Pa. SC agrees to hear case over Marcellus shale rights

By Jessica M. Karmasek | Apr 5, 2012

Chief Justice Ronald Castille

HARRISBURG, Pa. (Legal Newsline) - The Pennsylvania Supreme Court this week agreed to take up a case questioning whether shale is a "mineral."

The Court's two-page order, filed Tuesday, granted John E. Butler and Mary Josephine Butler's petition for allowance of appeal.

The issue is whether the state Superior Court, in interpreting a deed reservation for "minerals," erred in remanding the case for the introduction of scientific and historic evidence about the Marcellus shale and the natural gas contained in a 244-acre property.

That is, despite the fact that the state's high court has held a "rebuttable presumption" exists that parties intend the term "minerals" to include only metallic substances, and that only the parties' intent can rebut the presumption to include non-metallic substances, the petitioners note.

William H. Pritchard and Craig L. Pritchard, heirs to the estate of Charles Powers, appealed from an order entered in the Susquehanna County Court of Common Pleas, sustaining the Butlers' preliminary objections and dismissing the Pritchards' request for declaratory judgment.

In July 2009, the Butlers filed a complaint to quiet title, naming as defendants the Powers estate and its heirs.

They alleged ownership of the land in fee simple, and ownership of all "minerals and petroleum oils" based on adverse possession.

Soon after, they filed an affidavit stating that the identity and whereabouts of the defendants and their heirs are unknown, and filed a motion for publication. The same day, the court granted their motion.

In September 2009, the Butlers proceeded to file a motion for judgment, stating that the defendants failed to file an answer or any other pleading.

It wasn't until the court scheduled a hearing for Sept. 22, 2009 that the defendants, the Pritchards, surfaced.

They argue that the Butlers' predecessors intended to distinguish surface rights from subterranean rights upon conveying the land by way of the exception in the Butlers' deed.

The Pritchards also assert that Marcellus shale is a mineral consistent with the reservation of rights in the deed, because a mineral is any inorganic object that can be removed from soil and used for commercial purposes; and no Pennsylvania decision has decided that mineral rights exclude Marcellus shale.

In its Sept. 7, 2011 opinion, the superior court declared the Butlers the owners in fee simple of the property, located in Apolacon Township in Susquehanna County, but reversed and remanded the case for further proceedings.

Judge Susan Peikes Gantman, who authored the court's 15-page ruling, explained that there are still questions as to whether shale is a mineral, if it is "conventional natural gas," and if it is similar to coal to the extent that whoever owns the shale, owns the shale gas.

"On this record, we are unable to say with certainty that Appellants (the Pritchards) have no cognizable claim based on the facts averred," she wrote. "Consequently, the parties should have the opportunity to obtain appropriate experts on whether Marcellus shale constitutes a type of mineral such that the gas in it falls within the deed's reservation."

One Pennsylvania lawyer says that if the state's high court should rule that shale is indeed a "mineral," chaos could ensue.

Kevin M. Gormly, an oil, gas and mineral law attorney who is not involved in the case, told the Pennsylvania Law Weekly in September that such a determination would cause problems for those who have already paid landowners millions to drill on their properties.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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