Opinion ID: 110252
Heading Depth: 1
Heading Rank: 4

Heading: The Second Stated Issue

Text: This issue concerns money paid to Louisiana by oil and gas lessees since 1950 in respect to Zone 1 areas now adjudicated to the United States. Louisiana asserts a right permanently to retain that money. The amount involved is some $19 million. [2] During the past three decades these federal lands have been administered by Louisiana. Before the Interim Agreement of 1956, Louisiana acted unilaterally in leasing those areas; after that date, it acted with the acquiescence of the United States given by the agreement. The Special Master concluded that, by permitting Louisiana to administer Zone 1, the United States waived its rights to demand an accounting of, and payment with respect to, the revenues derived from its lands in the Zone. The Master did acknowledge that the very opposite result would certainly be the case in the absence of any adjudication or agreement between the parties to the contrary. Supplemental Report 15. He found a waiver on the part of the United States, however, that centered in a provision of the Outer Continental Shelf Lands Act, 43 U. S. C. § 1336, which he read as foreclosing the federal claim to the money. He noted that the Interim Agreement contained no specific language regarding payments derived from leases on areas lying within Zone 1 or Zone 4, although it did with respect to revenues derived from leases on areas lying within Zones 2 and 3. He stressed ¶ 6 of the agreement, which provided that notwithstanding any adverse claim, Louisiana, as to any area in Zone 1 (and the United States, as to any area in Zone 4), shall have exclusive supervision and administration, and may issue new leases and authorize the drilling of new wells and other operations without notice to or obtaining the consent of the other party. App. to Reply Brief for Louisiana 14a. Louisiana, in fact, collected rentals on mineral leases on areas in Zone 1. The United States did not question Louisiana's right to do so. The Master observed that Louisiana anticipated the possibility that some portions of Zone 1, upon which it granted leases, might ultimately be adjudged to belong to the United States, for it inserted in almost all the leases a provision to the effect that it was granting the right to extract minerals only from those parts of the leasehold areas owned by Louisiana. The conclusion the Master drew was that Louisiana was entitled to keep all rentals derived prior to the entry of the supplemental decree of June 16, 1975, from leases upon areas lying within Zone 1, and that the United States had no right to recover them. We are constrained to disagree with the Special Master on this issue. We accept the submission of the United States that the ground rules of the controversy were laid down in 1950. The Court's very first decree, issued December 11, 1950, specified, 340 U. S., at 900, that the United States was entitled to an accounting from Louisiana of all sums derived by the State from lands adjudicated to the United States. This was a principle laid down independently of the not-yet-enacted Submerged Lands Act and Outer Continental Shelf Lands Act. The principle had its roots in the Court's decision in United States v. California, 332 U. S. 19 (1947). The Submerged Lands Act of 1953 did not change the ground rules. It released and confirmed a coastal belt to the coastal States, and the United States thereby release[d] and relinquishe[d] all claims of the United States . . . for money . . . arising out of [past] operations within the belt. 43 U. S. C. § 1311 (b) (1). For areas seaward of that belt, however, the States' obligation to account and pay remained unchanged. This Court's decision of May 31, 1960, in the second suit, was unambiguous on this matter, and the Court made plain the continued vitality of the original ground rules. 363 U. S., at 7, 83, and n. 140. The cited footnote stated flatly: On June 5, 1950, the date of this Court's decision in the Louisiana and Texas cases, all coastal States were put on notice that the United States was possessed of paramount rights in submerged lands lying seaward of their respective coasts. . . . [T]he United States remains entitled to an accounting for all sums derived since June 5, 1950, from lands not so relinquished [by the Sub-merged Lands Act]. The preceding Interim Agreement of October 1956 was forced into being by continuing conflict, by an injunction obtained by Louisiana in its courts, and by the injunction issued by this Court on June 11, 1956. See 351 U. S. 978. As we have noted, the agreement divided the submerged lands into the four zones hereinabove described. The first, nearest the shore, was to be administered by Louisiana. The others were to be administered by the United States, except for certain leases already granted by Louisiana in Zone 2 and the requirement of state concurrence for any new leasing in that zone. Receipts from Zones 2 and 3 were to be impounded. No such impoundment obligation, however, was imposed on the United States with respect to Zone 4 or upon Louisiana with respect to Zone 1. It turned out that the seaward boundary of Louisiana's submerged lands, as finally determined, does not coincide with the line that divided Zones 1 and 2. The final boundary meanders back and forth across the agreement's line between those two Zones producing bulges on each side. Louisiana has been successful in some of its claims to lands within Zone 2, and the United States has accounted for and paid over funds received from those areas. Yet Louisiana denies any corresponding obligation to account for and pay over revenues it received from those portions of Zone 1 that the United States has successfully claimed. Louisiana asserts that the United States, by the Interim Agreement, waived and abandoned its right to revenues from Zone 1 during the life of the agreement. The agreement itself contains no express words of waiver. On the other hand, neither does it provide specifically for eventual repayment of any revenues from portions of Zone 1 ultimately adjudicated to the United States. But the agreement does recite: nor shall any provision hereof be the basis for . . . waiving in any manner any right, interest, claim, or demand whatsoever of either party now pending in the proceedings above referred to, or otherwise. App. to Reply Brief for Louisiana 9a. And it further recites that the baseline from which the several zones were measured had not been surveyed or finally fixed, and that no inference was to be drawn from the use of that baseline. Id., at 10a. These provisions of the agreement persuade us that each party specifically was reserving any monetary claims it might have outside Zones 2 and 3. It was to be expected, of course, that most of Zone 1 would ultimately be adjudicated to Louisiana. This fact accounts for the decision to permit the State to enjoy, for the interim, the revenues from that area. [3] The Outer Continental Shelf Lands Act was the complement of the Submerged Lands Act, for it provided in detail for the administration of federal submerged lands lying beyond those granted to the coastal States. It authorized an agreement with a State respecting operations under existing mineral leases and the issuance of new leases pending the settlement or adjudication of a controversy as to ultimate ownership. 43 U. S. C. § 1336. This provision is referred to in the Interim Agreement, and it is the one on which the Special Master focused his attention. The Master placed particular stress on the following sentence in the statute: Payments made pursuant to such agreement, or pursuant to any stipulation between the United States and a State, shall be considered as compliance with section 1335 (a) (4) of this title. The Master viewed the payments made by Louisiana's lessees in Zone 1 as governed by this language and concluded that any federal claim with respect to those payments was foreclosed. We do not so read that sentence. The provision, we feel, means no more than that a lessee is not in default so long as the agreement remains in effect and he makes the payments required by it. The Act protects the lessee. Whatever the lessee's ultimate obligation, if any, to the United States might turn out to be, there is no basis for reading into § 1336 a waiver by the United States of Louisiana's independent duty to account, or a waiver of any claim for money due the United States. The State's obligation does not derive from the Shelf Lands Act; it was imposed by this Court's 1950 decree, was not waived by the Interim Agreement, and is not excused by the quoted provision of the Shelf Lands Act. This conclusion is buttressed by the fact that until 1975 the actions of the parties and the rulings of this Court consistently indicate that this was the common understanding. The 1960 decree was prepared by the parties at the invitation of the Court. 363 U. S., at 85. The decree itself recognized that once the coastline was determined, Louisiana was to account and to pay. 364 U. S., at 503. The decree of December 13, 1965, although distinguishing between impounded and nonimpounded funds, contained no waiver of any obligation relating to receipts that were not impounded. 382 U. S., at 294. This Court's decision of March 17, 1975, 420 U. S. 529, and the implementing decree of June 16, 1975, 422 U. S. 13, recognized that in some places the true limit of Louisiana's submerged lands was shoreward of the Zone 1 line. That decree, also, was proposed by the parties at the invitation of the Court. 420 U. S., at 530. It declared rights divided by a specified boundary line which, in many places, did not correspond with the seaward edge of Zone 1. It required each party to account for and to pay over impounded revenues attributable to lands adjudicated to the other. 422 U. S., at 15-16. We see no reason to conclude that those accounting provisions were included only for informational purposes, rather than to spell out the parties' pecuniary obligations. [4]