## Facts

- Geysers Development Partnership (GDP) owned real property at “The Geysers,” a geothermal-energy field in Northern California.
- Geysers Power Company, LLC (Geysers Power) held a long-term lease on the property (a 99-year “Lease and Agreement” originally executed in 1955 and amended in 1956), giving it exclusive rights to drill for, produce, and use steam from the leased property to generate electricity.
- Over time, GDP granted easements to various power entities, including an easement to Occidental Geothermal, Inc., a competitor of Geysers Power.
- Western GeoPower, Inc. (WGP) sought an easement across GDP’s property to construct and operate power transmission lines and related facilities.
- WGP planned to extract steam from a neighboring property (not part of GDP’s leased property) and transmit electricity over the lines crossing GDP’s land.
- Geysers Power objected, asserting that the requested easement would harm it by affecting steam availability and by increasing competition that could reduce electricity prices and profits.
- GDP filed a declaratory-judgment action to determine whether GDP or Geysers Power had the right under the lease to grant easements on the property for transmission tied to steam extracted from outside the leased property.
- The parties filed cross-motions for summary judgment asking the court to interpret the lease as a matter of law.

## Issues

1. Under the 1955 lease (as amended in 1956), did GDP (as lessor and fee owner) retain the right to grant an easement across the property for power transmission facilities carrying electricity generated from steam extracted from land outside the leased property?
2. Did Geysers Power’s “exclusive” lease rights give it authority to block or control such a third-party easement based on claimed operational or economic harm?

## Decision

- The court granted summary judgment for GDP and denied Geysers Power’s request for summary judgment.
- The court declared that, under the lease’s plain language, GDP retained the right to grant the requested easement for transmission of electricity generated from off-property steam.
- The court rejected Geysers Power’s position that its exclusive development rights on the leased property amounted to a general right to prevent GDP from granting easements for off-site generation projects.
- The court concluded that the dispute could be resolved on the lease text and did not require a trial.

## Legal Principles

- Contract interpretation under California law starts with the parties’ intent as expressed in the writing; where the language is clear, courts apply it as written.
- An exclusive grant in a resource-development lease is read in relation to the subject of the grant (here, extracting and using steam from the leased property), rather than as a transfer of all control over the surface for unrelated purposes.
- Property rights not granted to the lessee by the lease remain with the lessor, including the ability to convey access rights and easements that fall outside the lessee’s defined lease rights.
- A lessee cannot expand its leasehold rights beyond the contract text based only on competitive effects or asserted business impacts from third-party projects.

## Conclusion

Geysers Development Partnership v. Geysers Power Company held that the geothermal lease gave the lessee exclusive rights to develop and use steam from the leased land, but did not give the lessee a veto over the landowner’s ability to grant an easement for transmission lines serving electricity generated from steam extracted on neighboring, non-leased property; the lease’s plain language left that easement-granting authority with the lessor.


Geysers Development Partnership v. Geysers Power Company, 2018 WL 3730129 (2018)