CHARLESTON – A Northern Panhandle man says a new law will unfairly increase taxes on the oil and gas wells on his property.
Scott C. Sonda filed his complaint May 23 in Kanawha Circuit Court against West Virginia Tax Commissioner Matthew Irby, state Tax and Revenue Secretary Larry Pack, Ohio County Assessor Tiffany Hoffman, Brooke County Assessor Tom Oughton, the Ohio County Commission, the Brooke County Commission and the West Virginia State Tax Department.
According to the complaint, Sonda owns a total of about 500 acres in both Ohio and Brooke counties and resides in Wheeling in Ohio County. He says there are numerous wells on and under his property that are used for extraction of resources. The complaint says Sonda’s Brooke County property is valued at about $1.9 million, and his Ohio County property is worth about $326,000.
Toriseva
“Taxation must be fair and reasonable considering the property taxed,” attorney Teresa Toriseva told The West Virginia Record. “Our constitution also requires taxation to be equal and uniform throughout the State. This law does the opposite of that.
“Scott Sonda, a Brooke and Ohio Country farmer, along with thousands of similarly situated West Virginia land owners, will see property taxes regarding oil and gas raised exorbitantly because of this unconstitutional law.”
House Bill 4850 was passed February 23 and took effect May 23, the day of the filing. The law will remove the sunset clause from oil and gas personal property tax. The sunset clause was established to eliminate the tax on resource landowners by July 2025.
The complaint says the law will continue to allow the state to create an arbitrary value on resources produced from resource wells instead of the actual value of the resource extracted.
“House Bill 4850 follows the yield capitalization valuation, which, general speaking, attempts to convert the future benefit to present value using a specific yield data,” the complaint states. “The results of the enactment of House Bill 4850 will result in local resource wells being grossly overvalued, which in turn causes increased taxes to the landowners who have resource wells on their property.”
The complaint says the state tax department currently calculates the value of a resource well as if the well is in its first active year regardless of its actual age.
“Taxation of a resource well at ‘year one’ is the highest taxation, while using a lower decline rate for wells that are more than one year old, to the landowner as it is presume that the well extracts the greatest value of resources during its first year of operation,” the complaint states. “The current valuation of resource wells for taxation is based on an arbitrary system that violates the plaintiff’s constitutional right to fair and equitable taxation.”
Sonda says his wells are valued at about $12,000 per acre in Brooke County and about $7,000 per acre in Ohio County. He notes a neighbor sold undeveloped acreage for about $10,000 per acre.
He says he and several other well owners will be severely harmed by the law going into effect.
Sonda seeks a petition for injunctive relief through a temporary restraining order to stop the law from going into effect. He also seeks to have the law declared unenforceable by the court, and he seeks a writ of mandamus requiring the defendants to determine the true and actual value of his property to adequately assess oil and gas and property taxes.
He also seeks court costs, attorney fees and other relief.
Sonda is being represented by Toriseva and Joshua Miller of Toriseva Law in Wheeling. The case has been assigned to Circuit Judge Stephanie Abraham.
In 2022, Sonda and another man sued over a gas pooling bill they said would endanger their constitutional rights because the law would force landowners to participate in an oil or gas producing unit. After a federal district court ruling was appealed, the Fourth Circuit Court of Appeals reversed and remanded the federal court order with instructions.
The federal judge then dismissed the case in March, ruling the plaintiffs did not have standing to bring their claims because they failed to “allege any facts that SB 694 is being enforced against them.”
Kanawha Circuit Court case number 24-C-611