## Facts

- A 1920 severance deed conveyed to the coal owner “all the coal of the Pittsburgh or River Vein” under specified tracts, plus mining rights including ventilation, drainage, and mining without leaving support.
- The deed reserved to the surface estate “the right to drill and operate through said coal for oil and gas without being held liable for any damages.”
- Decades later, the surface owners leased oil and gas rights to a developer who drilled wells from the surface into the coal seam to extract coalbed gas for commercial sale.
- The coal owner filed quiet-title actions seeking a declaration that coalbed gas in the seam belonged to the coal estate.
- The trial court quieted title to the coalbed gas in the surface owners and allowed extraction subject to limits designed to avoid unreasonable harm to the coal; the intermediate appellate court affirmed.

## Issues

1. Whether coalbed gas located within a severed coal seam is owned by the coal estate or the surface/fee estate.
2. Whether a deed reservation granting the surface owner the right to drill through the coal for “oil and gas” reserves ownership or development rights in coalbed gas.

## Decision

- The Supreme Court of Pennsylvania reversed and remanded.
- The Court held that coalbed gas “present in coal” belongs to the coal owner so long as it remains within the coal estate and under the coal owner’s dominion and control.
- The Court held that the surface/fee owner owns coalbed gas that migrates out of the coal seam into surrounding strata owned by the surface/fee estate.
- The Court construed the reservation to drill through the coal for “oil and gas” as addressing conventionally exploitable oil and gas as understood at the time of the 1920 deed, not as reserving ownership of coalbed gas in the seam.

## Legal Principles

- Subsurface gas is owned by the party holding title to the property in which the gas is located while in place; ownership is lost by conveyance or by migration out of the owned property.
- When coal is severed from the surface estate, title to the coal rests in the coal grantee, and incidents inherent to the coal estate include dominion over gas contained within the coal seam.
- Coalbed gas allocation turns on location: gas within the coal seam belongs to the coal owner; gas that migrates into surrounding strata belongs to the owner of those strata.
- Reservations and grants concerning “oil and gas” are construed in light of what was generally known to be commercially exploitable at the time of the severance deed, absent clearer language.

## Conclusion

The court allocated coalbed gas ownership by physical situs and deed context: the coal estate owns gas within the coal seam, the surface/fee estate owns only migrated gas in surrounding formations, and a general reservation to drill for “oil and gas” did not reserve title to coalbed gas in the coal.


United States Steel Corp. v. Hoge, 468 A.2d 1380 (Pa. 1983)