Legal Definitions - apportionment rule

The apportionment rule is a legal principle that applies to oil and gas leases. It is a minority doctrine that states that if a piece of land is divided during the lease term, the royalties accrued under the lease must be shared by the landowners in proportion to their interests in the land.

For example, let's say Grey granted a lease to Simms for a piece of land. Later, Grey sold half of the land to Metcalfe. According to the apportionment rule, Simms and Metcalfe would each be entitled to half of any royalty from the land, no matter where the producing well was located.

It is important to note that only three states in the United States follow this rule: California, Mississippi, and Pennsylvania. The majority of states follow the nonapportionment rule, which means that the royalties are not divided among the landowners based on their interests in the land.

The apportionment rule is designed to ensure that each landowner receives a fair share of the royalties from the oil and gas produced on the land. It prevents one landowner from receiving a disproportionate amount of the royalties simply because the producing well happens to be located on their portion of the land.