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Beardslee v. Inflection Energy, LLC

ELR Citation: 45 ELR 20156
Nos. 12-4897, (2d Cir., 08/19/2015)

The Second Circuit held that New York's moratorium on hydraulic fracturing did not allow energy companies to extend oil and gas leases they entered into with landowners. The leases contained "force majeure" clauses, excusing the parties from nonperformance due to events outside their control, as well as "habendum clauses," establishing the primary and definite term during which the companies could exercise the drilling rights granted by the leases. In 2008, while the leases were still in effect, the state's governor ordered the environmental review of hydraulic fracturing within the state and suspended the issuance of any drilling permits. The companies argued that the moratorium was a "force majeure" event that extended the leases' terms. But because the force majeure clause does not modify the habendum clause, the oil and gas leases expired by their terms and the leases' force majeure clauses did not extend the leases' primary terms.