Waterfowl Ltd Liab, et al v. USA

United States Court of Appeals
Fifth Circuit
F I L E D
June 20, 2006
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
_______________
m 05-30219
_______________
WATERFOWL LIMITED LIABILITY COMPANY AND LACASSANE COMPANY, INC.,
Plaintiffs-Appellees,
JARDIN MINERALS COMPANY AND BRUIERE MINERALS COMPANY,
Intervenor Plaintiffs-Appellees,
VERSUS
UNITED STATES OF AMERICA,
Defendant-
Intervenor Defendant-
Appellant.
____________________________________
Appeal from the United States District Court
for the Western District of Louisiana
_____________________________________
Before JOLLY, SMITH, and GARZA,
Circuit Judges.
JERRY E. SMITH, Circuit Judge:
The United States appeals a judgment that
its mineral royalty, attached to mineral servi-
tudes on the relevant land, had (except for a
forty-one acre tract) prescribed in accordance
with Louisiana law because of the lack of qual-
ifying production for a period in excess of ten
years. We reverse and remand.

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2
I.
A.
In 1937, acting under the authority of the
Migratory Bird Conservation Act, 16 U.S.C.
§ 715 et seq., the United States purchased ap-
proximately 13,000 acres of land in Cameron
Parish, Louisiana, from plaintiff Lacassane
Co., Inc. (“Lacassane”), 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.1 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 La-
cassane 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.
B.
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 ten years, and parties could not contract to
extend the ten-year prescription period.2 In
1940, however, Louisiana passed Act 315,
which provided as follows:
When land is acquired by conventional
deed or contract, condemnation or expro-
priation proceedings by the United States
of America, or any of its subdivisions or
agencies from any person, firm or corpora-
tion, and by the act of acquisition, order or
judgment, oil, gas or other minerals or roy-
alties are reserved, or the land so acquired
is by the act of acquisition conveyed subject
to a prior sale or reservation of oil, gas, or
other minerals or royalties, still in force and
effect, the rights so reserved or previously
sold shall be imprescriptible.
United States v. Little Lake Misere Land Co.,
Inc., 412 U.S. 580, 584 (1973) (quoting the
statute); see also LA. REV. STAT. § 31:149
(current successor to Act 315). Act 315 was
meant to “facilitat[e] federal land acquisitions
by removing uncertainty on the part of reluc-
tant vendors over the duration of mineral res-
ervations retained by them.” Little Lake Mis-
ere, 412 U.S. at 599.
Despite the apparently forward-looking
purpose of the Act, the Louisiana Supreme
Court held that it applied even to federal ac-
quisitions, such as the government’s purchase
of land from Lacassane, that had taken place
before the Act was passed. See Whitney Nat’l
Bank v. Little Creek Oil Co., 33 So. 2d 693,
1 Louisiana does not recognize separate mineral
estates. Mineral rights “can only be held separate
from the surface land in the form of a mineral
servitude.” Cent. Pines Land Co. v. United States,
274 F.3d 881, 884 (5th Cir. 2001) (citing
Frost-Johnson Lumber Co. v. Salling’s Heirs, 91
So. 207, 245 (La. 1920)). A mineral servitude is
“the right of enjoyment of land belonging to an-
other for the purpose of exploring for and produc-
ing minerals and reducing them to possession and
ownership.” LA. REV. STAT. § 31:21.
2 See Hightower v. Martizky, 195 So. 518, 520-
21 (La. 1940). Lacassane’s reservation of mineral
rights in the 1937 acquisition contract contained an
express term of prescription similar to that existing
under Louisiana law. The current Louisiana rules
for prescription of a servitude are codified at LA.
REV. STAT. §§ 31:27-61.

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3
696 (La. 1947). In addition, the court held
that Act 315 superseded not only the prior de-
fault statutory rule of prescription but also pre-
existing contractual terms of prescription. See
Leiter Minerals, Inc. v. Cal. Co., 132 So. 2d
845, 854-55 (La. 1961). 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, 412 U.S. at 592, the
United States 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 acquisi-
tion. Instead, federal law must provide the
rule of decision. Although state law often
should be “borrowed” as the federal rule of de-
cision, “specific aberrant or hostile state rules
do not provide appropriate standards for
federal law.” Id. at 596. The Court held that
Act 315 could not be borrowed as the law
governing certain pre-1940 federal land acqui-
sitions pursuant to the Migratory Bird Con-
servation Act, because
[a]s applied to a consummated land trans-
action under a contract which specifically
defined conditions for prolonging the ven-
dor’s mineral reservation, retroactive appli-
cation of Act 315 to the United States de-
prives it of bargained-for contractual inter-
ests. . . . To permit state abrogation of the
explicit terms of a federal land acquisition
would deal a serious blow to the congres-
sional scheme contemplated by the Migra-
tory Bird Conservation Act and indeed all
other federal land acquisition programs.
Id. at 597.
Having determined that Act 315 could not
govern the federal land acquisitions at issue,
the Court did not need to choose between
adopting “residual” Louisiana law (Louisiana
law excepting Act 315) and “formulating an
independent federal ‘common law’ rule” of
prescription. The explicit prescription terms of
the acquisition contract controlled, rendering
the servitudes at issue prescriptible and already
prescribed. Id. at 604.
C.
The instant plaintiffs, intervenors, and their
ancestors in title, holders of the Lacassane and
Gardiner Servitudes, were in a position similar
to that of the Little Lake Misere plaintiffs.
The United States had acquired the land sub-
ject to said servitudes before passage of Act
315, and the acquisition contract contained an
express term of prescription for the Lacassane
Servitude.3 The holders of the Gardiner and
Lacassane Servitudes sued in federal court in
1984, seeking a declaratory judgment that
their servitudes, although prescriptible pursu-
ant to Little Lake Misere, had not yet pre-
scribed.4
3 As we have noted, the Gardiner Servitude had
been created before the government’s acquisition of
the relevant land. The government therefore could
not bargain for an explicit term of prescription for
that servitude. We held in Central Pines, 274 F.3d
at 891-92, however, that a federal interest “in
obtaining . . . mineral rights via the default rule of
prescription in place before Act 315” is strong
enough to prevent the borrowing of Act 315 as the
rule of decision for pre-1940 federal land acquisi-
tions, even where there is no explicit contractual
term of prescription for the relevant servitude. The
relevance of Central Pines is discussed more
thoroughly infra.
4 The underlying litigation is Brewer v. United
(continued...)

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4
In 1988, the parties entered into a settle-
ment 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 royal-
ties received by the servitude owners on oil,
gas, or other minerals attributable to the land
subject to the Lacassane and Gardiner Servi-
tudes, with certain articulated exceptions. The
servitude owners also conveyed to the govern-
ment “one-half of all rentals and bonuses re-
ceived 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.”5
Under Louisiana law, a mineral royalty is
“the right to participate in production of min-
erals from land owned by another or land sub-
ject to a mineral servitude owned by another.
Unless expressly qualified by the parties, a roy-
alty is a right to share in gross production free
of mining or drilling and production costs.”
LA. REV. STAT. § 31:80. When a royalty right
is “created by one whose title terminates at a
particular time or upon the occurrence of a
certain condition,” such as an owner of a
servitude, the royalty extinguishes when the
underlying title extinguishes. Id. § 31:83.
In addition, royalty rights, like servitudes,
are real property rights owned separately from
“perfect title” in the land and are subject to
prescription after ten years of nonuse. See id.
§ 31:85. There are different rules for servi-
tudes and royalty rights, however, with regard
to what counts as a qualifying use capable of
interrupting the prescription period.
Most notably, good faith drilling opera-
tions, even if unsuccessful, interrupt prescrip-
tion running against a servitude. See id.
§ 31:27 et seq. On the other hand, only actual
production of minerals subject to the royalty
interest interrupts prescription running against
a royalty. See id. § 31:85 et seq. Thus, while
a mineral royalty carved out of a servitude is
always extinguished when the servitude ceases
to exist, it also can be extinguished before the
servitude expires. The royalty, in other words,
is prescriptible separately from the servitude.
In 2003, Waterfowl Limited Liability Com-
pany (“Waterfowl”), holder of a two-thirds in-
terest in the Gardiner Servitude, and Lacas-
sane, holder of the Lacassane Servitude, sued
for a declaratory judgment that the govern-
ment’s mineral royalty on production from the
Gardiner and Lacassane servitudes had (with
the exception of a forty-one acre tract subject
to the Garrison No. 1 well) prescribed in
accordance with Louisiana law as a result of
4(...continued)
States, No. 84-0270 (W.D. La.) (the “Brewer
litigation”).
5 The conveyance to the United States of bonus
and rental rights under mineral leases is not central
to this action. A mineral lease is “a contract by
which the lessee is granted the right to explore for
and produce minerals.” LA. REV. STAT. § 31:114.
A bonus is “money or other property given for the
execution of a mineral lease, except interests in
production from or attributable to property on
which the lease is given.” Id.. § 31:213(1). A
rental is “money or other property given to main-
tain a mineral lease in the absence of drilling or
mining operations or production of minerals.” Id.
§ 31:213(4).

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5
the lack of qualifying production for a period
in excess of ten years. In an amended com-
plaint, Waterfowl and Lacassane included a
claim under the Quiet Title Act, 28 U.S.C.
§ 2409, seeking a determination that the min-
eral 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
Company (“Jardin”) and Bruiere Minerals
Company (“Bruiere”) to intervene because
they own mineral rights affected by the gov-
ernment’s royalty. Jardin holds a one-third in-
terest in the Gardiner Servitude, and Bruiere
holds the mineral royalty and executive rights
attributable to Jardin’s interest.6
The government stipulates that its royalty
has prescribed under Louisiana law, but it con-
tends that Louisiana law does not govern the
rights established in the settlement agreement
and the implementing act of conveyance.
Rather, the government argues that pursuant
to Little Lake Misere and Central Pines, fed-
eral law controls the rights at issue. Further-
more, the government contends that the rele-
vant rules of the Louisiana Mineral Code
cannot be borrowed as the federal rule of
decision because the state rules are hostile to
the government’s interests. The government
asserts that the terms of the settlement agree-
ment and act of conveyance establish that the
royalty is not separately prescriptible and can
cease to exist only when the underlying servi-
tudes are extinguished.
The parties forewent a trial and agreed that
the district court should enter final judgment
on the basis of the stipulations, submitted doc-
umentary evidence, and briefs. Applying Loui-
siana law of its own force, and in the alterna-
tive 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.
II.
We review questions of law, including
choice of law and contract interpretation, de
novo.7 Because this matter involves determin-
ing whether federal or state law applies, and
also involves interpreting a settlement agree-
ment, we utilize that standard here.
III.
Little Lake Misere sets up a two-tiered in-
quiry for determining what law governs the
rights at issue in cases such as this. First, we
must determine whether federal law controls
or state law applies of its own force. Second,
if we decide that federal law controls, we must
determine the content of the applicable federal
law. Specifically, we must decide whether to
adopt state law as the federal rule of decision.
Because the government has conceded that its
royalty has prescribed under Louisiana law, it
can succeed only if federal law applies and
state law is not borrowed as the federal rule of
decision.
6 For the sake of simplicity, the remainder of
this opinion will refer to Waterfowl, Lacassane,
Jardin, and Bruiere collectively as the “servitude
owners,” even though Bruiere does not hold a
servitude interest.
7 See Adams v. Unione Mediterranea di Si-
curta, 220 F.3d 659, 674 (5th Cir. 2000); Dell
Computer Corp. v. Rodriguez, 390 F.3d 377, 384
(5th Cir. 2004); see also Guidry v. Halliburton
Geophysical Serv., Inc., 976 F.2d 938, 940 (5th
Cir. 1992) (stating that “[a] settlement agreement
is a contract”).

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6
A.
In answering the initial choice of law ques-
tion, the Court in Little Lake Misere, 412 U.S.
at 592, placed particular emphasis on whether
the transaction at issue “is one arising from
and bearing heavily upon a federal regulatory
program.” If this condition is met, state law
cannot apply to the transaction of its own
force. In determining that federal law con-
trolled the particular acquisition before it, the
Court reasoned as follows:
We deal with the interpretation of a land
acquisition agreement (a) explicitly autho-
rized, though not precisely governed, by
the Migratory Bird Conservation Act and
(b) to which the United States itself is a
party. As in Clearfield and its progeny,
“the duties imposed upon the United States
and the rights acquired by it find their roots
in the same federal sources . . . . In ab-
sence of an applicable Act of Congress it is
for the federal courts to fashion the govern-
ing rule of law according to their own stan-
dards.”
Id. at 594 (quoting Clearfield Trust Co. v.
United States, 318 U.S. 363, 366-67 (1943)).
In Central Pines, we dealt with a federal
land acquisition similar to the one in Little
Lake Misere, with one notable distinction. In
Little Lake Misere, the acquisition contract
contained an express term of prescription for
the relevant servitude created at the time of the
acquisition. The servitude at issue in Central
Pines, however, was already in existence when
the United States purchased the relevant land;
thus, there was no express term of prescription
in the acquisition contract, because the gov-
ernment was incapable of bargaining for such
a term. We held that the absence of an explicit
contractual right was not enough to render
state law applicable of its own force where the
remaining operative conditions of Little Lake
Misere
SSa purchase pursuant to a federal
statute with the United States as a party to the
acquisitionSSwere present. We stated that
[w]hether or not the United States bar-
gained over the creation of the servitude,
the acquisition subject to the existing servi-
tude created a federal interest in the poten-
tial prescription of the mineral servitude
conveyed by the 1929 deed via the rule of
prescription in place at the time of contract.
. . . The term at issue in Little Lake in ef-
fect set the prescriptive period for the re-
served mineral servitude. The Govern-
ment’s contract “right” was to obtain the
mineral rights after the contractual pre-
scriptive period had elapsed. Similarly, in
this case the Government’s right is to ob-
tain the mineral rights after the default pre-
scriptive period has elapsed. This right, as
in Little Lake, is federalSSthough arguably
weaker because it arises from a default rule.
274 F.3d at 888-89.
Based on Little Lake Misere and Central
Pines, federal law undoubtedly controlled the
rights at issue in the Brewer litigation out of
which the government’s mineral royalty arose.
By purchasing the land subject to the Gardiner
and Laccassane Servitudes pursuant to the Mi-
gratory Bird Conservation Act and before the
passage of Act 315, the United States acquired
interests in the reversion of the mineral rights
on the extinction of those servitudes following
the end of the contractual period of prescrip-
tion with respect to the Lacassane Servitude
and the end of the then-existing statutory pre-
scription period with respect to the Gardiner
Servitude. Those reversionary interests, per
Little Lake Misere and Central Pines, are
governed by federal law.

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7
The question, however, is whether the roy-
alty right conveyed to the United States as part
of the settlement of the Brewer litigation must
also be governed by federal law. The servi-
tude owners argue, and the district court
agreed, that because the royalty was obtained
as consideration in a settlement agreement
rather than as part of a land acquisition pursu-
ant to a federal program, federal law does not
control. The government contends, to the
contrary, that rights obtained in the settlement
of a dispute over federal interests are equally
matters of federal law. The government ar-
gues that by modifying the rights established
between the parties as part of the 1937 acqui-
sition, the Brewer settlement did not displace
the Migratory Bird Conservation Act as the
legal foundation for those rights.
We agree with the government. The United
States was able to obtain the instant royalty
interest only because it had the authority under
the Migratory Bird Conservation Act to pur-
chase the land to which the royalty was at-
tached and to acquire, as part of that purchase,
reversionary interests in the mineral rights on
that land. The fact that the United States ob-
tained the royalty as part of a reorganization of
the rights the parties held under the initial deed
should not render federal law inoperative. In
the language of Clearfield Trust, the govern-
ment’s royalty right finds its root in the same
federal source that allowed the 1937 acquisi-
tion. Accordingly, federal law controls the
right, including its prescriptibility.
B.
Having determined that federal law controls
the royalty right in issue, we must decide
whether to adopt Louisiana law as the federal
rule of decision, notwithstanding that Louisi-
ana law does not apply of its own force. As
we have noted, the Court stated in Little Lake
Misere, 412 U.S. at 596, that “specific aber-
rant or hostile state rules do not provide ap-
propriate standards for federal law.” The
Court asserted that, at the very least, state law
should not be borrowed as the rule of decision
where doing so would deprive the government
of a bargained-for contractual interest. Id. at
597.
We elaborated on Little Lake Misere in
Central Pines, stating that we
begin with the premise that state law should
supply the federal rule unless there is an
expression of legislative intent to the con-
trary, 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 appli-
cation of its own rules must be weighed.
Cent. Pines, 274 F.3d at 890. We added that
the government’s interest in the application of
the default prescription rules in place at the
time of contracting, while not as strong as a
bargained-for contractual interest, is neverthe-
less strong enough to militate against applica-
tion of a revised state law rule that would
deprive the government of that “expectancy
interest.” Id. at 891.
The relevant state law did not change be-
tween the time the settlement agreement was
reached and the filing of the servitude owners’
lawsuit. As far as this litigation is concerned,
mineral royalties have always been separately
prescriptible under Louisiana law. The gov-

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8
ernment therefore does not have the kind of
expectancy interest that was relevant in Cen-
tral Pines. Indeed, with respect to land acqui-
sition contracts the United States entered into
after passage of Act 315, Central Pines holds
that “Act 315 provides the background rule
that the United States bargained under. With-
out ‘significant conflict’ between the applica-
tion of state law and the federal interest as-
serted, state law should be borrowed as the
rule of decision.” Id. at 892-93.
Crucially for this case, Central Pines goes
on to state that the government’s mere “inter-
est in adding funds to the Treasury” is not sig-
nificant enough to bar the borrowing of state
law. Id. at 893. Thus, the fact that cutting off
the royalty right of the United States could
diminish the amount of money flowing into its
coffers is not a sufficient reason for refusing to
borrow the prescription regime of the Louisi-
ana Mineral Code as the rule of decision.8
To avoid the application of state law, then,
the government must show that it contracted
around the Louisiana Mineral Code in the set-
tlement agreement and act of conveyance to
create a mineral royalty that is not prescriptible
separately from the underlying servitudes.9 If
the government did so, it has a bargained-for
contractual interest in a royalty not separately
prescriptible that, per Little Lake Misere,
contrary state law cannot abrogate.10
The government points to two persuasive
pieces of evidence in the settlement agreement
and act of conveyance that indicate an intent to
avoid application of Louisiana law with re-
spect to the royalty right. First, the granting
clause of the act of conveyance states that “the
rights herein conveyed” are given to the Unit-
ed States and its “successors or assigns for-
ever.” A grant to an individual or entity and
its “successors or assigns forever” is a legal
term of art that establishes that the object or
interest is conveyed absolutely and uncondi-
tionally.11 Of course, a mineral royalty is by its
8 Under the Refuge Revenue Act, 16 U.S.C.
§ 715s, if the United States receives proceeds from
the royalty, those proceeds would be set aside in a
fund, most of which would ultimately be paid over
to Cameron Parish. The Parish would then distrib-
ute the funds to affected local governments to
offset property taxes lost as a result of the exis-
tence of the Lacassine National Wildlife Refuge.
The fact that the United States has determined that
the best use of mineral royalty proceeds is obtained
by paying such proceeds over to local governments
does not change our analysis in any way.
9 Based on Little Lake Misere and Central
Pines, we must conclude that state law provides a
default regime. Absent a relevant intervening
change in state law, state law is presumed to pro-
vide the operative federal rule of decision unless
the parties opt out of it.
10 As we have said, Louisiana law does not al-
low parties to extend or contractually to obliterate
statutory rules of prescription. Under this prong of
the Little Lake Misere analysis, however, Loui-
siana law would not operate of its own force.
Rather, it would be used only as a “borrowed”
federal rule of decision where it is not in conflict
with federal interests. If the federal government
contracted for a royalty that is not separately pre-
scriptible, Louisiana’s rules of prescription would
be in conflict with that contractual interest and
therefore could not be borrowed as the federal rule
of decision.
11 Cf. Porter v. Acadia-Vermilion Irrigation
Co., 479 So. 2d 1003, 1008 (La. App. 3d Cir.
1985) (stating that “according to settled jurispru-
(continued...)

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9
nature an interest inferior to fee simple, or
“perfect,” title in land. Nevertheless, the use
of traditional fee simple language in the grant-
ing clause indicates that the royalty conveyed
to the United States was meant to endure as
long as possibleSSin other words, as long as
the servitude to which it was attached sur-
vives.12
Second, as part of the settlement, the par-
ties explicitly agreed that Louisiana law, Act
315 excepted, governs the underlying servi-
tudes. Language adopting Louisiana law as
controlling is absent from the sections of the
agreement that deal with the royalty right.
Standing alone, this silence does not prevent
us from nevertheless borrowing state law as
the rule of decision with regard to the pre-
scriptibility of the royalty. Taken in conjunc-
tion with the granting clause, however, that sil-
ence is indicative of an intent to opt out of
Louisiana law.13
Given that the United States bargained for
a royalty that is not subject to the Louisiana
Mineral Code (particularlynot the prescription
regime of the Code), it would be inappropriate
to borrow state law as the federal rule of de-
cision. Instead, Little Lake Misere counsels
that as a matter of federal law the government
should be given the benefit of its bargain. Ac-
cordingly, the government’s mineral royalty is
not prescriptible separately from the Gardiner
and Lacassane Servitudes, and therefore the
royalty has not yet prescribed.
The judgment is REVERSED, and this
matter is REMANDED for further appropriate
proceedings as necessary.
11(...continued)
dence . . . a grant ‘forever’ connotes an unlimited
grant and a sale in fee simple”), cert. denied, 483
So. 2d 1019 (La. 1986).
12 The language in a granting clause is not con-
clusive where the clause is part of a form or where
there is other evidence in the contract that an un-
limited grant was not intended. See Porter, 479
So. 2d at 1008; City of Eunice v. Sunland Props.,
Inc., 597 So. 2d 1198, 1201 (La. App. 3d Cir.
1992). Neither of those conditions is present, how-
ever. In fact, as discussed infra, the language of
the settlement agreement bolsters the conclusion
that the granting clause in the implementing act of
conveyance is significant.
13 The government extends this argument even
further, asserting not only that the parties’ silence
as to the applicability of Louisiana law is evidence
of an intent to opt out of that law, but also that the
(continued...)
13(...continued)
parties could not have “expected or understood”
that Louisiana law would supply the rule of deci-
sion because it is uncertain what type of interests
the government obtained under the relevant agree-
ments. The government contends that it is not
pointing out this supposed confusion in order to
argue that its interest has not prescribed under
Louisiana law (an argument it cannot make, be-
cause it stipulated prescription under Louisiana
law in proceedings below), but merely to demon-
strate that there could be no expectation that Lou-
isiana law would apply if it’s not even clear from
the agreements what rights are at issue.
This particular argument is ineffective, because
it is plain from the face of the settlement agreement
and act of conveyance that the United States was
given a mineral royalty, with attendant rights to
bonuses and rentals, and not some sort of “special”
interest undefined by Louisiana law. The act of
conveyance is entitled “Act of Conveyance of
Mineral Royalty Interest,” and in describing the
rights held by the United States, the settlement
agreement and act of conveyance refer to “royal-
ties” and “royalty interests.”

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10
EMILIO M. GARZA, Circuit Judge, dissenting 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.
Accordingly, I would remand the case to the district court for additional fact finding on that issue.
The majority tacitly invokes the principle of “inclusio unius est exclusio alterius,” reasoning that
the inclusion of a choice-of-law provision with respect to a specific portion of a contract indicates
an intent that the same law does not govern the remainder of the contract. The choice-of-law
provision in the settlement agreement at issue in this case, however, is more complex than the
majority indicates. It states that the servitudes “are governed by the Louisiana Mineral Code, except
as modified by this agreement and the holding of the United States Supreme Court in United States
v. Little Lake Misere Land Co., 412 U.S. 880 (1973) in so far as that case holds that LSA RS 9:5806
does not make the subject mineral servitudes imprescriptable.” While the majority emphasizes the
selection of Louisiana law, it seems that the real significance of this provision is that it clarifies where
Louisiana law does not govern, i.e., where it conflicts with Little Lake Misere or where it was
modified by the agreement. The choice-of-law provision is therefore equally consistent with the
parties’ intending Louisiana law to govern the entire arrangement, except in the one narrow area
where they specified that it would not, as it is with their intending that state law would govern only
the servitudes. The choice-of-law provision is therefore equivocal in supporting the conclusion that

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the parties bargained with the understanding that Louisiana law would not apply to the United States’
mineral interest.
As for the granting clause, the majority concedes that the term, “forever,” used therein cannot
“connote[] an unlimited grant and a sale in fee simple,” as it usually does in contracts governed by
Louisiana law. Porter v. Acadia-Vermilion Irrigation Co., 479 So. 1003, 1008 (La. App. 3d Cir.
1985). For that reason, it is unclear what the parties intended the term to mean. While they might,
as the majority concludes, have intended for the royalty to last as long as the underlying servitudes,
they might have merely meant that whatever rights were conveyed in the settlement agreement were
not subject to any time constraint other than those, like LA.REV. STAT. § 31:85, that define the scope
of the rights themselves. The granting clause therefore does not demonstrate that the government
bargained for a right that is inconsistent with the application of Louisiana law.
In this case, the district court did not make factual findings as to which law the parties intended
to govern the servitudes. Because nothing in the contract affirmatively evidences the parties’ intent,
I would remand this case to the district court for additional fact finding. See In re Mercer, 246 F.3d
391, 404 (5th Cir. 2001) (remanding for further fact finding on the question of intent to deceive);
Texas Dept. of Hous. and Comm. Affairs v. Verex Assur., Inc., 68 F.3d 922, 931 (5th Cir. 1995)
(remanding for further fact finding on the issue of mutual mistake). Accordingly, I respectfully
dissent in part.

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