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Hunton & Williams, LLP

Hunton & Williams Offers Advice on Emergency Planning
As the World Health Organization monitors a potential pandemic of the Avian Flu and the world's focus on other natural disasters, the attorneys at Hunton & Williams are wasting no time preparing clients for the affect on the workforce.

Advice to employers on the protocols for unexpected emergencies ranges from establishing a strong communications plan to creating a program for working from home, possibly for extended periods of time. In addition, the Hunton & Williams attorneys advise on the legal obligations of employee attendance and payroll policies in the event of an outbreak or pandemic. The scope of procedures also includes what employers should do in preparation for hurricanes, earthquakes and other disasters or possible attacks.

""At Hunton & Williams, we recognize that a quick return to 'business as usual' is largely dependent on the precautionary actions taken before an unexpected incident occurs,"" said Hunton & Williams partner Terry Connor, co-head of the labor and employment practice in Miami. ""We offer our clients the legal support necessary for employers to prepare their staff and organize their business infrastructure for a potential virus pandemic, natural disaster or terrorist attack.""

Under the leadership of Susan Wiltsie, of the firm's Washington office, the firm's labor team and Emergency Response & Homeland Security Legal Services joined forces to develop the following preparation guidelines for workforce settings in the case of an Avian Flu pandemic.

Employers must be attuned to federal/state/local public authorities and law enforcement for information and guidance.

Assign someone to monitor the progress of the disease globally to keep key staff informed. Create a communication grid to spread crucial information quickly and efficiently to all staff.

Develop training materials with basic information about the disease, its recognition and transmission. In addition, develop a hygiene protocol which might include: an increase in hand washing, suspending hand shaking and hugging, and identifying the location of anti-bacterial sprays and face masks in office.

Review insurance policies for medical and psychological services for employees in the case of a devastating pandemic. Also, consider evaluating corporate insurance policies regarding coverage in the case of extended office closures due to an emergency public health evacuation.

Analyze travel needs and enable quarantine of employees who return from infected areas, but who are not sick. Furthermore, consider investing in equipment or outside arrangements for videoconferencing to avoid unnecessary travel.

Modify policies on employee attendance and pay policies. Be sure the payroll department is aware of its legal obligations and establish protocol for time recording in compliance with federal and state laws. Review sick leave policies, being sure not to offer incentives for employees who come to work sick.

Prepare for possible extended office closures. Identify critical jobs and job functions that are necessary for business continuity. Then, train several employees with those essential skills. Develop a network for telecommuting and prepare clear instructions for a ‘working from home’ procedure. Create a plan for obtaining and administering medication on a priority basis to those with critical skills.

08-23-2006

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Cravath, Swaine & Moore, LLP

CRAVATH REPRESENTS WEYERHAEUSER IN MERGER AGREEMENT WITH DOMTAR
Cravath represented Weyerhaeuser in the merger of its fine paper business with Domtar Inc. for approximately $3.3 billion. The lawyers involved in this matter are partners Alan C. Stephenson, Richard Hall and B. Robbins Kiessling and associates Wendi Hoeben, J. Mathias von Bernuth and Joseph Zavaglia on corporate matters; partner Andrew W. Needham and associates Rolf Zaiss and Annie Kim on tax matters; partner Elizabeth L. Grayer and associate Robin C. Landis on antitrust matters; associate David J. Mandl on environmental matters; and associate Joyce Law on real estate matters. The deal was announced on August 23, 2006.

08-23-2006

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Bullivant Houser Bailey

Oil & Gas Leasing: Montana Supreme Court Discusses “Production in Paying Quantities
Recently the Montana Supreme Court interpreted a clause common in oil and gas leases – the “Habendum Clause” – which controls whether a Lessee/Producer can automatically extend an oil and gas lease beyond the initial term of the lease. In Somont Oil Company, Inc. v. A & G Drilling, Inc., 332 Mont. 56 (2006), the Montana Supreme Court refined and reaffirmed long-standing interpretations on the meaning of the phrases “production in paying quantities,” and “temporary cessation of production.” These interpretations, discussed in more detail hereafter, are also consistent with similar cases in California and Oregon. While Nevada and Washington do not report cases on this question, given the similarity of oil and gas lease forms used in all of these states, it is likely that all of these courts would apply the same reasoning as the Montana court.

The Habendum Clause

The Habendum Clause in an oil or gas lease governs whether a lease can be extended beyond the primary term (to a secondary term). The primary term is a fixed number of years during which the Lessee has the opportunity to explore, drill, and produce oil or gas. If no oil or gas is produced at the end of the primary term, the lease terminates. However, if oil or gas is produced (typically “in paying quantities), the lease is automatically extended into the secondary term.

Normally, the Habendum Clause contains two requirements to keep the lease alive:

1) What is generally referred to as the “thereafter clause”, which states “as long thereafter as oil or gas is produced in paying quantities from the land.” And,

2) So long as there is no permanent cessation of production.

In Somont, the landowner sought to terminate the oil and gas leases on the basis that the oil company had failed to produce oil or gas from its wells in paying quantities, so that the company’s lease ended due to cessation of production. The company raised issues of economics generally in the oil & gas industry, and various other considerations to explain or justify temporary lapses in production over the life of the lease. The Montana Supreme Court addressed the two key questions.

Has there been “Production in Paying Quantities?”

The Montana Court defined paying quantities as the production of oil or gas from the land in some quantity that would pay a small profit over the cost of operation, but not including the initial cost of establishing the well. If that element is met, the inquiry stops there. However, if the landowner/Lessor establishes that the Producer/Lessee failed to produce in paying quantities because production has stopped, another question must be answered.

What happens if Production Ceases?

The question here is whether the cessation in production is determined to have been permanent or temporary. Like many things in the law, this is not necessarily a simple question. The Montana Court said that truly permanent cessation, for any reason, will automatically terminate lease if it is beyond the primary term. A temporary cessation, however, gives the Lessee an opportunity to resume production and continue the secondary term. The Court said in the Somont case that a temporary cessation occurs only when it is caused by a “sudden stoppage of the well or a mechanical breakdown of the equipment used in connection with the well, or the like.” In that situation, the Lessee has the burden of proving that the cessation is short-term, and that diligent steps are being taken to correct the mechanical errors. If the Lessee meets that burden, a Court will be hesitant to deprive the company of its investment on the land by terminating the lease. In the Somont case, the Lessee failed to provide sufficient evidence on this issue, focusing more on market conditions as opposed to on-site conditions for example, and therefore failed to meet its burden. Therefore, the Court decided in favor of the landowner and terminated the lease.

California and Oregon

California courts have ruled in much the same way. In San Mateo Community College District v. Half Moon Bay Limited Partnership, 65 Cal.App.4th 401 (1998), the producer argued that it satisfied the Habendum Clause to justify automatic extension into a secondary term by discovering oil and gas during the primary term. The California Court rejected that argument and ruled that to extend the lease, oil or gas must be produced in paying quantities before the end of the primary term. The Court said that production in paying quantities meant “sufficient quantities each year as will return a profit to the lessee over and above his operating, but not his drilling or equipping costs in producing the oil and gas.” This language was taken from an earlier California case, Montana-Fresno Oil Co. v. Powell, 219 Cal.App.2d 653 (1963), which also said that a producing well, not just discovery of oil or gas, is required. California has also refined the “paying quantities” issue by noting that if there is production in the secondary term, the court will measure revenue over a longer period of time to determine if the well is producing at a profit. (Transport Oil Co. v. Exeter Oil Co., 84 Cal.App.2d 616 (1948). The Court also commented that a highly profitable lease may at times be operating at a temporary loss, but that would not necessarily mean it is not “producing in paying quantities.”

The Oregon Supreme Court appears to have been influenced by California’s decisions as well. In Fremont Lumber Company v. Starrell Petroleum, 228 Or. 180 (1961), the landowner wanted to end the lease because the Lessee waited until the last month of the primary term before beginning exploration. The Oregon Supreme Court also found that production must begin before the end of the primary term to extend the lease into a second term. The Oregon Court also focused on finding some measure of profitably in making that determination.

Washington and Nevada

We did not find a reported case for these states involving an Habendum Clause, but mineral exploration and production companies typically use boilerplate form leases in all five states discussed in this article. These leases do not vary significantly from state to state. A typical Habendum Clause may not necessarily use the term “paying quantities” (although many do) and may look similar to this: “It is agreed and understood that this lease shall remain in force for a term of five years from the date hereof, hereinafter called the ‘primary term,’ and as long thereafter as oil or gas, or either of them is produced from said land.” It is highly likely, therefore, that a Washington or Nevada Court deciding a dispute over whether an oil and gas lease should be extended beyond the primary term would be guided by cases from Montana and the other states that have reported decisions.

Conclusion

Due to the rising cost of energy, there is a resurgence of interest in exploration and production of natural gas, in particular, in the western United States. Energy exploration and production companies are approaching landowners with increasing frequency in areas that may not previously have received much attention. Landowners should be cautious in signing lease forms offered by these companies, as they will affect fundamental rights of land or mineral ownership. This discussion highlights but one area of many that could be a concern for the land or mineral interest owner. To be safe, landowners should contact legal counsel with knowledge and experience in the area of mineral or oil and gas leasing for advice before signing a lease form.

08-23-2006

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The Law Firm Of Baker & Daniels LLP

April Edwards Sellers Rejoins Baker & Daniels
April Edwards Sellers has rejoined Baker & Daniels LLP as an associate with the business litigation practice in the Indianapolis office.

Sellers spent the last 3½ years in the administration of Indianapolis Mayor Bart Peterson, most recently as deputy chief of staff to the mayor. She was a litigation lawyer at Baker & Daniels for four years before joining Peterson's administration at the start of 2003.

With Baker & Daniels, Sellers represents clients in a variety of trial, pretrial and post-trial proceedings before state and federal courts.

Sellers is a 1998 graduate of the Indiana University School of Law in Bloomington. She received her bachelor's degree from Ohio Wesleyan University.

08-23-2006

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Jaffe Raitt Heuer & Weiss, P.C.

Benjamin John McCracken Joins Jaffe Raitt Heuer & Weiss, P.C.
Benjamin John McCracken has joined Jaffe Raitt Heuer & Weiss, P.C. as an associate in the Firm's Litigation Practice Group. Jaffe CEO Richard Zussman made the announcement.

McCracken earned his B.S. in political science from Northern Michigan University in 2000 and his J.D. from the University of Detroit Mercy Law School in 2005, where he graduated magna cum laude.

While attending law school, McCracken worked for the University of Detroit Mercy Immigration Law Clinic, and fulfilled a judicial internship with Michigan Supreme Court Justice Marilyn Kelly. Upon graduation, he served as a law clerk for Justice Kelly.

08-23-2006

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Jenner & Block LLP

Sullivan Elected to Council of ABA Section of Legal Education and Admissions to the Bar
Jenner & Block Partner Barry Sullivan was recently elected to the Council of the American Bar Association’s Section of Legal Education and Admissions to the Bar.

According to the ABA, members of the Council are “persons of integrity and intelligence who have evidenced interest in legal education and whose participation is likely to be guided by the interests of the public and by the high standards of the legal profession.”

During his three-year term, Mr. Sullivan will help the Council to determine law schools' adherence with the American Bar Association's Standards for Approval of Law Schools and recommend the accreditation and reaccrediatation of law schools by the ABA. The Section also studies and makes recommendations for the improvement of the law school accreditation and bar admission processes.

In addition to his role on the Council, Mr. Sullivan has served on several committees in the ABA’s Section on Legal Education, including the Accreditation Standards Review Committee, Communications Skills Committee and Committee on Law School Administration. He also served as Chair of the Section’s Committee on Professionalism from 1999-2000.

Mr. Sullivan, who is co-chair of the Firm's Appellate and Supreme Court Practice, served for five years as dean of the Washington and Lee University School of Law. He has been a visiting professor of law at Northwestern University School of Law, a Fulbright professor of law at the University of Warsaw and a visiting law fellow of the University of London. Most recently, he has taught part-time at the University of Warsaw and at the University of Chicago, where he is currently Senior Lecturer in the Irving B. Harris Graduate School of Public Policy Studies.

08-23-2006

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Davis Polk & Wardwell

Comcast Notes Offerings
Davis Polk & Wardwell advised Comcast Corporation on its SEC-registered debt shelf takedown of $1 billion aggregate principal amount of 5.90-percent notes due 2016 and $1.25 billion aggregate principal amount of 6.45-percent notes due 2037.

Based in Philadelphia, Comcast is the largest cable television operator in the United States.

The Davis Polk corporate team included partners Bruce K. Dallas and Nigel D. J. Wilson and associates Sarah K. Solum and Adrian Yeo, all of the Menlo Park office. Partner Lucy W. Farr of the New York office and Rachel Kleinberg of the Menlo Park office provided tax advice. Cari M. Hebel of the Menlo Park office was the legal assistant on the transactions.

08-23-2006

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