April 29, 2013
As many predicted, the Pennsylvania Supreme Court, in Butler v. Charles Powers Estate, has decided there is no need for scientific evidence to determine whether shale and the natural gas contained within it fall under the definition of “minerals” for the purposes of interpreting deed reservations.
Relying upon the Dunham Rule, named after the 1882 Pennsylvania Supreme Court case Dunham & Shortt v. Kirkpatrick, the Court found that they were not since they are not “metallic” in nature. Justice Max Baer, writing for the Court, said, “the common, layperson understanding of what is and is not a mineral is the only acceptable construction of a private deed,” and that, “notwithstanding different interpretations proffered by other jurisdictions, the rule in Pennsylvania is that natural gas and oil simply are not minerals because they are not of a metallic nature, as the common person would understand minerals.”
Accordingly, parties drafting deeds should clearly state that if it is their intention to reserve natural gas rights, they must specifically say so.View File