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Beardslee v. Inflection Energy, LLC

United States District Court for the Northern District of New York

November 15, 2012, Decided; November 15, 2012, Filed




United States District Judge



Plaintiffs Walter and Elizabeth Beardslee and other landowners1 (collectively "plaintiffs") brought this declaratory judgment action against defendants Inflection Energy, LLC ("Inflection"), Victory Energy Corporation ("Victory"), and Megaenergy, Inc. ("Mega") (collectively "defendants") seeking a declaration that certain oil and gas leases entered into between the parties expired at the conclusion of the primary terms of those leases and that the terms have not been extended by force majeure. See Compl.. Defendants counterclaim seeking a declaration that the leases were extended due to force majeure.

Plaintiffs moved for summary judgment declaring that no force majeure event occurred  [**2] and that the leases have expired. Defendants opposed plaintiffs' motion and cross-moved for summary judgment declaring that the leases were extended by force majeure and are in full force and effect. Plaintiffs opposed defendants' motion and replied in support of their motion. Defendants replied in support of their motion.

Oral argument was heard on August 30, 2012, in Utica, New York. Decision was reserved.


A. Oil and Gas Industry in New York State

Gas drilling in New York State is governed by the Environmental Conservation Law. Under the authority of that statute, the State Environmental Quality Review Act ("SEQRA"), N.Y. Envtl. Conserv. Law section 8-0101, was passed "to inject environmental considerations directly into governmental decision making." City Council of Watervliet v. Town Bd. of Colonie, 3 N.Y.3d 508, 515, 822 N.E.2d 339, 341, 789 N.Y.S.2d 88 (2004) (internal quotations omitted).

SEQRA requires all New York State agencies, including the New York State Department of Environmental Conservation ("DEC"), to prepare or cause to be prepared an Environmental Impact Statement ("EIS") for "any action . . . which may have a significant effect on the environment." N.Y. Envtl. Conserv. Law § 8-0109(2).2  [**3] Where the impacts from separate actions are common and predictable, a generic EIS ("GEIS") may be prepared to analyze the impact of all such actions generally and cumulatively instead of preparing an individual (or site-specific) EIS for each action. See N.Y. Comp. Codes R. & Regs tit. 6, § 617.10(a). The purpose of a GEIS is to provide a comprehensive review of the potential environmental impacts of an activity and how those impacts could be mitigated. Subsequent proposed actions which may significantly affect the environment, but which are not adequately addressed by a GEIS, require either a supplemental GEIS ("SGEIS") or a site-specific  [*216]  EIS. See id. § 617.10(d)(4); N.Y. Envtl. Conserv. Law § 8-0109(2).

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904 F. Supp. 2d 213 *; 2012 U.S. Dist. LEXIS 163177 **; 180 Oil & Gas Rep. 539; 2012 WL 5522912

BEARDSLEE, Walter R. & Elizabeth A.; Walter R. Beardslee, Andrea R. Menzies & John A. Beardslee as Co-Trustees of THE DRUSILLA W. BEARDSLEE FAMILY TRUST; BENSON, Phyllis L. & COCCIA, Lynda B.; DONNELLY, Nathan J. & Carolyn B. & Kevin P.; DONNELLY, Rose Ann & Marie S.; HANER, William J. & Joseph, James; LAWTON, Margaret; MARTIN, Glen & Lynn M.; McTAMNEY, Joseph E. & B. Louise; MEAD, Bonnie D. & R. Dewey; MIDDENDORF, Wayne R. & Cynthia L.; MOSHER, Jr., Floyd E. & Lesa D. (a/k/a Lesa Huntington); MOUNTAIN PARADISE CLUB NY 31 LLC, and James W. Reynolds as Trustee of the JAMES W. REYNOLDS TRUST; PFEIL-ELLIS, Mary A. & ELLIS, Kerry K.; SALAMIDA, Paul R. & Pauline M.; SHAY, Gary D. & Bonita K.; and VARGASON, Brad A., Plaintiffs, -v- INFLECTION ENERGY, LLC; VICTORY ENERGY CORPORATION; and MEGAENERGY, INC., Defendants.

Subsequent History: Question certified by Beardslee v. Inflection Energy, LLC, 761 F.3d 221, 2014 U.S. App. LEXIS 14876 (2d Cir. N.Y., 2014)

Affirmed by Beardslee, 2015 U.S. App. LEXIS 14516 (2d Cir. N.Y., Aug. 19, 2015)


leases, drilling, force majeure, Lessee, Shale, formations, horizontal, primary term, oil and gas, defendants', plaintiffs', frustration of purpose, summary judgment, environmental, impossibility, expired, oil, environmental impact, conventional, foreseeable, Energy, oil production, site-specific, constituents, declaration, regulation, royalties, impacts, feet