Antero Resources Corporation v. Matthew R. Irby, WV Tax Commissioner, David Sponaugle, Assessor of Doddridge County, The County Commission of Doddridge County, and Arlene Mossor, Assessor of Ritchie County, and The County Commission of Ritchie County
20-053020-053120-0579
| W. Va. | Apr 8, 2022Background
- Antero Resources owns numerous Marcellus Shale horizontal wells in Doddridge and Ritchie Counties assessed for ad valorem taxes for TY2016 and TY2017.
- After this Court’s 2019 Consol Energy decision remanded valuation methodology issues, the Tax Commissioner prepared "re-valuations"; parties agreed on some wells but disputed treatment of wells producing both oil and gas.
- Administrative Notices set singular monetary operating-expense deductions for oil-only wells ($5,750) and gas-only Marcellus horizontal wells ($150,000 for 2016; $175,000 for 2017); Notices also provided ranges and instructed pro-rating when wells produced both resources.
- The Tax Commissioner applied a pro rata monetary deduction for mixed wells (e.g., 75% gas × $150,000 + 25% oil × $5,750 = monetary deduction), and the business court upheld those re-valuations on summary judgment.
- Antero argued the approach violated this Court’s Consol Energy mandate requiring a "singular monetary average deduction" and that the post-judgment June 2020 Guidance and constitutional claims should control; the business court rejected Antero’s challenges and the Supreme Court affirmed.
- The Supreme Court declined to address the June 2020 Guidance and unpreserved constitutional claims because they were not considered by the business court; it held the Tax Commissioner’s pro rata application of singular monetary averages for mixed wells was reasonable and consistent with Consol Energy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Tax Commissioner’s re-valuations for wells producing both oil and gas violate Consol Energy’s requirement of a "singular monetary average" deduction | Antero: mixed wells must receive a single consolidated monetary deduction (not a percentage-weighted combination) to comply with Consol Energy | Tax Commissioner: used singular monetary averages ($5,750 for oil; $150k/$175k for gas) and pro-rated the monetary amounts by production percentage — not a different formula | Court: Affirmed Tax Commissioner — pro rata application of singular monetary averages based on production percentages is permissible and addresses the special mixed-well circumstance |
| Whether the re-valuation methodology results in unequal formulas (sliding scale) condemned in Consol Energy | Antero: the weighting method is another sliding-scale variant creating two formulas | Tax Commissioner: methodology applies the same monetary averages, merely pro-rated by production share, so no unequal formulas | Court: Rejected Antero — Consol Energy did not address mixed-production wells; here singular monetary averages are used and pro-ration is reasonable |
| Whether Antero is entitled to relief based on Tax Department’s June 2020 Guidance or Administrative Procedure/due process claims | Antero: Guidance should be applied retroactively; failure to apply it is arbitrary, violates APA and due process | Tax Commissioner: Guidance issued after the business court’s orders; not considered below so improper to raise on appeal | Court: Declined to consider June 2020 Guidance and related constitutional/APA claims because they were not adjudicated by the business court and record is inadequate |
| Whether Antero waived objections by failing to raise methodology for mixed wells in prior Consol Energy proceedings | Antero: contends Consol Energy requires singular monetary average and that this applies here | Tax Commissioner: Antero did not raise mixed-well challenge previously and thus waived; but court may still address | Court: Noted waiver argument but addressed merits; found Tax Commissioner’s method reasonable and within discretion |
Key Cases Cited
- Steager v. Consol Energy, Inc., 242 W. Va. 209, 832 S.E.2d 135 (W. Va. 2019) (held operating-expense deduction must be a singular monetary average and struck down use of percentage/"not to exceed" caps that created unequal formulas)
- Western Pocahontas Properties, Ltd. v. County Comm’n of Wetzel Cty, 189 W. Va. 322, 431 S.E.2d 661 (W. Va. 1993) (presumption that assessor valuations are correct; taxpayer bears clear-and-convincing burden to show error)
- Appalachian Power Co. v. State Tax Dep’t of W. Va., 195 W. Va. 573, 466 S.E.2d 424 (W. Va. 1995) (statute and administrative rule interpretation is reviewed de novo)
- In re Michael Ray T., 206 W. Va. 434, 525 S.E.2d 315 (W. Va. 1999) (appellate courts will not decide nonjurisdictional issues not decided below)
- Louck v. Cormier, 218 W. Va. 81, 622 S.E.2d 788 (W. Va. 2005) (standard for appellate discretion to consider constitutional issues not preserved)