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Pennsylvania High Court Reaffirms Marcellus Property Rights
The Pennsylvania Supreme Court has reaffirmed the state’s 131-year history of mineral rights law, unanimously ruling in favor of a Susquehanna County couple that had filed a lawsuit over the rights to the natural gas under property in the Marcellus Shale.
Central to the case was a deed written in 1881 by Charles Powers, who transferred 50% of the oil and minerals rights on 244 acres in Apolacon Township to his heirs (Butler v. Charles Powers Estate, No. 27-MAP-2012), John and Mary Butler, who currently own the land, filed a lawsuit in 2010, arguing that since Powers didn’t include “natural gas” in the deed, his heirs had no right to the gas.
Ultimately, the six-judge panel decided that the high court’s 1882 landmark decision in Dunham & Shortt v. Kirkpatrick should be its guide. The “Dunham Rule” maintains that the conveyance of mineral rights does not include either petroleum oils or natural gas unless those commodities are specifically mentioned. In other words, the legal definition of “minerals” does not include oil and gas, and further, the legal definition of petroleum oils does not include natural gas, unless it also is specifically mentioned.
“The Dunham Rule is clear…that the common, layperson understanding of what is and is not a mineral is the only acceptable construction of a private deed,” Justice Max Baer said in a 24-page opinion.
The Butlers’ attorney, Gregory Krock of Buchanan Ingersoll & Rooney PC, told NGI the ruling was a significant victory for the oil and gas industry. “The Dunham Rule still is valid and in effect today, and the rule applies to all natural gas contained in any geologic formation. There’s really no reason to treat Marcellus Shale gas differently than natural gas that’s in any other geologic formation.”
In January 2010, a Court of Common Pleas judge in Susquehanna County agreed with the Butlers’ assertion that they owned the natural gas rights, citing the Dunham ruling. But in September 2011 the state Superior Court disagreed and remanded the case (see NGI, Sept. 19, 2011).
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