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Supreme Court of Pennsylvania Delivers Butler v. Powers Opinion

On April 24, 2013, the Supreme Court of Pennsylvania issued an opinion in the case of Butler v. Powers, addressing the distinction between the words “gas” and “minerals” in private conveyances of land in Pennsylvania.  The case began as a quiet title action in Susquehanna County, and the issue was whether an 1881 reservation of “One-half the minerals and Petroleum Oils” in a parcel of land would also include a right to the natural gas.  The appellees argued that gas from shale formations should be classified under the term “minerals” in land conveyances, similar to the manner in which coalbed methane gas is considered a part of the coal estate in Pennsylvania.  The appellees’ argument was contrary to the long-standing rule stated in an 1882 decision of the Supreme Court of Pennsylvania, Dunham & Shortt v. Kirkpatrick, which created a rebuttable presumption that a reservation of “minerals” did not include “oil” or “gas” unless the term was specifically recited in the reservation.

On appeal of the Butler trial court decision, the Superior Court of Pennsylvania remanded the case in order for the parties to obtain expert testimony explaining whether gas from the Marcellus Shale is “conventional gas” and could be considered a “mineral.”  The Supreme Court of Pennsylvania ultimately rejected the Superior Court’s analysis and appellees’ arguments, and held that the rebuttable presumption in Dunham applies the same to shale gas as it would to gas recovered from shallow formations.  Thus, the Supreme Court of Pennsylvania upheld the “Dunham Rule” in its April 24, 2013 opinion.  According to the Supreme Court, the Dunham Rule (and subsequent case law) remains “viable,” “controlling,” and “unwavering in clarity.”  The majority opinion can be found here and concurring opinion here.