## United States Court of App eals

F O R T H E E I G H T H C I R C U I T

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No. 1 1- 33 83

__ __ __ __ __ _ Larry W . Nix on , Hus ba nd
, * in di vi du al ly and on be ha lf o f * al l o th ers si m il arl y

si tu at ed ; *

* Am y B. Nix on , W ife , in di vi du al ly *

an d o n b eh al f of

all ot he rs * si m il arl y si tu at ed ; *

* Mi ch ael D. Lath em , in di vi du al ly *

an d o n b eh al f of

all ot he rs * si m il arl y si tu at ed
, *

* Pl ai nt iff s - Ap pe ll an ts , *

* App eal fro m

th e Uni te d S ta te s

v. * Dis tri ct Co ur t fo r th e
* East ern Dis tri ct of Ark an sa s. Agr iB an k, FC B, *

* Defen da nt - App el le e. *

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Su bm it te d: Apri l 2 0, 2 01 2 Fi le d: Ju ly 25, 2 01 2

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Befo re MUR PHY, MELLOY, an d GRUENDER, Ci rcu it Ju dg es

.

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MELLOY, Circu it Ju dg e.Pl ai nt iff s, su cces so rs in ti tl e to lan d l oc at ed in Van B ur en Co un ty, Ark an sa s, br ou gh t a de cl arat or y jud gm en t act io n in Ark an sa s st at e co u rt ag ai ns t Agr iB an k, FCB, se ek in g to qu ie t ti tl e to oi l an d ga s rig ht s th at Agr iB an k ho ld s in Pl ai nt iff s' la nd

. Agr iB an k rem ov ed th e cas e to th e Uni te d St at es Dis tri ct Co ur t fo r th e East ern Dis tri ct of Ark an sa s an d th e r e a f

t e r mov ed to di sm is s th e co m pl ai nt un de r Fed eral Ru le of Ci vi l Pro ced ur e 12 (b )(6 ). The di st ric t co ur t gr an te d th e m ot io n, id en ti fy in g two 1
ba se s on whi ch to do so : fir st , th at a reg ul at io n pr om ul ga te d by th e Farm Cred it Adm in is tra ti on sp eci fic al ly ap pr ov ed of th e so rt of own ers hi p in te res ts he ld by Agr iB an k th at th e Pl ai nt iff s no w at ta ck ; an d se co nd
, th at th e ch al le ng e to Agr iB an k's oi l an d g as rig ht s was ba se d o n a rep eal ed act of C on gr es s. We affir m

.

I.

Pl ai nt iff s' pr ed eces so rs in in te res t pu rch as ed th e la nd in qu es ti on fro m th e Fed eral Land Ban k o f St . Lou is (th e Lan d Ban k) on Octo be r 10 , 1 93 8, an d Ja nu ary 10
, 19 39

. The Lan d Ban k acq ui red
, an d di sp os ed of
, th e la nd pu rs ua nt to th e Fed eral
Farm Loa n Act of 19 16 (th e Act)
, Fed

. Lan d Ban k of W ic hi ta v. Bd

. of Cn ty. Co m m ' r s , 3 6 8 U

. S. 14 6, 14 7, 15 1 (1 96 1)
, whi ch was rep eal ed in it s en ti ret y by th e Farm Cred it Act of 19 71

. Pu b. L. No. 9 2

- 1 8 1
, 85 St at

. 58 3 (1 97 1)

. In bo th

co nv ey an ces , th e Lan d Ban k res erv ed fo r it se lf "an un di vi de d on e-h al f (1 /2 ) of al l oi l,

ga s, co al an d ot he r m in eral s in
, u po n an d un de r th e ab ov e de sc rib ed la nd ." Tho se

res erv at io ns in cl ud ed no te m po ral li m it at io n. It is pu rs ua nt to th os e res erv at io ns th at Defen da nt , as th e Lan d Ban k's su cces so r in in te res t, pu rp or ts to ret ai n an in te res t in
th e m in eral rig ht s at te nd an t t o P la in ti ffs ' lan d.

The Act un de r whi ch th e Lan d Ban k op e r a t e d p l a ced li m it s on a la nd ba nk 's ab il it y to ho ld la nd

. Sp eci fic al ly, th e Act "l im it ed th e pe rio d of own ers hi p to fiv e

The Hon or ab le Ja m es M. Mo od y , Uni te d St at es Dis tri ct Ju dg e fo r th e East ern 1 Dis tri ct of Ark an sa s.

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-y ears un le ss sp eci al pe rm is si on co ul d be ob ta in ed f r o m t h e Farm Cred it Adm in is tra ti on ." Fed

. Lan d Ban k of W ic hi ta , 36 8 U.S. at 14 8. The Act st at ed : "'n o

su ch ba nk sh al l ho ld ti tl e an d po ss es si on of an y real es ta te pu rch as ed or acq ui red to

se cu re an y de bt du e to it
, fo r a lo ng er pe rio d th an fiv e y ears , ex cep t with th e sp eci al

ap pr ov al of th e Farm Cred it Adm in is tra ti on in writ in g.'" Fed

. Lan d Ban k of W ic hi ta , 36 8 U.S. at 14 8 n.3 (q uo ti ng 12 U.S.C. § 78 1 Fo ur th (rep eal ed 19 7 1 )). Tha t li m it at io n th en be cam e nu ga to ry , at le as t wit h res pe ct to a la nd ba n k ' s r et en ti on of

m in eral rig ht s, on Ja

nua ry 1, 1943
, w hen th e Farm Cred it Adm in is tra ti on pr om ul ga te d

a reg ul at io n th at au th or iz ed al l ban ks to ho ld m in eral rig ht s in ex ces s of fiv e y ears

. F e d

. La n d Ban k of W ic hi ta v. Bd

. of Cn ty Co m m 'rs of Kio wa Cn ty, 35 4 P.2 d 67 9,
68 2 (Kan

. 19 60 ) (rev 'd on ot he r gr ou nd s by Fed

. Lan d Ban k of W ic hi ta , 36 8 U.S. at 15 6) (n ot in g da te of reg ul at io n's pr o mu l g a ti on ). Tha t reg ul at io n, whi ch "g ran t[e d] bl an ke t p erm is si on to al l la nd ba nk s to ho ld m in eral rig ht s l on ge r th an fiv e y ears ," Fed . Land Ban k o f W ic hi ta , 36 8 U.S. at 14 8, s ta te d:

Hol di ng m in eral r i g h ts fo r m or e th an 5 y ears

. In cas es whe re, in

co nn ect io n wit h a sa le of ba nk -o wne d real es ta te , th e ba nk ha s ret ai ne d

ro y al ty or ot he r rig ht s in or to m in eral s, and de si res to ho ld su ch rig ht s fo r a pe rio d in ex ces s of 5 y ears , it is no t co ns id ered th at th e ba nk ha s bo th "t it le an d p os se ss io n" of real es ta te wit hi n th e m ean in g o f se ct io n 13 Fo ur th (b ) of

th e Fed eral Farm

Loan Act (1 2 U.S.C. 78 1 Fo ur th (b ) (1 2 U.S.C.A. s 78 1 Fo ur th (b ))). H o w e v e r, re te nt io n of su ch min er al s

an d mi ne ra l r ig ht

s f or pe ri od s i n e xces s o f 5 yea rs , whe n i n th e b an k's
op in io n it is in th e b an k's in te re st to do so , ha s th e ap pr ov al of th e Admi ni st ra ti on

.

Fed

. Lan d Ban k of W ic hi ta , 36 8 U.S. at 15 3 ( q u o t i n g 6 C.F.R. § 10 .64 ) (em ph as is ad de d)

.

I n s e e k i n g to qu ie t ti tl e to th e m in eral rig ht s he ld by Defen da nt s, Pl ai nt iff s
arg ue d th at th e earl ie r-g ran te d res erv at io ns were su b je c t t o th e fiv e-year st at ut or y li m it
, no twi th st an di ng th e la te r-p ro m ul ga te d reg ul at io n's bl an ke t gr an t of ap pr ov al

.

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-The di st ric t co ur t he ld
, in te r al ia , th at th e res erv at io ns at is su e in th is ca s e d i d no t

vi ol at e th e Act be cau se th e reg ul at io n ga ve th e Lan d Ban k th e "s pe ci al ap pr ov al " fo r th e m in eral rig ht s res erv at io ns as req ui red by th e Act. Acco rd in g to th e di st ric t co ur t,

su ch ap pr ov al th ereb y

rem ov ed th e res erv at io ns fro m th e Act 's fi ve -y ear l im it

.

II.

The di st ric t co ur t pr ov id ed two in de pe nd en t rat io na le s fo r gr an ti ng Agr iB an k's di sm is sa l m ot io n. Bo th are le ga l co nc lu si on s th at we rev ie w de no vo

. Turk is h Co al

. of Am
., In c. v. Bru in in ks
, 67 8 F.3 d 61 7, 62 3 (8 th Ci r. 20 12 ). Fi rs t, th e di st ric t co ur t

co nc lu de d th at th e ab ov e-q uo te d reg ul at io n ex em pt ed th e m in eral rig ht s in qu es ti on fro m th e Act's fiv e-year li m it at io n. Seco nd
, th e di st ric t co ur t ci te d a rece nt cas e fro m
t h i s c o u r t fo r th e pr op os it io n th at a rep eal ed st at ut e m ay no t be en fo rced "u nl es s

co m pe t e nt au th or it y ha s ke pt th e st at ut e al iv e fo r th at pu rp os e." Fi rs tc om , In c. v. Qwest Co rp ., 55 5 F.3 d 66 9, 67 6 (8 th Ci r. 20 09 ) (in te rn al qu ot at io n m ark s om it te d)

. The di st ric t co ur t co nc lu de d th at be cau se th e Act ha s be en rep eal ed
, an d be cau se no

co m pe te nt au th or it y ha s ke pt th e Act al iv e, th e A c t c an no t fo rm th e ba si s of th e Pl ai nt iff s' c ha ll en ge to Agri Ban k's m in eral rig ht s.

Ch al le ng in g th e di st ric t co ur t's fir st rat io na le
, Pl ai nt iff s a rg ue th at th e
reg ul at io n do es no t ap pl y in th i s cas e be cau se th e Lan d Ban k acq ui red th e m in eral rig ht s m or e th an fiv e y ears pr io r to th e da te th e reg ul at io n was pro m ul ga te d. W hi le
th e Lan d Ban k's sa le of la nd an d si m ul ta ne ou s res erv at io n of m in eral rig ht s oc cu rred fe wer th an fiv e y ears pr io r to th e reg ul at io n's pr om ul ga ti on , th e Lan d Ban k fir st cam e in to po ss es si on of th e la nd mor e th an fiv e y ears be fo re th e reg ul at io n's pr om ul ga ti on

. Thu s, th e Pl ai nt iff

s arg ue th at th e rel ev an t da te is whe n th e Lan d Ban k fir st acq ui red
th e la nd
, as op po se d to whe n th e Lan d Ban k res erv ed th e m in eral rig ht s in qu es ti on

.

-4

-W hi le th at pre m is e is de ba ta bl e, an y di sp ut e on th is po in t is irre le va nt

. Eve n if we 2

as su m e th at th e Lan d Ba n k o b t a i ne d th e m in eral rig ht s m or e th an fiv e y ears be fo re
t h e reg ul at io n's pr om

ul ga ti on , we st il l m

us t co nc lu de th at th e reg ul at io n's t e x t i s b r oa d en ou gh to in su la te th os e m in eral rig ht s fro m th e Act's fiv e-year li m it at io n

. Sp eci fic al ly, th e se co nd po rti on of th e reg ul at io n— whi ch ap pr ov ed th e "re te nt io n of

su ch m in eral s an d m in eral rig ht s f or pe rio ds in ex ces s of 5 y ears "— ex em pt ed th e rig ht s at is su e in th is cas e fro m th e Act 's l im it at io ns

.

The Act's fiv e

- ye a r li m it at io n was su bjec t to ab ro ga ti on up on "t he sp eci al

ap pr o v a l o f t h e Farm Cred it Adm in is tra ti on in writ in g." 12 U.S.C. § 78 1 Fo ur th (rep eal ed 19 71 ). The FCA ga ve jus t su ch ap pr ov al
, in writ in g, whe n it pr om ul ga te d

a reg ul at io n st at in g th at "'re te nt io n of su ch m in eral s an d m in eral rig ht s fo r pe rio ds in

ex c e ss of 5 y ears

. . . ha s th e ap pr ov al of th e Adm in is tra ti on .'" Fed

. Lan d Ban k of
W ic hi ta , 36 8 U.S. at 15 3 (qu ot in g 6 C.F.R. § 10 .64 ). "[S]uc h m in eral s an d m in eral rig ht s," in tu rn , refe rs to "ca se s whe re, in co nn ect io n wit h a sa le of ba nk -o wne d real

es ta te , t he ba nk ha s ret ai ne d ro y al ty o r ot he r r ig ht s in or to m in eral s, an d de si res to ho ld su ch rig ht s fo r a pe rio d in ex ces s of 5 y ears ." Id

. Und er th e pl ai n te xt of th e Act

an d th e reg ul at io n, th e Lan d Ban k rece iv ed th e FCA's writ te n a p p r o va l fo r th e "re te nt io n of

. . . m in eral rig ht s fo r pe rio ds in ex ces s of 5 y ears " an d was th eref or e

em po wered to ho ld th e m in eral rig ht s i n q ue st io n b ey on d fi ve y ears . Id.

Neit he r th e Act no r th e reg ul at io n pr ov id e te xt ua l su pp or t fo r th e Pl ai nt iff s' di st in ct io n be twee n m in eral rig ht s acq ui red pr io r to fiv e y ears be fo re the reg ul at io n

was pr om ul ga te d an d su ch rig ht s acq u i r e d a f t er th at po in t. Rat he r, th e reg ul at io n's

us e o f t h e pa st te ns e—" In cas es whe re

. . . th e ba nk ha s re ta in ed ro y al ty or ot he r

In Ark an sa s, "[a ] res erv at io n is a cl au se in a de ed whe reb y th e gr an to r res erv es 2

so m e ne w th i n g to hi m se lf, is su in g ou t of th e th in g gr an te d whi ch was no t in es se be fo re." W al ln er v. Jo hn so n, 73 0 S.W .2d 25 3, 25 6 (Ark

. Ct

. App

. 19 87 ). Und er th is pr eced en t, it wou ld se em th at th e Lan d Ban k di d n ot ho ld th e sp eci fic in te res ts at is su e m or e th an fiv e y ears be fo re t he FCA p ro m ul ga te d t he reg ul at io n.

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-r i gh ts

. . . ."— su gg es ts th at th e reg ul at io n was in te nd ed to ap pl y to res erv at io n s

al read y he ld by th e va rio us la nd ba nk s. Id

. (em ph as is ad de d)

. In de ed
, th e Su pr em e Co ur t ch arac te riz ed th e reg ul at io n as gr an ti ng " bl an ket pe rm is si on to al l la nd ba nk s
to ho ld m in eral rig ht s lo ng er th an fiv e y ears ." Fed

. Lan d Ban k of W ic hi ta , 36 8 U.S.

at 14 8 (em

ph as is ad de d)

. Acco rd in gl y , t he res erv at io ns at is su e en joy ed th e FCA's

ap pr ov al an d wer e n ot su bjec t t o t he Act's fiv e-year li m it at io n.

B e c a u s e we co nc lu de th at th e di st ric t co ur t was co rrec t in ho ld in g th e Act' s fiv e-year li m it at io n in ap pl ic ab le to th e m in eral rig ht s at is su e, we ne ed no t rev ie w th e di st ric t co ur t's al te rn at iv e rat io na le fo r di sm is sa l. See Mi si sc hi a v. St

. Jo hn 's Mer cy Heal th Sy s., 45 7 F.3 d 80 0, 80 5 (8 th Ci r. 20 06 ). W e affi r m t h e jud gm en t of th e di st ric t co ur t.

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