Amy Hull-Wright, Michael Hull, Betty Garrett Schmidt, Trustee of the Betty Schmidt Revocable Trust, Susan Schwartz, and Mitchell Garrett v. Arsenal Resources, LLC

IN THE INTERMEDIATE COURT OF APPEALS OF WEST VIRGINIA

AMY HULL-WRIGHT, MICHAEL HULL, BETTY GARRETT SCHMIDT,
TRUSTEE OF THE BETTY SCHMIDT REVOCABLE TRUST,
SUSAN SCHWARTZ, and MITCHELL GARRETT,
Defendants Below, Petitioners

v.) No. 25-ICA-410 (Oil and Gas Conservation Comm’n Docket No. 412, Cause
Nos. 507-508, Order No. 1)
FILED
ARSENAL RESOURCES, LLC, May 1, 2026
ASHLEY N. DEEM, CHIEF DEPUTY CLERK
Applicant Below, Respondent INTERMEDIATE COURT OF APPEALS
OF WEST VIRGINIA

MEMORANDUM DECISION

Petitioners Amy Hull-Wright, Michael Hull, Betty Garrett Schmidt, Trustee of the
Betty Schmidt Revocable Trust, Susan Schwartz, and Mitchell Garrett appeal the October
2, 2025, order from the Oil and Gas Conservation Commission of West Virginia
(“Commission”), which is part of the West Virginia Department of Environmental
Protection (“WVDEP”). The Commission’s order combined eighty-three oil and gas tracts
(totaling 367.62 acres) in Harrison County into a newly formed Marcellus shale formation
horizontal drilling unit (in a process called “unitization”). Petitioners own portions of the
mineral rights in four of the affected tracts. The Commission named the newly formed unit
the JOsborn 214 Unit (“Unit”) and designated Respondent Arsenal Resources, LLC
(“Arsenal”), as operator.1 Petitioners objected to their inclusion within the Unit, arguing
that Arsenal failed to make good faith offers for Petitioners’ interests within the Unit.
Arsenal filed a response to petitioners’ appeal.2 Petitioners filed a reply.

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, we find that deficiencies in the order prevent this Court from engaging in
a meaningful appellate review. As explained below, a memorandum decision vacating the

1
The Commission’s order also formed a unit known as JOsborn 212; however,
petitioners only own an interest in JOsborn 214, which is the only unit related to this appeal.
2
Petitioners are represented by Edmund L. Wagoner, Esq., and Matthew B.
Hansberry, Esq. Arsenal is represented by Max C. Gottlieb, Esq., J. Zak Ritchie, Esq.,
Maureen F. Gleason, Esq., and Levi B. Pellegrin, Esq.
1
order on appeal and remanding this matter to the Commission for further proceedings is
appropriate under Rule 21 of the West Virginia Rules of Appellate Procedure.

On July 24, 2025, Arsenal filed its Application for Pooling and Unitization of
Horizontal Well Operation (“Application”) to unitize the oil and gas tracts within the
proposed Unit pursuant to West Virginia Code § 22C-9-7a (2022) (the “Act”). At the time
of the Application, Arsenal had obtained consent from royalty owners within the Unit
equaling 75.1% of the net acreage in the Unit, and 100% of the net acreage of the oil and
gas operators.3 Additionally, Arsenal asserted that it made good faith efforts to obtain
consent from all locatable interest holders. See W. Va. Code § 22C-9-7a(c)(2)(C)(i).4 The
Application included an affidavit by T.J. Baldwin, a landman for Arsenal, wherein he
attested that Arsenal made good faith offers and efforts to obtain leases or consent to pool
from the oil and gas interests within the Unit.

The Commission held an evidentiary hearing on Arsenal’s Application on August
21, 2025. Relevant to this appeal, Arsenal presented testimony from Mr. Baldwin.5 Mr.
Baldwin testified to Arsenal’s good faith efforts to negotiate with petitioners. Here,
Arsenal’s counsel attempted to establish good faith by repeatedly asking Mr. Baldwin
whether he believed that Arsenal had negotiated with the mineral owners in good faith to
which Mr. Baldwin simply responded in the affirmative, “Yes.” Mr. Baldwin’s direct
testimony on the issue of good faith also indicated that past and present “economics”

3
See W. Va. Code § 22C-9-7a(c)(2)(A) (requiring pre-application consent from
royalty owners totaling 75% or more of the net acreage); W. Va. Code § 22C-9-
7a(c)(2)(B)(i) (requiring pre-application consent from the oil and gas operators equal to
55% or more of the net acreage owned, leased, or operated by operators and the applicant).
4
As a prerequisite, this statute states that an applicant must have:

Made good-faith offers to consent or agree to pool or unitize, and has
negotiated in good faith with, all known and locatable royalty owners having
executory interests in the oil and gas in the target formation within the
acreage to be included in the proposed horizontal well unit who have not
previously consented or agreed to the pooling or unitization of the interests
and whose interests are not subject to development under § 37B-1-1, et seq.
of this code[.]
5
Arsenal also called geologist Dave Boyer and reservoir engineer Ross Schweitzer
as witnesses. However, as set forth by the order on appeal, Mr. Boyer’s and Mr.
Schweitzer’s testimony was scientific in nature, and did not relate to the negotiations
between the parties.

2
played a significant role in Arsenal’s efforts to drill the well and negotiate with the Unit’s
mineral owners, and that until recently, the economics had not been favorable for Arsenal
for about six years. Arsenal’s counsel did not attempt to further develop Mr. Baldwin’s
testimony to explain the general term “economics” and what it meant in the context of
Arsenal’s efforts in the matter at hand.

Thereafter, petitioners’ counsel attempted to cross-examine Mr. Baldwin on the
issue of good faith. This included counsel seeking an elaboration on Mr. Baldwin’s earlier
testimony about Arsenal’s “economics” rationale. However, the Commission declined to
allow petitioners’ counsel to develop the issue, subjectively noting on its own accord that
Arsenal is just a small business doing the best it can to try and make a living, and because
Arsenal is the only “game in town” wanting to develop the Unit, then its offer is the best
deal petitioners can receive. The Commission further noted that under the statute, the price
offered during negotiations does not play a role in its determination of good faith, but
rather, stated that the Legislature removed its authority to decide if a good faith price was
offered, placed it with an independent third party for evaluation and preparation of a report,
and bound the Commission to the findings of the report as dispositive on the issue of good
faith. See W. Va. Code § 22C-9-7a(g)(4) (2022).6

At the close of evidence, the Commission addressed certain requests from Arsenal’s
counsel. For example, the Commission sustained an objection from Arsenal’s counsel
regarding its consideration of any evidence pertaining to market conditions and prices
because it was not relevant under the Act. Arsenal’s counsel also began to ask the
Commission to provide an explanation of the evidence presented on good faith and the
Commission’s analysis of that evidence under the applicable statutory provisions;
however, before counsel could explain the full request, a Commission representative
interjected: “Well, that doesn’t require anything. The Commission will do what the
Commission does.”7

6
This statute requires an applicant to submit a summary of certain economic data
regarding leases and payments within the proposed unit to an attorney or accountant
selected by the Commission’s chairman who is designated as an “independent, third party.”
Their role is to review the summary for accuracy and prepare a report for the Commission
containing the calculation of certain averages related to the proposed unit, which the
Commission is required to include in its order. The statute also provides for the
independent, third party to be paid for their services, and permits an applicant to designate
the summary it provides as confidential. However, as the Court notes later in this decision,
the Commission’s view of the report’s implications for its authority in these matters is
inaccurate.
7
This remark was not made by a Commissioner, but rather, by the Commission’s
general counsel, who was identified in the record as one of the Commission’s staff
3
Thereafter, petitioners reiterated their contention that the Commission must deny
the Application because Arsenal failed to meet the good faith requirement of West Virginia
Code § 22C-9-7a(c)(2)(C)(i). See W. Va. Code § 22C-9-7a(e)(2) (“The commission may
not issue a horizontal well unit order pursuant to this section unless it finds that the
applicant has before the filing of the application met the requirements of subsection (c) of
this section.”). However, the Commission voted to approve the Application and
memorialized its ruling by order entered on October 2, 2025.

Addressing the evidence adduced with respect to the Unit, the Commission’s order
made the following references regarding good faith. First, with respect to Arsenal, the
Commission’s order simply noted that “Mr. Baldwin testified . . . and described Arsenal’s
good faith efforts to locate and negotiate with owners that were unleased or had existing
leases with insufficient pooling rights.” Second, the order noted that petitioners objected
to the Application “based on their claim that Arsenal did not negotiate in good faith with
them.” The Commission’s order further noted in shortform that petitioners’ counsel
“cross[-]examined Mr. Baldwin and entered exhibits into the record, consisting of prior
negotiations between Arsenal and the objecting mineral owners.” Given this information,
the Commission made the singular determination that: “Arsenal has conducted good faith
negotiations with all known and locatable executive interest holders.” Ultimately, the
Commission concluded: “Pursuant to West Virginia Code § 22C-9-7a(e)(1), the
Commission has evaluated and considered all requirements set forth therein and concluded
that the Application[] compl[ies] with the statute.”8 This appeal followed.

In this appeal, our review is governed by the State Administrative Procedures Act,
which states:

members present at the hearing. The record further reflects that during the hearing, general
counsel inserted himself throughout the hearing by commenting to petitioners’ counsel that
his questioning and/or position was irrelevant, offering interpretations of the evidence for
the Commission, and making rulings on behalf of the Commission regarding certain
objections and evidentiary matters. This is troubling considering general counsel was not
the hearing examiner and is not a Commission member. Instead, the record soundly reflects
that the Commission’s chairman was presiding over the hearing as required by regulation.
See W. Va. Code R. 39-2-2.1 (“The Commission Chairman shall preside over all hearings
and meetings.”). But for general counsel’s noted interjections, the chairman was otherwise
ruling on other objections and evidentiary matters without interference.
8
West Virginia Code § 22C-9-7a(e)(1) mandates that the Commission consider a
specific set of factors when evaluating applications. Among those factors is whether the
applicant complies with requirements of West Virginia Code § 22C-9-7a(c).
4
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); accord W. Va. Code § 22C-9-11(a) (1998) (stating that
West Virginia Code § 29A-5-4 governs judicial review of Commission orders).

On appeal, petitioners argue that the Commission failed to properly consider
whether Arsenal properly demonstrated that it negotiated in good faith as required by the
Act. Namely, petitioners contend that the Commission failed to measure this threshold
issue against any reasonable conception of the good faith standard, and that the
Commission failed to reconcile all the evidence and provide a factual determination with
supporting analysis regarding its ruling on good faith. Conversely, Arsenal contends that
the Commission’s decision was proper and supported by the record.

As the parties are uniquely aware, they recently presented the Court with similar
arguments regarding a Commission order forming a different unit in the related case of
Hull-Wright v. Arsenal Resources, LLC, No. 25-ICA-304, 2026 WL 125974 (W. Va. Ct.
App. Jan. 16, 2026) (memorandum decision) (“Arsenal I”). In Arsenal I, we explained that
the Commission’s order was inadequate for the purposes of meaningful appellate review,
vacated the order, and remanded the matter to the Commission. Arsenal I, 2026 WL
125974, at *3-5. As explained below, we conclude that like Arsenal I, the present order on
appeal suffers from similar shortcomings and, thus, we find it necessary to vacate the
decision and remand the matter to the Commission.

To begin, the Court notes that in Arsenal I, we provided the parties with a detailed
explanation of the established precedent regarding the necessity for Commission orders to
contain proper findings of fact and conclusions of law. Id. at *3-4. Because the parties are
acutely aware of these principles, we do not need to rehash them in detail here. Instead, it
is sufficient to state that after applying our analytical framework from Arsenal I to the

5
present case, the Court concludes that the Commission’s order establishing the Unit does
not contain findings and analysis sufficient for appellate review.

As this Court made clear in Arsenal I, the Commission is the trier of fact and is
statutorily required to determine whether an application meets the requirements of the Act
and as part of its mandate, the Commission is expressly obligated to consider all the
evidence and determine whether an applicant negotiated in good faith. See Arsenal I, 2026
WL 125974, at *5 n.11.9 However, in this appeal, the Commission’s order contains no
findings regarding the substance of the parties’ exhibits and witness testimony placed on
the record. Critically, the present order fails to offer any findings by the Commission as to
what the exhibits and testimony convey, let alone the specific facts that the Commission
drew from the record to support its decision to grant Arsenal’s request to form the Unit.

Moreover, the parties offered the Commission conflicting positions on the issue of
good faith; however, the Commission’s order fails to reconcile those positions through
pertinent findings and analysis regarding the weight and credibility of the evidence
presented below. For example, the order makes no findings as to the date and amount of
the offers made, let alone any factual findings regarding the parties’ communications and

9
See W. Va. Code § 22C-9-10(e) (1998) (“After any hearing and consideration of
all of the testimony, evidence and record in the case, the commission shall render a decision
in writing.”) (Emphasis added). If anything, the Commission should be even more liberal
than civil courts when it comes to admitting evidence. West Virginia Code § 29A-5-2
(1964) provides in pertinent part that:

The rules of evidence as applied in civil cases in the circuit courts of this state
shall be followed [in contested agency cases]. When necessary to ascertain
facts not reasonably susceptible of proof under those rules, evidence not
admissible thereunder may be admitted, except where precluded by statute,
if it is of a type commonly relied upon by reasonably prudent men in the
conduct of their affairs.

Under Rule 402 of the West Virginia Rules of Evidence, which apply to proceedings in the
Commission, see W. Va. Code § 22C-9-10(b) (1998), “[r]elevant evidence is admissible
unless any of the following provides otherwise: (a) the United States Constitution; (b) the
West Virginia Constitution; (c) these rules; or (d) other rules adopted by the Supreme Court
of Appeals of West Virginia.” As noted elsewhere in this decision, the Commission is not
limited to the report prepared by the independent reviewer when deciding whether there
were good faith negotiations. If evidence is excluded by the Commission, “[a]ny party to
any such hearing may vouch the record as to any excluded testimony or other evidence.”
W. Va. Code § 29A-5-2(a).

6
negotiations.10 11 12 Instead, the Commission’s order only offers conclusory statements to
support its decision. This does not embody the Commission’s role as the trier of fact.

Accordingly, we vacate the Commission’s October 2, 2025, order as it relates to the
formation of the JOsborn 214 Unit and remand the matter to the Commission for further
proceedings, consistent with this decision.13 On remand, the Commission shall consider all
the evidence as the trier of fact and thereafter enter a new order ruling upon Arsenal’s entire
Application as required by the Act and other relevant statutes. The new order shall contain
sufficient findings of fact and conclusions of law to facilitate a meaningful appellate review

10
The parties cite to portions of the evidence adduced below on appeal and argue
that those facts support their respective positions. However, those are facts for the
Commission to reconcile for the first time on remand. If the parties submit conflicting
evidence on critical issues, the Commission must explain how it resolved the conflict in
reaching its decision. See Syl. Pt. 6, Muscatell v. Cline, 196 W. Va. 588, 474 S.E.2d 518
(1996) (“Where there is a direct conflict in the critical evidence upon which an agency
proposes to act, the agency may not elect one version of the evidence over the conflicting
version unless the conflict is resolved by a reasoned and articulate decision, weighing and
explaining the choices made and rendering its decision capable of review by an appellate
court.”).
11
The inadequacies of the Commission’s order aside, the Court also notes that the
Commission’s statements regarding the third-party report were inaccurate. There is no
language within West Virginia Code § 22C-9-7a(g)(4) that binds the Commission to the
subject report or otherwise prevents any party from presenting evidence related to the
economic factors surrounding an applicant’s decision to form a proposed unit or negotiate
with its royalty owners. By the statute’s plain language, the independent, third party is
performing a ministerial function for the Commission, which in no way usurps or limits
the Commission’s obligation as trier of fact to consider and weigh all the evidence to
determine if an applicant negotiated prices in good faith.
12
We further note that because Arsenal “opened the door” on the issue of
“economics” through its direct examination of Mr. Baldwin, petitioners’ counsel should
have been given full opportunity to develop that testimony upon cross-examination. This
is particularly true considering Arsenal’s failure to develop the issue beyond Mr. Baldwin’s
use of generalities in his direct testimony. Under our Administrative Procedures Act,
“[e]very party shall have the right of cross-examination of witnesses who testify[.]” W. Va.
Code § 29A-5-2(c) (1964).
13
Indeed, this includes holding further hearings as necessary for the parties to
develop a full and complete record on all issues for the Commission’s consideration and
ultimate decision to be set forth in a thorough order on remand.

7
should either party seek to file a new appeal.14 The Clerk of this Court is hereby directed
to issue the mandate contemporaneously herewith.

Vacated and Remanded.

ISSUED: May 1, 2026

CONCURRED IN BY:

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

14
As previously noted, this decision does not affect the Commission’s ruling with
respect to JOsborn 212. Likewise, we reiterate our observation in Arsenal I that this
decision does not address the merits of the underlying decision and should not be
interpreted as suggesting the outcome the Commission should reach upon remand. See
Arsenal I, 2026 WL 125974, at *5 n.12.
8