Opinion ID: 1784269
Heading Depth: 1
Heading Rank: 5

Heading: Reasonable Use of the Leased Premises

Text: Having determined that the surface rights granted under the Connell lease clearly include uses necessary for operations on adjacent lands, we must now determine if Kelley's use of the surface of the leased premises was reasonable. See Hamilton E. McRae, Granting Clauses in Oil and Gas Leases: Including Mother Hubbard Clauses, 2 Inst. On Oil & Gas L. & Tax'n 43, 58 (1951) (because courts have limited lessee's incidental rights, including surface use, to those necessary to the exercise of the purpose of the lease, the right of surface use by the lessee gives rise to the corollary that lessee's use must not be negligent or unreasonable.) (footnote omitted). The mineral lessee has the right to use the surface of the leased premises to the extent reasonably necessary for its operations thereon and on adjacent lands. This right is not unfettered, however. See, e.g., East v. Pan American Petroleum Corp., 168 So.2d 426 (La.App. 3d Cir.1964) (lessee acted unreasonably in excavating 14,000 cubic yards of dirt from leased premises to use in building board road to well on adjacent tract). The Connell lease and the Mineral Code imposed upon the mineral lessee the standard of reasonableness with regard to the exercise of surface rights under the lease. Paragraph 18 of the Connell lease provided that Lessee shall compensate Lessor for all damages to the timber, growing crops, fences and improvements on the premises occasioned as a result of the Lessee's operations hereunder. Additionally, paragraph 19 provided in pertinent part that the lessee, at the expiration of the lease, shall ... restore the surface of the premises to as nearly as reasonably possible the condition in which it was at the commencement of the lease. Significantly, La.Rev.Stat. 31:11 requires that the landowner and the mineral owner each exercise its respective rights with reasonable regard for those of the other. The standard of reasonableness is flexible and require[s] judicial interpretation to determine its impact on a given set of circumstances. McCollam, A Primer for the Practice of Mineral Law Under the New Louisiana Mineral Code, 50 Tul.L.Rev. 729, 811 (1976). See also La.Rev.Stat. 31:11, Comment. Although the standard of reasonableness in Article 11 constitutes legislative form without specific content ... the thrust of the rule is to permit concurrent use of the land by the surface owner and the mineral owner with neither owner deemed to have a paramount right of use. McCollam, supra at 760. Finally, the reasonableness standard in Article 11 is not necessarily measured against a negligence standard. La.Rev. Stat. 31:11, Comment. Accordingly, the circumstances which constitute an unreasonable exercise of contractual rights must be determined on a case-by-case basis. See Broussard v. Northcott Exploration Co., Inc., 481 So.2d 125, 129 (La.1986). The issue thus presents a question of fact which is subject to the manifest error standard of review. Canter v. Koehring Co., 283 So.2d 716 (La.1973). In the present case, the trial judge, who personally visited the site, concluded in denying plaintiffs' petition for preliminary injunction that Kelley's use of the road was not contrary to the reasonableness standard and was consistent with rights granted under the Connell lease. The court of appeal erred in reversing the trial court without a finding of manifest error. Of great importance is the fact that the road had been in existence since 1981 or earlier, and Sonat, Kelley and their predecessors used the road to drill and operate wells on the Connell tract and the Seamster tract. These operations involved daily use of the road by a pumper to each well and occasional use by an eighteen-wheel truck to haul salt water and condensate from the wells. The evidence established that the road was inadequate for Kelley's purposes in connection with the drilling and completion of the Crichton well. According to a petroleum engineer for Kelley's contract operator, access twenty-four hours per day under all weather conditions is critical for ongoing mineral operations, as well as for safety, especially during the drilling stage of limited duration. He explained that although the existing road was not ... in terrible shape, it was old and narrow and needed some improvement; the trucks, in attempting to navigate the road, became stuck and sometimes overturned, causing the filling in of ditches alongside the road; inadequate drainage allowed water to stand on the road, causing dirt to come onto the road; and timber growth also caused somewhat blind curves. The engineer testified that he recommended adding a layer on top of the existing road and cutting smaller brush and timber alongside the road in order to improve the drainage. He explained that the additional layer improved the road from the north gate to the new well and would last for several years with low maintenance. A Sonat employee also testified that the road was not an all-weather road and needed improvement. He had driven over the unimproved road for two years to service Sonat's two wells, and he described the unimproved road as pretty sticky, explaining that he experienced difficulty in using the road in rainy weather because it was real slick. Although he never found it impossible to service the wells because of the condition of the road, he occasionally observed that saltwater trucks could not make it up the road on rainy days. He further testified that the improvement of the road enhanced Sonat's operations on the Connell tract because it's not near as much trouble getting [operations] out and not near as much wear and tear on [the] truck. Although the traffic on the road increased during the two-to-three months of drilling and completion phases of Kelley's operation on the adjacent land, [7] this factor does not by itself establish that use of the road by Kelley and its contract operator was unreasonable. While traffic increased temporarily during the relatively brief drilling and completion operations, the traffic thereafter returned to the normal pattern of use that had been employed on the same location of the road for many years by Sonat and Kelley and their predecessors. [8] Other evidence supported the trial court's finding of reasonableness. Sonat is also using the road for access to the Connell wells, and a Sonat employee testified that the road has improved [Sonat's operations on the Connell tract] quite a bit. Moreover, while Kelley's contractor removed the north locked gate during the drilling and completion of the Crichton well, the contractor after completion restored the gate to its original position, and Kelley posted a security guard at the location while the gate was not in place. In summary, Kelley's actions in improving the road, expressly authorized by the adjacent lands clause of the Connell lease, were reasonable. The unimproved road could not be used safely by the equipment needed to drill and complete the Crichton well. Moreover, the temporarily increased traffic, while heavy, was customary for such oil and gas operations. The trial court properly found that Kelley and its contract operator used the road under the express authority of the lease to conduct mineral operations on adjacent lands and that their use was reasonable under the circumstances. There was no evidence that defendants ever used the road for any purpose inconsistent with the rights granted under the lease. [9] We emphasize that the decision on the reasonable regard requirement of Article 11 might be different if a party bought a one percent interest in a mineral lease that had been held by production for twenty years and immediately proceeded to construct a new road, along with housing for its employees, on the leased premises in order to conduct operations on adjacent lands. However, on the facts and circumstances in the record in the present case, we cannot say that the trial court erred in finding that Kelley used the surface of the leased premises with reasonable regard for the rights of the lessors.