Link

US Approves Expanded Gas Exports

Obama administration approves $10 billion natural gas export facility in Texas.  Just a few years ago we were building import terminals.  What a difference shale gas has made to the strength of the US economy.

Dow Chemical has been in opposition to exporting gas from the US because they say that this will drive up prices and make US industry less competitive.  However they support this measure because it still calls for a case by case review of all new export facilities.  Still, if Dow thinks that we should curtail US exports to keep prices down in the US, then they should not be allowed to export for the same reason.  Right?

Click on this article’s title to see the article from today’s Wall Street Journal.  Log-in may be required.

Herder Hunting Club v. Keller 2010 Title Wash Decision

Another interesting case in PA that upholds the rights of property owners. Involves an 1899 mineral rights reservation and a 1935 tax sale.   A number of other cases also cited.   September 29, 2010.

See the complete filing here:  Herder Spring Hunting Club v. Keller.  It is also below, however there may be some typos below due to the copy and paste process.

IN THE COURT OF COMMON PLEAS OF CENTRE COUNTY, PENNSYLVANIA

CIVIL ACTION – LAW

HERDER SPRlNG HUNTING CLUB, Plaintiff,

v.                         No. 2008-3434

HARRY KELLER and ANNA KELLER, his wife; J. ORVIS KELLER; ELLIS 0. KELLER; HENRY HARRY KELLER; WILLIAM H. KELLER; MARY EGOLF;

JOHN KELLER; HARRY KELLER; ANNA BULLOCK; ALLEN EGOLF;

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MARY LYNN COX; ROBERT EGOLF; NATHAN EGOLF; ROBERTS.  KELLER; BETTY BUNNELL; ANN K. BUTLER; MARGUER1TE TOSE; HENRY PARKER KELLER; PENNY ARCHIBALD; HEIDE SUE HUTCHISON; REBECCA SMITH; ALEXANDRA NILES CALABRESE;

CORRINE GRAHAM FISHERMAN; JENNIFER LAYTON MANRIQUE; DAYID KELLER; STEPHEN RICHARD KELLER; MICHAEL EGOLF, their heirs, successors, executors, administrators, and assigns, as well, as ANY OTHER PERSON, PARTY OF ENTITY,

Attorney for Plaintiff

Attorney for Defendants:

David Mason, Esq. Brian Marshall,  Esq. Timothy Schoonover,  Esq. Rebecca Warren, Esq.

Lunsford,  J.

OPINION and ORDER

Plaintiff and Defendant filed Motions for Summary Judgment which are presently before the Court.  For the  following reasons,  the Motion  for Summary Judgment filed by Plaintiff  is denied and the Motion for Summary Judgment filed by Defendant is granted.

Background

On August 14, 2008, Plaintiff initiated this action by filing a Complaint in the nature of an Action to Quiet Title. Plaintiff subsequently filed a First Amended Complaint on October 27, 2008. Plaintiff contends a 1935 tax sale extinguished the 1899 reservation of subsurface rights by Harry and Anna Keller and conveyed fee simple title to the tax sale purchaser, Max Herr. Plaintiff argues Defendants failed to report their reservation of subsurface rights as required under the Act of March 28, 1806. Plaintiff also asserts it has adversely possessed the mineral rights for a period in excess of twenty-one (21) years. The adverse possession claim has not been addressed by either party in the Motions for Summary Judgment.

This suit arises out of a dispute over subsurface rights. In I 894, Defendants Harry and Anna Keller 1  acquired a tract of unseated2″ real estate containing 460 acres strict measure, known as the Eleanor Siddons Warrant (hereinafter also referred to as the “property”) at a tax sale. On June 20, 1899, the Kellers transferred the surface rights of the property to Isaac Beck, Isaiah Beck and James Fisher by deed but reserved unto themselves, their heirs and assigns all subsurface rights therein:

[e]xcepting and reserving unto the said parties of the first part, their heirs and assigns forever all the coal, stone, fire clay, iron ore and other minerals of whatever kind, oil and natural gas lying or being, or which may now or hereafter be formed or contained in or upon the said above mentioned or hereafter be formed or contained in or upon the said above mentioned or described tract of land; together with the sole and exclusive right liberty and privilege of ingress and egress unto, upon and from the said land for the

1   Harry Keller served as a Court of Common Pleas Judge in Centre County, Pennsylvania. Judge Keller served from 1926 to 1927.

2 The distinction of seated and unseated land was part of Pennsylvania tax assessment  law prior to 196 J.

Unseated land was unoccupied and unimproved whereas seated land contained pennanent  improvements as indicate a personal responsibility  for taxes. See Hutchinson v. Kline, 199 Pa. 564,  (1901).

2 purpose of examining, digging and searching for, and of mining and manufacturing  any minerals oil, or natural gas found therein or thereon for market, and the transportation and removal of the same without hindrance or molestation from the said parties of the second part, there heirs executors administrators, lessees or assigns, or any of them; together with the right and privilege onto the said parties of the first part, their heirs or assigns, to take from said land such timber as may be necessary for the purposes aforesaid, and for the said purposes to build, construct or dig common roads, railroads, tramways, or monkey drifts and make all and every other improvement that may be necessary either upon or under the surface of said land, on and over which may be transported or manufactured all mineral, oil and natural gas formed in or on said land, and to erect such buildings structures and other necessary improvement thereon as the parties of the first part hereto their heirs or assigns, may deem necessary for the

convenient  use of working of said mines mills or works, and the manufacturing  and preparing of the out put of the same for market with the right to deposit the dirt and waste from said mines, mills and works upon the surface of said land as may be necessary for convenient and for all of said foregoing uses and purposes to take and appropriate  such land for their exclusive use as the said parties of the first part, their heirs or assigns may deem necessary.

The deed was recorded on August 8, 1899 in Centre County Deed Book 80, Page 878. The property was subsequently transferred on various occasions.

In February of J 910, the Becks sold the property to Arthur Baird. In August of 1910, Mr. Baird sold the property  to Robert Jackson and Thomas Litz. In 1922, Ralph Smith acquired the property via deed from Jackson and Litz. In November of 1935, the Centre County Commissioners acquired title to the property via Treasurers Sale. The property was offered for sale by the Treasurer for unpaid real estate taxes. No bidder bid the upset price and the Commissioners purchased the property. At the time the land was unseated. By deed dated June 3,

1941, the Centre County Commissioners sold the property to Max Herr. Max Herr died intestate on February 2, 1944.

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In 1959, Plaintiffs were interested in purchasing the property from Mr. Herr’s widow. A title search was performed and Plaintiff became aware of the reservation. Plaintiff’s attorney, Richard Sharp, Esquire3 , suggested to grantor’s attorney Roy Wilkinson, Jr., Esquire, 4  that Mr. Wilkinson “cover the exception by a specific clause making the conveyance subject to all exceptions and reservations as are contained in the chain of title.” (Defendant’s Motion for Summary Judgment 3/1112010 Exhibit E) Plaintiffs deed dated November 30, 1959 reflected “this conveyance is subject to all exceptions and reservations as are contained in the chain of title.” Plaintiffs  deed was recorded on April12, 1960 at Deed Book 253, page 107.

Recently it was discovered that the property contains “a deep stratum of shale which contains natural gas.” Defendants’ Brief in Opposition to Plaintiff’s Motion for Summary Judgment, 4/8/2010, at 2.

Discussion

Under the Pennsylvania Rules of Civil Procedure, Rule 1035.2, “[a]fter the relevant pleadings are closed, but within such time as not to unreasonably delay trial, any party may move for summary judgment in whole or in part as a matter of law:

I.  whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report, or

2.  if, after completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence

‘Richard Sharpe served as a Court of Common Pleas Judge in Centre County, Pennsylvania from 1978 to 1980.

4  Roy Wilkinson, Jr. was one of the seven original judges nominated by Governor Raymond Shafer to the Commonwealth Court and confirmed by the Senate in 1971. Wilkinson served on the Court until 1981 when he was appointed a Justice of the Pennsylvania Supreme Court by Governor Richard Thornburgh.

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 of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury.

Pa. R.C.P. 1035.2. Summary judgment is appropriate where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter oflaw. Blackman v. Federal Realty Inv. Trust, 444 Pa. Super. 411,415,664 A.2d 139, 141 (1995). The court may grant summary judgment only where, examining the record in the light most favorable to the non-moving party, the moving party’s right to it is clear and free from doubt.ld. at 141-142.

I.          P1aintiff’s Motion for Summary Judgment

Plaintiff argues that Defendants neglected to take any action in order to protect their respective subsurface interests in the premises. Plaintiff argues if Harry Keller was to retain the reserved subsurface rights, he was required to notify the County Commissioners of his severance of the subsurface interest from the ownership of the surface so that it could be taxed pursuant to Act of March 8, 1806. Plaintiff points out that the Act of March 8, 1806, placed an obligation on owners of unseated lands to give the county commissioners a description of the unseated lands held. Plaintiff argues because there is no evidence the subsurface interest was reported to the county for taxation and no separate assessment issued, the fee simple interest was assessed, levied and sold to Max Herr.

Additionally, Plaintiff argues it has adversely possessed the mineral rights for a period in excess of twenty-one (21) years although this issue was not addressed in the Motion for Summary Judgment.

In response, Defendants argue: 1.) only subsurface rights under operation and production have value which is assessable and taxable, and 2.) only assessed property can be acquired by a tax sale purchaser and, as Plaintiff admits, the subsurface rights were never assessed prior to the tax sale in this matter. Furthermore, Defendants contend Plaintiff has failed to meet its burden to prove that the Keller subsurface rights were taxable prior to the 1935 tax sale. Because the property’s subsurface rights were not assessed, Plaintiff’s predecessor in interest received only the assessed surface rights at the tax sale. Defendants also argue that Plaintiff is estopped from claiming ownership of the subsurface rights, where it expressly acknowledged all reservations in the chain of title in its own deed.

In F. H Rockwell & Co. v. Warren County, 228 Pa. 430,433,77 A.655, 666 (1910), the Court noted “{a] mere naked reservation of oil and gas in a deed without any other facts to base a valuation upon is not sufficient to warrant the assessment of taxes.5 ” /d. at 433. In Day v. Johnson,  31 Pa. D.&CJd 556, 1983 WL 968 (Pa.Com.Pl., 2003), the court found in favor of a plaintiff who claimed subsurface rights through a deed reservation over defendants who claimed ownership through a tax sale. The Day court found the subsurface interest was never assessed for taxation purposes and therefore could not be sold for delinquent taxes. !d. at 558. The court further found the creation of an exception and reservation without the operation for the removal of the minerals does not create a taxable estate per se and would not until production is commenced and the property is assessed. !d. The court provided the assessment for tax purposes of the subsurface rights is on the production of the oil and gas from the subsurface not on an estate where valuation

5   tn a 2007 Pennsylvania  Supreme Court case, the Court clarified that in F.H. Rockwell it stated that “oil and gas beneath the surface are also separately ta’\able as land, but F.H. Rockwell did not contemplate whether any particular statutory  provision pennitted the taxation of oil and gas interests, as we have since repeatedly instructed that an enactment of the General Assembly is necessary for a tax to be valid. See Northwood Constr. Co., 856 A.2d at 796; IOGA, 814 A.2d at 182; Appeal ojH.K Porter Co., 219 A.2d at

654. Moreover, the enactment  of the General County Assessment Law followed F.H. Rockwell and, as determined  in JOGA. there is no statutory authority that presently supports the real estate taxation of oil and gas interests.” Coobpring Stone Supply,  Inc. v. County of Fayette, 593 Pa. 338, 929 A.2d 1 J 50 (2007).

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admits the subsurface rights were not assessed prior to the I 935 tax sale. Furthermore, Plaintiff does not have any evidence that there has ever been production of subsurface resources on the property since the recordation ofthe Keller reservation in 1899. Because the subsurface interest was never assessed for taxation purposes it could not have been sold for delinquent taxes.

Regarding Plaintiffs claim that the Kellers failed to report their reservation of subsurface rights to the county commissioners, all inferences must be drawn in favor of the non­ moving party, Defendants. There is no evidence one way or another whether the Kellers ever reported their ownership interest for assessment purposes. Defendants were unable to locate evidence of any reserved mineral interest having been reported to the county for taxation purposes consistent with the Act of March 28, 1806. Defendants aver the records were not kept by the Recorder of Deeds or were lost or destroyed. Therefore Plaintiffs claim of ownership based on the purported failure of Harry Keller to report his reservation of subsurface rights to the Centre County Commissioners which resulted in Keller escaping assessment and taxation and his rights being sold at tax sale along with the surface rights to the County, Max Herr and Plaintiff fails and Plaintiff’s Motion for Summary Judgment is denied.

II.       Defendants’  Motion for Summary Judgment

Defendants argue that the Keller heirs have clear record title to the subsurface rights and Plaintiff is bound by its explicit acknowledgement thereof in its own recorded deed and; therefore, this Court should grant Defendants’ Motion for Summary Judgment as a matter of law. Defendants argue the Kellers detailed an explicit reservation of subsurface rights which was recorded in the Centre County land records. Plaintiff had actual knowledge of the reservation when it acknowledged the reservation at the time of purchase in 1959.

rights, where the chain of title in its deed expressly acknowledged the reservations concerning subsurface rights. When Plaintiff purchased the property from Max Herr’s widow, the language “[t]his conveyance is subject to all exceptions and reservations as are construed in the chain of title.” Defendants contend that because Plaintiff drafted the acknowledgement in its deed recognizing the Keller reservation, Plaintiff must be estopped from now claiming the Keller reservation was “extinguished” by the Tax Sale in 1935. In response, Plaintiff argues the language contained in the 1959 deed from Kate Herr to Plaintiff, “[t]his conveyance is subject to all exceptions and reservations contained in the chain of title,” dos not support Defendant’s arguments. Plaintiff argues the language is not part of the description but part of the “Habendum.” However, clearly Plaintiff was aware of the  reservation of subsurface rights no matter where it was included in the deed. When Plaintiff purchased the property in 1959, Plaintiff’s attorney, Richard Sharp, sent correspondence to Ms. Herr’s attorney, Roy Wilkinson, Jr., suggesting that Attorney Wilkinson “cover the exception by a specific clause making the conveyance subject to all exceptions and reservations as are contained in the chain of title.” The deed contains the suggested language, ”this conveyance is subject to all exceptions and reservations as are contained in the chrun of title.” Therefore, Plaintiffs cannot claim they were unaware of the reservation as Plaintiff’s attorney proposed the language to cover the exception that was added to the deed.

Essentially Plaintiff relies on the arguments made in its Motion for Summary Judgment that that the Kellers failed to report the reservation under the Act of March 8, 1806 and; therefore, the 1935 tax sale extinguished the 1899 reservation of subsurface rights. However, as addressed above, Defendants make a valid point that there are no records of any reports of such

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 reservations. Plaintiff also argues “tax sale does not convey weak title” citing Ziffv.  Taylor from Centre County. However, rights to minerals are separate estates and may be assessed and taxed separately from the surface rights. Armstrong v. Black Fox Mining and Development Corp., 15

Pa. D & C.3d 757, 762, 1980 WL 741 (Pa.Com.PI., 1980) citing Sanderson v. Scranton, I 05 Pa.

469 (1884).

In Armstrong, a 1903 deed severed title to the surface from the coal and conveyed “[a]ll coal of whatever king lying and being in and under” a 54 acre tract of land. Id. at 758. The surface rights were sold for delinquent taxes by the Armstrong County Tax Claim Bureau to the Duppstadts. Id. at 759.  In Armstrong, the defendant argued the coal ownership to a 54 acre tract was not separately assessed for taxation purposes from the surface and thus was sold with the surface by the Tax Claim Bureau. ld. at 761. Plaintiffs denied the coal was not separately assessed and further argued the tax sale could not have conveyed the coal since it was not owned by the prior owners in whose name the sale for delinquent taxes was made. ld. The court noted, “[a] purchaser at a tax sale of the surface of the estate would not be able to rely on this to claim he purchased the coal estate as well.” !d. at 762. A tax sale for delinquent taxes conveys only that estate owned by the titleholder and covered by the assessment. Jd citing Miller v. McCollough,

104 Pa. 624 (1 884), Brundred v. Egbert, 164 Pa. 615 (1894). Therefore, in the present case, because the property was undisputedly unseated and was not under production at any time prior to the tax sale to Max Herr, the subsurface rights were not conveyed to Max Herr as the prior owner did not possess the subsurface rights. Defendants’ Motion for Summary Judgment is granted as to the above issues raised in the Motion for Summary Judgment.

Neither party has addressed the issue of adverse possession in the Motions for Summary Judgment consequently this issue is still pending before this Court.

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ORDER OF COURT

AND NOW,  this  29th day of September, 2010, upon consideration of the Motion  for Summary Judgment filed  by Plaintiff,  Herder Spring  Hunting  Club, said motion  is hereby denied. Upon consideration of Defendants’ Motion for Summary  Judgment, said motion  is hereby Granted; however, Plaintiff’s claim that it has adversely  possessed  the property  known as the Eleanor  Siddons Warrant  for a period in excess of twenty-one (21) years is still at issue before this Court.

Bradley P. Lunsford, Judge

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Sullivan County Court Rules onTitle Wash in Meske v Davidge

In the Case of Meske vs Davidge, the Sullivan County Court rules on the constitutionality of the practice of “title-washing”.  The Davidges, for whom the ruling was in favor, are one of the families similar to the Hoyts as parties who severed the mineral rights from the surface properties in the late 1800’s, and still have ownership of those rights.

The entire ruling can be found at this link.  20130423 Meske v Davidge Order – Opinion

Below is also a copy of the ruling, however as it has been transcribed from the PDF, you should not rely on this for accuracy and should see the complete ruling.

………………………………………………………………………………………………………………………………………………………………………………………………..

IN THE COURT OF COMMON PLEAS OF THE 44TH JUDICIAL DISTRICT

SULLIVAN COUNTY BRANCH- CIVIL DIVISION

CIVIL ACTION- LAW ACTION TO QUIET TITLE

DONALD E. MESKE and

HAZEL G. MESKE, his wife, Plaintiffs

vs.

ALMA K. HULL, widow, CENTRAL PENNSYLVANIA LUMBAR COMPANY, : JOHN KRAVITZ, ELIZABETH KRAVITZ,: his wife, MATE K. BORDEN, S. RICHARD, DAVIDGE, CALBERT CRARY and RUTH CRARY, his wife, their: successors, heirs, administrators and assigns or anyone claiming by, through or under them,

ORDER

AND  NOW,  this  19th day  of  April,  2013,  upon  consideration  of  Plaintiffs’  Motion  for Summary  Judgment,  Defendants’  Cross-Motion  for  Summary  Judgment,  the  responses  filed thereto, the briefs filed in support thereof, oral argument and based upon the attached Opinion, IT IS HEREBY ORDERED that:

1.  Plaintiffs’ Motion for Summary Judgment is DENIED.

2.   Defendants’ Cross-Motion for Summary Judgment is GRANTED.

Russell D. Shurtleff, President Judge

 cc:

Andrew Fletcher, Esquire Tucker R. Hull, Esquire J.C. Wilkinson, III, Esquire

Christopher M. Williams, Esquire

Joel R. Burcat, Esquire

………… .. ………. ……. .. .. …….. .. … .. ……… .. …………. “.’ ……….,………………………………………………….. ………………………………………………………”……………………………………..

DONALD E. MESKE and

HAZEL G. MESKE, his wife, Plaintiffs

vs.

ALMA K. HULL, widow, CENTRAL PENNSYLVANIA LUMBAR COMPANY, : JOHN KRAVITZ, ELIZABETH KRAVITZ,: his wife, MATE K. BORDEN, S.

RICHARD, DAVIDGE, CALBERT

CRARY and RUTH CRARY, his wife, their:

successors, heirs, administrators and assigns or anyone claiming by, through or under them,

Defendants

CIVIL ACTION – LAW ACTION TO QUIET TITLE

2009-CV-11

DONALD E. MESKE and

HAZEL G. MESKE, his wife, Plaintiffs

vs.

CALVERT CRARY and RUTH CRARY, his wife, their successors, heirs, administrators and assigns or anyone claiming by, through or under them, Defendants

2011-CV-33

Christopher Williams. Esquire -Attorney for Plaintiffs

Joel R. Burcat, Esquire- Attorney for Plaintiffs Tucker R. Hull, Esquire – Attorney for Defendants Andrew Fletcher, Esquire – Attorney for Defendants J.C. Wilkinson, Esquire- Attorney for Defendants

OPINION Shurtleff, P.J., April 9, 2013:

This Opinion is in support of the attached Order.

I.         BRIEF FACTS

Donald and Hazel Meske (hereinafter “Plaintiffs”) instituted this action by filing a Complaint to Quiet Title on May 7, 2009 to the subsurface rights of a parcel of land in Sullivan County.  More specifically, this case involves a dispute over the ownership of the mineral, oil and gas rights (hereinafter “the Subsurface Estate”) under an approximate one thousand twenty six (1,026) acre parcel of land (hereinafter “the Property”) which is located in Colley Township, Sullivan County, Pennsylvania and identified as Sullivan County Parcel No. 02-041-0014. The surface rights (hereinafter “Surface Estate”) to this land are undisputedly owned by Plaintiffs by deeds dated September 13, 2000 and August 19, 2005, which was recorded in the Sullivan County Recorders office.

Title to the Surface and Subsurface Estate of the Property originate in a deed dated February 27, 1894, in which Sherwood B. Davidge conveyed to the Union Tanning Company the Surface Estate of the Property.  This same deed excepted and reserved all the “petroleum and other oils, gas, coal, iron and other minerals” for Sherwood B. Davidge and his heirs and assigns forever. A tax sale was held on June 3, 1910 and Calvin H. McCauley (hereinafter “McCauley”) acquired certain property.  Plaintiffs allege that pursuant to the duly acknowledged tax deed, McCauley acquired both the Surface and Subsurface Estates.   After the 1910 tax sale McCauley conveyed to the Central Pennsylvania Lumber Company (hereinafter “CPL”) whatever interest he acquired in the Property as a result of that sale.  Thereafter, CPL conveyed the Surface Estate to Edward M. Hull by deed dated November 11, 1924.   The “Hull deed” explicitly noted the earlier exception and reservation of the Subsurface Estate in favor of Sherwood B. Davidge and S. Richard Davidge stating:

EXCEPTING AND RESERVING all petroleum and other oils, gas, coal, iron and rights were reserved  by  Sherwood B. Davidge and others in deed to  Union

Tanning Company dated February 27, 1894, by Samuel Thorne and John W. Sterling  in  deed  to  Union  Tanning  Company  dated  May  1,  1893,  and  by Sherwood B. Davidge and wife in deed to Union Tanning Company dated November 4, 1895, being the deeds hereinbefore recited, and as fully as said minerals and mineral rights were conveyed by the grantor S. Richard Davidge by deed dated March 15, 1924.

See, Linda P. Davidge & Louise Davidge Raimondi’s Statement of Undisputed and Disputed Issues of  Material Fact; see also, Plaintiffs’  Counterstatement to  Defendants’ Statement of Undisputed and Disputed issues ofMaterial Fact at 11.

Thereafter, by deed dated January 25, 1939 Edward Hull conveyed the Surface Estate to himself and his wife, Alma K. Hull.  Mrs. Hull conveyed the Surface Estate to John Kravitz on October 27, 1954. John Kravitz conveyed a portion of the Surface Estate to DMBW Corporation by deed dated November 21, 1967.   Then, by way of assignment dated May 25, 1967 Leon Charney acquired the Surface Estate.

In 1968, a tax sale was held as it pertained to the property at issue. The property was sold to

Charles Kschinka by way of a series of treasurer’s deeds following the tax sale on August 27, 1968.  At some point, Charles Kschinka transferred his interest to C&S Investments who then transferred its interest to Plaintiffs. The issue before this Court is the effect that the 1968 tax sale had on the Subsurface Estate.  Plaintiffs maintain that the 1968 tax sale merged the Surface and Subsurface Estates and therefore Charles Kschinka acquired both the Surface and Subsurface Estates in fee simple.  Defendants, on the other hand, maintain that at the time of the 1968 tax sale, the Subsurface Estate was a separate interest in land, not subject to taxation and therefore the taxing authority could not have sold it.

II.        PROCEDURAL HISTORY

Plaintiffs initiated this action by filing a Complaint on May 7, 2009. Thereafter, on June 24, 2009 Defendants Linda Davidge and Louise Davidge Raimondi filed Preliminary Objections, which were denied by Court Order on October 6, 2009.   Defendants subsequently moved for entry of default judgment against other Defendants in the action. This Court by Order dated September 15, 2009 granted said default.

Defendants filed an Answer with New Matter and Counterclaim on October 22,2009. Defendants’ Counterclaim seeks lost rental income and an injunction enjoining Plaintiffs  from exercising any  rights to the Subsurface Estate.                                                     Plaintiffs filed  an  Answer to Defendants’ Counterclaim and New Matter.

Discovery commenced on December 14, 2009 and proceeded through a consolidation with a similar case docketed in Sullivan County, Pennsylvania to 2009-CV-117.   Discovery concluded on May 2, 2012.  No depositions were taken.  Plaintiffs filed the instant Motion for Summary Judgment on November 30, 2012 and subsequently filed a praecipe to list the case for trial. Defendants thereafter filed a Cross-Motion for Summary Judgment on December 28, 2012. The Motions were briefed, oral arguments were held and this matter is now ripe for discussion.

III.        STANDARD OF REVIEW

A party may move for summary judgment any time after the pleadings have closed. An entry of summary judgment is appropriate if, after reviewing the pleadings, answers to interrogatories, depositions, together with any admissions or affidavits, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.   Welsh v. Bulger, 548 Pa. 504,

698 A.2d 581 (1997); Pa.R.C.P. 1035.2.  Summary judgment is appropriate only in those cases where there is no genuine issue of any material fact as to a necessary element of the cause of action.  Pa.R.C.P. 1035.2(1).  More specifically, it is the moving party that bears the burden of

Hoffman, 553 A.2d 900, 903 (Pa. 1989).

Pennsylvania Rule of Civil Procedure 103-5.2 states that a party may move for summary judgment as a matter of law:

If, after the completion of discovery relevant to the motion, including, the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of fact essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury.

Pa.R.C.P. 1035.2.

In other words, it is appropriate to grant summary judgment when the evidentiary record shows that there is an insufficient basis of fact or evidence to make out a prima facie cause of action and, therefore, there is no issue to be submitted to the jury.   See, Note to Pa.R.C.P.

1035.2.

Through this  action, Plaintiffs wish  to  quiet title to the Subsurface Estate.    Therefore, Plaintiff must establish title by a fair preponderance of the evidence.   Moor v. Com, Dept. of Environmental Resources, 129 Pa.Cmwlth. 628, 566 A.2d 905 (1989).                                                        Once the plaintiff has carried his burden of establishing a prima facie title, the adverse party must show better title. ld Through their Motion for Summary Judgment, Plaintiffs assert they have established title to the Subsurface Estate  of  the  Property.                                                               Defendants, through their  Cross-Motion for  Summary Judgment, assert the complete opposite.

IV.      DISCUSSION

It is clear that at the time of the 1968 tax sale, S. Richard Davidge owned the Subsurface Estate via quitclaim deed dated November 1, 1924.  The issue before this Court, therefore, is whether the 1968 tax sale merged the Surface and Subsurface Estates such that Plaintiffs now own both in fee simple.

Plaintiffs argue that the 1968 tax sale resulted in a merger of the Surface and Subsurface Estates in the Property and as such, Defendants cannot establish that they have title to the Subsurface Estate.  In so arguing, Plaintiffs rely on Proctor v. Sagamore Big Game Club, 166

F.Supp. 465,  (W.D. Pa. 1958), Hutchinson v. Kline, 49 A.  312  (Pa. 1901) and Moore v. Commonwealth of Pa. Dep’t of Envtl. Res., 566 A.2d 905 (Pa. Commw. Ct. 1989) for the proposition that at the time of both the 1910 and 1968 tax sales, the purchasers of the property at issue obtained fee simple title to both the Surface and Subsurface Estates because (1) the lands were unseated; (2) the oil, gas, mineral or coal rights had not been previously severed; (3) the purchaser received a duly acknowledged Treasure’s Deed for the property; and (4) the property was not redeemed within two (2) years of the date of the tax sale.  Plaintiffs’ reliance on these cases, however, is misplaced as these cases involved interpretation of the Acts of 1804 and 1815 and not the Act of July 7, 1947, P.L. 1368, No. 542, (hereinafter “the 1947 Act”), which is the Act that governed at the time of the 1968 tax sale.   Furthermore, the record reflects that the subsurface rights, namely the oil, gas, mineral and coal rights, had been previously severed from the surface rights.

In arguing for Summary Judgment in their favor, Plaintiffs further rely on the 1947 Act. More specifically, Plaintiffs cite to 72 P.S. § 5860.609 which states:

Every such sale shall discharge the lien of every obligation, claim, lien or estate

with which said property may have or shall become charged, or for which it may

be liable, except no such sale shall discharge the lien of any ground rent or mortgage which shall have been recorded before such taxes become liens, and which is or shall be prior to all other liens, except other mortgages and ground rents.

The 1947 Act,§  609.  Plaintiffs state that based upon this law, “the Court should determine that, under the plain meaning of the statutory text, [footnote omitted], the Davidge family’s interest in the Subsurface was divested by operation of Pennsylvania statutory law.”  Pl. Memorandum of Law in Opposition to Def. Cross-Motion for Summary Judgment, p. 10.  With this argument, this Court simply cannot agree.

The 1947 Act defines property in Section 102 as “real property subject to a tax lien” and that tax liens are permitted only for “taxes which … may be lawfully levied on property in this Commonwealth”.  The 1947 Act,§ 301.

Defendants correctly set forth that at the time of the 1968 tax sale, the Subsurface Estate was a separate and distinct interest in land from the Surface Estate.  The Pennsylvania Supreme Court has  held  that  the conveyance  of  property  while excepting  and  reserving  oil, gas and mineral rights, creates a separate estate in the land.   See, Rockwell v. Warren County, 228 Pa.

430, 77 A. 665 (1910).  Pursuant to the General County Assessment Law Act of May 22, 1933,

the Subsurface  Estate was not subject  to taxation  as of the time of the 1968 tax sale1

See Independent Oil and Gas Ass’n ofPa. v. Bd of Assessment Appeals of Fayette County, 814 A.2d 180, 184-5 (Pa. 2002) (holding that the General County Assessment Law Act of May 22, 1933 did not grant counties the authority to impose ad valorem tax on an oil and gas estate).  Based upon this, therefore, the real issue before this Court is whether an estate in land that was not legally subject  to taxation and the taxing authority  was, in fact, not taxing could be sold on account of assessed and unpaid taxes due on a separate estate in land.

At the time of the 1968 tax sale, the Subsurface Estate was an entirely separate estate in land that was not subject to ad valorem taxation.  As such, the Sullivan County Taxing Authority had no right under the 1947 Act to merge the Surface and Subsurface Estates at the 1968 tax sale.

It is undisputed that Sullivan County was not taxing the Subsurface Estate at or prior to the 1968 tax sale.

Lastly, a deed cannot grant a greater interest in property than the interest owned by the grantor.  Wagner v. Landisville Camp Meeting Ass’n, 24 A.3d 374 (Pa.Super. 2011).  To do so would constitute a taking in violation of the United States Constitution.   The United States Supreme Court in Mennonite Board of Missions v. Adams, 462 U.S. 791 (1983) held that to divest a mortgage holder’s interest in a property without notice and an opportunity to present objections to the sale would violate the Due Process Clause of the Fourteenth Amendment ofthe United States Constitution.   The Davidge’s estate was recorded with the Sullivan County Recorder of Deeds and yet none of the Davidge’s predecessors received notice of the 1968 tax sale. See, Statement of Facts,4, 6.

V.        CONCLUSION

Based upon the foregoing, Plaintiffs’ Motion for Summary Judgment is denied and Defendants’ Cross-Motion for Summary Judgment is granted.

Rise in US Gas Production Fuels Unexpected Plunge in Emmissions

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Wall Street Journal Article. April 18, 2013

By RUSSELL GOLD

U.S. carbon-dioxide emissions have fallen dramatically in recent years, in large part because the country is making more electricity with natural gas instead of coal.

Energy-related emissions of carbon dioxide, the greenhouse gas that is widely believed to contribute to global warming, have fallen 12% between 2005 and 2012 and are at their lowest level since 1994, according to a recent estimate by the Energy Information Administration, the statistical arm of the U.S. Energy Department.

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While other factors, including a sluggish U.S. economy and increasing energy efficiency, have contributed to the decline in carbon emissions from factories, automobiles and power plants, many experts believe the switch from coal to natural gas for electricity generation has been the biggest factor. Carbon-dioxide emissions account for nearly 84% of greenhouse-gas emissions, while methane—the main ingredient in natural gas—makes up 8.8%, according to a recent Environmental Protection Agency report.

Natural gas emits half as much carbon dioxide as coal when used to make electricity, though the calculation fails to take into account the release of methane from natural-gas wells and pipelines, which also contributes to climate change.

Few people predicted this drop in carbon emissions. “Everybody just figured that emissions were just going to continue to increase rapidly,” says Ted Nordhaus, chairman of the Breakthrough Institute, an energy and climate think tank based in Oakland, Calif. “Nobody was expecting the worst recession since the Great Depression, but also no one was really expecting this remarkable shift from coal to gas either.”

Last year, 30% of power in the U.S. came from burning natural gas, up from 19% in 2005, driven by drilling technologies that have unlocked large and inexpensive new supplies of the fuel.

More of this article is available here:  http://online.wsj.com/article/SB10001424127887324763404578430751849503848.html?KEYWORDS=rise+in+US+gas+production

Should Fracking be Regulated by the Federal Government?

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From the Wall Street Journal:  April 15, 2013.  This is not the complete article, which can be found here:  http://online.wsj.com/article/SB10001424127887323495104578314302738867078.html?mod=WSJ_JREnergy_4_2_RIGHT

Fracking supporters say it could set America on the road to energy independence and drastically change our economic prospects while helping address climate change.

But who should be in charge of regulating fracking?

Fracking—short for hydraulic fracturing—involves injecting fluids into the ground to access hard-to-reach reserves of oil and natural gas, including shale gas, which the U.S. has in vast abundance but hasn’t been able to reach easily up to now.

Many advocates argue that the federal government should step in and regulate the practice more forcefully because fracking can have big environmental impacts that can’t be managed effectively by individual states alone. At scale, they say, those hazards inevitably reach across state lines and become a national problem. The result could be widespread bans on the practice and a premature end to the shale-gas revolution, they say.

But others say states are well equipped to regulate fracking. They say the risks of fracking are overstated, and the impacts of fracking—both positive and negative—are mostly local, and different people balance them differently. So regulation should be left to the people who feel them most directly. Existing federal authority can handle whatever problems may spill across state lines, they say.

Jody Freeman argues for federal regulation of fracking. She is the Archibald Cox professor of law at Harvard Law School and was counselor for energy and climate change in the White House in 2009-10. Making the case that regulation should be handled by the states is David Spence, associate professor of law, politics and regulation at the McCombs School of Business and School of Law at the University of Texas.

Yes: A National Issue Can’t Be Addressed State by State

By Jody Freeman

Harvard Law School

Jody Freeman

We need stronger federal regulation of fracking for a simple reason: It affects the entire nation, not just individual states.

Fracking has the potential to help the U.S. achieve energy independence, boost the economy and reduce greenhouse-gas pollution.

Yet the cumulative environmental impact of drilling at this scale is great, and it needs to be addressed in a comprehensive way. We won’t achieve the full promise of fracking if environmental impacts and public reaction cause land to be pulled out of production.

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No: States Can Best Balance The Competing Interests

By David Spence

Korey Howell

Like all forms of energy production, fracking entails risks. States are better equipped than the federal government to regulate most of those risks.

Why? Because both the benefits and the costs of fracking fall mostly on states and local communities. States gain the most from added jobs and tax revenue; they face the truck traffic, noise, pollution risks and rapid industrial growth. Consequently, states are in the best position to figure out how best to balance fracking’s costs and benefits.

It is true that the natural-gas industry risks losing public trust if it doesn’t perform to high standards. But turning the regulatory framework over to Washington isn’t the answer.

Link

Gas Wells in PA Up; Revenue to Towns Down

While the number of natural gas wells in Pennsylvania increased by 26% to 5,500 this year, revenues from fees to municipalities are down.  The culprit? The low price of natural gas.  But in rosier news, gas prices have increased 50% to almost $4.00 from about $2.00 last August.

http://www.foxbusiness.com/news/2013/04/04/natural-gas-futures-climb-after-eia-reports-inventory-draw/

Craig Mayer Testifies Regarding Title Wash and SB 258

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Craig Mayer, General Counsel of Pennsylvania General Energy testified before the State Environmental Resources and Energy Committee on March 19th, 2013 regarding title wash as it relates to oil and gas mineral estates and mineral rights in Pennsylvania. His comments were in opposition to SB258.  In them, he states, “SB 258 alters basic property law in Pennsylvania and would destabilize subsurface land titles.” Mayer put together a database of 124 quiet title cases from 2008 to 2012 in 7 counties where Hoyt Royalty has sizeable mineral interests: Bradford, Tioga, Susquehanna, Sullivan, Lycoming, Clinton, and Wyoming.  Mayer, who also relies on statements by Attorney Jay Wilkinson, finds a large potion of the title wash cases to be at some level defective and he finds that they add a large amount of uncertainly to an operator relying on them. This is a well thought-through analysis of the title wash situation in Pennsylvania and a very interesting read.

See the full testimony here:  http://wallaby.telicon.com/pa/library/2013/20130319TZ.PDF

Energy Companies and Environmental Groups Agree on New Fracking Standards

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Original story by AP, March 20, 2013.  Reported by Cleveland.com http://www.cleveland.com/business/index.ssf/2013/03/both_sides_agree_on_tough_new.html

PITTSBURGH   — In an unlikely partnership between  longtime adversaries, some of the nation’s biggest energy companies and  environmental groups have agreed on a voluntary set of standards for gas and oil fracking in the Northeast that appear to go further than  existing state and federal pollution regulations.

The program  announced Wednesday will work a lot like Underwriters Laboratories,  which puts its UL seal of approval on electrical appliances that meet  its standards. In this case, drilling and pipeline companies will be  encouraged to submit to an independent review of their operations, and  if they are found to be taking certain steps to protect the air and  water, they will receive the blessing of the brand-new Pittsburgh-based  Center for Sustainable Shale Development.

If the project succeeds, it could have far-reaching implications for both the industry and  environmental groups. A nationwide boom in hydraulic fracturing, or  fracking, has unleashed huge new energy reserves but also led to fears  of pollution and climate change.

Shell Oil Vice President Paul  Goodfellow said this is the first time the company and environmental  groups have reached agreement to create an entire system for reducing  the effects of shale drilling.

“This is something new,” said Bruce Niemeyer, president of Chevron Appalachia. “This is a bit of a unique  coming-together of a variety of different interests.”

In addition  to Shell and Chevron, the participants include the Environmental Defense Fund, the Clean Air Task Force, the Heinz Endowments, EQT Corp., Consol Energy and the Pennsylvania Environmental Council, and the organizers  hope to recruit others.

It may be part of a trend. Earlier this  month a coalition of industry and environmental groups in Illinois  announced that they worked together on drilling legislation now pending  there. But the Pittsburgh project, which has been in the works for  nearly two years, would be voluntary.

“We believe it does send a  signal to the federal government and other states,” said Armand Cohen,  the director of the Boston-based Clean Air Task Force. “There’s no  reason why anyone should be operating at standards less than these.”

The new standards include limits on emissions of methane,  a potent  greenhouse gas, and the flaring, or burning off, of unwanted gas;  reductions in engine emissions; groundwater monitoring and protection;  improved well designs; stricter wastewater disposal; the use of less  toxic fracking fluids; and seismic monitoring before drilling begins.

The project will cover Pennsylvania, West Virginia and Ohio — where a  frenzy of drilling is under way in the huge, gas-rich Marcellus and  Utica Shale formations — as well as New York and other states in the  East that have put a hold on new drilling.

Shell said it hopes to  be one of the first companies to volunteer to have its operations in  Appalachia go through the independent review. Chevron said it expects to apply for certification, too, when the process is ready to start later  this year.

Mark Brownstein, an associate vice president with the  Environmental Defense Fund, said many oil and gas companies claim to be  leaders in protecting the environment, and “this can be one opportunity  for them to demonstrate that leadership” by submitting to an audit.

“Anyone who claims to be placing a priority on good management practice” should be rushing to sign up, he said.

The project will be overseen by a 12-member board consisting of four seats  for environmentalists, four for industry and four for independent  figures: former Treasury Secretary Paul O’Neill; Christine Todd Whitman, the former New Jersey governor and Environmental Protection Agency  chief; Carnegie Mellon University President Jared Cohon; and Jane Long,  former associate director at the Lawrence Livermore National Laboratory.

The center’s proposed 2013 budget is $800,000, with the two sides expected  to contribute equal amounts, said Andrew Place, the project’s interim  leader and director of energy and environmental policy at EQT, an  Appalachian energy company.

Mark Frankel, an expert on ethics and  law at the American Association for the Advancement of Science in  Washington, said the idea sounds promising, but it remains to be seen if the new standards are a significant improvement over existing laws. He  said there are also ethical and policy questions.

“What does it mean to have an independent board? Who’s on it? How do they get on it?” he asked.

George Jugovic, president of the environmental group PennFuture, one of the  participants, said the industry’s involvement makes this different from  past debates over fracking.

“Buy-in from them is huge. That  provides leadership from within,” Jugovic said. “It’s very different  from someone from the outside saying, ‘You can do better.'”

Keystone Pipeline and Our Accidental Energy Independence

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This morning’s NY Times features and editorial by Thomas L. Friedman titled “No to Keystone.  Yes to Crazy.”  In it, Friedman asks, “Who wants the U.S. to facilitate the dirtiest extraction of the dirtiest crude from tar sands in Canada’s far North?”  It’s a rhetorical question, of course, because Friedman thinks that Obama will soon allow the Pipeline to move forward and for that, he contends, environmentalist need to at least get something good in return.  They need to “go crazy” until they do.  “I’m talking chain-themselves-to-the-White-House-fence-stop-traffic-at-the-Capitol kind of crazy.”

Friedman says: “It’s great that shale gas is replacing coal as a source of electricity since it generates less than half the carbon dioxide.”  (It is also important to control methane from being leaked from hydraulic fracturing since that can also release C02.)   And he refers to oil economist Philip K. Verleger, Jr.’s Winter 2013 essay for Journal of International Economy:  “The End of the Oil Crises”   This sounded interesting so I looked it up.  But by accident, (This is a pun.  Read on to know why.) I found and read Verleger’s “Tale of U.S.” in the Spring, 2012 edition of the same publication.  Just as well.  The two articles are very similar.

Here’s how “Tale of US” begins.

“In little more than a decade, the United States will find itself as an energy exporter and this amazing outcome will have happened by accident. [Aha!]  The United States will then have low-cost energy supplies for decades. If oil prices remain high, America will benefit from the difference. Today, South Korea pays around $14 per million Btus for natural gas; the United States will pay less than $4. The situation is, and will be, the same in China and Europe. They will pay more, and the comparative advantage will make it possible for the United States to remain the global economic leader. I have been studying energy issues for forty years and the data are difficult to believe. But facts are facts. U.S. energy independence, as controversial as it sounds, will lay the groundwork for the New American Century. Specifically, the United States will be energy-independent by 2023, the fiftieth anniversary of President Richard M. Nixon announcing his “Project Independence.” By energy independence, I mean the United States will export more energy than it imports. In 2023, America will be exporting natural gas, petroleum products, coal, and possibly crude oil if the federal government lifts prohibitions on the latter. The United States will also be importing some oil. On balance, though, America will be a net exporter. The United States will reap enormous economic benefits in achieving energy independence by not following the approach proposed by President Nixon and his advisers. That plan can be described as the high-cost dirty path to energy independence. Nixon advocated an aggressive boost in offshore resource development, pursuit of the extraordinarily expensive fastbreeder reactor, increased coal use, and expanded shale oil development in Colorado using the very expensive techniques now at work on Canada’s tar sands. Implementing Nixon’s strategy would have saddled the United States with high-cost energy supplies and very high emissions of harmful global warming gases.  The path actually taken is very different. It might be called the low-cost clean path to energy independence.

The United States came upon this course by accident.”

The article goes on to discuss how fracking was perfected just as the energy industry was ready to turn their backs on the U.S. as a source of production and how deregulation and financial markets helped to create added incentives to pursue home-grown energy development.  There is also a nice graph showing that it costs roughly half (and for some states significantly less) to fill up with Compressed Natural Gas for CNG vehicles than it does to fill up with oil-based gas for traditional vehicles.   It also discusses CAFE standards, regulation, and renewable energies which, while in some cases beneficial, never were as successful as the “accidental” growth of the shale gas and oil boom in the U.S.

Gas Boom Projected to Grow for Decades

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BY RUSSELL GOLD – WALL STREET JOURNAL

U.S. natural-gas production will accelerate over the next three decades, new research indicates, providing the strongest evidence yet that the energy boom remaking America will last for a generation.

The most exhaustive study to date of a key natural-gas field in Texas, combined with related research under way elsewhere, shows that U.S. shale-rock formations will provide a growing source of moderately priced natural gas through 2040, and decline only slowly after that. A report on the Texas field, to be released Thursday, was reviewed by The Wall Street Journal.

The research provides substantial evidence that there are large quantities of …

Full article at Wall Street Journal.  Login may be required.   http://online.wsj.com/article/SB10001424127887323293704578330700203397128.html?mod=rss_most_viewed_day_europe?mod=WSJEurope_article_forsub