Antero Resources Corporation v. Matthew R. Irby, West Virginia Tax Commissioner, Joseph Romano, Assessor of Harrison County, and The County Commission of Harrison County, sitting as the Board of Assessment Appeals and Antero Resources Corporation v. Matthew R. Irby, West Virginia Tax Commissioner, Arlene Mossor, Assessor of Ritchie County, and Ritchie County Commission and Antero Resources Corporation v. Matthew R. Irby, West Virginia Tax Commissioner, Joseph R. Romano, Assessor of Harrison County, and the County Commission of Harrison County and Antero Resources Corporation v. Matthew R. Irby, West Virginia Tax Commissioner, David Sponaugle, Assessor of Doddridge County, and Doddridge County Commission and Antero Resources Corporation v. Matthew R. Irby, West Virginia Tax Commissioner, David Sponaugle, Assessor of Doddridge County, and County Commission of Doddridge County and Antero Resources Corporation v. Matthew R. Irby, West Virginia Tax Commissioner, Lisa Jackson, Assessor of Tyler County, and The County Commission of Tyler County sitting as the Board of Assessment Appeals ( 2023 )

FILED
June 13, 2023
EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
STATE OF WEST VIRGINIA OF WEST VIRGINIA
SUPREME COURT OF APPEALS
Antero Resources Corporation,
Petitioner Below, Petitioner
vs.) No. 22-0048 (Harrison County 20-P-83-2)
Matthew R. Irby,
West Virginia Tax Commissioner,
Joseph Romano, Assessor of
Harrison County, and The County Commission of
Harrison County, sitting
as the Board of Assessment Appeals,
Respondents Below, Respondents
and
Antero Resources Corporation,
Petitioner Below, Petitioner
vs.) No. 22-0049 (Ritchie County CC-43-2018-AA-1)
Matthew R. Irby,
West Virginia Tax Commissioner,
Arlene Mossor, Assessor of
Ritchie County, and Ritchie County Commission,
Respondents Below, Respondents
and
Antero Resources Corporation,
Petitioner Below, Petitioner
vs.) No. 22-0050 (Harrison County 18-F-235-3)
Matthew R. Irby,
West Virginia Tax Commissioner,
Joseph R. Romano, Assessor of
Harrison County, and the County Commission
of Harrison County,
Respondents Below, Respondents
and
1
Antero Resources Corporation,
Petitioner Below, Petitioner
vs.) No. 22-0051 (Doddridge County CC-09-2019-AA-1)
Matthew R. Irby,
West Virginia Tax Commissioner,
David Sponaugle, Assessor of
Doddridge County, and Doddridge County Commission,
Respondents Below, Respondents
and
Antero Resources Corporation,
Petitioner Below, Petitioner
vs.) No. 22-0052 (Doddridge County CC-09-2018-AA-1)
Matthew R. Irby,
West Virginia Tax Commissioner,
David Sponaugle, Assessor of Doddridge County,
and County Commission of Doddridge County,
Respondents Below, Respondents
and
Antero Resources Corporation,
Petitioner Below, Petitioner
vs.) No. 22-0144 (Tyler County 18-AA-1)
Matthew R. Irby,
West Virginia Tax Commissioner,
Lisa Jackson,
Assessor of Tyler County, and
The County Commission of Tyler County sitting
as the Board of Assessment Appeals,
Respondents Below, Respondents
MEMORANDUM DECISION
In these consolidated cases, Petitioner Antero Resources Corporation (“Antero”) appeals
several business court orders entered in four counties in December 2021 and January 2022.
Respondents are State Tax Commissioner Matthew R. Irby (“the tax commissioner”), Doddridge
2
County Assessor David Sponaugle, Tyler County Assessor Lisa Jackson, Harrison County
Assessor Joseph Romano, Ritchie County Assessor Arlene Mossor (collectively, “the assessors”),
and the County Commissions of Doddridge, Harrison, and Tyler Counties (collectively, “the
county commissions”).1 Upon our review, we determine that oral argument is unnecessary and that
a memorandum decision is appropriate. See W. Va. R. App. Proc. 21.
Antero asks us to return to the issues we considered in Steager v. Consol Energy, Inc., 242
W. Va. 209, 832 S.E.2d 135 (2019), wherein we reviewed the tax commissioner’s methods of
valuing gas-producing wells in this state for the 2016 and 2017 tax years, insofar as the business
court relied on that precedent to affirm several tax assessments of Antero’s natural resource
holdings for the 2018 and 2019 tax years. Pursuing this end, Antero presents six assignments of
error. It argues that the business court erred in (1) finding preclusive effect in Consol Energy, Inc.;
(2) declining to apply a “2020 Guidance” (“the guidance” or “the 2020 guidance”) written by the
tax commissioner retroactively to the 2018 and 2019 tax years; (3) failing to find that the tax
commissioner’s refusal to retroactively apply the guidance is arbitrary and capricious and, thus, in
violation of the state Administrative Procedures Act; (4) failing to recognize that the tax
assessments violate due process principles; (5) failing to recognize that the tax assessments violate
state and federal constitutional equal protection principles; and (6) failing to recognize that the tax
assessments violate the dormant Commerce Clause of the federal constitution. We review these
assignments of error under the following standard:
“‘An assessment made by a board of review and equalization and approved
by the circuit court will not be reversed when supported by substantial evidence
unless plainly wrong.’ Syllabus Point 1, West Penn Power Co. v. Board of Review
and Equalization, 112 W.Va. 442, 164 S.E. 862 (1932) (other internal citations
omitted).” Syllabus Point 3, In re: Tax Assessment of Foster Foundation’s
Woodlands Retirement Community, 223 W.Va. 14, 672 S.E.2d 150 (2008).”
Syllabus Point 2, Mountain America, LLC v. Huffman, 224 W.Va. 669, 687 S.E.2d
768 (2009).
Syl. Pt. 2, Lee Trace, LLC v. Raynes, 232 W. Va. 183, 751 S.E.2d 703 (2013).
Each of Antero’s six assignments of error ultimately attacks the tax commissioner’s ad
valorem taxation of the natural resource properties on the ground that the tax commissioner
exceeded his authority in declining the deduction of certain post-production expenses from the
valuation of gas and oil producing wells.2 The assessments were upheld by the county
1
Antero appears by counsel Ancil G. Ramey and John J. Meadows. The tax commissioner
and the assessors appear by West Virginia Attorney General Patrick Morrisey and Deputy Attorney
General Sean M. Whelan. Two county commissions (Harrison and Doddridge) appear by counsel
R. Terrance Rodgers and Jonathan Nicol. Another county commission (Tyler) appears by counsel
D. Luke Furbee.
2
Consol Energy, Inc. addressed the taxation of gas-producing wells. After remand, Antero
asked us to further address the tax commissioner’s methodology as it related to wells that produced
(continued. . .)
3
commissions, each sitting as a board of review and equalization, and then appealed and referred to
the business court. When we considered Antero’s challenges to prior tax year assessments in
Consol Energy, Inc., the non-deduction of post-production expenses was a central consideration,
and we declined to find error in the tax commissioner’s assessment, because the tax
commissioner’s statutory interpretation was reasonable:
[W]e cannot say that the Tax Department’s position that gathering, compressing,
processing, and transporting expenses are not “directly related” to the “maintenance
and production” of natural gas is arbitrary, capricious, or manifestly contrary to the
enabling taxation statute. In accordance with our precedent, its position “must be
sustained if it falls within the range of permissible construction.” W. Va. Health
Care Cost Review Auth. [v. Boone Memorial Hospital], 196 W. Va. [326] at 339,
472 S.E.2d [411] at 424 [1996]. More importantly, the equity of such an
interpretation is well beyond the reach of this Court under these circumstances. It
is sufficient to conclude that the Tax Department’s exclusion of these expenses
from its average expense calculation is a reasonable construction of the regulation
and not facially inconsistent with the enabling statute.
Consol Energy, Inc., 242 W. Va. at 223, 832 S.E.2d at 149.
While our analysis of this issue as it affected Antero’s 2016 and 2017 tax assessments does
not preclude Antero from challenging its later tax assessments on the same ground, the legal
precedent is nevertheless controlling.3 Antero argues, however, that the tax commissioner’s
guidance, published in June of 2020 (for the 2021 property tax year), changed the landscape of
natural resource property assessment, because it effectively communicated a position on an issue
over which state law was previously silent. The guidance, prior to its withdrawal in October of
2020, provided, “To avoid having your well overvalued for property tax purposes, it is important
that you appropriately adjust actual gross proceeds of sale to properly reflect the gross receipts you
would have received had the sales transaction been a field line point of sale.” This adjustment,
presumably, was designed to account for the post-production expenses associated with delivering
a natural resource to a remote market, the very expenses that Antero would deduct in the valuation
both oil and gas. Antero Res. Corp. v. Irby, Nos. 20-0530, 20-0531, and 20-0579, 2022 WL
1055446 (W. Va. Apr. 8, 2022)(memorandum decision).
3
Antero’s first assignment of error, as noted in the body of this decision, argues that the
business court “erred by ruling that Antero’s claims in this case were precluded” by Consol Energy,
Inc. It is apparent from our reading of the business court’s orders that, though the business court
characterized Consol Energy, Inc. as collaterally estopping Antero’s claims, the court was
discussing the application of Consol Energy, Inc. as settled precedent. Certainly, the business court
explained that “Antero makes the same arguments with regard to its position as to why
postproduction costs should be included in the calculat[ion] in determining its operating expenses”
as it did when appearing for Consol Energy, Inc. The court applied the settled law to the facts
before it, then went on to discuss Antero’s additional arguments (such as the potential force of the
2020 guidance) that were not resolved by Consol Energy, Inc. We, therefore, find no error in the
circuit court’s application of Consol Energy, Inc. to the facts presented in this case.
4
of its wells. Antero argues that the guidance amounts to a retroactive interpretive rule that permits
the deduction of expenses beyond the singular monetary average discussed in Consol Energy, Inc.
Upon thorough consideration of the arguments supporting Antero’s second and third
assignments of error, we disagree that the guidance is a retroactive interpretive rule that binds the
tax commissioner to a specified course of action.4 The characterization of a rule as legislative or
interpretive, or indeed the determination of whether a particular communique is a rule at all, can
require arduous deliberation. Furthermore, the determination of the nature of a rule significantly
controls the force of that rule. See Appalachian Power Co. v. State Tax Dep’t of W. Va., 195 W.
Va. 573, 583-84, 466 S.E.2d 424, 434-35 (1995).5 However, because Antero does not ask us to
characterize the rule as legislative or interpretive, but only to treat it as an interpretive rule, we
need not classify the guidance. Instead, we need merely ask whether the characterization of the
2020 guidance as an interpretive rule would have required the circuit court to afford Antero the
relief it seeks. We conclude, without determining the nature of the 2020 guidance, that the business
court was not clearly wrong in finding that its publication did not affect the analysis we prescribed
in Consol Energy, Inc.
4
We note that Antero previously raised this issue regarding its 2016 and 2017 tax
assessments, and we declined to address it because the 2020 guidance was published after the
business court entered its orders related to those tax assessments. Antero Res. Corp. v. Irby, Nos.
20-0530, 20-0531, and 20-0579, 2022 WL 1055446, at *5 (W. Va. Apr. 8, 2022)(memorandum
decision). We explained that we “will not decide nonjurisidictional questions which were not
considered and decided by the court from which the appeal has been taken.” Id. (quoting, in part,
Syl. Pt. 7, In re Michael Ray T., 206 W. Va. 434, 525 S.E.2d 315 (1999)). In asking the business
court in this case to consider the application of the 2020 guidance, which was not available to the
boards of review and equalization, Antero essentially asked the business court to do what we
previously declined to do.
5
In that case, we explained:
Under West Virginia law, there are three types of rules—legislative, interpretive,
and procedural. We are not concerned with procedural rules in this case. Legislative
rules are those “affecting private rights, privileges or interests,” in what amounts to
a legislative act. W. Va. Code, 29A-1-2(i) (1982). Legislative rules have “the force
of law[.]” W. Va. Code, 29A-1-2(d) (1982). See also Chico Dairy Co. v. West Va.
Human Rights Comm’n, 181 W.Va. 238, 382 S.E.2d 75 (1989) (to be valid, the
promulgation of legislative rules must be authorized by the West Virginia
Legislature). Interpretive rules, on the other hand, do not create rights but merely
clarify an existing statute or regulation. See W. Va. Code, 29A-1-2(c) (1982).
Because they only clarify existing law, interpretive rules need not go through the
legislative authorization process. See W. Va. Code, 29A-3-1, et seq.; Chico Dairy
Co. v. West Virginia Human Rights Comm’n, supra.
Appalachian Power Co. v. State Tax Dep’t of W. Va., 195 W. Va. 573, 583, 466 S.E.2d
424, 434 (1995).
5
“Although they are entitled to some deference from the courts, interpretive rules do not
have the force of law nor are they irrevocably binding on the agency or the court. They are entitled
on judicial review only to the weight that their inherent persuasiveness commands.” Appalachian
Power Co., 195 W. Va. at 583, 466 S.E.2d at 434. The 2020 guidance simply is not persuasive in
this instance. As explained above, Antero advocates for the application of the rescinded 2020
guidance, initially written for the 2021 tax year, to its 2018 and 2019 tax assessments. In this
simplified description of Antero’s argument, we find the essence of the business court’s
determination that the guidance did not rouse the “sea change” that Antero suggests. First, the
2020 guidance was not before the county boards of review and equalization when they considered
Antero’s challenges to these tax assessments. Second, the post-assessment publication of the 2020
guidance neither affected the calculation for the valuation of the natural resource properties, nor
created an expectation on which Antero detrimentally relied. Moreover, the tax commissioner
rescinded the 2020 guidance almost immediately on publication. To paraphrase the business court,
the 2020 guidance is inadequately persuasive to overcome the Consol Energy, Inc. holding
affording deference to the tax commissioner’s decision to forego the deduction of post-production
expenses for valuation of natural resource properties, at least for the 2018 and 2019 tax years.
We turn to Antero’s fourth, fifth, and sixth assignments of error, in which Antero argues
that the tax commissioner’s assessment process breaches several constitutional safeguards. With
respect to these arguments, the business court explained:
As [Consol Energy, Inc.] explicitly found that the non-deductibility of those
postproduction expenses was permissible, this Court must reject Antero’s instant
argument that the County Commission’s revalued assessment[s . . .] of Antero’s
wells are impermissible because they do not include the deduction of post-
production expenses, which Antero argues violates statutory provisions, is arbitrary
or capricious or characterized by abuse of discretion or clearly unwarranted
exercise of discretion and violates constitutional provisions, including the federal
and state Due Process Clauses, federal Equal Protection Clause, state Equal and
Uniform Taxation Clause, and dormant Commerce Clause.
Antero’s assertion that it has been denied due process, which it offers here in a brief, two-paragraph
argument that cites no legal precedent, rests entirely on application of the 2020 guidance. We have
found the guidance unpersuasive, and we disagree that any statement in it proves a due process
violation. Furthermore, equal protection concerns were of considerable importance in our
determination of Consol Energy, Inc., and Antero’s argument here (equal in brevity to that of its
due process argument) does not induce us to doubt that we thoroughly considered the equality and
uniformity of the provisions at issue. Finally, Antero argues (also somewhat briefly, in view of the
magnitude of the accusation) that the denial of the post-production expenses deduction violates the
dormant Commerce Clause because it discriminates against interstate commerce and subjects
Antero to the risk of multiple taxation.6 Antero cites no legal authority to support its position that
6
The dormant Commerce Clause prohibits state taxation that would negatively affect
interstate commerce.
(continued. . .)
6
the dormant Commerce Clause requires states to allow an entity to deduct the expenses associated
with transporting the entity’s product to its chosen marketplace. We are presented with no evidence
that such a deduction is critical to interstate commerce. We, therefore, find no error in the business
court’s order.
For the foregoing reasons, we affirm.
Affirmed.
ISSUED: June 13, 2023
CONCURRED IN BY:
Chief Justice Elizabeth D. Walker
Justice Tim Armstead
Justice John A. Hutchison
Justice William R. Wooton
DISQUALIFIED:
Justice C. Haley Bunn
The Commerce Clause grants Congress power to “regulate Commerce . . .
among the several States.” [U.S. Const.] Art. I, § 8, cl. 3. . . . Although the Clause
is framed as a positive grant of power to Congress, “we have consistently held this
language to contain a further, negative command, known as the dormant Commerce
Clause, prohibiting certain state taxation even when Congress has failed to legislate
on the subject.” Oklahoma Tax Comm’n v. Jefferson Lines, Inc., 514 U.S. 175, 179,
115 S.Ct. 1331, [1335,] 131 L.Ed.2d 261 (1995).
....
Under our precedents, the dormant Commerce Clause precludes States from
“discriminat[ing] between transactions on the basis of some interstate element.”
Boston Stock Exchange v. State Tax Comm’n, 429 U.S. 318, 332, n. 12, 97 S.Ct.
599, [608, n. 12,] 50 L.Ed.2d 514 (1977). This means, among other things, that a
State “may not tax a transaction or incident more heavily when it crosses state lines
than when it occurs entirely within the State.” Armco Inc. v. Hardesty, 467 U.S.
638, 642, 104 S.Ct. 2620, [2622,] 81 L.Ed.2d 540 (1984). “Nor may a State impose
a tax which discriminates against interstate commerce either by providing a direct
commercial advantage to local business, or by subjecting interstate commerce to
the burden of ‘multiple taxation.’” Northwestern States Portland Cement Co. v.
Minnesota, 358 U.S. 450, 458, 79 S.Ct. 357, [362,] 3 L.Ed.2d 421 (1959) (citations
omitted).
Matkovich v. CSX Transportation, Inc., 238 W. Va. 238, 244, 793 S.E.2d 888, 894 (2016)(quoting
Comptroller of the Treasury of Maryland v. Wynne, 575 U.S. 542 (2015)).
7