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.
The entire article can be seen here: Oil and Gas Mineral Rights in PA
When some property owners in the Marcellus Shale region want to contract with drilling companies to explore for natural gas on their land, they may find that others have laid claim to their sub-surface rights.
Disputed ownership results from Pennsylvania laws that are more than a century old and a long-dormant practice called “title washing.”
A title wash occurred when someone bought undeveloped property at a tax sale. Former Pennsylvania tax laws gave the purchaser clear title to the taxed property. According to these early tax laws, the obligation to pay taxes on undeveloped property ran with the property. An owner could therefore default on taxes and then purchase the same property at a tax sale, thereby “washing” the property’s title from any prior obligations. From 1900-1950, Pennsylvania saw a lot of “title-washing.”
Some legal scholars believe that even if the tax assessment was directed at only the surface estate, the tax sale of the unseated surface could nonetheless “wash” the title of the unassessed subsurface rights to minerals, oil and gas. These scholars rely on early court decisions which they contend ruled that tax sales “washed” the title to the subsurface interests.
Judges more recently have focused on whether subsurface rights could have been or were taxed. Pennsylvania’s highest court has now declared that oil and natural gas cannot be assessed for property taxes. With no assessment possible, courts have ruled that title to the oil and gas in question was not “washed” when the surface rights were sold for taxes.
It is imperative that property owners have a careful title search done before negotiating a drilling contract, paying close attention to any past tax sales. In some cases, the property owner may not own or will have to defend his or her right to sell the subsurface rights.
— Ronald L. Hicks, Jr., Meyer, Unkovic & Scott, email@example.com
Business workshop is a weekly feature from local experts offering tidbits on matters affecting business. To contribute, contact Business Editor Brian Hyslop at firstname.lastname@example.org.
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?
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