Pennsylvania High Court Takes Appeal on Marcellus Shale Rights

Two PA landowners are challenging an intermediate appeals court ruling that called for scientific opinion on whether Marcellus Shale gas should be considered a mineral.  John and Mary Butler’s case could be the first in more than 50 years where the court will address a 130-year-old rule governing land transfers.  The case arose from a dispute between the Butlers and the heirs of an 1881 deed covering 244 acres in Susquehanna County.  The deed transferred the oil and mineral rights for the land to the heirs of Charles Powers.  The issue involved is whether or not gas is considered to be a mineral.  There was a case in 1882 which provides that transfer of mineral ownership must refer specifically to oil and gas to transfer rights to those products.  In the Butlers’ case, the Powers deed mentions petroleum and oils but does not specifically mention gas.  The Butlers sued in 2010 to claim the gas under their land, claiming that the lack of the word “gas” in the document separating subsurface rights on the property gave them the right to tap it.  The Powers heirs claim gas should be considered a mineral.  After the trial judge ruled for the Butlers, an appeals court judge decided in September that state law isn’t clear with respect to shale gas and ordered the trial court to solicit expert opinions on the issue.  If the Supreme Court were to modify the existing rule in any way, it could throw the oil and gas industry in PA into chaos.  The case to watch is Butler v. Charles Powers Estate, 27MAP2012, Supreme Court of Pennsylvania, Middle District (Harrisburg)