International Minerals And Chemical Corp. v. Llano, Inc

770 F.2d 879 (10th 1985), cert. denied, 475 U.S. 1015 (1986)

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Nature of the Case

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Facts

International (P) sought a declaratory judgment to excuse itself from performance under a natural gas contract with Llano (D). P was required to take 4.8m BTU's of gas from Ilano per day or to pay for that amount anyway. P was engaged in the business of operating a potash mine and processing facility and operated nine submerged combustion evaporators. These evaporators emitted large amounts of pollution. In December 1978 New Mexico decided to regulate those emissions. P was forced to look for alternative methods of production and notified D that its gas consumption would be 50-60% of normal and that in response to environmental problems, the reduced gas consumption might be permanent and thereby invoking the force majure clause in the contract between them. This resulted in P not taking is required take or pay amounts from D during the last 18 months of the contract. The trial court found for D even though D could sell the gas at a higher price than it would have received from P. D appealed.