Pa. Supreme Court Issues Decision in Butler Case
On April 24, 2013, the Pennsylvania Supreme Court issued its highly anticipated decision in the
Butler v. Charles Powers Estate case. The Supreme Court decided to maintain the status quo in Pennsylvania by reaffirming the application of the
Dunham Rule, meaning that there will not be a sea change in the Commonwealth regarding the interpretation of oil and gas conveyances.
The
Dunham Rule requires that, for an interest in oil and gas rights to be reserved in a deed, the term "natural gas" must be specified in the reservation. At issue in the case was whether a reservation of "minerals" in an 1882 deed included Marcellus Shale gas. The trial court applied the
Dunham Rule to find that the reservation did not include Marcellus Shale gas.
On appeal, the Superior Court reversed and remanded for further proceedings to allow expert testimony on whether Marcellus Shale gas constitutes a "mineral." The Supreme Court granted an Allowance of Appeal on the issue of whether the Superior Court erred in remanding the case for expert testimony about the Marcellus Shale and the gas contained therein.
The current property owners, John and Mary Josephine Butler, argued that it was irrelevant whether modern-day experts consider Marcellus Shale a "mineral." Rather, they argued that the
Dunham Rule established a presumption that a reservation of "minerals" does not include oil and gas. This presumption can only be rebutted by evidence that it was the intent of the parties to this particular conveyance to include oil and gas in the reservation of "minerals."
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