A Marcellus Shale case that has nothing to do with fracking p2

10/18/2014 | Real Estate Blog

When law students and real estate agents learn about property rights, they hear the expression “bundle of sticks” over and over. A landowner does not have one property right; he has a bunch of them. Some of them can be transferred, but that transfer does not affect the other rights. We have been talking about easements, a kind of transfer that leaves all the other sticks in the bundle. Bob’s right-of-way through Judy’s farm does not reduce her interest in the rest of her land.

So, while the bundle of sticks can change even when ownership does not, a change of ownership may change the bundle. An owner may hold onto one last right to the property in a transfer. With the railroad easements discussed in our posts about the Brandt v. U.S. decision (see part one here), that right was called a “reversionary interest.” The government argued that the easements belonged to the railroads until the railroads abandoned them; after that, ownership would revert (return) to the government. The government gave up all but one property right, the right of reverter.

When we talk about owning property from the core of the Earth to the heavens, then, we have to remember the bundle of sticks. Some of the rights, like the right to the air above our property, can be leased or sold. The classic example is the Pan Am building (now the Met Life building) looming over Grand Central Station: The airline bought the rights to the space above the railroad terminal.

The same applies to stuff below the Earth’s surface. Western Pennsylvania is known as coal country, but the coal companies don’t own every bit of land above a deep mine. Rather, they own a piece of property that is big enough to give them access to the coal deposit, and they purchase or lease the rights to the coal seams. On the surface, above the seam, farmers work the land, businesses ply their trades, homeowners enjoy all but one of their property rights.

It is possible to separate mineral rights from all the other property rights, and it is possible to sell or to lease mineral rights without selling or leasing any of the rest of the owner’s property rights. But what happens when the land above that coal seam is sold, or, in this recent case, when the land above the Marcellus Shale gas field is sold?

We’ll explain how the courts answered the question in our next post.

Source: Philly.com, “Marcellus Shale gas boom sparks land disputes,” Andrew Maykuth, Sept. 1, 2014