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W.Va. mineral rights owners facing tax hikes

WHEELING, W.Va. — Higher Marcellus and Utica shale output spiked property tax burdens for more than 23,000 oil and natural gas mineral owners across West Virginia this year, according to attorneys for the State Tax Department.

One by one Friday, some of those mineral owners asked officials with the tax department and the Ohio County Commission how they could lower property tax bills they believe are unfairly calculated.

“This appraisal is three times more than it was in 2013,” resident Beth McIntyre told officials. “Many of us are on fixed incomes.”

Sitting as the Board of Equalization and Review on Friday, Ohio County commissioners Tim McCormick, Randy Wharton and Orphy Klempa told the mineral owners there is not much they can do to reduce the amount of oil and natural gas property tax owed to the state.

“We have no ability to change these laws. This is state law,” Klempa said.

“To talk to the West Virginia State Tax Department is a moot point if it’s already set in law,” McIntyre said.

“The State Tax Department can’t do anything. But the Legislature can,” Klempa responded.

This was but one of a series of similar exchanges between officials and landowners, as mineral owner Randy Creighton said the tax department bases its determination on production numbers provided by driller Chesapeake Energy. Though the Oklahoma City-based firm recently sold its West Virginia operations to Southwestern Energy, Chesapeake was the only active horizontal fracker in Ohio or Brooke counties prior to this.

“Chesapeake is the one that says they are taking the gas … and they are under investigation,” Creighton said in reference to reports of the U.S. Department of Justice issuing subpoena regarding Chesapeake’s royalty payment practices. The driller revealed this information in a Securities and Exchange Commission filing last year.

Tax department attorneys Jan Mudrinich and Timothy Waggoner said 23,000 landowners received letters in recognition of at least a 10 percent increase in the value of their minerals this year.

The billing cycle runs two years behind, so property owners are now receiving bills based on what happened in 2013. They said production information supplied by drillers is one of the primary factors used to calculate the property values.

“That information is cross-checked to make sure it is accurate,” Waggoner said.

During the Friday hearings, mineral owner Timothy Elliott asked if he had any recourse for his tax bill, to which McCormick told him he could appeal to Circuit Court.

“We will be in touch with them,” McCormick added regarding state legislators. “We are the ones who have to sit through these 85 hearings.”

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