ELR Citation: 45 ELR 20060
No(s). 44 (N.Y. Mar 31, 2015)

New York's highest court refused to extend hydraulic fracturing leases entered into between energy companies and landowners. The leases contained a "force majeure" clause, excusing the parties from nonperformance due to events outside their control, as well as "habendum clauses," establishing the primary and definite term during which the companies could exercise the drilling rights granted by the leases. In 2008, while the leases were still in effect, the state's governor ordered the environmental review of hydraulic fracturing within the state and suspended the issuance of any drilling permits. As a result, no operations have been conducted upon the leaseholds, the energy companies have not produced oil and gas from the properties within the leases' primary terms, and no royalties have been paid to the landowners. When the lease periods expired, the landowners sought a declaration that the leases had expired by their own terms. The companies argued that the environmental review mandate was a "force majeure" event that extended the leases' terms. But because the force majeure clause does not modify the habendum clause, the leases terminated at the conclusion of their primary terms.