SHREVEPORT (LN) — A federal judge ruled Monday that Weyerhaeuser Co. is bound by a $60-per-acre fee cap for surface access under a 99-year timber lease, but dismissed Louisiana Minerals Ltd.’s breach of contract claim because the plaintiff failed to prove it lost any business.
U.S. District Judge Ards found that Weyerhaeuser violated the 1986 Timber Sale and Lease Contract by collecting fees in excess of the $60-per-acre amount adjusted for inflation and by requiring lump-sum pre-payments for damages that the contract intended to be annual.
The dispute centered on a series of agreements Weyerhaeuser entered into with third-party oil and gas operators seeking access to approximately 200,000 acres of land in north Louisiana owned by Louisiana Minerals Ltd.
LML alleged that Weyerhaeuser interfered with its mineral development by charging excessive damages for timber loss and surface use, thereby exceeding the contractual compensation scheme.
The Timber Contract, which remains in effect through 2085, grants Weyerhaeuser the right to use the land for timber operations and other purposes, while LML reserves the exclusive right to explore for and produce minerals.
Under Article 7 of the contract, LML is obligated to pay for damage to Weyerhaeuser’s timber and to pay $60 per acre for surface acres used in connection with drilling or subsurface exploration.
The contract specifies that this $60 sum must be increased or decreased in proportion to changes in the U.S. Consumer Price Index.
Ards found that Weyerhaeuser charged third parties significantly more than the adjusted $60 rate, with some operators reporting payments of $2,500 per acre or fees based on $200 per rod for rights-of-way.
The judge ruled that Weyerhaeuser cannot negotiate additional fees for LML’s mineral lessees to access the property for mineral-related activities, as doing so would render LML’s reserved mineral rights meaningless.
However, Ards dismissed LML’s breach of contract claim with prejudice because the plaintiff produced no evidence that Weyerhaeuser’s excessive charges prevented LML from concluding oil and gas leases or caused it to lose any business opportunities.
LML’s witnesses acknowledged they were unable to identify any lost business resulting from Weyerhaeuser’s actions, and the company had not attempted to recover the amounts paid to Weyerhaeuser from third parties.
The court also ruled that Weyerhaeuser is permitted to enter into surface use agreements for pipelines that carry minerals or other substances across the property, provided those pipelines do not produce LML’s minerals.
Ards denied both parties’ requests for attorneys’ fees, finding that neither side was the prevailing party because LML obtained declaratory relief but failed on its damages claim, while Weyerhaeuser avoided monetary liability but was found to have violated the contract terms.
Weyerhaeuser acquired the grantee’s interest in 2002 through a merger with Willamette Timber Company, which had entered into similar third-party agreements with LML’s predecessors since the contract’s inception in 1986.
LML’s management did not discover the discrepancy between the contract’s $60 rate and Weyerhaeuser’s actual charges until 2017, when new leadership reviewed the agreement during negotiations for a third-party pipeline deal.