Opinion ID: 1803236
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Heading Rank: 3

Heading: Implied Duty to Restore the Surface:

Text: We first consider the text of Mineral Code article 122: § 122. Lessee's obligation to act as a reasonably prudent operator A mineral lessee is not under a fiduciary obligation to his lessor, but he is bound to perform the contract in good faith and to develop and operate the property leased as a reasonably prudent operator for the mutual benefit of himself and his lessor. Parties may stipulate what shall constitute reasonably prudent conduct on the part of the lessee. The express terms of this article impose upon a mineral lessee two obligations: (1) to perform the contract in good faith, and (2) to develop and operate the leased property as a reasonably prudent operator for the mutual benefit of lessee and lessor. Caskey, 737 So.2d at 1261. Of relevance here, the text of this provision does not impose an express duty to restore the surface. Rather, it simply adapts the general, good administrator standard of La. Civ.Code art. 2710, applicable to all leases, to the specific context of a mineral lease. Comment., La.Rev.Stat. 31:122. The School Board's reliance upon this article as the source of an implied duty to restore the surface is largely based upon statements contained in the Official Comment. Specifically, the Comment states that, although an implied duty to restore the surface is not among the four implied obligations clearly recognized in Louisiana as stemming from the duty to act as a reasonably prudent operator, there appears no reason whatsoever to exclude this particular obligation as being a specification of the prudent administrator standard. Comment, La.Rev.Stat. 31:122. The Comment reasons that an implied duty to restore the surface may be inferred from Civ.Code arts. 2719 and 2720, general provisions related to a lessee's obligations upon termination of a lease. Id. The Comment also observes that [i]t is established that the mineral lessee must restore the surface even though the lease contract is silent, citing Smith v. Schuster, 66 So.2d 430 (La.App. 2 Cir.1953) as authority. Id. The duty to restore is limited by an economic balancing process, the Comment recognizes, according to which a court must apply a standard of reasonableness and balance[ ] the cost of perfect restoration against the value of the use to which the land is being put. Id. (citing Rohner v. Austral Oil Exploration Co., 104 So.2d 253 (La.App. 3 Cir.1958)). At the outset, we note that statements contained in the official comments are not part of the statute, and are not binding on this court, although we do not discount them entirely. See, e.g., Ramirez v. Fair Grounds Corp., 575 So.2d 811, 813 (La.1991). Our review of the jurisprudence bearing on this issue, as well as the general Civil Code articles dealing with lease, does not, however, persuade us that article 122 imposes an implied duty to restore the surface absent proof that the lessee unreasonably or excessively exercised his rights under the mineral lease. This court has not squarely addressed the issue of whether, and under what circumstances, article 122 imposes an implied duty to restore the surface to its original condition. Although Caskey, 737 So.2d at 1261, identified the duty to restore the surface as near as practical on completion of operations among a list of obligations purportedly recognized under Louisiana's pre-Mineral Code jurisprudence, citing only the Comment to article 122, that case did not involve as an issue whether there existed such a duty or the scope thereof. [8] Further, the court observed that the lessee's performance of this duty was governed by the standard of the conduct expected of persons of ordinary prudence under similar circumstances and conditions, with due regard for the parties' respective interests. Id. (citing Frey v. Amoco Prod. Co., 603 So.2d 166, 175 (La.1992)). The Caskey court also emphasized the importance of the express terms of the mineral lease, noting the rule that [i]n the absence of a violation of law or public policy, the mineral lease constitutes the law between the parties and regulates their respective obligations. 737 So.2d at 1262 (citing Frey, 603 So.2d at 171). Other cases where this court has awarded damages for a mineral lessee's failure to restore the surface have turned on the finding that the terms of the parties' lease expressly imposed this obligation. In Magnolia Coal Terminal v. Phillips Oil Co., 576 So.2d 475, 477, the plaintiff sought damages for the defendant oil company's failure, among other things, to restore the surface to its original condition. The court quoted the language of the mineral lease providing that [l]essee shall pay for all damages caused by Lessee's operations, including damage to ... soil and other property.... Id. In reversing the court of appeal and reinstating the trial court's damage award for the plaintiff, the court observed that the lease impose[d] an express obligation [to restore the surface] which is a matter of contract not within the purview of the mineral code. Id. at 483 (emphasis added). This court's recent decision in Corbello, 850 So.2d at 694, also involved an express lease provision obligating the lessee, upon termination of the lease, to reasonably restore the premises as nearly as possible to their present condition. The court emphasized that the lease terms constituted the law between the parties, and specifically relied upon general principles of contract interpretation to find that the defendant was required to restore the surface to its original condition regardless of the underlying value of the land. Id. at 693-94. Further, both Magnolia Coal Terminal and Corbello involved allegations that the defendants had operated negligently or unreasonably. In Magnolia Coal Terminal, 576 So.2d at 477, there were allegations that the defendants failed to properly plug and abandon wells or to clean up a well site. This court commented that the defendants had shown a callous disregard for the damage being inflicted on the property, and that, [t]his is not the ordinary case in which the lessee has caused minor soil damage. Enormous damage was proven to the soil of the leased premises. Id. at 484 (emphasis added). Similarly, in Corbello, 850 So.2d at 697-98, it was established that the defendant's operations had contaminated the subsurface Chicot Aquifer. The court noted that it was unreasonable for the defendant to argue that its liability should be limited despite the damage it caused through neglect and/or faulty operations. Id. at 694. In this case, in contrast, we find that there was no evidence of any negligent or excessive use by either of the defendants. Judge McDonald also reached this conclusion in dissent. Terrebonne Parish School Board, 878 So.2d at 522 (McDonald, J., dissenting in part and concurring in part). Finding no decisions of this court addressing the existence and scope of any implied duty to restore the surface, we look to decisions of the courts of appeal. Defendants argue, and we agree, that Rohner v. Austral Oil Co., 104 So.2d 253 (La. App. 3 Cir.1958), properly articulated the rule concerning the scope of any implied duty to restore the surface. The plaintiff in Rohner sought damages of $250 per acre to four acres of his property that he claimed were damaged by the defendant lessee's placement of a drilling rig and turnaround, and the digging of pits necessary to drill a well. Id. at 255. The court stated the relevant rule governing a lessee's obligation to restore the surface as follows: Unless provided for in the lease, the lessee is not responsible for damages which are inflicted without negligence upon the lessor's property in the course of necessary drilling operations. Moreover when the damaging of the lessor's property by the mineral lessee is not negligent per se, the lessor must prove that the injury was caused by unreasonable or negligent operations of the lease. Id. (citing William O. Bonin, Comment, Mines and Minerals-Oil and Gas-Surface Rights of Lessor and Mineral Lessee, 26 TUL. L.REV. 522, 523 (1952)). Applying this rule, the court denied recovery, finding that the plaintiff had not shown that his land was damaged due any negligent or unreasonable operations by the defendant. Id. Rather, the damage to the plaintiff's land was attributable solely to the ordinary, customary, and necessary acts which must be done by a drilling company in order to put down a well. Id. We find unpersuasive the First Circuit's attempt to distinguish Rohner as concerning only the narrow circumstance where a lessee has undertaken restoration of the surface and has not performed satisfactorily. Terrebonne Parish School Board, 878 So.2d at 529. The Rohner court does not limit its reasoning in this manner, and neither does the scholarly article upon which the court relied. See John M. McCollam, A Primer for the Practice of Mineral Law Under the New Louisiana Mineral Code, 50 TUL. L. REV. 732, 811 (1976) (characterizing the holding of Rohner as limiting the lessee's duty to restore the surface where the surface use has been reasonable and the lessee has not been negligent). Other decisions of the courts of appeal similarly limit the scope of a lessee's duty to restore the surface to those circumstances where a mineral lessee has exercised his rights under the lease unreasonably. Although disagreeing with the Rohner court that a lessor was required to show negligence per se as a prerequisite to recovery for a lessee's failure to restore the surface, the court in Ashby v. IMC Exploration Co., 496 So.2d 1334, 1337 (La.App. 3 Cir.1986), aff'd on other grounds, 506 So.2d 1193 (La.1987), nevertheless denied recovery for diminished use of the land arising out of [the defendant's] reasonable, necessary exercise of its rights under the mineral lease. In Edwards v. Jeems Bayou Production Co., 507 So.2d 11, 13 (La.App. 2 Cir.1987), the court quoted the Ashby court's reasoning and endorsed the lessee's right to conduct its operation in accordance with the mineral lease. Cf. Smith v. Schuster, 66 So.2d 430, 431-32 (La.App. 2 Cir.1953) (recognizing that a lessee's duty to restore the surface is subject to its rightful use); Broussard v. Waterbury, 346 So.2d 1342, 1343-44 (La.App. 3 Cir.1977) (characterizing Rohner as expressing a contrary view, but, nevertheless, adopting the rightful use limit from Smith and stating that a lessee's duty to restore is subject to a reasonableness standard), writ denied, 350 So.2d 674 (La.1977). Further support for limiting the lessee's duty to restore to circumstances where a lessee has operated excessively may be found in La. Civ.Code arts. 2719 and 2720, as defendants urge and as Judge McDonald noted in dissent. See Frey, 603 So.2d at 171 (Mineral leases are construed as leases generally and, wherever pertinent, codal provisions applicable to ordinary leases are applied to mineral leases.). Articles 2719 and 2720 do not impose a strict obligation to return leased property in an unchanged condition. Rather, both articles allow for deterioration of the leased property because of necessary wear and tear. The First Circuit failed to consider the significance of the lease's express grant of the right to dredge canals, or the effect of the wear and tear limitation contained in these articles upon the lessee's duty to restore. In determining what constitutes necessary wear and tear in a particular case, it is useful to consider the character of the specific rights granted in the lease. The lessor may be considered to have given his assent to the wear and tear normally involved in exercising the rights granted. Here, the School Board's express grant of the right to dredge canals constituted consent to or approval of the changes necessarily incident to dredging. Thus, the marshland here was worn and torn in precisely the manner the parties' contemplated. In Butler v. Baber, 529 So.2d 374, 380 (La.1988), this court quoted the reasoning of then Judge Lemmon, in partial dissent in Jurisich v. La. S. Oil & Gas Co., 284 So.2d 173, 184 (La.App. 4 Cir.1973), stating that a mineral lessor who expressly granted the lessee the contractual right to dredge canals, 'consent[s] in advance ... to reasonable, necessary and skillful dredging and to those changes on the leased premises normally incident to those dredging activities,' and observing that the dredging of canals normally involves `the removal of earth, the creation of enlargement of a cavity, and the placement of excavated soil on a spoil bank in proximity to the canal.' [9] (Emphasis added). This court's decision in Riggs v. Lawton, 231 La. 1019, 93 So.2d 543, 545 (1957) further illustrates the principle that a lessor may not compel a lessee to restore the leased premises to their former condition when the lessor has expressly approved the modifications that the lessee accomplished. The lessee in Riggs sued the lessor to recover money spent to build an additional room and bath onto the leased property. Id. at 544. The lessor counterclaimed, seeking an order requiring the lessee to remove these additions to the property and to return it in the same state in which the lessee received it. Id. The court held, relying in part on articles 2719 and 2720, that the lessor was not entitled to an order compelling removal of the additions because they were made with [the lessor]'s full consent and approval. Just as the lessor in Riggs consented to the lessee's additions to the leased property, the School Board here gave the defendants permission to dredge the canals on the leased land, and, in so doing, the School Board consented to return of the leased land with the alterations that dredging entails. See also K & M Enters. of Slaughter, Inc. v. Pennington, XXXX-XXXX (La.App. 1 Cir. 5/12/00), 764 So.2d 1089, 1094 (denying damages for restoration of leased land to the lessor where the land was only altered by [the lessee] in furtherance of the farming operations that were the clear object of the lease, and ... such alterations, being integral parts of farming operations, were anticipated by the parties as part of the purpose for which the lease was intended), writ denied, XXXX-XXXX (La.6/30/00), 766 So.2d 548. Applying the jurisprudence and Civil Code articles discussed above, we hold that, in the absence of an express lease provision, Mineral Code article 122 does not impose an implied duty to restore the surface to its original, pre-lease condition absent proof that the lessee has exercised his rights under the lease unreasonably or excessively. The School Board did not present any such evidence, and the trial court did not find that the operations of Samson and Bois D'Arc were unreasonable or excessive. To the contrary, the defendants presented ample evidence showing (1) that they complied with all relevant regulations of the Louisiana Commissioner of Conservation, and (2) that their decision not to backfill the canals at issue was entirely consistent with industry custom. [10] Thus, the First Circuit's holding that these defendants were impliedly obligated to backfill the canals is not supportable. [11] The School Board also argues, however, that an express provision in the contract assigning the rights under the lease to Bois D'Arc had the effect of (1) expressly obligating Bois D'Arc to restore the surface, and (2) creating a stipulation pour autrui in favor of the School Board that would enable the School Board to enforce this obligation. The relevant language in the assignment from ARCO to Bois D'Arc obligated Bois D'Arc to restore the surface of the leased premises, in compliance with applicable state and federal regulations. (Emphasis added). [12] Thus, Bois D'Arc's obligation under this provision was to restore the surface only to the extent that federal or state law required it. The School Board has not shown that federal law obligated Bois D'Arc to backfill these canals. And, as discussed at length above, we have found that Louisiana law imposes no such obligation under these circumstances. Thus, we reject the School Board's argument that this clause expressly obligated Bois D'Arc to restore the surface. In holding that the defendants are not obligated to restore the leased premises, we are not unaware of the plight of Louisiana's coastal wetlands, as discussed at length by plaintiff's expert witness, Dr. Shea Penland, at trial. We find, however, that imposing an implied duty to restore the surface that was clearly beyond the contemplation of the parties at the time they contracted is not a legally supportable resolution to an undoubtedly difficult problem confronting our state and its people. Should the School Board have desired to ensure that its lessee would undertake restoration upon termination of the lease, the School Board could have bargained for an express lease term so providing. And should the state, in recognition of the inherent value of Louisiana's coastal wetlands, have wished to impose an obligation upon all mineral lessees to undertake restoration of the leased land upon the termination of a mineral lease, the state was at liberty to attempt to pass legislation to expressly do so. Further, we briefly note the ongoing efforts of state and federal legislative bodies to address the problem of coastal erosion. As noted by various amici in briefs submitted in support of defendants, in 1990, Congress passed the Federal Coastal Wetlands Planning, Protection and Restoration Act, 16 U.S.C. §§ 3951-3956, which allocated federal money to match state funds to study, plan, design and construct projects to preserve and restore wetlands. A comprehensive plan for the protection and conservation of Louisiana's wetlands called Coast 2050: For the Sustainable Coast of Louisiana, has been adopted by the state and its federal partners. See also Comment, Wetlands Mitigation and Mitigation Banking in Louisiana, 59 LA. L.REV. 591, 592-97 (1999) (discussing Louisiana's regulatory preference for mitigation banking to compensate for wetlands loss). The court is hesitant to interpose its authority, limited, as it must be, to resolving civil disputes between litigating parties, to order piecemeal restoration of the coast in some fashion, considering the far superior knowledge of relevant environmental concerns that state agencies and experts possess.