Honorable Bob Armstrong

Commissioner General Land Office Austin, Texas 78701 Opinion No. M-1046
Re: Whether a twenty-five year termmineral lease may be extended beyond its fixed terms by virtue of a forcemajeure clause Dear Mr. Armstrong: under presented facts.

You request our opinion onwhether a twenty-five year term mineral lease, dated June 11, 1946,was in good standing at the time an extension of the leasewas applied forunder theprovisions ofArticle 5944c, Section 2,.Vernon'sCivil Statutes.

Prior to 1948, the State of Texas issued a considerable number of twenty-five year term oil and gas leases. In order toprevent the rapid depletion ofmineral reserve under such leases and toprevent wasteful production practice, and to increase the revenue of the Public Free School Fund, House Bill 17,Acts of the 50th Legislature, Regular Session, 1947, Chapter 82,Page 139, codified inVernon's asArticle 5344c, Vernon's Civil Statutes, was enacted. This Act authorized the School Land Board, on application made prior to October 1, 1948, to amend these leases to extend their terms for as long asminerals arebeing produced inpaying quantities and authorized theBoard to fix the consideration for each amendment.

Section 2ofHouse Bill 17,Acts of the 50th Legislature, Regular Session, 1947, has been amended numerous times to change the cut-off date for filing an application to extend the fixed term leases.

House Bill No. 1755,Acts of the 62nd Legislature, First Called Session, 1971, again changed the cut-off date. No other change was made by the 1971 amendment which became effective June 15, 1971.

Article 5344c, Sec. 2, as amended in its relevant portion, now reads:

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"Sec. 2. Any lease heretofore granted and in good standing covering any of the lands or areas referred to in Section 1of thisAct, upon application by any owner thereof to the Commissioner of the General Land Office before December 1, 1971,may be amended under the terms of thisAct so as toprovide that such lease shall remain in effect as long after the expiration of itsprimary term as oil, gas, or other mineral covered by such lease isproduced therefrom,. ~ ."
The lease inquestion was given on the 11th day of June, 1946, and it covered ninety acres of the Brazos River Bed located in Fort Bend County. Normally, under the terms of the lease, the twenty-five year period would end on June 11, 1971. An application to extend the lease asprovided by Article 5344c, Sec. 2,was filed on October 4, 1971.

You state inyour request that .theapplicant and owner of the leasemaintains that the leasewas extended beyond October 4, 1971, under the forcemajeure clause contained in paragraph 10 of the oil and gas lease. The term "forcemajeure" (orits Latin equivalent, to forces of nature, vismajor) originally was restricted as stated InThe George Shiras, 61 Fed. 300, 301 (3dCir. 1894):

II

. . .Aloss is said tobe caused by vis in;n;;when it results immediately from anatural

,wrthout the intervention ofman, and could not have been prevented by the exercise ofprudence, diligence, and care. . .Thus,a storm of unusual and extraordinary violence, a sudden gust ofwind, and a tempest, have been held tobe examples of vismajor.

. ." (Emphasis supplied.)
However, later cases tended toward abroader definition of forcemajeure and in Pacific Vegetable Oil Corp. vs. C.S.T., *, 29 Cal.Zd 228, 238, 174 P.2d 441 (Cal.Sup., 1946), the Court held that governmental action provoked by the necessity of war constituted forcemajeure. The Court there stated:

"'Forcemajeure', or the Latin expression 'vismajor', isnot necessarily limited to the equivalent of anAct of God. The test is whether under theparticular circumstances therewas such an insuperable interference occurring without theparty's intervention as -5112-Honorable Bob Armstrong, page 3 (M-1046)

could not have been prevented by the exercise ofprudence, diligence and care. . . ." (Emphasis supplied.)
The forcemajeure clause in the lease in question reads, inpart, as follows:

"10. Should lessee beprevented from complying with any express or implied covenant of this lease, from conducting drilling operations thereon, or fromproducing oil and/or gas therefrom, after effort made in good faith, by reason ofwar, rebellion, riots, strikes, acts of God, or any order, rule or regulation of governmental authority,~then while soprevented, lessee's obligation to comply with such covenant shall be suspended and lessee shall not be liable fordamages for failure to comply therewith: and this lease shall be extended while and so long as lessee isprevented, by any such cause, fromdrilling, reworking operations or producing oil, gas or otherminerals from the leased premises: provided, however, thatnothing herein shall be construed to suspend the payment of delay rentals in order tomaintain this lease in effect during theprimary or extended term in the absence of such drilling or reworking operations orproduction of oil and/or gas." (Emphasis added.)
Under a fixed term lease such aswe have here, the lessee has twenty-five years inwhich toproduce the oil and gas, and, ifhe isprevented by causes beyond his control, then, in effect, the lessee does not have a twenty-five year term lease.

The undisputed facts as furnished to us fromyour office indicate that for a total period in excess of 120days over the past twenty-five years, the lesseewas prevented fromdrilling, reworking operations orproducing by reason of "Acts of God" and/or by "order, rule or regulation of governmental authority" within the literal meaning ofparagraph 10 of the lease. The information furnished reflects no lack of good faith efforts by the lessee. Thus, under the language ofparagraph 10, the lease has been extended beyond October 4, 1971, by its own terms.

Therefore, it is the opinion of this office that the force majeure clause has extended the lease inquestion in excess of 120 days past the regular expiration date of June 11, 1971. It -5113-Honorable Bob Armstrong, page 4 (M-1046)

is further our opinion that the leasewas in good standing on October 4, 1971, at the time application was made to the Board for an extension of the lease and, thus, the School Land Board may consider the application to extend the lease now pending before the School Land Board.
SUMMARY

Under the existing facts, the lease inquestion has been extended by the forcemajeure clause and the leasewas in good standing on the date the application to renewwas made.

C.MARTIN ey General of Texas Prepared by Linward Shivers Assistant Attorney General
APPROVED: OPINION COMMITTEE
Kerns Taylor, Chairman W. E. Allen, Co-Chairman J. Milton Richardson John Reeves JimBroadhurst Marietta Payne
SAM MCDANIEL Staff Legal Assistant

ALFRED WALKER Executive Assistant
NOLA WHITE First Assistant

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