The Seventh Circuit Court Addresses Reclamation Terms in a Sand Mining Agreement
The U.S. Court of Appeals for the Seventh Circuit recently heard a case involving a sand mining agreement from 1997. At the center of the dispute was a reclamation plan in the agreement under the heading titled “Condition at Termination.” The mining company was to remove its equipment and restore the disturbed land from mining activities. The contract ended in 2010, but three years later, in 2013, the land still had not been reclaimed. The contract did not specify a firm deadline for reclamation. Instead, it was a continuing obligation that was ultimately left to a jury to decide whether the mining company’s delay in reclamation was unreasonable. After over six years of litigation and two jury trials (the first ending in a mistrial), the jury ultimately found in favor of the mining company, holding that the contract did not require reclamation by the end of the contract. The Seventh Circuit affirmed.
The court heard the case to determine whether a reasonable jury could find in favor of the mining company. The landowners argued that, based on the contract’s language, the reclamation deadline was at the end of the contract term in 2010, despite the absence of a specific date. However, because the contract lacked a clearly defined deadline or a method to determine one, such as “three weeks after the last sale of sand,” the court ruled against the landowner.
The court held that although the first sentence of the relevant section stated the mining company’s equipment would remain its property “at the end of the contract,” the second sentence—requiring the company to remove its equipment—did not require it to do so by that time. The court reasoned that, grammatically, the phrase “at the end of the contract” in the first sentence did not carry over to the subsequent provisions. Moreover, if the mining company was required to remove all equipment at the end of the contract, there would be no need to clarify ownership at that time. The final part of the section required the mining company to return the land to a specified state, which the landowner could reasonably request. Again, the court could not agree with the landowner that the contract required reclamation by a set date because the landowner could request completion by a different date. The court also emphasized that headings will not override the text of the contract.
The main issue with the contract’s reclamation plan was that it was incomplete and did not specify a deadline for completion. This is especially important in long-term contracts, where reclamation or similar obligations may extend beyond the primary operational period. These parties could have saved six years of litigation and significant legal fees by including a set date or at least a way to determine what date reclamation is required. As a landowner, you should have a clear method for determining when reclamation needs to be completed.
