Court Opinion

ID: 9775237
Source: CourtListenerOpinion
Date Created: 2023-08-29 18:51:00.255025+00
Date Added: 2024-06-11T07:32:23.978646
License: Public Domain

CAMPBELL, Justice,
concurring.
This Court should not now apply the law of implied covenants in oil and gas leases to lignite and coal leases. Heavy commercial use of lignite and coal is just beginning in Texas. Our jurisprudence of hard minerals has not been developed.
The mining, transporting, storage, use, and marketing of lignite and coal is so different from oil and gas the implied covenants in oil and gas leases may not be applicable. The unwritten intent of the parties of a lignite and coal lease will probably be different from those of an oil and gas lease. The ability to develop is different because the lignite and coal lessee may have to construct the consuming facility and this often takes several years and is very costly. One consuming facility may be the only marketing outlet for many years. A coal and lignite lessee with a lease of several thousand acres cannot extract the mineral from each lease on a prorata basis as may be done in some oil and gas leases covering a large acreage. Implied covenants in oil and gas leases may not be applicable.
I agree that if there is an implied covenant to reasonably develop a coal and lignite lease, this contract negates forfeiture by express language. However, the contract does not stop here. It provides that no forfeiture shall result from the breach of any implied covenant. This is very broad and could well be subjected to the reasonableness test as have non-competition contracts, the reasonable prudent operator test of oil and gas operators, or other limitations.
Lessor and lessee have contracted that no forfeiture would result from lessee’s failure to prosecute mining operations so long as delay rentals are paid. In this cause lessor has contracted against the right to cancel the lease for the failure of lessee to prosecute mining operations.
I concur in the result.
SPEARS and WALLACE, JJ., join in this concurring opinion.