counsel of Record

Baker & Botts, L.L.P. Pike HAL, Jr.

The Warner J. Davip Garrett

1299 Pennsylvania Ave., BLANCHARD, WALKER,

NW O’QuIn & Roserts

Washington, D.C. 20004 (A Professional Law Corp.)

(202) 639-7700 Post Office Drawer 1126

Shreveport, LA 71163

CLaupIA WILSON Frost (318) 221-6858

JANE NENNINGER BLAND

Macey REASONER STOKES KeitrH A. Jones

Baker & Borrts, L.L.P. Beck, REDDEN & SECREST

910 Louisiana 1331 Lamar Street

Houston, TX 77002 Houston, TX 77010

(713) 229-1234 (713) 659-8140

Counsel for Petitioners

August 17, 1995

{oS nt Ke

No. 95-___

In The

Supreme Court of the United States

October Term, 1995

MISSISSIPPI RIVER TRANSMISSION CORPORATION,

MURPHY EXPLORATION AND PRODUCTION

COMPANY, PENNZOIL EXPLORATION AND

PRODUCTION COMPANY, TOTAL MINATOME

CORPORATION, NORAM ENERGY CORP. AND

ROSEWOOD RESOURCES, INC.,

Petitioners,

SECRETARY, LOUSIANA DEPARTMENT OF

REVENUE AND TAXATION,

Respondent.

On Petition For Writ Of Certiorari

To The Court Of Appeal, First Circuit,

State Of Louisiana

APPENDICES

Ka ASRS ATT A DE ls RO

APPENDIX A

APPENDIX B

APPENDIX C

APPENDIX D

APPENDIX E

APPENDIX F

APPENDIX G

APPENDICES

Page

Opinion, Louisiana Court of Appeal,

First Circuit (December 29, 1994),

reported at 648 So.2d 1108 .......... la

Per Curiam Decision on Application

for Writ of Certiorari, Supreme Court

of Louisiana (May 19, 1995), reported

OE Ge IE BE doc oiperhe revisions 17a

Written Reasons For Judgment, 19th

Judicial District Court of Louisiana

In and For the Parish of East Baton

Rouge (January 18, 1990)........... 19a

Supplemental Written Reasons For

Judgment, 19th Judicial District

Court of Louisiana In and For the

Parish of East Baton Rouge (January

a ne eee ore 26a

Judgment, 19th Judicial District

Court of Louisiana In and For the

Parish of East Baton Rouge (Septem-

os SAR ee 28a

Memorandum Opinion, United

States District Court for the Western

District of Louisiana (May, 1990

o¢e ke Gndvaevevets eaxees 33a

Constitutional and Statutory Provi-

ST ls das beet deeehoed6ened 6406608 54a

Mineral Leasing Act for Acquired

See ee oy © OE DO ieee dee 54a

The Federal Coal Leasing Amend-

mente. Act OF 1975 $ 12 .....0cccce. 56a

Buck Act § 2(a) and § 6(c)......... 56a

iia

APPENDICES - Continued

Page

Constitution of the State of Louisiana

of 1921, Article X, §§ 1 and 21..... 57a

Constitution of the State of Louisiana

of 1974, Article VII, § 4............ 58a

Louisiana Revised Statutes,

Title 47:

DE Skt ceenssspevnbsseenvanceaas 59a

OE son cvvksasawniatncds cece aed 60a

DOE ck ces cwepeucascceeseevnaten es 60a

§ 633(7)(a) [Prior to 1973 amend-

GOED 6 6 aa hac dacted thas senks cree 6la

§ 633(7)(a) [Subsequent to 1973

RT: Ee Se ee 62a

§ 633(8) [Prior to 1973 amendment]

edhe bd Geer Caw etss shan eaaner 63a

§ 633(8) [Subsequent to 1973

SURGE 5 6c Sale oc eccsestoecees 63a

O GI) a cvkcéa ewe neny’s scbexXeinues 64a

1992 La. ACIS ING. 12. cccccccvcesees 65a

Brg corre yy pe oe

APPENDIX A

MRT Exploration Company, Mississippi River

Transmission Corporation, Murphy Oil Corporation,

Pennzoil Producing Company, Texas Gas Exploration

Corporation and Arkla, Inc.

Shirley McNamara, Secretary, Louisiana Department of

Revenue and Taxation.

Rosewood Resources, Inc.

Shirley McNamara, Secretary, Louisiana Department of

Revenue and Taxation.

No. 94 CA 0063, 94 CA 0064.

Court of Appeal of Louisiana,

First Circuit.

Dec. 29, 1994.

Rehearing Denied Feb. 2, 1995.

Before LOTTINGER, C.J., and CARTER and

PITCHER, JJ. PITCHER, Judge.

Plaintiffs! filed this action to recover severance taxes

paid under protest for a period beginning in October of

1 Suit Number 262,928 and Suit Number 323,597 were con-

solidated by the trial court. We will refer to the appellants from

both suits collectively as “plaintiffs.” Plaintiffs in Suit Number

262,928 (our docket number 94 CA 0063) are Arkla, Inc., Penn-

zoil Producing Company, Arkla Exploration Company, as suc-

cessor to the interests of MRT Exploration Company and

Mississippi River Transmission Corporation, Murphy Oil USA,

inc., and Total Minatome Corporation, as successor to the inter-

ests of Texas Gas Exploration Corporation by corporate merger.

The plaintiff in Suit Number 323,597 (our docket number 94 CA

0064) is Rosewood Resources, Inc.

1982. Plaintiffs argued that the Louisiana Severance Tax

Statutes were unconstitutional as applied to oil and gas

production from the Barksdale Air Force Base, a federal

enclave. In response, defendant, the Louisiana Depart-

ment of Revenue and Taxation, filed a reconventional

demand for severance taxes covering the period from

December of 1979 through September of 1982.7 The trial

court dismissed plaintiffs’ claims, holding that the Louisi-

ana Severance Tax Statutes were valid and enforceable.

The trial court also granted judgment in favor of defen-

dant on its reconventional demand. We affirm.

FACTS

The facts of these two consolidated cases were

adduced by written stipulation and excellently summa-

rized in the trial court’s written reasons for judgment. We

will adopt those reasons as our own. They are as follows:

The State of Louisiana, the City of Shre-

veport and the Bossier Levee District conveyed

22,000 acres located in Bossier Parish to the

United States in 1930 for the construction of

Barksdale Air Force Base. The Bureau of Land

Management leased the mineral rights in the

portion of the base known as the “Parcel 3

Lands” to Union Producing Company in 1961.

Arkla, Inc., Arkla Exploration Company, Penn-

zoil Producing Company, Total Minatome Cor-

poration and Murphy Oil USA, Inc. are the

successors of Union Producing Company’s

rights. The Bureau leased rights in the property

2 The reconventional demand was filed in Suit Number

262,928 only.

known as the “Miss Murphy USA Lease” to

W.R. Stephens and Natural Gas and Oil Corpo-

ration. Arkla Exploration Co. and Murphy Oil

USA, Inc., are the successors of the leasehold

rights of W.R. Stephens and Natural Gas and Oil

Corporation. These seven lessees are the plain-

tiffs in Suit Number 262,928.

The Bureau of Land Management leased the

mineral rights in the property known as the

“Parcel 1” and “Parcel 4” land to Shell Oil Com-

pany in 1961. Rosewood Resources, Inc., is the

successor in interest of the leasehold rights of

Shell Oil Company and is the plaintiff in Suit

Number 323,597.

The State of Louisiana notified the Suit

Number 262,928 plaintiffs that $38,535.37 was

owed in accordance with L.S.A.-R.S. 47:631 as a

tax on the severed oil and gas for the period

beginning October 1982. That amount was paid

under protest pursuant to L.S.A.-R.S. 47:1576

and Suit Number 262,928 was filed for the

recovery of that amount and all amounts paid

since, which is in excess of $1,858,000.00.

The State notified Rosewood Resources that

oil and gas severance taxes in the amount of

$123,772.65 for the period March, 1986 through

June, 1987, were being assessed from Rosewood

in connection with the Barksdale leases in accor-

dance with L.S.A.-R.S. 47:631. Rosewood paid

the assessment under protest on October 15,

1987. Suit Number 323,597 was then filed by

Rosewood to recover those amounts plus the

assessments paid from July, 1987 through the

present, an amount in excess of $314,000.

Two federal court proceedings were intsti-

gated [sic] a week prior to the filing of the first

state court action. The cases were dismissed

based upon the Tax Injunction Act, 28 U.S.C.

Sec. 1341 which denies Federal Court jurisdic-

tion in a proceeding of this nature.

Appeals were taken to the Fifth Circuit in

both cases and the dismissal was affirmed. The

Court held in MRT Exploration v. McNamara,

731 F.2d 260 (Ct. App. 5th Cir. 1984), that the

Louisiana Department of Revenue and Taxation

is taxing only the revenues of the plaintiffs and

not the royalty going to the United States and

that there is no reason why Louisiana should be

any less free from federal interference in the

administration or [sic] its own fiscal affairs

because these plaintiffs extracted mineral, which

came beneath federal lands. The Fifth Circuit

then directed the matter to state courts for a

determination of the validity of the tax. MRT

Exploration, 731 F.2d at 264.

After taking the matter under advisement, the trial

court determined that the Louisiana Severance Tax was

an “income tax” within the meaning of the Buck Act. The

trial court further determined that the 1976 amendment

to the 1947 Mineral Leasing Act for Acquired Lands gov-

erned the leases at issue.

In supplemental written reasons for judgment, the

trial court determined that plaintiffs in Suit Number

262,928 were liable for severance taxes for the period of

December, 1979 through September, 1992. From this deci-

sion, plaintiffs have appealed, raising two sets of issues.

ISSUES

MAIN DEMAND

The first set of issues addresses the trial court’s rea-

sons for judgment entered on the main demand on Janu-

ary 18, 1990, and are as follows: (1) whether the State of

Louisiana may impose a severance tax upon the minerals

severed from within the confines of Barksdale Air Force

Base without infringing upon the limitations established

by Article I, Section 8, Clause 17 of the Constitution of the

United States; (2) whether the Louisiana Severance Tax,

as in effect for the years at issue in these proceedings, is

an “income tax” within the meaning of the Buck Act; and

(3) whether the 1976 Amendment to the Mineral Leasing

Act for Acquired Lands of 1947 is applicable to the leases

in the instant case.

Plaintiffs argue that the Louisiana Severance Tax?

infringes upon Article I, Section 8, Clause 17 of the Con-

stitution of the United States. Plaintiffs contend that the

cases of Humble Pipe Line Company v. Waggonner, 376

U.S. 369, 84 S.Ct. 857, 11 L.Ed.2d 782 (1964), and Missis-

sippi River Fuel Corporation v. Cocreham, 382 F.2d 929

(5th Cir. 1967), cert. denied, 390 U.S. 1014, 88 S.Ct. 1264,

20 L.Ed.2d 164 (1968) and 390 U.S. 1015, 88 S.Ct. 1264, 20

L.Ed.2d 164 (1968), effectively settled this issue; therefore,

the trial court erred in failing to follow the dictates of

these cases.

3 LSA-R.S. 37:631-646.

Article I, Section 8, Clause 17 of the United States

Constitution permits the United States to obtain exclusive

jurisdiction over lands within a State. It provides as fol-

lows:

The Congress shall have Power...

To exercise exclusive Legislation in all Cases

whatsoever, over such District (not exceeding

ten Miles square) as may, by Cession of particu-

lar States, and the Acceptance of Congress,

become the Seat of the Government of the

United States, and to exercise like Authority

over all Places purchased by the Consent of the

Legislature of the State in which the Same shall

be, for the Erection of Forts, Magazines, Arse-

nals, dock-Yards, and other needful Build-

In Waggonner, the United States Supreme Court

rejected Louisiana’s attempt to impose an ad valorem tax

on the property located on Barksdale Air Force Base, a

federal enclave. The Court concluded that Congress had

exclusive legislative power within the confines of a fed-

eral enclave. However, the Supreme Court noted that

“[w]hen Congress has wished to allow a State to exercise

jurisdiction to levy certain taxes within a federal enclave

it has specifically so stated, as in the Buck Act, 4 U.S.C.

Secs. 104-110.” Waggonner, 376 U.S. at 374, 84 S.Ct. at

860-861.

In Cocreham, the U.S. Fifth Circuit Court of Appeals

held that Louisiana could not exact severance taxes on oil

and gas produced by the lessee, a private corporation,

under mineral lease from the United States on land that

was part of Barksdale Air Force Base. In Cocreham, 382

F.2d at 938, the court stated that, “[jjust as the state

cannot tax personal property located on Barksdale Field,

it cannot impose a severance tax when the incidence of

taxation, the severance of minerals from the soil, takes

place on a federal enclave, outside the jurisdiction of the

State of Louisiana.” The Cocreham court, like the Wag-

gonner court, recognized that Congress could allow a

State to exercise jurisdiction to levy taxes within a federal

enclave, as in the Buck Act. Cocreham, 382 F.2d at 937.

Thus, the exclusive jurisdiction of Congress, as set

forth in Article I, Section 8, Clause 17 of the Constitution

of the United States, may be modified by an Act of

Congress. The Buck Act is such a modification.

The Buck Act was enacted by Congress in 1940 to

enable the states to impose certain taxes including

“income taxes” within federal enclaves. Section 106 of

this Act reads as follows:

Sec. 106. Same; income tax

(a) No person shall be relieved from lia-

bility for any income tax levied by any State, or

by any duly constituted taxing authority

therein, having jurisdiction to levy such tax, by

reason of his residing within a Federal area or

receiving income from transactions occurring or

services performed in such area; and such State

or taxing authority shall have full jurisdiction

and power to levy and collect such tax in any

Federal area within such State to the same

extent and with the same effect as though such

area was not a Federal area.

(b) The provisions of subsection (a) shall

be applicable only with respect to income or

receipts received after December 31, 1940.

Sec. 110(c) of the Buck Act defines “income tax” as

“any tax levied on, with respect to, or measured by, net

income, gross income, or gross receipts.”

Thus, the right is specifically granted to the State of

Louisiana, as a taxing authority, to levy and collect a tax

measured by the income from any party “receiving

income from transactions occurring or services per-

formed in such area . . . to the same extent and with the

same effect as though such area was not a Federal area.”

See Howard v. Commissioners of the Sinking Fund of the

City of Louisville, 344 U.S. 624, 627-629, 73 S.Ct. 465,

467-468, 97 L.Ed. 617, 621-622 (1953).

Therefore, we conclude that the State can impose a

severance tax on the minerals severed from within the

confines of Barksdale Air Force Base if the Louisiana

Severance Tax is an “income tax,” as defined in Sec.

110(c) of the Buck Act.

II.

Plaintiffs argue that the Cocreham case resolved the

issue of whether the Louisiana Severance Tax was an

income tax under the Buck Act.4 The Cocreham court

stated as follows:

4 Plaintiffs also argue that the Louisiana Constitution, Arti-

cle VII, Sec. 4, differentiates between the income tax and the

severance tax. However, we believe that this difference is of no

consequence. The key is whether the tax is an income tax under

federal law.

The portion of the Buck Act on which the

Collector relies provides that a state may levy an

income tax in a federal enclave within the state

to the same extent as if the area were not a

federal enclave. 4 U.S.C.A. Sec. 106. The Act

defines ‘income tax’ as ‘any tax levied on, with

respect to, or measured by, net income, gross

income, or gross receipts.’ 4 U.S.C.A. Sec. 110(c).

The Louisiana severance tax is ‘levied upon all

natural resources severed from the soil .

including . .. minerals such as oil [and] a

LSA-R.S. 47:631, and is measured by the quan-

tity of minerals severed, LSA-R.S. 47:633. Con-

gress has authorized the states to impose an

income tax on private persons in federal

enclaves, but the Louisiana severance tax is sim-

ply not an income tax. We are not free to expand

the technical and precise language that Con-

gress has used.

Cocreham, 382 F.2d at 939-940.

The trial court determined that the amendment to

paragraphs 7 and 8 of LSA-R.S. 47:633 by Acts 1973, Ex.

Sess., No. 6, changed the severance tax on oil, distillates

or other natural resources from a tax based on the quan-

tity of the resource to a tax based on the value. The court

concluded that with this amendment, the severance tax

became an “income tax” within the meaning of the Buck

Act, and did not infringe upon the exclusive rights of

Congress to legislate for the federal enclave.

As noted by the court in Humble Oil and Refining

Company v. Calvert, 478 S.W.2d 926 (Tex.1972), cert.

denied, 409 U.S. 967, 93 S.Ct. 293, 34 L.Ed.2d 234, the

broad definition of “income tax” contained in the Buck

Act was intended by Congress:

10a

The Congressional intent is strongly stated

in the bill’s Senate Report where it is stated that

‘It]his definition [of income tax] . . . must of

necessity cover a broad field because of the

great variations to be found between the differ-

ent State laws. The intent of your committee in

laying down such a broad definition was to

include therein any State tax (whether known as

a corporate-franchise tax, or business-privilege

tax, or any other name) if it is levied on, with

respect to, or measured by net income, gross

income, or gross receipts.

Therefore, we agree with the trial court’s determina-

tion that the amendment to the Louisiana Severance Tax

rendered it an “income tax” within the meaning of the

Buck Act. See Humble Oil and Refining Company v.

Calvert, 464 S.W.2d 170, 175-176 (Tex. Civ. App. 1971).

Plaintiffs argue that if this court determines the Loui-

siana Severance Tax is an “income tax” under the Buck

Act, the opinion of the trial court must be modified

because it recognized that the severance tax on natural

gas remained a volume-based tax.

The Louisiana legislature modified the provisions of

paragraphs 7 and 8 of LSA-R.S. 47:633 to provide that the

imposition of the Louisiana Severance Tax on oil and

condensate would thereafter be based on a percentage of

the value of the minerals severed at the time and place of

the severance. However, no amendment was made to the

provisions of paragraph 9 of LSA-R.S. 47:633, which sets

forth the method of determining the amount of severance

tax due on the severance of natural gas and its equiva-

lents. Therefore, the severance tax on natural gas and its

equivalents remains a volume-based tax.

SETI etre iat MAG IME AA! A TS

lla

However, because we find that the Louisiana Sever-

ance Tax may be imposed as a result of the 1976 amend-

ment to the Mineral Leasing Act for Acquired Lands, this

contention is without merit.

Il.

Plaintiffs argue that the leases in question never came

within the purview of the Mineral Leasing Act of 1920, or

the Mineral Leasing Act for Acquired Lands of 1947, and

therefore were not subject to the 1976 amendment to the

Mineral Leasing Act for Acquired Lands.

The leases in the present case were granted under the

express supervisory authority of the Secretary of the Inte-

rior, subject to various Public Land Orders.° These leases,

entitled “Protective Lease of Oil and Gas Lands,” were

executed by the Director of the Bureau of Land Manage-

ment. The Public Land Orders were issued as a result of

an opinion of the United States Attorney General dated

April 2, 1941. The Attorney General was of the opinion

that “there was implied authority in the Executive branch

to take protective measures in cases where lands acquired

by the United States for a specific public purpose are

found to contain oil which is being drained by adjoining

owners — such lands not being subject to the Mineral

Leasing Act of February 25, 1920.” 40 Op. Att’y Gen. 41

(1941).

The Mineral Leasing Act of 1920, now codified in 30

U.S.C. Secs. 181-263, was designed to set the framework

5 Public Land Order No. 701 and 2178.

12a

by which minerals underlying certain lands belonging to

the United States could be mined. The Act itself indicated

that its purpose was to promote the mining of coal,

phosphate, oil, oil shale, gas and sodium on the public

domain. The Act also set forth the method by which

deposits of certain minerals could be disposed of, and

granted to the Secretary of the Interior the power to

dispose of such minerals. The Act specifically did not

apply to Appalachian Forest Act lands, lands in national

parks and monuments, and lands withdrawn or reserved

for military purposes.

This Act was amended in 1946 to provide that the

mineral deposits owned by the United States and subject

to the Act excluded (1) Appalachian forest lands, (2)

lands in incorporated cities, towns or villages, (3) lands in

national parks and monuments, (4) lands acquired under

other Acts after February 25, 1920, and (5) lands within

naval petroleum and oil shale reserves except as speci-

fically provided for in the Act. The 1946 amendment to

this Act deleted the specific reference to lands withdrawn

or reserved for military purposes.

The Mineral Leasing Act for Acquired Lands, now

codified in 30 U.S.C. Secs. 351-359, was first enacted in

1947. The purpose of this Act was to promote and encour-

age the development of ore, gas and other minerals on

the acquired lands of the United States on a uniform basis

under the jurisdiction of the Department of Interior. The

Act was also intended to provide for the leasing of fed-

eral lands not theretofore subject to leasing under the

Mineral Leasing Act of 1920. Section 8 of this Act, now 30

U.S.C. Sec. 357, provides as follows:

PIL LLLELIOL ENS Mc MOTE TEER RD EE FA aE APES MRE CE EMIS OLD Liaise 8 Bee tts HI ht

13a

Nothing contained in this Act shall be con-

strued to affect the rights of the State or other

local authorities to exercise any right which they

may have with respect to properties covered by

leases issued under this Act, including the right

to levy and collect taxes upon improvements,

output of mines, or other rights, property, or

assets of any lessee of the United States.

As enacted, Section 3 of the 1947 Act, now 30 U.S.C.

Sec. 352, provided that this Act applied to:

. . all deposits of coal . . . [and] oil

. which are owned or may hereafter be

acquired by the United States and which are

within lands acquired by the United States

exclusive of such deposits in such acquired

lands as are (a) situated within incorporated

cities, towns and villages, national parks or

monuments, (b) set apart for military or naval

purposes, or (c) tidelands or submerged lands

may be leased by the Secretary under the same

conditions as contained in the leasing provisions

of the mineral leasing laws subject to the provi-

sions hereof.

In 1976, Section 3 of this Act, now 30 U.S.C. Sec. 352,

was amended. The amendment deleted the exclusion

from the provisions of the Act of properties set apart for

military or naval purposes.

The trial court concluded that the 1976 amendment to

the Mineral Leasing Act for Acquired Lands should gov-

ern in the case of these corporate leases. The court noted

that the power of the states to impose severance taxes on

minerals extracted by lessees of the United States was

strengthened by this amendment. The trial court con-

cluded that all of the disputed taxes were assessed after

l4a

the 1976 amendment to the Mineral Leasing Act for

Acquired Lands, and the amendment applies to all Loui-

siana leases regardless of when the leases were executed.

After our review of the foregoing statutes, we find

that the trial court was correct in its determination that

the 1976 amendment to the Mineral Leasing Act for

Acquired Lands is applicable to the leases in the instant

case.

ISSUES

RECONVENTIONAL DEMAND

Plaintiffs’ second set of issues addresses the trial

court’s supplemental reasons for judgment on defen-

dant’s reconventional demand. The trial court stated as

follows:

Stipulation number 32, submitted by defendant

and the Suit Number 262,928 plaintiffs, provides

that if the taxes are found by this Court to be

owing for the period in dispute in the main

demand, that the taxes owed for the period

December, 1979 through September, 1982, the

period addressed in the reconventional demand,

are in the amount of $1,866,146.59 plus legal

interest from judicial demand (12-29-82) until

paid.

Plaintiffs contend that the trial court’s award for the

pre-October, 1982 period is erroneous because (1) it

grossly misconstrues the precise words of Stipulation

Number 32; (2) it fails to recognize and address the fact

that the amendments to LSA-R.S. 52:1 in 1982 became

effective as of September 10, 1982; (3) it did not address

the fact that the change of position announced by the

eee pee ee ee Ree ere a 2 ee ’

a :

; TREATS RA fe Me Re ERE TH EM

15a

Department under its letter dated September 30, 1982

indicates that the taxes will only be collected with respect

to production subsequent to September, 1982; and (5) [sic]

it failed to apply the doctrine of Contemporaneous Con-

; struction for all periods prior to the time that the Depart-

ment announced its change of position as to the

imposition of severance taxes on production from within

the confines of a federal enclave.

Stipulation Number 32 provided as follows:

Suit No. 262,928 Plaintiffs acknowledge that

the value of the oil severed from the wells

located on the Miss Murphy Lands and the Par-

cel 3 Lands during the months December 1979

through September 1982 was such that the Loui-

siana severance tax attributable thereto would

have been $996,119.53 if such production is

held to be subject to taxation, that the quantity

of gas severed from the wells located on the

Miss Murphy Lands and the Parcel 3 Lands

during the months December 1979 through Sep-

tember 1982 was such that the Louisiana sever-

ance attributable thereto would have been

$742,870.34 if such production is held to be

subject to taxation, and that the value of the

condensate severed from the wells located on

the Miss Murphy Lands and the Parcel 3 Lands

during the months December 1979 through Sep-

: tember 1982 was such that the Louisiana sever-

, ance tax attributable thereto would have been

$127,156.72 if such production is held to be

subject to taxation, all as is more particularly

set forth on Exhibit “Q” attached hereto and

made a part hereof. (Emphasis ours).

Rea RFE er SRE MMM FEI SI NR ie PTE oe

16a

These consolidated cases were submitted to the trial

court for decision upon the Joint Stipulation of Facts and

briefs of the parties. Stipulation No. 32 clearly provides

that taxes for this period are due “if such production is

held to be subject to taxation,” and the trial court so

found. However, plaintiffs’ arguments do not address

whether the production for this period was subject to

taxation. Rather, plaintiffs’ arguments focus on whether

defendant is in some way precluded from collecting these

taxes because of their actions during the period in ques-

tion. As such, we find that plaintiffs are bound by the

wording of the stipulation. Therefore, plaintiffs’ conten-

tions are without merit.

CONCLUSION

For the foregoing reasons, the judgment of the trial

court is affirmed. Plaintiffs, Arkla, Inc., Pennzoil Produc-

ing Company, Arkla Exploration Company, Murphy Oil

USA, Inc., and Total Minatome Corporation, are to

equally pay their share of one-half of the costs of this

appeal. Rosewood Resources, Inc. is to pay the remaining

one-half of the costs of this appeal.

AFFIRMED.

ley ta ee

17a

APPENDIX B

SUPREME COURT OF LOUISIANA

No. 95-C-0565

MRT EXPLORATION COMPANY

MISSISSIPPI RIVER TRANSMISSION, ET AL

Versus

SHIRLEY MCNAMARA [sub nom RALPH SLAUGHTER]

SECRETARY,

LOUISIANA DEPARTMENT OF REVENUE

PER CURIAM

Granted in part. As to the reconventional demand,

the lower courts misconstrued Stipulation No. 32, in

which the parties stipulated to the values of the oil, the

gas and the condensate severed between December 1979

and September 1982 and to the amount of taxes that

would be owed “if such production is held to be subject

to taxation.”

The trial court misconstrued this stipulation to pro-

vide that the stipulated amounts of taxes were owed for

the 1979-to-1982 period in the reconventional demand if

the court found that taxes were owed in the period cov-

ered in the main demand. The court of appeal perpetu-

ated this misconstruction by holding that the trial court

found that taxes were owing for the 1979-to-1982 period.

Thus, although the parties only stipulated to the amounts

of taxes in the event the reconventional demand was

meritorious, neither lower court passed on the merits of

whether taxes in the stipulated amounts were actually

owed for the 1979-to-1982 period.

18a

Accordingly, we remand the matter to the court of

appeal to make the determination of whether the produc-

tion of oil, gas and condensate between December 1979

and September 1982 was subject to taxation. Otherwise,

the application is denied.

WATSON, J., not on panel.

19a

APPENDIX C

MRT EXPLORATION COMPANY, SUIT NO. 262,928

MISSISSIPPI RIVER DIVISION “I”

TRANSMISSION

CORPORATION, MURPHY OIL

CORPORATION PENNZOIL

PRODUCING COMPANY,

TEXAS GAS EXPLORATION

CORPORATION AND ARKLA,

INC.

VERSUS PARISH OF EAST

SHIRLEY MCNAMARA (SUB ae, ee

NOM LEON TARVER, II),

SECRETARY LOUISIANA

DEPARTMENT OF REVENUE STATE OF

19TH JUDICIAL

DISTRICT COURT

AND TAXATION LOUISIANA

ROSEWOOD RESOURCES, SUIT NO. 323,597,

INC. DIVISION “M”

VERSUS 19TH JUDICIAL

DISTRICT COURT

SHIRLEY MCNAMARA

(SUB NOM LEON Hiren Poll

TARVER, II), SECRETARY matics

LOUISIANA DEPARTMENT

OF REVENUE AND TAXATION _ STATE OF

LOUISIANA

WRITTEN REASONS FOR JUDGMENT

ISSUE

The task this Court has before it is to characterize the

Louisiana Oil and Gas Severance Tax, L.S.A.-R.S. 47:631 et

seq, to determine if the imposition of that tax on minerals

recovered by private entities from the ground beneath

20a

Barksdale Air Force Base collides with the Supremacy

Clause of the United States Constitution.

FACTS

The facts of these two consolidated cases are undis-

puted. The State of Louisiana, the City of Shreveport and

the Bossier Levee District conveyed 22,000 acres located

in Bossier Parish to the United States in 1930 for the

construction of Barksdale Air Force Base. The Bureau of

Land Management leased the mineral rights in the por-

tion of the base known as the “Parcel 3 Lands” to Union

Producing Company in 1961. Arkla, Inc., Arkla Explora-

tion Company, Pennzoil Producing Company, Total Min-

atome Corporation and Murphy Oil USA, Inc. are the

successors of Union Producing Company’s rights. The

Bureau leased rights in the property known as the “Miss

Murphy USA Lease” to W. R. Stephens and Natural Gas

and Oil Corporation. Arkla Exploration Co. and Murphy

Oil USA, Inc., are the successors of the leasehold rights of

W. R. Stephens and Natural Gas and Oil Corporation.

These seven lessees are the plaintiffs in Suit Number

262,928.

The Bureau of Land Management leased the mineral

rights in the property known as the “Parcel 1” and “Par-

cel 4” land to Shell Oil Company in 1961. Rosewood

Resources, Inc., is the successor in interest of the lease-

hold rights of Shell Oil Company and is the plaintiff in

Suit Number 323,597.

The State of Louisiana notified the Suit Number

262,928 plaintiffs that $38,535.37 was owed in accordance

with L.S.A.-R.S. 47:631 as a tax on the severed oil and gas

2la

for the period beginning October 1982. That amount was

paid under protest pursuant to L.S.A.-R.S. 47:1576 and

Suit Number 262,928 was filed for the recovery of that

amount and all amounts paid since, which is in excess of

$1,858,000.00

The State notified Rosewood Resources that oil and

gas severance taxes in the amount of $123,772.65 for the

period March, 1986 through June, 1987, were being

assessed from Rosewood in connection with the Bar-

ksdale leases in accordance with L.S.A.-R.S. 47:631. Rose-

wood paid the assessment under protest on October 15,

1987. Suit Number 323,597 was then filed by Rosewood to

recover those amounts plus the assessments paid from

July, 1987 through the present, an amount in excess of

$314,000.

Two federal court proceedings were instigated a

week prior to the filing of the first state court action. The

cases were dismissed based upon the Tax Injunction Act,

28 U.S.C. Sec. 1341 which denies Federal Court jurisdic-

tion in a proceeding of this nature.

Appeals were taken to the Fifth Circuit in both cases

and the dismissal was affirmed. The Court held in MRT

Exploration v. McNamara, 731 F.2d. 260 (Ct. App. 5th Cir.

1984), that the Louisiana Department of Revenue and

Taxation is taxing only the revenues of the plaintiffs and

not the royalty going to the United States and that there

is no reason why Louisiana should be any less free from

federal interference in the administration or [sic] its own

fiscal affairs because these plaintiffs extracted mineral,

which came beneath federal lands. The Fifth Circuit then

directed the matter to state courts for a determination of

22a

the validity of the tax. MRT Exploration, 731 F.2d. at 264.

This Court finds that the assessment is proper and orders

plaintiffs suit dismissed.

The Louisiana Severance Tax is an

“Income Tax” Under the Buck Act

At the onset, we recognize that this issue is not a new

one in federal or state jurisprudence. Plaintiff argues that

the question of the constitutionality of state taxation of

minerals severed from a federal enclave was disposed of

by the U.S. Fifth Circuit in Mississippi Fuel Corporation v.

Cockreham [sic] 382 F.2d. 929 (U.S. Ct. App. 5th Cir. 1967),

cert. denied, 390 U.S. 1014 20 L.Ed. 2d 164, 88 S.Ct. 1264,

on rehearing 390 F.2d. 34 (U.S. Ct. App. 5th Cir. 1968).

However, that case followed the decision of the Supreme

Court in Humble Pipe Line vs. Waggoner [sic], 376 U.S. 269,

84 S.Ct. 857, 11 L.Ed. 782 (1964), in which the State of

Louisiana was held unable to assess an ad valorem tax on

personal items located within Barksdale. Humble dealt

specifically with an ad valorem tax. The tax being

assessed against these private entities is a tax upon the

value of minerals extracted from the ground.

The legislature amended paragraphs 7 and 8 of

L.S.A.-R.S. 47:633 by Acts 1973, Ex. Sess., No. 6, to change

the severance tax on oil, distillates or other natural

resources from a tax based on the quantity of the resource

to a tax based upon its value. With this valuation method,

the tax falls within the Congressionally authorized taxing

power established in the Buck Act, 4 U.S.C.A. Sec.

105-110. We hold that the severance tax is an “income

tax” within the meaning of the Buck Act.

—_oc ee oe. ULL hl

23a

The Buck Act was enacted by Congress to enable the

states to impose certain taxes including “income taxes”

within federal enclaves. “Income tax” is defined very

broadly to mean “any tax levied on, with respect to, or

measured by, net income, gross income or gross receipts.”

Humble Oil and Refining Co. v. Calvert, 478 S.W.2d. 926

(Tex. 1972) at 929. The Texas Supreme Court in Humble

concluded that the Texas tax on the extraction of minerals

based on the value of the minerals was within the mean-

ing of the Buck Act. By calling the tax a severance tax or

an income tax “begs the question.”

Mississippi Fuel Corporation v. Cockreham [sic], supra,

held that the Louisiana tax was “levied upon all natural

resources severed from the soil . . . and is measured by

the quantity of such minerals severed.” Mississippi River

Fuel Corporation, supra, at 940. That case is no longer

dispositive of the characterization of the tax because of

the change of the method of calculation of the tax from

quantity based to value based.

Since the Buck Act grants to the states the power to

tax the receipts of any individual within a federal area,

the Louisiana tax is authorized and constitutional.

The Mineral Leasing Act for Acquired Lands

as Amended in 1976 Applies to These Leases

This Court is also in accord with defendant’s conten-

tion that the 1976 amendment to the Mineral Leasing Act

for Acquired Lands (30 U.S.C. Sec. 351-359) should gov-

ern in the case of these corporate leases. Section 8 of that

act provides:

24a

“Nothing in this act shall be construed to affect

the rights of the State or other local authorities

to exercise any right which they may have with

respect to properties covered by leases issued

under this Act, including the right to levy and

collect taxes upon improvements, output of

mines, or other rights, property or assets of any

lessee of the United States.”

The power of the states to impose severance taxes on

minerals extracted by lessees of the United States was

strengthened by an Act of Congress of August 4, 1976 (30

U.S.C.A. Sec. 352) which amended Section 3 by deleting

the exception for land “set aside for military or naval

purposes.”

Plaintiffs’ argument that the amended act cannot

apply to them since the leases in question were created

when the act excluded land used for military bases is not

persuasive. Taxing authorities always may impose new

taxes which affect existing contracts.

All of the disputed taxes were assessed after the

amendment to The Leasing Act for Acquired Lands, 30

U.S.C.A. 352. As a matter of Louisiana law, the act as it

currently is, applies to all Louisiana leases regardless of

when the leases were executed.

CONCLUSION

The Louisiana General Severance Tax L.S.A.-R.S.

47:633, is a valid, enforceable tax under Louisiana law on

the withdrawal of minerals from the earth below surface

owned by the U.S. Government. There is no indication

25a

that Congress ever intended private petroleum com-

panies to benefit from the exclusion of federal land from

state taxation by allowing them to escape a lawfully

enacted tax. The constitutional authority and the machin-

ery to thwart this taxation, if thought unacceptable, is

available to Congress. Commonwealth Edison v. Montana,

453 U.S. 609, 101 S.Ct. 2946 69 SE2d. 884 (U.S 1981).

(White, J., concurrance [sic]). There is no congressional

legislation forbidding taxation of this income. Therefore,

it is held that the Louisiana Severance Tax is valid and

enforceable under Constitutional guidelines and Louisi-

ana law.

Baton Rouge, Louisiana, this 18 day of January, 1990.

William H. Brown

Judge, 19th Judicial District Court

26a

APPENDIX D

MRT EXPLORATION COMPANY, SUIT NO. 262,928

MISSISSIPPI RIVER

TRANSMISSION

CORPORATION, MURPHY OIL

CORPORATION, PENNZOIL

PRODUCING COMPANY,

TEXAS GAS EXPLORATION

CORPORATION, AND ARKLA,

INC.

VERSUS

SHIRLEY MCNAMARA (SUB

NOM LEON TARVER, IJ),

SECRETARY LOUISIANA

DEPARTMENT OF REVENUE

AND TAXATION

ROSEWOOD RESOURCES,

INC.

VERSUS

SHIRLEY MCNAMARA (SUB

NOM LEON TARVER, II),

SECRETARY LOUISIANA

DEPARTMENT OF REVENUE

AND TAXATION

DIVISION “I”

19TH JUDICIAL

DISTRICT COURT

PARISH OF EAST

BATON ROUGE

STATE OF

LOUISIANA

SUIT NO. 323,597,

DIVISION “M”

19TH JUDICIAL

DISTRICT COURT

PARISH OF EAST

BATON ROUGE

STATE OF

LOUISIANA

SUPPLEMENTAL WRITTEN REASONS

FOR JUDGMENT

Stipulation number 32, submitted by defendant and

the Suit Number 262,928 plaintiffs, provides that if the

taxes are found by this Court to be owing for the period

in dispute in the main demand, that the taxes owed for

the period December, 1979 through September, 1982, the

27a

period addressed in the reconventional demand, are in

the amount of $1,866,146.59 plus legal interest from judi-

cial demand (12-29-82) until paid. Judgment will be

signed accordingly.

Baton Rouge, Louisiana, this 21st day of January,

1990.

William H. Brown

JUDGE, 19th Judicial District Court

28a

APPENDIX E

MRT EXPLORATION

COMPANY, MISSISSIPPI

RIVER TRANSMISSION

CORPORATION,

MURPHY OIL

CORPORATION,

PENNZOIL PRODUCING

COMPANY, TEXAS GAS

EXPLORATION

CORPORATION AND

ARKLA, INC.

versus

SHIRLEY McNAMARA

(SUB NOM RALPH

SLAUGHTER),

SECRETARY LOUISIANA

DEPARTMENT OF

REVENUE AND

TAXATION

ROSEWOOD RESOURCES,

INC.

versus

SHIRLEY McNAMARA

RALPH (SUB NOM

RALPH SLAUGHTER),

SECRETARY LOUISIANA

DEPARTMENT OF

REVENUE AND

TAXATION

NUMBER 262,928,

DIVISION “I”

19TH JUDICIAL

DISTRICT COURT OF

LOUISIANA IN AND

FOR THE PARISH OF

EAST BATON ROUGE

NUMBER 323,597,

DIVISION “M”

19TH JUDICIAL

DISTRICT COURT

COURT OF LOUISIANA

IN AND FOR THE ;

PARISH OF EAST ;

BATON ROUGE

(«Kh ba giapientinaes inde Rina plist: Sak = OR Re a ee

ROOTS Ghee, tan a

29a

JUDGMENT

This matter came on for trial on October 31, 1989

upon the facts set forth in the Joint Stipulation of Facts

filed herein on that date. The Court, having considered

the Joint Stipulation of Facts and the arguments advanced

by counsel for the parties in the briefs filed herein,

entered its Written Reasons For Judgment which was

signed and filed on January 18, 1990, and its Supplemen-

tal Written Reasons For Judgment which was signed and

filed herein on January 31, 1990. Plaintiff’s Motion To

Withdraw Supplemental Written Reasons For Judgment

and For Reconsideration of Issues Addressed was denied.

The Court is advised by the parties that the amount of

one million eight hundred sixty-six thousand one hun-

dred forty-six and 59/100 ($1,866,146.59) dollars set forth

in the Supplemental Written Reasons For Judgment

includes the sum of five hundred thirty-nine thousand

eighty-two and 68/100 ($539,082.68) dollars which is the

object of the reconventional demand in those separate

proceedings (but related by subject matter) styled Texas

Gas Exploration Corporation v. Shirley McNamara, Secretary,

Louisiana Department of Revenue and Taxation, number

262,929 on the docket of this Court, and therefore the

amount of one million eight hundred sixty-six thousand

one hundred forty-six and 59/100 ($1,866,146.59) dollars

set forth in the Supplemental Written Reasons for Judg-

ment should actually be one million three hundred

twenty-seven thousand sixty-three and 91/100

($1,327,063.91) dollars. The parties have further advised

the Court that Pennzoil Exploration and Production Com-

pany is now the obligor with respect to the interest of

30a

Pennzoil Producing Company in these proceedings.

Therefore,

IT IS ORDERED, ADJUDGED AND DECREED that

the demands of the Plaintiffs in both of these consoli-

dated proceedings are hereby rejected.

IT IS FURTHER ORDERED, ADJUDGED AND

DECREED that judgment is hereby rendered in favor of

Plaintiff in reconvention in Docket Number 262,928, the

Secretary of the Louisiana Department of Revenue and

Taxation, and against the Defendants in reconvention,

namely, Mississippi River Transmission Corporation,

Arkla, Inc., Murphy Oil USA, Inc., TOTAL MINATOME

CORPORATION and Pennzoil Exploration and Produc-

tion Company, in the following amounts:

Mississippi River Transmission

Corporation $612,063.80

Arkla, Inc. 118,423.98

Murphy Oil USA, Inc. 162,670.66

TOTAL MINATOME CORPORATION _ 198,004.89

Pennzoil Exploration and

Production Company 235,900.58

together with interest at the rates established under and

pursuant to La. R. S. 47:1601 from the date such taxes

were due until paid, which amounts of interest, through

the date of entry of this judgment, are as follows:

Mississippi River Transmission

Corporation $1,106,394.70

Arkla, Inc. 215,060.57

Murphy Oil USA, Inc. 293,076.51

TOTAL MINATOME CORPORATION 359,581.27

Pennzoil Exploration and

Production Company 428,400.65

and for all costs of those proceedings.

3la

IT Is ORDERED, ADJUDGED AND DECREED that

Plaintiff in Docket Number 323,597, namely Rosewood

Resources, Inc., shall pay all costs of that proceeding.

Judgement read, rendered and signed in Baton

Rouge, Louisiana on this the 15th day of September, 1993.

/s/ William H. Brown

WILLIAM H. BROWN

Judge, 19th Judicial

District Court

APPROVED AS TO FORM IF JUDGMENT IS ENTERED

ON OR BEFORE SEPTEMBER 30, 1993:

On behalf of Mississippi River Transmission Corporation,

Arkla, Inc., Murphy Oil USA, Inc. and Rosewood

Resources, Inc.

By:

J. Edgerton Pierson, Jr.

La. Bar Roll No. 11000

BLANCHARD, WALKER, O’QUIN & ROBERTS

(A Professional Law Corporation)

Post Office Drawer 1126

Shreveport, Louisiana 71163-1126

(318) 221-6858

Counsel for Mississippi River Transmission Corpora-

tion, Arkla, Inc., Murphy Oil USA, Inc. and Rose-

wood Resources, Inc.

32a

On behalf of Pennzoil Exploration and Production Company

By:

Malcolm S. Murchison

La. Bar Roll No. 9836

HARGROVE, GUYTON, RAMEY & BARLOW

(A Professional Law Corporation)

Post Office Box B

Shreveport, Louisiana 71161-0010

(318) 227-1113

Counsel for Pennzoil Exploration and Production

Company

On behalf of TOTAL MINATOME CORPORATION

By:

Marshall T. Napper

La. Bar Roll No. 9887

SHOTWELL, BROWN & SPERRY

Post Office Box 1591

Monroe, Louisiana 71210

(318) 388-4700

Counsel for TOTAL MINATOME CORPORATION

On behalf of Ralph Slaughter, Secretary of the Louisiana

Department of Revenue and Taxation

By:

Robert G. Pugh, Sr.

La. Bar Roll No. 10897

PUGH, PUGH AND PUGH

Suite 2100, Commercial National Tower

333 Texas Street

Shreveport, Louisiana 71101-5302

(318) 227-2270

Counsel for the Secretary of the Louisiana Depart-

ment of Revenue and Taxation

33a

APPENDIX F

UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF LOUISIANA

SHREVEPORT DIVISION

LEON TARVER II [sub nom

Arnold A. Broussard],

Secretary, Louisiana

Department of Revenue

and Taxation

CIVIL ACTION

NO. 90-0043

versus CHIEF JUDGE

TOM STAGG

H. WAYNE WILSON, Trustee,

GEORGE R. SCHURMAN and

SCHURMAN OIL & GAS, INC.

MEMORANDUM OPINION

The issue in this bankruptcy appeal is whether the

State of Louisiana may impose a severance tax on the

resources extracted by a mineral lessee from the land

within Barksdale Air Force Base in Bossier City, Louisi-

ana. The bankruptcy judge held that it may not, denied

the State’s motion for summary judgment, and entered

judgment in favor of the Trustee.

THE FACTS:

The underlying facts are not in dispute. By act of

donation dated November 8, 1930, the City of Shreveport

conveyed lands containing approximately 22,000 acres

34a

located in Bossier Parish to the United States for a mili-

tary post, flying field and bombing range. Pursuant to

Act No. 4 of the 1930 legislative session the State donated

its interest in the beds of the streams, lakes, bayous and

lagoons lying within that tract to the United States. Sim-

ilarly, the Board of Commissioners of the Bossier Levee

District also conveyed its interests in certain other prop-

erties within that tract to the United States. Thus, by

these acts of donation, the United States acquired a “fee

simple title” to the entire tract.!

Not surprisingly, the soil beneath Barksdale had res-

ervoirs of oil, gas and other minerals. Apparently, the

United States government became concerned that it was

losing substantial income as a result of the drainage by

mineral lessees of adjoining land owners who were pro-

ducing minerals from these reservoirs and from reser-

voirs of adjoining lands. Such concern resulted in an

opinion by the Attorney General of the United States to

the President that the lands which comprise Barksdale

could be leased for mineral development.? Relying on

this advice from the Attorney General, Presidents Frank-

lin D. Roosevelt and Harry S. Truman issued executive

! See Humble Pipe Line Company v. Waggonner, 376 U.S. 369,

370 (1964).

2 Appellants’ brief, Exhibit D. At this time, the only acts of

Congress pertaining to the granting of oil, gas and mineral

leases were those relating to Indian lands and domain lands. Of

course, the lands comprising Barksdale were neither Indian

lands nor domain lands.

35a

orders authorizing the Secretary of the Interior to with-

draw® or reserve lands of the United States for public

purposes.

Pursuant to an act of Congress, the Secretary of the

Interior issued Public Land Orders, pertaining to Barks-

dale which (1) transferred jurisdiction over certain

described Barksdale lands from the Department of the

Air Force to the Department of Interior; (2) authorized

action to prevent Barksdale mineral drainage; (3) prohib-

ited use of Barksdale’s surface areas needed by the Air

Force; (4) authorized the Air Force to stipulate reserva-

tions and restrictions to be contained in the proposed

Barksdale leases; and (5) required pre-clearance by the

Air Force that any Barksdale mineral lease would not

interfere with the primary use of the land as an Air Force

base. Under the authority of these orders, oil, gas and

mineral leases were issued by the Department of Interior.

The lease at issue in this case is denominated “Protective

Lease of Oil and Gas Lands Under Authority of Section

441, Revised Statutes: 5 U.S.C. 405” and dated February 1,

1961.° Pursuant to this document, the United States

leased certain properties comprising Barksdale to Sinclair

° “Withdrawal” is defined as transferring jurisdiction over

an area of federal land from one department, i.e., the United

States Air Force, to another department, i.e., the Department of

Interior. See 43 C.F.R. § 2300.0-5(h).

* Now codified at 43 U.S.C. § 141, et seq.

> Appellants’ Brief, Exhibit N.

36a

Oil & Gas Company.® Through various operating agree-

ments, the debtors, George R. Schurman and Schurman

Oil & Gas, Inc. became the owners of certain leasehold

rights in Parcel 2. During their period of operation of the

lease, the debtors filed Louisiana Severance Tax Returns

with the Louisiana Department of Revenue and Taxation,

but indicated on the returns that the severed oil was

exempt from taxation. The Department of Revenue and

Taxation filed an Application for Payment of Administra-

tive Expenses, asking the Bankruptcy Court to recognize

the sum of $33,546.57, plus interest, due with respect to

the oil severed from this property for the period August

1, 1985 through August 31, 1986. On December 5, 1989,

the bankruptcy judge entered an opinion and order deny-

ing the Department’s motion for summary judgment, and

entering judgment for the debtors.

ANALYSIS OF LAW AND FACTS:

The applicable jurisprudence begins with the 1925

decision of the United States Supreme Court in Mid-

Northern Oil Company v. J. W. Walker, 268 U.S. 45 (1925).

That case involved a suit brought by an oil company to

enjoin the enforcement of an annual license tax imposed

by the State of Montana upon persons producing petro-

leum. The oil company argued that the Montana tax, as

applied to it, was invalid, because the Company, by

assignment of the original leases, was a lessee of the

United States of public lands entered as homesteads but

6 This lease involved the particular tract of land that is

known as “Parcel 2.” See Appellees’ Brief, Exhibit 1.

37a

not yet granted by a patent, upon which it was engaged

in prospecting for and producing crude petroleum under

the provisions of the Leasing Act of February 25, 1920.

The Company therefore argued that it was a govern-

mental agency, means or instrumentality whose opera-

tions could not be taxed by the State.

The Supreme Court did not consider whether the

Company, under its leases, was an agency, means or

instrumentality of the United States because, in the

Court’s view, the Leasing Act of 1920 authorized the state

taxation at issue. In so holding, the Court relied upon

§ 32 of the 1920 Act, which provided: “Nothing in this

Act shall be construed or held to affect the rights of the

states or other local authority to exercise any rights which

they may have, including the right to levy and collect

taxes upon improvements, output of mines, or other

rights, property, or assets of any lessee of the United

States.”” The Court rejected the contention that § 32 per-

tained to existing rights of the states, i.e., rights existing

when the 1920 Act was passed. According to the Court:

[W]e find nothing in the body of the act which,

by any stretch of meaning, purports to detract

from or render less certain any such preexisting

rights; and, in that view, the theory advanced

fails for want of material upon which to operate.

It fairly cannot be supposed that Congress

would indulge in the altogether idle ceremony

of enacting a law to save rights which, being in

no way challenged or affected, stood in no need

of being saved. The more natural view, and the

one we adopt, is that Congress, having provided

7 30 U.S.C. § 189.

38a

for leasing the public lands to private corpora-

tions and persons whose property, income, busi-

ness and occupations ordinarily were subject to

state taxation, meant by the proviso to say in

effect that, although the act deals with the let-

ting of public lands and the relations of the

government to the lessees thereof, nothing in it

shall be so construed as to affect the right of the

States, in respect of such p vate persons and

corporations, to levy and collect taxes as though

the government were not concerned. In other

words, the purpose of Congress was to remove

altogether from the field of controversy, among

other questions, the very questions which is

here presented, and to put beyond doubt the

authority of the states to impose taxes upon

lessees in respect of their property, although

arising from, and in respect of their taxable

rights, although exercised under the act without

regard to the origin thereof or to the interest of

the United States in the lands or leases.

Mid-Northern Oil Company, supra, at 48-49.

The validity of state taxation pertaining to federal

property was next addressed by the high court in the

1952 decision of Howard v. Commissioners of the Sinking

Fund of the City of Louisville, 344 U.S. 624 (1953). That case

involved a challenge to the validity of a Louisville, Ken-

tucky, occupational tax or license fee ordinance as

applied to employees of a naval ordnance plant located

on federally-owned land. In a brief opinion, the Court

upheld the tax relying on the Buck Act, 4 U.S.C. §§ 105, et

seq. Section 106 of this Act provides:

39a

(a) No person shall be relieved from liability

for any income tax levied by any State, . . , hav-

ing jurisdiction to levy such a tax, by reason of

his residing within a Federal area or receiving

income from transactions occurring or services

performed in such area; and such State or taxing

authority shall have full jurisdiction and power

to levy and collect such tax in any Federal area

within such State to the same extent and with

the same effect as though such area was not a

Federal area.

(b) The provisions of subsection (a) shall

be applicable only with respect to income or

receipts received after December 31, 1940.

Section 110(c) of the Buck Act defines income tax as “any

tax levied on, with respect to, or measured by, net

income, gross income, or gross receipts.” The Court held

that the tax authorized by the ordinance was an “income

tax” within the meaning of the Buck Act. Howard, supra,

at 629. According to the Court:

The grant was given within the definition of the

Buck Act, and this was for any tax measured by

net income, gross income, or gross receipts. . . .

By virtue of the Buck Act, the tax can be levied

and collected within the federal area, just as if it

were not a federal area. (Emphasis in original.)

Id. Justices Douglas and Black dissented, as they were

unable to join in the Court’s conclusion that the tax was

an “income tax” within the meaning of the Buck Act.

According to the dissenters, “Congress has not yet

granted local authorities the right to tax the privilege of

working for or doing business with the United States.” Id.

40a

The Louisiana Supreme Court addressed the identical

issue presented herein in Murphy Corp. v. Fontenot, 225 La.

379, 73 So.2d 180 (1954).® Plaintiff in that case sought a

refund of severance taxes paid under protest, contending

that Article I, Section 8, Clause 17 of the United States

Constitution gives the United States exclusive jurisdiction

over lands involving Barksdale and, therefore, divested

the State of Louisiana of its jurisdiction to collect sever-

ance taxes. Article I, Section 8, Clause 17 of the Constitu-

tion provides that:

The Congress shall have Power...

To exercise exclusive Legislation in all Cases

whatsoever, over such District (not exceeding

ten Miles square) as may, by Cession of particu-

lar States, and the acceptance of Congress,

become the Seat of the Government of the

United States, and to exercise like Authority

over all Places purchased by the Consent of the

Legislature of the State in which the Same shall

be, for the Erection of Forts, Magazines, Arse-

nals, dock-Yards, and other needful Buildings;

According to the Court, the land on Barksdale subject

to the lease at issue? was not used for the erection of a

fort, magazine, arsenal, dock-yard or other needful build-

ings for military purposes. Murphy, supra, at 183. The

Court provided that when the federal government

8 As will be discussed, infra, the Murphy decision is con-

trary to controlling Fifth Circuit precedent.

9 The lease in Murphy is, for our purposes, identical to the

lease at issue in the instant case.

4la

granted to the private oil operators the right of explora-

tion for their private commercial purposes, the govern-

ment did not intend to take away from the donating state

the right to collect severance taxes. Id. In so finding, the

Court relied upon La. Rev. Stat. 52:1,1° as well as the

transferral of portions of the land from the Secretary of

War to the Department of Interior. According to the

Court, this withdrawal of land by the Secretary of War

caused the property at issue no longer to be exempt from

taxation, as the exemption only applied as long as the

property was used for military purposes. Id. at 184.

In concluding that the State had the power to collect

the taxes involved, the Court also cited 2(k) of the lease

which required the lessee:

To pay when due, all taxes lawfully assessed

and under the laws of the State of the

United States upon improvements, oil and gas

produced from the lands hereunder, or other

rights, property, or assets of the lessee; ... .

Significantly, the Court recognized that the lease was not

made under the Federal Leasing Act of 1920, but the

Court noted that the lease itself, especially the paragraph

10 At the time, La. Rev. Stat. 52:1 read as follows:

The United States, in accordance with the seven-

teenth clause, eighth section of the first article of the

Constitution of the United States, may acquire and

occupy any land in Louisiana required for the pur-

poses of the federal government. The United States

shall have exclusive jurisdiction over the property

during the time that the United States is the owner or

lessee of the property. The property shall be exempt from

all taxation, assessments, or charges levied under author-

ity of the state. (Emphasis added.)

42a

just mentioned, incorporated many provisions of that

statute. According to the Court, to hold that a State was

without power to collect the severance taxes, the Court

would have to ignore the mandatory provisions of the

contract. Justice Hawthorne dissented, arguing that since

the United States is vested with exclusive jurisdiction

pursuant to Article I, Section 8, Clause 17 of the Constitu-

tion, Louisiana was without authority to levy and collect

the taxes in question.

The Barksdale tax issue was visited by the Fifth Cir-

cuit in Mississippi River Fuel Corporation v. Fontenot, 234

F.2d 898 (5th Cir. 1956). There, the Fifth Circuit affirmed

the district judge’s finding that: (1) the Louisiana Sever-

ance Tax is not a tax upon property but upon the privi-

lege of severing natural resources from the soil, and in

this case no part of the tax burden fell upon the federal

government but was payable by the lessee who owned

the working interest in the resource produced; (2) that the

deeds by which the federal government acquired the title

were donations and not sales, and the land did not fall

within the purview of Article I, Section 8, Clause 17 of the

Constitution, and that exclusive territorial jurisdiction

was not ceded by the State of Louisiana to the federal

government; and (3) under 2(k) of the lease, the lessees

were obligated to pay the tax. The Fifth Circuit did not

agree with appellant’s contention that the severance tax

represented an attempt on the part of the State to exercise

legislative and executive jurisdiction over the lands com-

prising Barksdale Air Force Base. This was based upon

43a

the court’s view that the object and purpose of the gen-

eral severance tax!! and its effect is not to levy a tax upon

the lands included in the base. Fontenot, supra, at 901.

Instead, the tax was construed as applying not while the

oil or gas is in the earth, but when it is severed from the

earth. Id. At that point, Louisiana law obliges the person

severing to file a statement of his business and to pay the

tax. Having laid that groundwork, the Court restated the

issue thusly:

Whether a severer of oil and gas, who, if he had

taken it from any other land in the state, would

unquestionably be liable under the general laws

of the state for the severance tax, can carve out

of the fact, that it came from land which was a

part of Barksdale Field, an exemption for him-

self against having to pay the tax on severing

the oil and gas from the surface and appropriat-

ing it to his own use.

Id. at 902. The Court concluded that the tax provision in

the lease must be construed so as to give it effect; thus,

the operator cannot draw around himself a cloak of

immunity because the United States is lessor, but must, as

a part of the consideration for the lease and his obligation

under the statute, pay the taxes which the severance tax

statutes impose. Id.

At this point (the mid 1950s), it might appear that the

issue presented in this case had been resolved in favor of

the State. It clearly was, until the United States Supreme

Court decision in Humble Pipe Line Company v. Waggonner,

376 U.S. 369 (1964). The issue posed in Waggonner was

‘1 La. Rev. Stat. 47:631-46.

44a

“whether the United States has such exclusive jurisdic-

tion over a 22,000-acre tract of land in Louisiana on which

the Barksdale Air Force is located that Louisiana is with-

out jurisdiction to levy an ad valorem tax on privately-

owned property situated on the tract.” Id. at 370. A Loui-

siana district court and the Louisiana Court of Appeal

upheld the tax levied by the State on certain oil-drilling

equipment and pipe lines owned, used and kept by the

petitioners on the Base. The Louisiana Supreme Court

denied review.

The United States Supreme Court reversed. The

Court rejected the State’s contention that Article I, Section

8, Clause 17 of the Constitution did not apply because the

land for the military base was donated, not “purchased,”

within the meaning of that constitutional provision. On

this point, the Court held that under Article I, Section 8,

Clause 17, the United States acquired exclusive jurisdic-

tion when the land was ceded to it with consent of the

State (except for the State’s express reservation as to civil

and criminal process) just as if the United States had

acquired its title by negotiation and payment of a money

consideration. Id. at 372.

Contrary to the Fifth Circuit’s pronouncement in Fon-

tenot, supra, the Court placed no weight on the contrac-

tual provision in the lease requiring the lessee to “pay

when due, all taxes lawfully assessed and levied... . ”

Waggonner, supra, at 374. Said the Court, “We see nothing

more in this standard contractual provision than a pre-

caution on the government's part to guard itself against

liability for payment of any state taxes ‘lawfully assessed’

45a

against its lessee.” Id. According to Justice Black, a con-

tractual requirement to pay taxes lawfully owing, stand-

ing alone, cannot be read as manifesting the purpose of

the government to abandoning exclusive jurisdiction over

one of its important military enclaves. Significantly, he

added, “When Congress has wished to allow a state to

exercise jurisdiction to levy certain taxes within in a

federal enclave it has specifically so stated, as in the Buck

Act, 4 U.S.C. §§ 1047110.” Id.

In light of the Supreme Court's decision in Waggon-

ner, the Fifth Circuit in Mississippi River Fuel Corporation v.

Cocreham, 382 F.2d 929, 937 (Sth Cir. 1967), overruled its

decision in Mississippi River Fuel Corp. v. Fontenot, dis-

cussed supra. According to Cocreham, the Waggonner deci-

sion overruled the two alternate grounds underlying the

decision in Fontenot: (1) a provision of the contract requir-

ing the Company to pay all taxes lawfully assessed; and

(2) the severance tax did not interfere with the exclusive

jurisdiction by the United States. According to the Fifth

Circuit, the Supreme Court thereby reaffirmed a long line

of decisions that a state may not legislate for a federal

enclave “even if the legislation does not conflict with a

regulation of Congress or interfere with a federal function

or instrumentality.” Cocreham, supra, at 937.

The Fifth Circuit also rejected the argument that Wag-

gonner did not overrule Fontenot, because Waggonner

involved an ad valorem tax while the earlier decision,

like Cocreham, involved a severance tax. According to

Judge Wisdom:

While there are differences between the taxes

involved, we think that [Humble Pipe Line Com-

pany v. Waggonner] did not rest on the peculiar

46a

attributes of the ad valorem tax. It rested instead

on the general principle that a state lacks

authority to levy any tax in an area under the

exclusive jurisdiction of the United States. Just

as the state could not tax personal property

located on Barksdale Field, it cannot impose a

severance tax when the incidence of taxation,

the severance of minerals from the soil, takes

place on a federal enclave, outside the jurisdic-

tion of the State of Louisiana.

Id., at 938.

Most importantly, the Fifth Circuit also rejected the

contention that Congress, in the Buck Act, retroceded to

the State of Louisiana jurisdiction to levy the tax. The

Buck Act provides that a state may levy an “income tax”

in a federal enclave within a state to the same extent as if

the area was not a federal enclave. 4 U.S.C. § 106. The

Fifth Circuit held, however, that the Louisiana Severance

Tax is “simply not an income tax.” Cocreham, supra, at 940.

Instead, the Court recognized that the Louisiana Sever-

ance Tax is levied upon all natural resources severed from

the soil, including minerals such as oil and gas, and is

measured by the quantity of minerals severed.!?

According to the Court, “We are not free to expand the

technical and precise language that Congress has used.”

12 The Louisiana statute, as amended, now provides that

the tax is measured by the value of the minerals severed. See La.

Rev. Stat. 47:633(7).

47a

Cocreham, supra. In a per curiam opinion, the Fifth Circuit

panel in Cocreham denied a petition for rehearing.!%

The trustee contends that the issue in this case was

squarely resolved in its favor by the decisions in

Cocreham, supra. The Court agrees. A more direct and

specific pronouncement of the Fifth Circuit cannot be

found. Nevertheless, appellant suggests that certain

changes in the law since the decisions discussed above

now require a different result. Specifically, appellant

argues that the severance tax is now due and payable

13 Mississippi River Fuel Corporation v. Cocreham, 390 F.2d 34

(1968). Because of the importance of that decision to the issue in

this case, the decision is quoted at length:

Humble Pipe Line Company v. Waggonner [citation omit-

ted] holds that the United States has exclusive juris-

diction over Barksdale Air Force Base. The fact that in

[Humble] the tax in question was an ad valorem tax on

pipe lines 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 fugi-

tive 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.

4 * *

The argument that in its sovereign capacity Louisiana

-has the power to impose a tax on the severance of oil

and gas in the 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.

Id. at 35-36. Judge Rives dissented.

48a

because: (1) the decision in Commonwealth Edison Company

v. Montana, 453 U.S. 609 (1981) authorizes the State to

levy and collect severance taxes; (2) the amendments" in

1983 to the Louisiana Severance Tax laws made the sever-

ance tax on oil an “income tax” so as to come within the

meaning of the Buck Act; (3) a 1976 amendment to the

1947 Mineral Leasing Act for acquired lands!5 constitutes

a retrocession to the State of Louisiana of the power to

levy such severance taxes; and (4) an amendment in 1982

to La. Rev. Stat. 52:1 empowered the State to impose a

appellant makes compelling arguments regarding each of

these issues, the court concludes that the decision of the

bankruptcy judge is correct.

Appellants’ least persuasive argument is that the

recent Supreme Court decision of Commonwealth Edison

Company v. Montana, supra, and its interpretation of § 32

of the 1920 Act, has changed the law that is to be applied

in this case. The Commonwealth Edison case is clearly

distinguishable. There, the Supreme Court upheld a sev-

erance tax imposed by the State of Montana on each ton

of coal mined in the state, including coal mined on fed-

eral land, in spite of arguments that the tax violated both

the Commerce Clause and Supremacy Clause of the

United States Constitution. A careful reading of the case

reveals no reference to exclusive federal jurisdiction set

14 La. Rev. Stat. 47:633(7), supra n. 11.

1S 30 U.S.C. §§ 351, et seq.

16 A Louisiana district judge adopted Arguments 2 and 3,

above, in an opinion filed January 18, 1990. Appellants’ Brief,

Exhibit M.

49a

forth in Article I, Section 8, Clause 17 of the Constitution

because, apparently, no federal enclave was involved.

Instead, the Court was dealing with federal land subject

to the concurrent jurisdiction of the state and federal

governments. The bankruptcy judge, therefore, correctly

concluded that appellants’ reliance on Commonwealth Edi-

son is misplaced.

Appellant also argues!” that the 1973 amendment to

La. Rev. Stat. 47:633, changing the severance tax on oil

and other natural resources from a measurement based

upon quantity to a measurement based upon value,

brings the severance tax at issue herein within the provi-

sions of the Buck Act. For this proposition, appellant

relies upon Howard, supra. This argument, however, was

squarely rejected by the Fifth Circuit in Cocreham, where

the Court held that, “The Louisiana Severance Tax is

simply not an income tax.” Cocreham, 382 F.2d at 940.

Appellants’ argument in this respect erroneously

assumes, however, that the 1973 amendment to La. Rev.

Stat. 52:1 brings the Louisiana Severance Tax on oil

within the purview of the Buck Act. The court cannot

believe that the change in the method for calculation of

the amount of the tax on the oil severed from a quantity-

based tax to a value-based tax alters the Fifth Circuit’s

conclusion that the tax is not an income tax. This seems

clear, as the severance tax at issue is not levied upon any

particular taxpayer, but rather upon the natural resources

themselves.!8 Additionally, the severance tax is neither

levied on nor measured by net income, gross income, or

17 See Appellants’ Brief at 27-31.

18 See La. Rev. Stat. 47:632.

50a

gross receipts, as required by the Buck Act. Rather, it

appears that the severance tax is not imposed upon

income at all, but instead upon the increase in the value

of one’s property.!9 Accordingly, the court concludes that

the severance tax in issue is not an “income tax” within

the meaning of the Buck Act.?° The court now turns to the

appellants’ contention that the 1976 amendment to the

1947 Mineral Leasing Act,2! makes the Louisiana Sever-

ance Tax at issue applicable to this lease. Appellant

argues that by this amendment, the full force and effect of

30 U.S.C. § 357 comes to bear on the issue herein. That

section provides:

Nothing contained in this chapter shall be con-

strued to effect the rights of the state or other

19 It is well settled that a mere increase in the value of

property is not income but merely an unrealized increase in

capital. 1 Mertens Law of Federal Income Taxation §§ 5:01 and 5:07

(1987).

20 The Texas Supreme Court’s decision in Humble Oil &

Refining Company v. Calvert. 478 S.W.2d 926 (Tex. 1972) is to the

contrary. In that case, the Court held that an occupation tax on

the business or occupation of producing oil and gas constituted

an income tax within the meaning of the Buck Act. However, it

appears that the Texas Court misconstrued the term “income

tax”. According to the Court:

By calling the tax an occupation tax or a severance

tax, or whatever else, begs the question. The purpose

of the tax is to bring “income” to the state for revenue

purposes. . . . Thus, irrespective of what the tax is

called, if its purpose is to produce revenue, it is an

income or a receipts tax under the Buck Act.

Id. at 175-76. It is submitted that under the Texas Court’s deci-

sion, every tax is an “income tax” within the meaning of the

Buck Act. This court cannot agree.

21 See 30 U.S.C. § 352.

5la

local authorities to exercise any right which they

may have with respect to properties covered by

leases issued under this chapter, includi: .: the

right to levy and collect taxes upon impxove-

ments, output of mines, or other rights, prop-

erty, or assets of any lessee of the United States.

The trustee counters by arguing that the 1947 Act, and the

amendments thereto, do not apply to this lease, because,

as set forth on the face of the lease in question, the lease

was granted under the supervisory authority of the Secre-

tary of the Interior subject to the provisions of Public

Land Orders No. 701 and 2178. As originally enacted, 30

U.S.C. § 352 excluded mineral deposits in acquired lands

which were set apart for military or naval purposes. The

1976 amendment amended that section by striking out

the exclusion for military or naval purposes.

The court seriously doubts whether the 1947 Act was

ever intended to apply to the lease at issue.?? Even so, the

court finds that the Supremacy Clause prohibits the

imposition of the severance taxes herein. Section 357 of

the 1947 Act provides that the Act shall not be construed

to affect the rights of a state to exercise “any right which

they may have... .” (Emphasis added.) As of the date of

the 1947 Act (as well as the 1976 amendment thereto), the

State of Louisiana had absolutely no power to impose a

tax upon the severance of minerals underlying Barksdale

Air Force Base. Beth the United States Supreme Court”?

and the United S ates Court of Appeals for the Fifth

22 As reflected in 30 U.S.C. § 358, the 1947 Act was intended

to apply only to leases granted prior to its effective date.

23 Humble Pipe Line Company v. Waggonner,

_ - ee ee re ly a

52a

Circuit?* specifically found that the State was without

power to impose such taxes because the United States has

exclusive jurisdiction over Barksdale Air Force Base pur-

suant to Article I, Section 8, Clause 17 of the Constitution.

This difficult issue, therefore, is also resolved in favor of

the trustee.

The only issue remaining is whether the 1982 amend-

ment to La. Rev. Stat. 52:125 vested a power in the State of

Louisiana to impose severance taxes upon Barksdale min-

erals. It seems clear that it did not. The jurisprudence

indicates that subsequent developments in state law are

not part of the laws of the ceded area unless. Congress

takes action to keep them current. See, e.g., Board of Super-

visors of Fairfax County, Virginia v. United States, 408 F.

Supp. 556, 564 (E.D. 1976). Thus, the only laws that

continue in effect are those state laws in effect at the time

of the transfer of jurisdiction. Guided by this principle,

24 Mississippi River Fie! Corporation v. Cocreham, supra.

25 As amended ix: 1%}., La. Rev. Stat. =2:1 provides:

A. The United States, in accordance «ith the seventeenth

clause, eighth section of the first artic’: of the Constitution of

the United States, may acquire and occupy any land in Louisi-

ana required for the purposes of the federal government. The

United States shall have exclusive jurisdiction over the property

during the time that the United States is the owner or lessee of

the property.

B. The property shall be exempt from all taxation, assess-

ment, or charge levied under authority of the State. Nothing

herein shall be construed or held to affect the rights of Louisiana or

other local authority to exercise any rights which they may have,

including the right to levy and collect taxes upon the severance of

natural resources, or other rights, property, or assets of any lessee of

the United States. . . . (Emphasis added.)

53a

the court concludes that the amendment in question is

irrelevant to the issues now before the court.

CONCLUSION:

The bankruptcy judge correctly concluded that the

State of Louisiana may not impose a severance tax on the

resources extracted by a minera’ lessee from the land

within Barksdale Air Force Base. Jespite a multi-faceted

attack on the bankruptcy judge’s reasoning and conclu-

sion, and notwithstanding the checkered history of juris-

prudence on minerals at Barksdale, no error of fact or law

is found. The court has addressed what it perceives to be

appellants’ principal arguments for reversal.26 However,

this court believes that the Fifth Circuit’s latest

pronouncement on this issue forecloses any contrary rul-

ing.*”? Accordingly, the bankruptcy judge’s decision is

AFFIRMED.

A judgment consistent with the terms of this Mem-

orandum Opinion shall issue herewith.

THUS DONE AND SIGNEP at Shreveport, Louisi-

ana, this 22nd day of May, 1990.

Tom Stagg, Chief Judge

26 Appellants other arguments are without merit.

27 Cocreham, supra.

54a

APPENDIX G

Constitutional and Statutory Provisions

Mineral Leasing Act for Acquired Lands, Pub. L. No.

382, §§ 3, 8 and 9, 61 Stat. 907, 907, 909 (1947) (codified as

amended at 30 U.S.C. §§ 352, 357 and 358).

Sec. 3. Except where lands have been acquired by the

United States for the development of the mineral

deposits, by foreclosure or otherwise for resale, or

reported as surplus pursuant to the provisions of the

Surplus Property Act of October 3, 1944 (50 U.S.C., sec.

1611 and the following), all deposits of coal, phosphate,

oil, oil shale, gas, sodium, potassium, and sulfur which

are owned or may hereafter be acquired by the United

States and which are within the lands acquired by the

United States (exclusive of such deposits in such acquired

lands as are (a) situated within incorporated cities, towns

and villages, national parks or monuments, (b) set apart

for military or naval purposes, or (c) tidelands or sub-

merged lands) may be leased by the Secretary under the

same conditions as contained in the leasing provisions of

the mineral leasing laws, subject to the provisions hereof.

The provisions of the Act of April 17, 1926 (44 Stat. 301),

as heretofore or hereafter amended, shall apply to

deposits of sulfur covered by this Act wherever situated.

No mineral deposit covered by this section shall be leased

except with the consent of the head of the executive

department, independent establishment, or instru-

mentality having jurisdiction over the lands containing

such deposit, or holding a mortgage or deed of trust

secured by such lands which is unsatisfied of record, and

subject to such conditions as that official may prescribe to

insure the adequate utilization of the lands for the

55a

primary purposes for which they have been acquired or

are being administered: Provided, That nothing in this Act

is intended, or shall be construed, to apply to or in any

manner affect any mineral rights, exploration permits,

leases or conveyances nor minerals that are or may be in

any tidelands; or submerged lands; or in lands underly-

ing the three mile zone or belt involved in the case of the

United States of America against the State of California

now pending on application for rehearing in the Supreme

Court of the United States; or in lands underlying such

three mile zone or belt, or the continental shelf, adjacent

or littoral to any part of the land within the jurisdiction of

the United States of America.

Sec. 8. Nothing contained in this Act shall be con-

Strued to affect the rights of the State or other local

authorities to exercise any right which they may have

with respect to properties covered by leases issued under

this Act, including the right to levy and collect taxes

upon improvements, output of mines, or other rights,

property, or assets of any lessee of the United States.

Sec 9. Nothing in this Act shall affect any rights

acquired by any lessee of lands subject to this Act under

the law as it existed prior to the effective date of this Act,

and such rights shall be governed by the law in effect at

the time of their acquisition; but any person qualified to

hold a lease who, on the date of this Act, had pending an

application for an oil and gas lease for any lands subject

to this Act which on the date the application was filed

was not situated within the known geologic structure of a

producing oil or gas field, shall have a preference right

over others to a lease of such lands without competitive

bidding. Any person holding a lease on lands subject

56a

hereto, which lease was issued prior to the effective date

of this Act, shall be entitled to exchange such lease for a

new lease issued under the provisions of this Act, at any

time prior to the expiration of such existing lease.

The Federal Coal Leasing Amendments Act of 1975,

Pub. L. No. 94-377, § 12, 90 Stat. 1083, 1090 (1976) (co-

dified as amended at 30 U.S.C. § 352).

Sec. 12. (a) Section 3 of the Mineral Leasing Act for

Acquired Lands (30 U.S.C. 352) is amended by striking

out “(b) set apart for military or naval purposes, or (c)”

and insert in lieu thereof “or (b)”.

(b) Such section 3 is further amended by inserting

the following after the first sentence thereof: “Coal or

lignite under acquired lands set apart for military or

naval purposes may be leased by the Secretary, with the

concurrence of the Secretary of Defense, to a govern-

mental entity (including any corporation primarily acting

as an agency or instrumentality of a State) which pro-

duces electrical energy for sale to the public if such

governmental entity is located in the State in which such

lands are located.”.

Buck Act, Pub. L. No. 819, §§ 2(a) and 6(c), 54 Stat. 1059,

1060 (1940) (codified as amended at 4 U.S.C. § 106(a) and

§ 110(c)).

Sec. 2. (a) No person shall be relieved from liability

for any income tax levied by any State, or by any duly

constituted taxing authority therein, having jurisdiction

to levy such a tax, by reason of his residing within a

57a

Federal area or receiving income from transactions occur-

ring or services performed in such area; and such State or

taxing authority shall have full jurisdiction and power to

levy and collect such tax in any Federal area within such

State to the same extent and with the same effect as

though such area was not a Federal area.

Sec. 6. (c) The term “income tax” means any tax

levied on, with respect to, or measured by, net income,

gross income, or gross receipts.

Constitution of the State of Louisiana of 1921, Article X:

§ 1. Taxing power; specific taxes

* * *

Income taxes. Equal and uniform taxes may be levied

upon net incomes, and such taxes may be graduated accord-

ing to the amount of the net income. Public officials shall not

be exempted. Reasonable exemptions may be allowed.

§ 21. Severance tax on natural resources

Section 21. Levy; rate; allocation to parishes. 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; but such tax on sulphur

shall not exceed One Dollar and Three Cents ($1.03) per

long ton of 2,240 pounds, provided that the present sever-

ance tax on sulphur shall be, and is, hereby fixed at One

Dollar and Three Cents ($1.03) per long ton of 2,240

pounds, effective as of the twentieth day after the present

Legislature shall have adjourned, and shall be collected

and expended in accordance with existing laws for the

collection of severance taxes on natural resources. Such

58a

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.

* * +

Constitution of the State of Louisiana of 1974, Article

VIL:

§ 4. Income Tax; Severance Tax; Political Subdivisions

Section 4. (A) Income Tax. Equal and uniform taxes

may be levied on net incomes, and these taxes may be

graduated according to the amount of net income. How-

ever, the state individual and joint income tax schedule of

rates shall never exceed the rates set forth in Title 47,

Section 32 of the Louisiana Revised Statutes on January 1,

1974. Federal income taxes paid shall be allowed as a

deductible item in computing state income taxes for the

same period.

(B) Severance Tax. 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. Natural resources may be classified for the

purpose of taxation. Such taxes may be predicated upon

either the quantity or value of the products at the time

and place of severance. No further or additional tax or

license shall be levied or imposed upon oil, gas, or sul-

phur leases or rights. No additional value shall be added

to the assessment of land by reason of the presence of oil,

gas, or sulphur therein or their production therefrom.

However, sulphur in place shall be assessed for ad val-

orem taxation to the person, firm, or corporation having

59a

the right to mine or produce the same in the parish where

located, at no more than twice the total assessed value of

the physical property subject to taxation, excluding the

assessed value of sulphur above ground, as is used in

sulphur operations in such parish. Likewise, the severance

tax shall be the only tax on timber; however, standing

timber shall be liable equally with the land on which it

stands for ad valorem taxes levied on the land.

Louisiana Revised Statutes, Title 47:

§ 31. Individuals, corporations and trusts subject to tax

There shall be levied, collected, and paid for each

taxable year a tax upon the net income of residents and

nonresidents, estates, trusts and corporations, as here-

inafter provided.

(1) Resident individuals. Every Person residing

within the state, or the personal representative in the

event of death, shall pay a tax on net income from what-

ever source derived, except as hereinafter exempted.

Every natural person domiciled in the state, and

every other natural person who maintains a permanent

place of abode within the state or who spends in the

aggregate more than six months of the taxable year

within the state, shall be deemed to be a resident of this

state for the purpose of determining liability for income

taxes under this Chapter.

(2) Nonresident individuals. Every nonresident

shall pay a tax upon such net income as is derived from

property located, or from services rendered, or from busi-

ness transacted within the state, or from sources within

the state, except as hereinafter exempted.

60a

(3) Corporations. Corporations shall be taxed on

net income from sources within the state, as hereinafter

set out.

(4) Domestic real estate investment trusts. Trusts

shall be taxed on net income from whatever source

derived, except as otherwise exempted.

(5) Foreign real estate investment trusts. Foreign

real estate investment trusts shall be taxed on net income

from sources within the state, as hereinafter set out.

§ 631. Imposition of tax

Taxes as authorized by Section 21 of Article X of the

Constitution of Louisiana!, are hereby levied upon all

natural resources severed from the soil or water, includ-

ing all forms of timber, including pulp woods, and tur-

pentine and other forest products; minerals such as oil,

gas, natural gasoline, distillate, condensate, casinghead

gasoline, sulphur, salt, coal, lignite and ores; also marble,

stone, gravel, sand, shells and other natural deposits; and

the salt content in brine.

§ 632. Taxes payable by owners; lien and privilege cre-

ated

A. These taxes shall be paid by the owner or pro-

portionately by the owners thereof at the time of the

severance and become due and exigible monthly, as

herein provided; they shall operate as a first lien and

privilege on the natural resources which lien and privi-

lege shall follow the natural resources into the hands of

1 The cited provision is from the 1921 Constitution. See,

now Article 7, § 4 of the 1974 Constitution.

«RON

6la

third persons whether in good or bad faith, and whether

the same be found in a manufactured or unmanufactured

state. In addition, oil and gas leases, interests and min-

erals, mineral rights, royalty interests, timber contracts,

and rights of any kind to the ownership of any natural

resource severed from the soil or water, shall be subject to

seizure and sale for the payment of the tax levied in this

Part in preference to all other claims, liens, and privi-

leges.

B. These taxes shall not be due or owed by any

political subdivision of the state if the natural resource

severed was owned and severed by that political subdivi-

sion for its own use.

§ 633(7)(a) [As in effect prior to 1973 amendment]. Rates

of tax

The taxes on natural resources severed from the soil

or water levied by R.S. 47:631 shall be predicated on the

quantity severed and shall be paid at the following rates:

* * *

(7)(a) On oil of 22 gravity and below, eighteen cents

per barrel of 42 gallons.

(b) On oil above 22 gravity and not above 28 gravity,

twenty cents per barrel of 42 gallons.

twenty-one (21¢) cents per barrel of 42 gallons.

(d) On oil above 31 gravity and not above 32 gravity,

twenty-two and one-half cents per barrel of 42 gallons.

(e) On oil above 32 gravity and not above 36 gravity,

twenty-four and one-half cents per barrel of 42 gallons.

62a

(f) On oil above 36 gravity and not above 43 gravity,

twenty-five cents per barrel of 42 gallons.

(g) On oil above 43 gravity, twenty-six cents per

barrel of 42 gallons.

(h) Where the liquid hydrocarbons produced by a

well consist of oil only and it is determined by the collec-

tor of revenue that such well is incapable of producing an

average six barrels of oil per day, the tax rate applicable

to the oil severed from such well shall be one-half of the

schedule set forth in this paragraph (7).

§ 633(7)(a) [As in effect after 1

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