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Click here for the full text of this decision FACTS:The United States appeals a judgment that its mineral royalty, attached to mineral servitudes on the relevant land, had (except for a 41 acre tract) prescribed in accordance with Louisiana law because of the lack of qualifying production for a period in excess of 10 years. In 1937, acting under the authority of the Migratory Bird Conservation Act, the United States purchased approximately 13,000 acres of land in Cameron Parish, Louisiana, from plaintiff Lacassane Co. Inc., to be included in the Lacassine National Wildlife Refuge. A portion of the acreage was subject to a pre-existing mineral servitude (the Gardiner Servitude) held by a previous owner of that tract. The Gardiner Servitude was a one-half interest in the minerals contained in the relevant parcel. In its deed of sale, Lacassane reserved for itself all mineral rights in the entire acreage (the Lacassane Servitude). Because the Gardiner Servitude was created first, the Lacassane Servitude was subject to the Gardiner Servitude. As a result, after selling the land to the government, Lacassane held all mineral rights in the land not subject to the Gardiner Servitude and a one-half mineral interest in the land subject to the Gardiner Servitude. The holders of the Gardiner and Lacassane Servitudes sued in federal court in 1984, seeking a declaratory judgment that their servitudes, although prescriptible pursuant to United States v. Little Lake Misere Land Co., 412 U.S. 880 (1973), had not yet prescribed. In 1988, the parties entered into a settlement agreement with the United States, which confirmed that the Gardiner and Lacassane Servitudes remained validly in existence. In exchange, the servitude owners agreed to carve a mineral royalty and bonus and rental rights out of the servitudes and to convey them to the United States. Pursuant to the settlement, the servitude owners executed an act of conveyance, which granted the United States one-half of all royalties received by the servitude owners on oil, gas, or other minerals attributable to the land subject to the Lacassane and Gardiner Servitudes, with certain articulated exceptions. The servitude owners also conveyed to the government “one-half of all rentals and bonuses received by [the servitude owners] under the terms of any oil, gas and mineral lease of the [subject land] . . . from and after such time as one-half of the income from such bonuses and rentals shall equal the sum of $750,000.00.” In 2003, Waterfowl Limited Liability Co., holder of a two-thirds interest in the Gardiner Servitude, and Lacassane, holder of the Lacassane Servitude, sued for a declaratory judgment that the government’s mineral royalty on production from the Gardiner and Lacassane servitudes had (with the exception of a 41 acre tract subject to the Garrison No. 1 well) prescribed in accordance with Louisiana law as a result of the lack of qualifying production for a period in excess of 10 years. In an amended complaint, Waterfowl and Lacassane included a claim under the Quiet Title Act, 28 U.S.C. �2409, seeking a determination that the mineral rights conveyed by the servitude owners to the United States had been extinguished by application of the Louisiana Mineral Code. The district court allowed Jardin Minerals Co. and Bruiere Minerals Co. to intervene because they own mineral rights affected by the government’s royalty. Jardin holds a one-third interest in the Gardiner Servitude, and Bruiere holds the mineral royalty and executive rights attributable to Jardin’s interest. The parties forewent a trial and agreed that the district court should enter final judgment on the basis of the stipulations, submitted documentary evidence and briefs. Applying Louisiana law of its own force, and in the alternative borrowing state law as the federal rule of decision, the court entered judgment in favor of the servitude owners as to all claims. The United States appeals. HOLDING:Reversed and remanded. At the time the United States acquired the land, all mineral servitudes in Louisiana were subject to the rule of “liberative prescription.” A servitude would prescribe if it went unused for 10 years, and parties could not contract to extend the ten-year prescription period. In 1940, however, Louisiana passed Act 315. Under the regime set up by the Louisiana Supreme Court, servitudes on land owned by the United States, which were prescriptible by statute or by contract when created, became imprescriptible under Act 315. In Little Lake Misere, the U.S. Supreme Court reversed, in part, these decisions of the Louisiana Supreme Court, holding that when a land acquisition by the United States arises from and bears heavily on a federal regulatory program, state law cannot, of its own force, govern the acquisition. Instead, federal law must provide the rule of decision. Although state law often should be “borrowed” as the federal rule of decision, “specific aberrant or hostile state rules do not provide appropriate standards for federal law.” The United States was able to obtain the instant royalty interest only because it had the authority under the Migratory Bird Conservation Act to purchase the land to which the royalty was attached and to acquire, as part of that purchase, reversionary interests in the mineral rights on that land. The fact that the United States obtained the royalty as part of a reorganization of the rights the parties held under the initial deed should not render federal law inoperative. The government’s royalty right finds its root in the same federal source that allowed the 1937 acquisition. Accordingly, federal law controls the right, including its prescriptibility. The court considers whether to adopt Louisiana law as the federal rule of decision, notwithstanding that Louisiana law does not apply of its own force. In Central Pines Land Co. v. United States, 274 F.3d 881 (5th Cir. 2001), the court elaborated on Little Lake Misere, holding that state law should supply the federal rule unless there is an expression of legislative intent to the contrary, or, failing that, a showing that state law conflicts significantly with any federal interests or policies present in this case. Refusing to apply state law is appropriate when national uniformity is required, as well as when state law conflicts with federal interests. The application of state law may in some cases so strongly conflict with federal interests that it can be rejected without further analysis. However, if state law only arguably interferes with federal interests, then the state’s interests in application of its own rules must be weighed. To avoid the application of state law, the government had to show that it contracted around the Louisiana Mineral Code in the settlement agreement and act of conveyance to create a mineral royalty that is not prescriptible separately from the underlying servitudes. Two pieces of evidence in the settlement agreement and act of conveyance indicate an intent to avoid application of Louisiana law with respect to the royalty right. First, the granting clause of the act of conveyance states that “the rights herein conveyed” are given to the United States and its “successors or assigns forever.” Second, as part of the settlement, the parties explicitly agreed that Louisiana law, Act 315 excepted, governs the underlying servitudes. Language adopting Louisiana law as controlling is absent from the sections of the agreement that deal with the royalty right. Taken in conjunction with the granting clause, that silence is indicative of an intent to opt out of Louisiana law, the court believes. As a matter of federal law the government should be given the benefit of its bargain. Accordingly, the government’s mineral royalty is not prescriptible separately from the Gardiner and Lacassane Servitudes, and therefore the royalty has not yet prescribed. OPINION:Smith, J.; before Jolly, Smith and Garza, J.J. DISSENT:Garza, J., dissents in part. “I agree with the majority’s conclusion that Louisiana law does not apply of its own force in this case. I also agree that Louisiana law should not be absorbed to provide the federal rule of decision if doing so would deprive the government of a bargained-for right. However, I conclude that the language of the contract itself does not reveal that the parties intended to contract around Louisiana law with respect to the government’s mineral royalty in the Lacassane and Gardiner servitudes.”

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