The Ohio Supreme Court has cleared the way for a settlement agreement between the Ohio Department of Revenue and the owners of the NEXUS gas pipeline to take effect in 2022.
The court’s recent 4-3 decision determined that the Lorain County auditor cannot appeal the NEXUS pipeline’s property tax assessment, which was determined by a 2022 settlement agreement between the Ohio state tax commissioner and the pipeline’s owners, Detroit-based DT Midstream and Canadian company Enbridge.
The natural gas pipeline crosses 13 counties – Stark, Columbiana, Erie, Fulton, Henry, Huron, Lorain, Lucas, Medina, Sandusky, Summit, Wayne and Wood – and 37 school districts in northern Ohio.
An Enbridge spokesman did not immediately respond to a request seeking comment on the court’s decision.
Lorain County Auditor Craig Snodgrass had objected to the tax commissioner’s settlement, which set the taxable value of Ohio’s share of the 256-mile NEXUS interstate pipeline at $950 million for 2019. Values for subsequent years would be determined by taking the 2019 valuation and subtracting depreciation.
Snodgrass sought to enforce the commissioner’s 2019 assessment, which pegged the pipeline’s value at more than $1.4 billion before settlement negotiations began. He appealed to the Ohio Supreme Court when the Ohio Board of Tax Appeals denied his request.
Judges Patrick DeWine, Michael Donnelly, Jennifer Brunner and Joseph Deters ruled that while county auditors have a legal right to challenge tax assessments, that right does not allow them to overturn a settlement approved by a tax commissioner who abuses his authority to offset tax claims.
Snodgrass has 10 days to file a motion for retrial.
Here are four things you should know about the Supreme Court decision and its implications:
1. Stark County opposed the Lorain County Auditor’s appeal
Stark County Auditor Alan Harold supports moving forward with the agreement.
“This decision by the Ohio Supreme Court reflects what the majority of county auditors and school districts involved have been requesting,” Harold said. “We patiently await finality, subject to any additional rights the Lorain County County Auditor may have for reconsideration.”
Harold, along with seven other county auditors and two school districts, filed an amicus curiae brief in the Supreme Court urging the court to uphold the settlement agreement reached between the tax commissioner and the NEXUS owners.
They said the Lorain County auditor’s appointment had a significant impact on the other 12 counties, as well as school districts and other local governments along the pipeline, because it resulted in a delay in the payment of millions of dollars in property taxes.
While NEXUS’s valuation was under review, the owners paid taxes based on what they believed the pipeline was worth, rather than the taxable value determined by the state, as they were permitted to do. The payments represent the difference between the amount the pipeline owners paid and the amount they would have had to pay under the settlement terms.
District auditors told the Supreme Court that the payment delays had stalled school construction projects and led to budget deficits.
2. Stark County is expected to receive nearly $6 million from NEXUS payments
According to the Comptroller’s Office, NEXUS owners paid $23.4 million in property taxes to Stark County and tax collectors in Washington, Nimishillen, Marlboro and Lake townships.
If the court’s decision stands, Stark County would receive an estimated $5.6 million in additional payments from NEXUS’s owners to cover payments over the past five years, during which NEXUS has only paid what it believes the pipeline is worth.
The total amount is still well below the $41.7 million Stark County originally expected to spend over the pipeline’s first five years of operation.
Affected facilities include Lake Local Schools, Lake Township, Louisville City Schools, Louisville Public Library, Marlboro Township, Marlington Local Schools, Nimishillen Township, North Canton, North Canton Public Library, Plain Local Schools, RG Drage Career & Technical Center, Rodman Public Library, Stark County 911, Stark County Board of Developmental Disabilities, Stark County Mental Health & Addiction Recovery, Stark County Children Services, Stark County Government, Stark Parks, Stark County District Library and Washington Township.
Northwest Local Schools is also set to receive money from the settlement for land within its district boundaries in Summit County. Its revenue is not included in Stark County’s figures.
3. Marlington Local Schools is not celebrating yet
Of all the institutions in Stark County, Marlington Local Schools, with $2.1 million in debt, is expected to benefit the most from the settlement.
Marlington Superintendent Daniel Swisher said he would wait until the end of the 10-day review period before getting his hopes up too much.
“I’m going to hold off on the excitement right now to make sure (the court decision) isn’t reconsidered and that the state gives us a little more guidance,” Swisher said, recalling previous times when the district began planning for additional funds and then payments were delayed again.
Swisher said when the district receives the additional money, it will go into a special capital improvement fund to improve the district’s buildings and facilities.
4. The NEXUS court decision has no impact on Rover Pipeline’s disputed tax payments
Some schools, libraries and government agencies in Stark County are still waiting for a decision on the tax value of the Rover pipeline.
Rover’s parent company, Energy Transfer, has appealed to the state Supreme Court a decision by the Ohio Board of Tax Appeals that valued the pipeline in Ohio at $3.7 billion, but the company argues the value should actually be $1.792 billion.
Rover’s two main 42-inch diameter routes traverse Pike, Bethlehem and Sugar Creek communities in Stark County and cross Carroll, Tuscarawas, Harrison, Wayne, Ashland and Richland counties.
Reach Canton Repository Editor Kelli Weir at 330-580-8339 or [email protected].
