The Letter Below Is Offered By The Town Attorney
The following letter, written by Attorney Denton, is available to all who have received a force majeure letter from Norse
Energy. The gas company has decided to use Executive Order #41 as means to justify the force majeure clause on the gas lease.
As you can see, the attorney feels that this is not allowable and he has asked that this letter be made available to all lease
holders. If you received a letter from Norse, or any other gas company, with notice of a force majeure, feel free to use this
letter as a template for your reply.
As with all leasing issues, the Town of DeRyter highly suggests that you seek advice
of your personal attorney. It is your property and you should take the steps required to protect you rights to the property.
To Norse Energy
Dear Sir or Madam:
We have read the letter dated January 10, 2011 which was not signed and which did not indicate
which officer or employee was acting as agent for the corporation. As you are aware, a corporation is an artificial
legal entity created with the permission of the State; and therefore no acts of the corporation are valid unless carried out
by human agents acting on the behalf of the corporation. Your letter does not indicate that an employee or agent signed
on behalf of the corporation. We must therefore assume that the letter is a draft and not the final letter.
As a consequence it has no force or effect until signed by a human being acting on behalf of the corporation, whether officer,
director or employee with an indication of the authority held by the signer.
For future reference, you may want to review
the substance of the letter before you delegate someone to sign on behalf of the corporation. You have misread the law
and the executive order # 41. There is no moratorium on drilling and fracking in New York State, therefore there
is no Force Majeure event.
The Executive Order only removes the "short cut" method of obtaining a drilling permit.
The Generic Environmental Impact Statement which commonly allows a shortened period for the consideration and granting of
a drilling permit did not originally address environmental impacts associated with high-volume hydraulic fracturing combined
with horizontal drilling. This has been known to the industry for many years. Well drilling permits can still
be obtained by complying with the normal 'site specific' SEQRA requirements, which have never disappeared nor
been rescinded. In addition well permits are currently being issued for all wells which do not require high-volume
hydraulic fracturing combined with horizontal drilling. The fact that the "old way" of having to comply with SEQRA by
the performance of a site specific EIS is still in existence belies your contention that an event of Force Majeure has occurred.
You may obtain a drilling permit under the current Executive Order; it simply will take more time and money. Incidentally,
a prominent environmental scientist in the oil and gas industry has repeatedly asserted that once one site specific EIS has
been performed that it can serve as a template for all subsequent site specific EIS's at other sites. He also asserts
that such an EIS would take about six months. Once one EIS has established the common environmental concerns in a "gas
field" all the future EIS's need only insert the site specific variations. Such subsequent EIS's would take far
less time. This is not rocket science and is commonly done under SEQRA.
Force majeure is an equitable concept
which originated to allow someone who had an obligation under a contract to be relieved 'temporarily' from that obligation
when an event, so tragic, so unexpected, so unforeseen, and uninsurable occurred. Norse has asserted no obligation which
it cannot perform. Without identifying specifically the obligation required of Norse of which Norse seeks to avoid,
there can be no obligation which force majeure can act upon. As Norse has neglected or refused to identify the obligation
from which it has it is to be relieved, Norse's letter is of no effect.
The Executive Order is also only an extension
of a preexisting order issued several years ago. Force majeure is an equitable defense under the laws of New York State.
In order to claim force majeure as an equitable defense Norse "must have given equity to receive equity". Norse's claim
of Force Majeure is not timely and at this late date constitutes laches. The Lessors in the community have relied on
the fact that Norse has done nothing to assert Force Majeure in the previous two and one half years of the existence of the
original Executive Order. Moreover, if you at Norse thought that the Executive Orders were invalid or a violation of
law, Norse had 120 days from the issuance of the Executive Orders to challenge it by way of an Article 78 proceeding under
the NYCPLR. That time has long passed for the original Executive Order and is still running for the second. If
the recent Executive Order #41, is considered a new order, then Norse must first exhaust all its remedies and seek mandamus
relief from the Order by commencing litigation against the State of New York and filing claims with the NY Court of Claims
for damages for a 'taking". Norse could prevail in those suits.
In addition, Norse is not prevented from drilling
and completing as there is still available fracking by use of propane gas, nitrogen, and carbon dioxide when combined with
horizontal drilling. The law never has guaranted the use of any specific technology.
Lastly, the letter of January
10, 2011 is a disingenuous attempt to transmute low natural gas prices and a natural gas supply glut and its consequent lack
of economic profit into a force majeure event. Neither a gas glut nor low prices for natural gas constitute a tragic,
unexpected, unforeseen and uninsurable event. In fact Norse commonly buys 'hedges" (a form of unregulated insurance
policy to guarantee a certain sale price of its natural gas) to guard against market fluctuations.
Based on the facts
set forth above, there is no event of Force Majeure.
We are returning your checks herein.
Very truly yours