Court Opinion

ID: 4133623
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:40:09.04243+00
Date Added: 2024-06-11T14:37:40.089645
License: Public Domain

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

       You request our opinion on whether a twenty-five year
term mineral lease, dated June 11, 1946, was in good standing
at the time an extension of the lease was applied for under
the provisions of Article 5944c, Section 2, .Vernon's Civil
Statutes.

       Prior to 1948, the State of Texas issued a considerable
number of twenty-five year term oil and gas leases. In order
to prevent the rapid depletion of mineral reserve under such
leases and to prevent 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 in Vernon's as Article 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 as minerals
are being produced in paying quantities and authorized the Board
to fix the consideration for each amendment.

       Section 2 of House 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 por-
tion, now reads:

                                  -5111-
Honorable Bob Armstrong, page 2      (M-1046)

            "Sec. 2. Any lease heretofore granted and
       in good standing covering any of the lands or
       areas referred to in Section 1 of this Act,
       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 this Act so as to provide that such
       lease shall remain in effect as long after the
       expiration of its primary term as oil, gas, or
       other mineral covered by such lease is produced
       therefrom,. ~ ."

       The lease in question 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 ap-
plication to extend the lease as provided by Article 5344c,
Sec. 2, was filed on October 4, 1971.

       You state in your request that .the applicant and owner
of the lease maintains that the lease was extended beyond
October 4, 1971, under the force majeure clause contained in
paragraph 10 of the oil and gas lease. The term "force majeure"
(or its Latin equivalent, vis major) originally was restricted
to forces of nature, as stated In The George Shiras, 61 Fed.
300, 301 (3d Cir. 1894):
           II. . .A loss is said to be caused by vis
      in;n;; when it results immediately from a natural
            , wrthout the intervention of man, and
      could not have been prevented by the exercise
      of prudence, diligence, and care. . .Thus, a
      storm of unusual and extraordinary violence, a
      sudden gust of wind, and a tempest, have been
      held to be examples of vis major. . ." (Em-
      phasis supplied.)

       However, later cases tended toward a broader definition
of force majeure 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 force majeure. The Court there stated:

            "'Force majeure', or the Latin expression
       'vis major', is not necessarily limited to the
       equivalent of an Act of God. The test is
       whether under the particular circumstances
       there was such an insuperable interference oc-
       curring without the party's intervention as
                                  -5112-
Honorable Bob Armstrong, page 3     (M-1046)

       could not have been prevented by the exercise
       of prudence, diligence and care. . . ."
       (Emphasis supplied.)

       The force majeure clause in the lease in question reads,
in part, as follows:

            "10. Should lessee be prevented from com-
      plying with any express or implied covenant
      of this lease, from conducting drilling opera-
      tions thereon, or from producing oil and/or gas
      therefrom, after effort made in good faith, by
      reason of war, rebellion, riots, strikes, acts
      of God, or any order, rule or regulation of
      governmental authority,~then while so prevented,
      lessee's obligation to comply with such covenant
      shall be suspended and lessee shall not be
      liable for damages for failure to comply there-
      with: and this lease shall be extended while
      and so long as lessee is prevented, by any such
      cause, from drilling, reworking operations or
      producing oil, gas or other minerals from the
      leased premises: provided, however, that noth-
      ing herein shall be construed to suspend the
      payment of delay rentals in order to maintain
      this lease in effect during the primary or ex-
      tended term in the absence of such drilling or
      reworking operations or production of oil and/or
      gas."   (Emphasis added.)

       Under a fixed term lease such as we have here, the lessee
has twenty-five years in which to produce the oil and gas, and,
if he is prevented 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 from your office
indicate that for a total period in excess of 120 days over the
past twenty-five years, the lessee was prevented from drilling,
reworking operations or producing by reason of "Acts of God"
and/or by "order, rule or regulation of governmental authority"
within the literal meaning of paragraph 10 of the lease. The
information furnished reflects no lack of good faith efforts by
the lessee. Thus, under the language of paragraph 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 in question 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 lease was 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 in ques-
       tion has been extended by the force majeure clause
       and the lease was in good standing on the date the
       application to renew was 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
Jim Broadhurst
Marietta Payne

SAM MCDANIEL
Staff Legal Assistant

ALFRED WALKER
Executive Assistant

NOLA WHITE
First Assistant

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