The Pennsylvania Supreme Court has granted the Petition for Allowance of Appeal from the Order of the Superior Court. The Opinion can be foundhere.
AND NOW, this 27th day of January, 2015, the Petition for Allowance of Appeal is GRANTED. The issues are:
(1) By failing to strictly construe [72 P.S. § 5020-409] and by ignoring and/or misconstruing this Court’s prior holdings, did the Superior Court err in ruling that a tax sale that occurred thirty-six years after the duly recorded severance of the subsurface oil and gas estate extinguished [p]etitioners’ interests where the tax deed and related documents described the assessed property as being that held by the then[-]unseated surface estate owner and when it is undisputed that there was no prior production or other basis upon which a valid assessment could be made of the reserved oil and natural gas interests?
(2) Did the Superior Court deny the [p]etitioners’ due process rights under the United States and Pennsylvania Constitutions when it held that the 1935 tax sale divested [p]etitioners of their properly reserved oil and natural gas interests?
(3) Did the Superior Court overlook controlling authority which provides that a grantee is bound by prior exceptions and reservations cited in its deed?
(4) Did the Superior Court exceed the scope of its appellate authority by making a factual finding that the Kellers never notified the Centre County Commissioners of their severed oil and gas estate when the trial court found that there was no evidence one way or another as to whether such notice was provided?
Hoyt Royalty weighed in with limited comments for this Philadelphia Inquirer piece that appeared in last Sunday’s paper. The article, by Andrew Maykuth, looks at the the Herder v Keller case and the issue of land and mineral (oil and gas) ownership rights in Pennsylvania.
While there is certainly more to be said, Mr. Maykuth did a nice job describing the history and the complex issues around this case. Here is the beginning of the article:
The Marcellus Shale natural gas discovery has triggered an associated boom in Pennsylvania land disputes, as formerly valueless mineral rights are now potentially worth millions.
The heirs of a Centre County landowner asked the Pennsylvania Supreme Court this month to resolve a case that stripped them of their 19th-century mineral rights, now claimed by a hunting club that bought the land in 1959.
The convoluted legal question affects the natural resources beneath huge expanses of timberland in the heart of the Marcellus Shale, which now accounts for nearly a quarter of the nation’s natural gas production.
“Although this case concerns a dispute over the ownership of oil and natural gas under roughly 433 acres of property, the questions presented potentially affect the mineral ownership rights of hundreds of thousands of acres of property located in this commonwealth,” Ronald L. Hicks, a Pittsburgh lawyer who represents the aggrieved heirs, wrote in an Aug. 8 Supreme Court filing.
How can one’s title be divested if natural gas was not and cannot be the subject of a proper real estate tax assessment?
With the ever-growing potential that Pennsylvania will play a significant role in the United States’ production of natural gas in the 21st Century, more lawsuits are being filed over who owns the rights to the subsurface gas. Generally, such lawsuits involve a dispute between the heirs of the early landowner who recorded a deed that severed the natural gas from the surface estate and one whose chain of title emanates from a tax sale held after the severance was recorded. Several commentators have opined that if the land was “unseated” at the time of the tax sale and the severed subsurface estate was not separately assessed, then the tax sale “washed” the prior recorded severance and passed title of the natural gas to the tax sale purchaser even though the underlying tax assessment was directed solely to the surface estate or other mineral interests.
Pennsylvania federal and state courts alike, including several from the trial courts in north-central Pennsylvania where such “title washing” was purportedly practiced at the turn of the 20th Century, have cast serious doubts on the extent to which severed natural gas titles have been lost or divested by these early tax sales.
This article summarizes Pennsylvania’s real estate tax laws and the historical taxation of natural gas interests. Also, this article discusses the concept of title washing and its proper application to the real estate taxation of natural gas interests. Finally, it addresses how title washing is being misconstrued by commentators and those claiming title via tax sales in order to improperly deprive owners or the heirs and assigns of their severed natural gas interests.