Brenda J. Whetzel v. Matthew R. Irby, in his official capacity as State Tax Commissioner of West Virginia

IN THE INTERMEDIATE COURT OF APPEALS OF WEST VIRGINIA
FILED
June 27, 2025
BRENDA J. WHETZEL,
ASHLEY N. DEEM, CHIEF DEPUTY CLERK
Petitioner Below, Petitioner INTERMEDIATE COURT OF APPEALS
OF WEST VIRGINIA

v.) No. 24-ICA-370 (W. Va. Office of Tax Appeals Docket No. 23-1361)

MATTHEW R. IRBY, IN HIS OFFICIAL
CAPACITY AS STATE TAX COMMISSIONER
OF WEST VIRGINIA,
Respondent Below, Respondent

MEMORANDUM DECISION

Petitioner Brenda J. Whetzel appeals the August 15, 2024, Final Decision of the
West Virginia Office of Tax Appeals (“OTA”) that affirmed the valuation by the State Tax
Commissioner of West Virginia of Ms. Whetzel’s oil and gas interests in Marshall County,
West Virginia. Respondent Matthew Irby filed a response in his official capacity as State
Tax Commissioner of West Virginia (“Tax Commissioner”).1 No reply was filed.

This Court has jurisdiction over this appeal pursuant to West Virginia Code § 51-
11-4 (2024). After considering the parties’ arguments, the record on appeal, and the
applicable law, this Court finds no substantial question of law and no prejudicial error. For
these reasons, a memorandum decision affirming the OTA’s decision is appropriate under
Rule 21 of the Rules of Appellate Procedure.

This case arose after the Property Tax Division of the Tax Commissioner’s Office
issued a tentative notice of increase in appraisal to Ms. Whetzel on January 17, 2023,
notifying her that the tentative mineral appraisal for her oil and gas interests in Marshall
County had increased by at least ten percent and one thousand dollars, as required by West
Virginia Code § 11-6k-4(e)(1) (2014). The notice stated that the appraisal of her mineral
interests increased from $1,549,230 in 2022 to $2,171,220 in 2023.

Upon receipt of the notice, Ms. Whetzel filed a petition for a Property Tax Appeal
with OTA on March 3, 2023. The parties agreed to waive the evidentiary hearing and
submitted the appeal on their written briefs; the submission of evidence closed on March
5, 2024. The parties jointly stipulated the following facts:

1
Petitioner is represented by J. Anthony Edmond, Jr., Esq. Respondent is
represented by Sean M. Whelan, Esq., Cassandra L. Means-Moore, Esq., and John B.
McCuskey, Esq.

1
1. The property at issue consists of oil and gas interests owned by Ms.
Whetzel, located on 151.79 acres in Marshall County.
2. For property tax year 2023, real property tax of $35,950.92 was
assessed against the oil and gas interests by the Marshall County
Assessor, payable in half-year increments of $17,975.46.
3. By petition dated February 28, 2023, Ms. Whetzel appealed the
valuation of her oil and gas interests to OTA.

The main issue before OTA was whether the Tax Department properly valued Ms.
Whetzel’s mineral interest. Ms. Whetzel argued that her mineral interest was improperly
assessed because the Tax Department did not follow the guidelines in the pertinent
emergency legislative rule sections 3.12 (defining “communitized area”) and 3.34
(defining “natural gas producing property”).2 Ms. Whetzel alleged that her mineral acreage

2
The portion of the emergency legislative rule cited by Ms. Whetzel, titled
“Valuation of Producing and Reserve Oil, Natural Gas Liquids, and Natural Gas for Ad
Valorem Property Tax Purposes,” Code of State Rules §§ 110-1J-1 – 11, was drafted by
the Tax Commissioner, pursuant to West Virginia Code § 11-1C-10(d)(3)(G) (2022), as an
emergency legislative rule to be effective for all assessments made on or after July 1, 2022,
for the valuation of property producing oil, natural gas liquids, or any combination thereof
because the prior rule was set to expire. The definitions cited by Ms. Whetzel are as
follows:

§ 110-1J-3. Definitions. As used in this rule and unless the context clearly
requires a different meaning, the following terms have the meaning ascribed
in this section.

3.12. “Communitized area” means an area involving more than one
lease, due to a cooperative agreement or legal mandate, and is developed for
the drilling and operation of a single or multiple oil or gas wells, or both, by
one or more operator.

3.34. “Natural gas producing property” means the property from
which natural gas or natural gas liquids has been produced or extracted at
any time during the calendar year preceding the July 1 assessment date.
Natural gas producing property includes the interest or interests underlying
an area of up to one hundred twenty-five (125) acres of surface per vertical
well for property with active wells on the parcel; and communitized acres of
surface per horizontal well for properties with one or more active wells. All
acreage of a natural gas producing property in excess of one hundred twenty-
five (125) acres per vertical well, or the communitized acres per horizontal
well, shall be valued at the non-producing rate per acre referenced in section
4 of this rule.

2
should be split into two categories and assessed according to the definitions she cited from
the emergency rule. Specifically, she asserted that the amount of her acreage that is
included in a unit (i.e., her communitized acreage) should be divided by the total acreage
of the unit and multiplied by 100 to result in a percentage figure representing the amount
of acreage within the boundaries of a natural gas producing unit. Then that percentage
should be multiplied by 125, since that is the upper limit of what is taxable at the producing
acreage, according to section 3.34, to yield an acreage amount that is taxable at the
production rate. Then that acreage amount should be subtracted from her total acreage
within the producing unit to yield a number that should be taxed at the non-production rate
in the district where the acreage lies. Ms. Whetzel’s briefing before OTA also purported to
provide examples of how these calculations would result in showing which portion of her
acreage was taxable at the “production rate”, and which portion of her acreage was taxable
at a “non-producing rate,” and then how to determine what she claimed the proper assessed
value should be.

The Tax Commissioner argued that Ms. Whetzel’s approach is not contained in the
relevant statutory language or the supporting legislative rules, and that the accurate method
of calculation of value for a producing well in both sources is based on gross receipts and
not acreage. OTA concurred with the Tax Commissioner and found Ms. Whetzel’s
calculations were unsupported by West Virginia law, stating that her “mathematical theory
and calculations are less than illuminating and appear to be a methodology of her own
creation. She neither cites any additional legal authority nor can this Tribunal locate any
regulation or statute that supports [her] methodology.” Instead, OTA found that “the
valuation of mineral rights is . . . based upon the royalty payments received as reported by
the producer and the income approach to value, not acreage.” Accordingly, OTA affirmed
the Tax Commissioner’s valuation of Ms. Whetzel’s property and the tentative increased
appraisal. It is from that decision that Ms. Whetzel appeals herein.

The West Virginia Administrative Procedures Act governs our standard of review
in administrative appeals, including appeals from final decisions of the Office of Tax
Appeals:

Notably, the emergency rule cited by Ms. Whetzel is no longer effective. After its adoption,
the Legislative Rule-Making Review Committee proposed amendments that were adopted,
and the final and current version of Code of State Rules §§ 110-1J-1 – 11, became effective
April 24, 2023. For our purposes, however, the operative definitions are substantively
unchanged, although the terms are now found in different subsections of the rule. To wit,
the definition of “communitized area” is now found at West Virginia Code of State Rules
§ 110-1J-3.11, and “natural gas producing property” is now found at West Virginia Code
of State Rules § 110-1J-3.33.

3
(g) The court may affirm the order or decision of the agency or remand the
case for further proceedings. It shall reverse, vacate, or modify the order or
decision of the agency if the substantial rights of the petitioner or petitioners
have been prejudiced because the administrative findings, inferences,
conclusions, decision, or order are:

(1) In violation of constitutional or statutory provisions;
(2) In excess of the statutory authority or jurisdiction of the agency;
(3) Made upon unlawful procedures;
(4) Affected by other error of law;
(5) Clearly wrong in view of the reliable, probative, and substantial evidence
on the whole record; or
(6) Arbitrary or capricious or characterized by abuse of discretion or clearly
unwarranted exercise of discretion.

W. Va. Code § 29A-5-4(g) (2021). Further, regarding reviews of OTA decisions, the
Supreme Court of Appeals of West Virginia has stated:

Findings of fact of the administrative law judge will not be set aside or
vacated unless clearly wrong, and, although administrative interpretation of
State tax provisions will be afforded sound consideration, this Court will
review questions of law de novo. Syllabus Point 1, Griffith v. ConAgra
Brands, Inc., 229 W. Va. 190, 728 S.E.2d 74 (2012).

Syl. Pt. 1, Antero Res. Corp. v. Steager, 244 W. Va. 81, 851 S.E.2d 527 (2020).

On appeal, Ms. Whetzel asserts four assignments of error. First, she argues that the
OTA implicitly applied the incorrect burden of proof to Ms. Whetzel’s appeal because it
agreed with and adopted the Tax Commissioner’s arguments. In the Tax Commissioner’s
briefing below, it quoted Syllabus Point 2 of Western Pocahontas Properties, Ltd. v.
County Commission of Wetzel County, 189 W. Va. 322, 431 S.E.2d 661 (1993), which
states the “burden is on the taxpayer challenging the assessment to demonstrate by clear
and convincing evidence that the tax assessment is erroneous.” However, as Ms. Whetzel
correctly points out, the Legislature altered the burden of proof in West Virginia Code §
11-3-24a(e), effective July 1, 2022, to a preponderance of the evidence standard.3 She
argues that although the final decision does not explicitly state the burden of proof, because
it found that Ms. Whetzel did not meet her burden of proof and affirmed the valuation by

3
The amended text states, “[t]he standard of proof which a taxpayer must meet at
all levels of review and appeal under this section shall be a preponderance of the evidence
standard.” W. Va. Code § 11-3-24a(e) (2022).

4
the Tax Commissioner, OTA essentially endorsed the Tax Commissioner’s flawed
statement that the burden of proof was a clear and convincing evidence standard.

However, we cannot find that OTA erred by applying the wrong burden of proof
when its decision does not affirmatively state the incorrect standard. The decision merely
states that “the burden of proof is on the petitioner to show the West Virginia State Tax
Department’s actions are erroneous, unlawful, void or otherwise invalid” and cites to West
Virginia Code § 11-10A-10(e) and West Virginia Code of State Rules § 121-1-63 (2003),
which both generally provide that the petitioner has the burden of proof during an appeal
hearing before OTA, except as otherwise provided by statute or legislative rule. There is
no language in the decision that the petitioner must show error by the Tax Department to a
clear and convincing standard of evidence. Moreover, to succeed in a judicial appeal of an
administrative decision such as this one,

An appellant must carry the burden of showing error in the judgment of
which [she] complains. This Court will not reverse the judgment of a [lower
tribunal] unless error affirmatively appears from the record. Error will not be
presumed, all presumptions being in favor of the correctness of the judgment.

Syl. Pt. 5, Morgan v. Price, 151 W. Va. 158, 150 S.E.2d 897 (1966); Cobble v. Lester, No.
24-ICA-201, 2024 WL 5201017, at *2 (W. Va. Ct. App. Dec. 23, 2024) (memorandum
decision). Furthermore, “where an order of a court of record is merely silent upon any
particular matter, it will be presumed, notwithstanding such silence, that such court
performed its duty in every respect as required by law.” Syl. Pt. 2, State v. J.S., 233 W. Va.
198, 757 S.E.2d 622 (2014). Accordingly, we find no merit in this assignment of error.

For her second and third assignments of error,4 Ms. Whetzel claims that OTA
abused its discretion by agreeing with the Tax Commissioner that “basing valuations on
royalty production is unrelated to acreage” because “production itself is indeed based on a
royalty owner’s acreage contained within a unit.” Accordingly, Ms. Whetzel argues that
the emergency legislative rule placing limitations on communitized acreage at 125 acres
should directly impact the Tax Commissioner’s calculation of her royalty production
valuation and that OTA should have found that applying sections 3.12 and 3.34 of the
emergency legislative rule that defined “communitized area” and “natural gas producing
property” was necessary when making the relevant calculations.

Under West Virginia law, the Tax Commissioner was obligated to determine the
value of property producing oil, natural gas, natural gas liquids, or any combination thereof

4
We consolidate these assignments of error for consideration as they are
substantially similar and were consolidated in Ms. Whetzel’s briefing. See Tudor’s Biscuit
World of Am. v. Critchley, 229 W. Va. 396, 402, 729 S.E.2d 231, 237 (2012).

5
“at its fair market value determined through the process of applying a yield capitalization
model to the net proceeds.” W. Va. Code § 11-1C-10(d)(3)(A) (2022).5 The statute goes
on to provide, “[f]or all assessments made on or after July 1, 2022, . . . [t]he yield
capitalization model shall be composed of a working interest model and a royalty interest
model.” W. Va. Code § 11-1C-10(d)(3)(C)(i) (2022). “The summation of the working
interest model and the royalty interest model shall represent the fair market value of the
property.” Id.

The emergency rule cited by Ms. Whetzel contains a section titled “Methods of
Valuation” that also dictates a process of applying a yield capitalization model to net
receipts. W. Va. Code R. § 110-1J-4.1 (2022). Consistent with the statutory language cited
above, the emergency rule describes a process of applying the yield capitalization model
to the working interest and royalty interest models, and then explains how to determine the
royalty interest calculations so that the amount will be “proportionally distributed to each
royalty owner based on the royalty percentage received during the most recent calendar
year to the July 1 assessment date.” W. Va. Code R. § 110-1J-5.2.2 (2022). It continues,

[t]he summation of the annual discounted income streams shall be the market
value estimate for the royalty interest of the producing oil or natural gas well
for an area of up to one hundred twenty-five (125) acres per producing
natural gas wells and up to forty (40) acres per producing oil wells.

Id.

Based on the record before us, the Tax Commissioner followed these procedures
and determined the appraised value of Ms. Whetzel’s natural gas royalty interest for the
2023 tax year. Ms. Whetzel does not argue any error in the calculations performed by the
Tax Commissioner, except that she states that “the valuation process utilized by the Tax
Commissioner’s office is simply incomplete.” However, rather than making a thorough,
cogent argument regarding this assertion, Ms. Whetzel summarily states that the definitions
of “communitized area” and “natural gas producing property” from the emergency
legislative rule should “come into play.” Her brief before this Court does not outline the
process she proposes should have been used, and without citation to the record, she only
broadly references the “algebraic equation” she presented below to demonstrate what the
valuation process would look like had the Tax Commissioner “followed the final piece of
the puzzle.” Upon review, we find nothing in the emergency rule’s definitions of
“communitized area” or “natural gas producing property” that would alter or add a step to
the valuation provisions that were undisputedly properly undertaken by the Tax
Commissioner. Accordingly, this assignment of error fails.

5
Although the Legislature has since amended the pertinent statute, we apply the
statute that was in effect at the time of the underlying events.

6
For her final assignment of error, Ms. Whetzel asserts that OTA erred when it stated
it does not have the authority to grant equitable relief because the Legislature granted it
such authority in West Virginia Code § 11-10A-8 (2021). This contention arises from
language in the OTA decision that characterized Ms. Whetzel’s alternative valuation
calculations as an implicit argument for equitable relief based on how different-sized tracts
of land are valued. OTA stated that it had limited jurisdiction and could not provide an
equitable result. However, because we determined there was no merit in Ms. Whetzel’s
arguments regarding her alternative valuation methodology, we need not consider whether
OTA had the authority to grant her the relief she requested. Finding no error or other basis
to disturb the decision on appeal, we affirm.

Accordingly, we affirm the August 15, 2024, decision of the Office of Tax Appeals.

Affirmed.

ISSUED: June 27, 2025

CONCURRED IN BY:

Chief Judge Charles O. Lorensen
Judge Daniel W. Greear
Judge S. Ryan White

7