Current Legal Cases on Mineral Leases and Landowner Information
Aukema, et al. vs. Chesapeake, et al.
Opinion from Joe Heath, Esq
An important federal court decision was handed down on November 15, 2011, in a Binghamton case, that impacts and essentially ends about 25 % of all gas leases. The purpose of this posting is to explain this decision, to identify which lease holders can benefit from it, and to give instructions as to how to take actions to end those leases which are covered by this decision. You must take actions to officially have your lease cancelled.
In a case entitled Aukema, et al. vs. Chesapeake, et al. (Docket No. 3:11-cv-00489), Judge David Hurd ruled against Chesapeake’s claim that it could indefinitely extend leases beyond their primary terms, due to the state’s regulatory delays inherent in its review of the dangers of fracking. Chesapeake had claimed that force majeure entitled it to these extensions. In this carefully reasoned decision, Chesapeake’s claim was rejected: “Accordingly, force majeure does not extend the leases.” All of the leases involved were declared “expired by their terms.”
Based upon this ruling, Fleased is eager to assist all lease holders whose leases’ primary terms have expired, secure official cancellation of their leases.
The first step is to review your lease and determine whether or not it has an automatic extension paragraph. To find this–most leases begin with a long paragraph entitled: “LEASING CLAUSE”, which lists all the activities the gas companies obtained with the lease, such as drilling gas well, taking water, storage of gas, etc. This is usually followed by a “DESCRIPTION” section, which merely defines the dimensions of your property that was leased.
Next comes the “LEASE TERM” paragraph, which normally is for a 5 or 10 year primary term, and which may even contain a specific date when this primary term ends, unless a well has been drilled or similar activities have taken place by the company on your land.
Unfortunately, in about 2/3 of the leases, this primary term and the termination date are very misleading, due to the next paragraph, which is entitled: “EXTENSION OF TERM OPTION”, in which the companies reserve the right to extend the lease for another 5 or 10 years, at their sole option, with a specified payment.
If this “extension” paragraph was crossed off in your lease, then you are in the position to take advantage of this new court ruling and take action to end your lease, as long as the initial, primary term has expired. If you have any questions about the contents of your lease, please scan a copy and send it to Fleased and we will have it reviewed and answer your questions.
The action you need to take is to send a notice letter, pursuant to New York’s General Obligations Law § 15-304 (2), to the company holding your lease, and to all other companies or parties to which any portion of your lease has been assigned. You will not have been notified of any such assignments and so, you will need to check the records in your county clerk’s office to discover all such assignments, as your notice letters must be sent to these assignees as well.
Forms for these notice letters are found on this Fleased web site, as well as forms for the Affidavit of Service, which must also be filled out and signed before a Notary Public. If the company and the assignees fail to respond to these notice letters within 30 days, you can then file copies of the notice letters and affidavits of service in the clerks office, and this filing officially ends your lease.
Opinion from Mary Jo Long, Esq.