Mar 11
25
What is meant by the term “minerals”?
Many people, including some lawyers and some of those employed in the oil and gas industry, misunderstand some basic terms and definitions relative to the ownership and leasing of oil and gas. One of the most confusing terms used is “minerals”. Many people might assume that the term “minerals” automatically includes oil and gas. This can be a big mistake.
Pennsylvania law includes a peculiar rule of real estate law known as “The Rule in Dunham’s Case”. This rule of law, which was the result of a Pennsylvania Supreme Court decision from 1882, provides that the term “minerals” used in a deed or other real estate document typically does NOT include oil and gas. Dunham’s Rule has been with us for 130 years, and many real estate titles rely on its continued existence; it is with us to stay.
Dunham’s Rule provides that the use of the term minerals creates a “presumption” that the parties did NOT INTEND to include oil and gas within that definition. Proof of a different intention can be very difficult to come by. The relevant document using the term minerals might be quite old, and the parties to the document may be deceased.
The advent of the development of the Marcellus Shale has brought Dunham’s Rule to the forefront in oil and gas legal work. The large drilling companies will apply Dunham’s Rule strictly, and some prospective lessors may be very disappointed when they learn that they do not own the oil and gas underlying their land because an old document used the term “minerals” instead of “oil and gas”.
Dunham’s Rule is very much criticized because of the confusion it can generate. In the 1950s, the late Pennsylvania Supreme Court Justice Michael Musmanno, known for his flowery language, in a dissent in a case upholding the Rule in Dunham’s Case, stated: “Since time immemorial, the firmament has been divided into the animal, the vegetable and the mineral. We can agree that oil and gas is not an animal, nor is it a vegetable. If it is not a mineral, then what is it? Have we created a fourth estate to be occupied solely by oil and gas? Or have we cut it loose to wander aimlessly in search of a home?”
The use of incorrect language can have huge consequences. An understanding of basic oil and gas law is critical in creating or reviewing leases, deeds, and other legal documents. The lawyers at Bassi, McCune & Vreeland, P.C. understand the law. Visit our website at www.bmvlaw.com.
James H. McCune, Esquire
Partner at Bassi, McCune, & Vreeland, P.C.
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