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United States Department of Agriculture
By: Peggy Kirk Hall, Tuesday, February 07th, 2023

Sometimes a legislative proposal stalls, appears dead, then emerges in another piece of legislation in a slightly different form.  That’s exactly what happened with the Growing Climate Solutions Act and its plan to help farmers with carbon and environmental credit markets.  First introduced in 2020, the bill gained some momentum and passed the U.S. Senate before coming to a standstill in the House. But Congress added the bill, with some negotiated changes, into the Consolidated Appropriations Act it passed in the final days of 2022. The USDA is now charged with implementing its provisions.

Purpose of the bill

The bill aims to reduce barriers for farmers, ranchers, and foresters who want to enter into voluntary markets that establish environmental credits for greenhouse gas emission reductions resulting from agricultural or forestry practices (also known as carbon credits).  It allows the USDA to create the “Greenhouse Gas Technical Assistance Provider and Third-Party Verifier Program” if it appears, after an initial assessment, that the program would accomplish these purposes for farmers, ranchers, and private forest landowners:   

  • Facilitate participation in environmental credit markets
  • Ensure fair distribution of revenues
  • Increase access to resources and information on environmental credit markets

Advisory Council

If the USDA determines that the program would meet the above purposes, it must establish an Advisory Council to help guide the program.  At least 51% of the Advisory Council must be farmers, ranchers, and private forest landowners, including beginning, socially disadvantaged, limited resource, and veteran members.  Other members on the Advisory Council would include representatives from agencies, the agricultural and forestry industries, the scientific research community, non-governmental organizations,  and professionals and private sector entities involved in credit markets.

Protocols

A primary concern with the environmental credit market is uncertainty and variations in how to establish, quantify, and value environmental credits.  An important component of the new program is for USDA to publish lists of widely accepted protocols that are designed to ensure consistency, reliability, effectiveness, efficiency, and transparency of the markets along with documents relating to the protocols.  The act directs the USDA to include protocol documents and details on calculations; sampling methodologies; accounting principles; systems for verification, monitoring, measurement, and reporting; and methods to account for issues such as additionality, permanence, leakage, and double counting of credits.

Vendor registry

Another concern for landowners who want to participate in environmental credit markets is knowing who to turn to for technical assistance.  To address this issue, the program would require the USDA to create a registry of third-party vendors of environmental credits who can help farmers, ranchers, and forest landowners measure the carbon reduction benefits of different types of practices.  Unlike an earlier version of the bill, the USDA would not establish a certification program for these vendors, although the agency must ensure that the vendors possess demonstrated expertise in practices that prevent, reduce, or mitigate greenhouse gas emissions. 

Assessments

The USDA, in concert with the Advisory Council, must submit an initial and ongoing assessments to the agricultural committees in the Senate and House.  The initial assessment must examine ways to ensure certainly for farmers, ranchers and forest landowners in the marketplace.  Ongoing assessments would examine the environmental credit market itself, including actors in the market, participation, credits generated and sold, barriers to entry, opportunities for other voluntary markets, and more.

Program funding

The act provides an appropriation of at least $1 million per year to fund the program through 2027 and another $4.1 million of potential unobligated American Rescue Plan Act funds.  It specifically prohibits the USDA from using funds from the Commodity Credit Corporation for the program, a demand of the House Agriculture Committee Chairman Glenn Thompson, who states that those funds are obligated for Farm Bill program payments.

What’s next?

Farm Bill negotiations this year and other climate initiatives recently undertaken by the Biden administration, such as the USDA’s Partnerships for Climate-Smart Commodities, could reduce the focus the Growing Climate Solutions Act would have received if it had passed when first introduced back in 2020.  Even so, the timeclock has started for the USDA to make its initial determination of whether the program would meet the intended purposes. Secretary Vilsack must make that determination by late September, and the expectation is that the program will proceed.  We should then see the Advisory Council established by fall and and can expect program outputs such as protocols and the third-party registry as early as 2024. 

Read the provisions of the new law beginning on page 1,512 of the Consolidated Appropriations Act of 2023, H.R. 2617.

Grain bin on country road with sign opposing solar development
By: Peggy Kirk Hall, Friday, January 20th, 2023

The solar energy “boom” in Ohio continues to encounter opposition from local communities that would be home to large-scale solar developments.  Yesterday, the Ohio Power Siting Board (OPSB) denied a solar project application in Defiance County due to “general opposition by local citizens and governmental bodies.”  Just before the holidays, a project in Greene County met the same fate.  The cases now bring the number of solar project rejections in Ohio to three. Each one highlights the role community opposition can play in project denial, particularly when local governments are part of that opposition.  

How does OPSB review a proposed solar project?

The OPSB is responsible for reviewing applications for solar energy projects that are over 50 MW in capacity.  Currently, the members of the OPSB include the chair of the Public Utilities Commission of Ohio, directors of the EPA and departments of Agriculture, Development, Health, and Natural Resources, and a public member, along with four non-voting legislators.  In the future, a county commissioner and township trustee will also join in the OPSB review process.

Ohio law requires the OPSB to analyze eight criteria when reviewing an application and deciding whether to grant a certificate to construct a major utility facility.  The law states in Ohio Revised Code 4906.10(A) that OPSB shall not grant a certificate unless it finds and determines all of the following:

(1) The basis of the need for the facility if the facility is an electric transmission line or gas pipeline;

(2) The nature of the probable environmental impact;

(3) That the facility represents the minimum adverse environmental impact, considering the state of available technology and the nature and economics of the various alternatives, and other pertinent considerations;

(4) In the case of an electric transmission line or generating facility, that the facility is consistent with regional plans for expansion of the electric power grid of the electric systems serving this state and interconnected utility systems and that the facility will serve the interests of electric system economy and reliability;

(5) That the facility will comply with Chapters 3704., 3734., and 6111. of the Revised Code and all rules and standards adopted under those chapters and under section 4561.32 of the Revised Code. In determining whether the facility will comply with all rules and standards adopted under section 4561.32 of the Revised Code, the board shall consult with the office of aviation of the division of multi-modal planning and programs of the department of transportation under section 4561.341 of the Revised Code.

(6) That the facility will serve the public interest, convenience, and necessity;

(7) In addition to the provisions contained in divisions (A)(1) to (6) of this section and rules adopted under those divisions, what its impact will be on the viability as agricultural land of any land in an existing agricultural district established under Chapter 929 of the Revised Code that is located within the site and alternative site of the proposed major utility facility. Rules adopted to evaluate impact under division (A)(7) of this section shall not require the compilation, creation, submission, or production of any information, document, or other data pertaining to land not located within the site and alternative site.

(8) That the facility incorporates maximum feasible water conservation practices as determined by the board, considering available technology and the nature and economics of the various alternatives.

Once all required elements of an application for a certificate are submitted and the application is complete, which can take many months, the OPSB staff and board begins its evaluation of the application to decide whether to grant the certificate.  The review process, which might include intervening parties and multiple hearings, can last for many months or even a year or more.  During that time, the OPSB must examine the application to determine if it meets the criteria in ORC 4906.10(A), relying on the expertise and recommendations of OPSB technical staff. 

Recently approved solar projects

In December, the OPSB approved the application of Springwater Solar, a 155 MW solar project proposed to be built on 1,085 acres in Madison and Franklin counties, holding that the project met all of the criteria in ORC 4906.10(A).  The decision brings the total of approved solar projects in Ohio to 34, representing 6,175 MW to be built on 63,554 acres, as illustrated on the map below.  The map also displays additional pending applications totaling 3,139 MW and 29,076 acres.

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Source:  Ohio Power Siting Board, available at https://opsb.ohio.gov/about-us/resources/solar-farm-map-and-statistics.

Recently denied solar projects

Two solar project applications recently reviewed by OPSB did not receive a green light from the board.  In December, the OPSB denied an application by Kingwood Solar that proposed to construct a 175 MW solar facility on 1,200 acres in Greene County.   And on January 18, the OPSB denied a Cepheus Energy proposal to construct a 68 MW solar project on 649 acres in Defiance County.  Before those two rejections, the OPSB had only previously denied one solar project application—the Birch Solar application rejected last October.  In all three instances, the OPSB based its denial on ORC 4906.10(A)(6), stating that the projects would fail to serve the “public interest, convenience, and necessity” due to general opposition.

In the Cepheus application, the board focused on local public interaction and participation, reviewing public testimony and 600 pages of public comments on the project.  The board also noted that seven local governments had expressed concern or opposition to the project, including the Defiance Soil and Water Conservation District, Delaware and Sherwood Township trustees, Defiance County Economic Development Office, Defiance County Board of Commissioners, Delaware Township Fire Department, and Sherwood Area Economic Development Corporation.

The interests of these impacted local government bodies was “especially compelling” given that the organizations have the responsibility for preserving the health, safety, and welfare of their citizens, OPSB noted.  Stating that there was “general opposition from local citizens and governmental bodies” and that local impacts would outweigh the project’s benefits, the board concluded that the project would not serve the public interest, convenience, and necessity.

The Cepheus rejection is similar to the Kingwood Solar project denied by OPSB in December.  In that case, the board reviewed Kingwood’s assertions of the positive economic impacts and renewable energy choices the project would bring the community, then focused on local responses to the project.  About 76% of those testifying during a 6.5-hour hearing were opposed to the projects and expressed an overarching concern that the project was not compatible with local land use plans and would “unalterably change the rural nature of the community.”  The board also noted concerns by the Citizens for Greene Acres, a local group that intervened in the case, regarding the unique characteristics of the wildlife, parks, recreation, cultural, and historic areas that would be affected and the high density of residents that would reside within 500 feet of the project.

But once again, a critical concern for OPSB was the clear opposition of local governments impacted by the project.  Cedarville Township, Xenia Township, Miami Township, and the Greene County Commissioners had all intervened in the case and adopted resolutions opposing the project.  Although Kingwood Solar had agreed to address 39 conditions of development that it had offered in a Stipulation agreement, none of the local governments agreed to the Stipulation and instead opposed approval of the project.  OPSB concluded that local opposition, “especially as demonstrated by Greene County and the three townships affected by the project,” warranted a conclusion that the project would not serve the public interest, convenience, and necessity.

Now what happens?

It’s typical in a rejection of a utility application for the developer applicant to exercise the right to request a rehearing. That has already occurred for the Birch Solar and Kingwood Solar projects, and we can expect a rehearing request for the Cepheus denial that just occurred on January 19.  Interestingly, it was not just the solar developer that requested a rehearing of the Kingwood project application—Greene County, the affected townships, and the Citizens for Greene Acres also requested a rehearing.   While those parties stated support for the decision of the OPSB that denied the certificate, they argue that in its findings, OPSB failed to determine that there were many other grounds for denying the certificate such as incompatibility with local land use planning, incapacitation of 1,025 acres of productive farmland, and negative local economic impacts. 

Now we await the determinations by OPSB on the rehearing applications.  The projects are each on hold, and construction cannot move forward unless the OPSB reverses its decision and approves the applications. 

More questions

The recent decisions by OPSB leaves us asking a few questions.  Does three rejections establish a trend in solar project denials due to community opposition?  Did the communities involved in the 34 solar projects approved by OPSB oppose those projects?  Do the local communities in the projects that are still pending before the OPSB oppose or support the projects, and how will community voices affect the review of those projects?  While we don’t have the answers, we’ll keep monitoring developments in large-scale solar development as we consider these important questions.

By: Robert Moore, Thursday, December 01st, 2022

Legal Groundwork

It is well known among Ohio farmers that installing subsurface drainage in poorly drained soil is a good investment.  However, some landowners are not aware of the value of drainage or may not share the same level of commitment to improve the land.  Furthermore, even if landowners do understand the benefit of subsurface drainage, they may not be willing to pay the substantial cost of installing drainage.  To overcome this obstacle, tenant farmers will sometimes offer to install and/or pay for the drainage tile rather than imposing the cost on the landowner.  This strategy can be a good way to improve the land without burdening the landowner with the entire cost.  If this strategy is used, the lease between the landowner and tenant becomes critical to protect the interests of both parties.

There are three potential strategies for landowners and tenants to implement when installing drainage tile.  The strategies are:

  • Landowner pays entire cost
  • Tenant pays entire cost
  • Landowner and Tenant share costs

In the following discussion, the legal implications of each strategy will be analyzed as well as provisions to include in a written lease to protect both parties’ legal interests.

 

Landowner Pays Entire Cost

As noted above, some landowners are reluctant to pay the entire cost for subsurface drainage. However, there are landowners who will choose to pay for subsurface drainage.  Before deciding upon paying for the tile, the landowner may want to negotiate a higher lease payment with the tenant.  The higher lease payment can be justified by the newly drained farmland being more productive.  The lease should clearly state that the tenant will agree to pay a higher lease payment provided the landowner installs drainage.  An example term to include in the lease could be something similar to:

In the event Landowner installs systematic drainage tile in the leased property, the annual lease rate shall be increased by $______.  The systematic drainage tile shall be installed by a contractor approved by both Landowner and Tenant.

Including a provision like the one above will ensure that the tenant is aware that they will be required to pay a higher lease rate due to the installation of the drainage system.  Also, by having a say in the contractor selected, the tenant can have some assurance that the drainage system will be well designed and properly installed.  Because of the high demand for leased land, it is probably not necessary for the landowner to enter into a long-term lease.  If a tenant opts out of the lease, the landowner will likely have no problem in finding another tenant.

 

Tenant Pays Full Cost of Drainage Improvement

A more common strategy for drainage improvements on leased land is for the tenant to pay the entire cost.  When the tenant pays for the entire drainage improvement, the tenant should insist on including terms in the lease to protect their investment.  These terms should create a long-term lease and provide for a means for the tenant to recoup their investment outlay for the drainage improvement should the landowner terminates the lease early.

The length of the lease should be long enough that the tenant recovers their investment in the drainage.  Lease terms of 10-15 years are often used when the tenants pays the entire cost but the term can be longer or shorter depending on the situation.  The tenant should calculate the increased revenue expected from installation of new drainage to determine the term of lease needed.

For example, Tenant agrees to pay for a new systematic subsurface drainage system.  Tenant expects the new drainage to increase revenue by $100/acre.  The drainage will cost $1,000/acre.  Tenant should be sure to have at least a 10-year lease to recoup their investment.  Perhaps the Tenant should ask for a 12 or 15-year lease to not only recoup costs but to enjoy some of the windfall from the installed drainage.

A provision should be included in the lease that requires the landowner to pay for at least some of the drainage tile in the event the lease is terminated early by the landowner.  An example term could be something similar to:

In the event this Lease is terminated prior to the scheduled termination date, for any reason other than due to Tenant’s breach of terms of this Lease, Landowner shall compensate Tenant the pro-rata cost of the tile paid for by Tenant.  The pro-rata share of the tile cost shall be calculated as follows: (length of lease - number of years installed)/length of lease.

As an example, let’s assume Landowner and Tenant enter into a 10-year lease and the drainage costs $1,000/acre.  Landowner terminates the lease in year 4 to put the land in a solar project.  Using the above formula in the lease provision, Landowner would be required to pay $600/acre to Tenant.

In the example, the Tenant will no doubt be disappointed that the lease is being terminated early, but at least they will recoup their remaining investment in the drainage.  Without such a provision, an early termination of the lease could lead to a Landowner refusing to compensate the Tenant for the drainage or causing a dispute between the parties as to how much is owed the Tenant.

Note:  In this example, Landlord will also likely owe Tenant for lost profits on the remaining 6 years of the lease as well as compensation for fertilizer applied and field operations performed in anticipation of continuing the lease through its full term.

 

Landowner and Tenant Share Cost

It is possible for the tenant and the landowner to share the cost of new drainage.  Sharing the cost might be particularly applicable in a share lease arrangement where the tenant and landowner are already accustomed to sharing costs.  In this scenario, the most important issue for the tenant and landowner to agree upon is how much each party will pay towards the drainage improvement.  The share of the cost is important not only for payment of the initial cost but also to determine what expensing or depreciation is available to the landowner and landowner.

 An example provision to include in this lease could be something similar to:

Tenant and Landlord agree to cooperate on the installation of new subsurface drainage on the Property subject to the following conditions:

  1. Tenant and Landlord shall mutually agree upon the contractor to install the drainage

  2. Tenant and Landowner shall, by mutual consent, determine the placement of the tile, design of the tile system and materials to be installed

  3. The drainage shall be installed on or before (date).

  4. Tenant and Landowner shall share in the costs of the new drainage installation.  Costs shall include all labor, material and any other related costs.

  5. Tenant shall be responsible for ___% and Landlord shall be responsible for ____% of the total costs.

  6. Each party shall be entitled to expense or depreciate their share of the cost

Again, the tenant should require a long-term lease to be sure they gain the benefit of their investment.  The lease should also include a provision to protect the tenant in the event of an early termination as discussed in the previous example.

 

Maintenance and Repair

Regardless of who is responsible for the costs of installing drainage systems, the lease should clearly state who is responsible for maintenance and repair of drainage systems.  There are many ways to address this issue.  In some cases, the landowner may be entirely responsible for maintenance while in other situations the tenant may be solely responsible.  Additionally, the landowner and tenant can agree to share in the maintenance costs.  Establishing who is responsible for maintenance and repair will help alleviate potential conflicts between the landowner and tenant.

 

Seek Legal Counsel

Attorneys with experience in agricultural leases can be a good source of ideas to incorporate into a lease.  Additionally, an attorney can ensure that the lease is drafted and executed properly to protect both tenant and landowner.  A small investment of time and money with an attorney can avoid conflicts and unwanted surprises.

Posted In: Property
Tags: farm leases, drainage improvements
Comments: 0
By: Peggy Kirk Hall, Tuesday, November 08th, 2022

It’s a common problem in Ohio: a dispute between two neighbors over connecting to a subsurface drainage tile system that crosses property lines.  Can one neighbor cut off the other neighbor's access to a tile?  Can one go onto the other’s property to maintain the tile?  If one replaces their system, can they still connect to the other’s tile?  Answers to neighbor drainage questions can be, like subsurface water, a little murky.  But a recent appeals court decision on a Licking County drainage dispute provides a few clear answers.

The drainage system at issue.  Landowner Foor’s clay subsurface drainage system had been on his farm for over fifty years.  Foor’s system connected to a larger drainage tile that ran across neighbor Helfrich’s property and eventually emptied into a pond on Helfrich's land. Foor and his predecessors had used and maintained the line on Helfrich’s property prior to Helfrich’s ownership.

The dispute.  Foor planned to replace his old system and also offered to replace the tile he connected to on neighbor Helfrich’s property.  Helfrich refused the replacement.  During installation of Foor’s tile, Helfrich dug up the tile area near the boundary and filled the hole with rocks and refuse, after which water welled up and flowed over the properties rather than through the tile on Helfrich’s property.  Foor installed a standpipe on his side of the boundary.  Helrich filed a complaint against Foor, claiming that Foor’s drainage was excessive and harmful.  Foor responded by asking the court to establish his rights to a drainage easement and irrevocable license to use the property where the tile ran across Helfrich’s property. A jury ruled in favor of Foor, awarding him $30,000 in damages and both an easement and irrevocable license where the tile ran across Helfrich’s property.

The appeal.  The Fifth District Court of Appeals affirmed two conclusions on the drainage rights of the two neighbors:

  • First, the court held that Foor’s replacement of the pre-existing subsurface drainage system was not an "alteration" of the flow of surface water that would trigger Ohio’s “reasonable use” rule for drainage.  The reasonable use rule allows a legal claim when an alteration of surface water flow causes an unreasonable interference with someone’s property.  Because the newly installed tile did not increase the amount of water draining from Foor’s property and maintained the same amount of drainage that had occurred for over fifty years, the court concluded there was no “alteration” of surface water flow. Without an alteration, the reasonable use rule did not apply and Helfrich did not have a claim against Foor based on the reasonable use rule.
  • Second, the court refused to overturn the jury’s award of a drainage easement and irrevocable license across Helfrich’s land to Foor.  Helfrich argued there was not sufficient evidence for the jury’s verdict but the court disagreed. The jury determined that an “easement by estoppel” existed when Helfrich purchased the property, based on evidence that the easement was apparent and not hidden to Helfrich when he purchased the property; that Foor and his predecessors relied on the drainage access and had previously repaired the tile on the neighboring property; and that the prior owners of the Helfrich property had gone along with Foor’s maintenance and use of the drainage tile on their land.  Likewise, the court held there was sufficient evidence to support the jury’s conclusion that the previous owners of the Helfrich property had granted the prior owners of the Foor property a “license” or right to enter their property and maintain the tile.  The jury determined that substantial investment by Foor and his predecessors suggested that the license was intended to be permanent, and the appeals court found that sufficient evidence also existed to support that conclusion.

How does this affect future drainage disputes between neighbors?  The Fifth District decision provides useful precedent for the difficult questions neighbor drainage disputes raise. The case supports the argument that a landowner has a legal right to maintain a subsurface drainage system that crosses property lines.  As long as there is not an “alteration” of surface water flow and history shows prior use, reliance, and maintenance of the connecting tile line on a neighbor’s property, a landowner can be in a strong legal position for continued use and maintenance of the tile.  Will other appellate courts agree with the Fifth District’s analysis, or will Helfrich ask the Ohio Supreme Court to review the decision?  Answers to those questions, like subsurface water, are a little murky.

Read the Fifth Appellate District's decision in Helfrich v. Foor Family Investments.

Mill Creek MetroParks bike trail
By: Peggy Kirk Hall, Wednesday, November 02nd, 2022

A landowner challenging the taking of land for a bikeway has lost in an appeal to the Ohio Supreme Court.  The decision by the state’s highest court doesn’t address whether Mill Creek MetroParks may take the land for the bike trail, but instead gives the Mahoning County Common Pleas Court the go ahead to continue the eminent domain proceeding.

The landowner’s argument.  Mill Creek MetroParks filed a case in 2019 to appropriate land from Edward Schlegel, who would not voluntarily consent to selling some of his land for the park district’s bike trail extension.  Schlegel sought to have the case dismissed when the Ohio General Assembly included a provision in the state’s budget bill in 2021 intended to address landowner opposition to the Mill Creek MetroParks bike trail.  The new provision prevents any park district in a county of between 220,000 and 240,000 people from using eminent domain for a “recreational trail” until July 1, 2026.  Mahoning County falls within the population range.

Schlegel asked the Mahoning Court of Common Pleas to dismiss the Park District’s eminent domain proceeding against him based on the new law. But Common Pleas Court Judge Sweeney denied Schlegel’s request, stating that the new law did not apply because the legislature passed the law after the Park District filed Schlegal’s case.  Schlegal then asked the Ohio Supreme Court for a “writ of prohibition” that would prevent Judge Sweeney from continuing with the eminent domain case.

The Supreme Court’s reasoning.  In seeking a writ of prohibition, Schlegal had to demonstrate that the common pleas court exceeded its authority and that he had no remedy at law other than a writ of prohibition.  The problem with Schlegel’s request, according to the Supreme Court, is that he did have an alternative and adequate remedy:  an appeal.  When the Mahoning County court issues a decision in the eminent domain proceeding, Schlegal has a right to appeal the decision.  At that time, he could challenge the judge’s decision not to dismiss the case due to the new law.

Schlegel argued that the procedures for an eminent domain case prevented him from challenging the common pleas court’s refusal of his request to dismiss the case.  An eminent domain proceeding has two parts:  the first is a determination of whether the agency has the right to make an appropriation of property and if so, the second is to determine the amount of compensation due for the appropriation.  Schlegel argued that because the new law became effective after the common pleas court determined the Park District had eminent domain authority, he lost his right to appeal that issue.  Not so, according to the Supreme Court.  Schlegel still has the right to appeal whether the park district may use eminent domain when the court issues its final judgment in the case regarding compensation.  A writ of prohibition therefore is not warranted, the Court concluded. 

What now?  Schlegel’s eminent domain case will resume in the Mahoning County court.  We can expect an appeal by Schlegel when the court determines the amount of compensation for the taking. 

Another bike trail case is coming.  In the meantime, the Ohio Supreme Court recently decided to review another case challenging the Mill Creek MetroParks bike trail.  The Seventh District Court of Appeals issued a decision earlier this year in favor of a bike trail challenge by landowner Diane Less.   The court held that the Park District lacked authority to use eminent domain against Less, basing its decision on the insufficiency of the resolutions the Park District passed when it decided to acquire land for the bike trail.  Ohio law allows a park district to use eminent domain authority for two specific purposes:  the conversion of forest reserves and the conservation of natural resources, and the appellate court determined that the Park District’s purpose for using eminent domain to extend the bike trail did not meet either of those purposes.  The Park District appealed that decision and on September 14, the Ohio Supreme Court agreed to review the decision.  The Court will likely hear the case in 2023.

Read the Schlegel v. Sweeney opinion and the Mill Creek v Less opinion online in the Opinions section of the Ohio Supreme Court’s website.

Map of portion of Birch Solar 1 project at OPSB
By: Peggy Kirk Hall, Friday, October 28th, 2022

Highlighting a continuing trend in opposition to solar energy development across the state, the Ohio Power Siting Board has for the first time denied the application of a large-scale solar energy project.  After a string of 34 OPSB-approved projects since 2018, the Birch Solar 1 project became the board's first denial when the OPSB determined the project would not serve the public interest.  

The proposed project.  The Birch Solar application proposed a 300 MW facility in Allen and Auglaize counties with solar panels on 1,410 acres and a total project area of 2,345 acres.  Of the total, 2,132 acres are currently in agricultural use. The project would also include 22.5 miles of gravel access roads, an operations and maintenance building, underground and aboveground electric collection lines, meteorological towers, weather stations, inverters and transformers, a collector substation, a point of interconnection switchyard, and a 345-kilovolt generation interconnection electric transmission line. A six-foot cedar post perimeter fence would secure the project, evergreen fencing would limit impacts to neighboring viewsheds, and solar panels would be setback a minimum of 300 feet from adjacent non-participating residences and roadways.

OPSB’s review.  The OPSB had the duty of reviewing the project application to determine whether it satisfied the legal criteria in Ohio Revised Code 4906.10(A) for siting a major utility in Ohio.  For a solar project, the criteria includes parts (A)(2) through (8):

  1. The nature of the probable environmental impact;
  2. That the facility represents the minimum adverse environmental impact, considering the state of available technology and the nature and economics of the various alternatives, and other pertinent considerations;
  3. That the facility is consistent with regional plans for expansion of the electric power grid of the electric systems serving this state and interconnected utility systems and that the facility will serve the interests of electric system economy and reliability;
  4. That the facility will comply with Chapters 3704., 3734., and 6111. of the Revised Code and all rules and standards adopted under those chapters and under section 4561.32 of the Revised Code;
  5. That the facility will serve the public interest, convenience, and necessity;
  6. What its impact will be on the viability as agricultural land of any land in an existing agricultural district established under Chapter 929. of the Revised Code that is located within the site and alternative site;
  7. That the facility incorporates maximum feasible water conservation practices as determined by the board, considering available technology and the nature and economics of the various alternatives.

The “public interest” factor and public opposition.  OPSB focused most of its analysis of the Birch Solar application on part (A)(6), that the facility “will serve the public interest, convenience, and necessity.” The board explained that the question of whether an application serves the public interest “must be examined through a broad lens and in consideration of impacts, local and otherwise, from the Project.”  The OPSB acknowledged that there can be potential public benefits to a proposed solar facility such as energy generation, economic benefits from employment and tax revenues, air quality and climate improvements, protecting landowner rights, and preserving agricultural land use.  But the board stated that it must weigh a project’s benefits against its impacts, especially impacts to those living near it.  To do so, the board reviewed the application, evidence, and comments on Birch Solar and identified a primary concern:  uniform and consistent public opposition to the project. 

The two counties and four townships where Birch Solar would locate all opposed the project.  Acting under new legal authority granted by Ohio’s legislature last year, Auglaize County has restricted large-scale solar development in all incorporated parts of the county and Allen County has established most of the county as restricted from solar development.  The Birch Solar application is unaffected by the designations since it was in process and grandfathered in before the new law, but OPSB noted that had the new law been in place, the county restrictions would have prohibited the project. 

OPSB also reviewed evidence submitted by Allen County officials stating that there would be 1,278 residences, four schools, and six churches within one mile of Birch Solar’s project area, and that the residents shared concerns about the project’s lack of dedicated local power; its impact on land use, property values, drinking water, groundwater, drainage, and roadways; its decommissioning plan; and negotiations on distributing “payment in lieu of taxes” revenue to local governments.

Of the hundreds of public comments submitted on the Birch Solar application, OPSB determined that approximately 80% of the comments were in opposition to the project and that opposition reasons were similar to those raised by the local governments.  Birch Solar argued that it had agreed to 40 stipulated conditions that would address opposition concerns and had offered to make “good neighbor” payments of $10--$50,000 and property value adjustments to adjacent landowners.  Even so, the OPSB concluded that Birch Solar would not serve the public interest, convenience, and necessity requirement because of “unanimous and consistent opposition to the Project by the government entities whose constituents are impacted by the Project.”

What’s next?  The battle may not be over.  Birch Solar has the right to request a rehearing and reconsideration of its application within 30 days of the OPSB decision.  For now, the board’s denial of the project might invigorate opposition groups that have formed in areas where projects are proposed.  But note that on the same day OPSB denied Birch Solar, it approved Pleasant Prairie Solar in Franklin County, a 250 MW facility with a 2,400 acre project area and Harvey Solar, a 350 MW project of 2,630 acres in Licking County.   And 15 more projects totaling 3,266 MW are currently pending before the OPSB.  Whether local opposition will prohibit any of those projects is an issue we’ll be watching.

Read more about the Birch Solar project in the OPSB case docket at https://opsb.ohio.gov/cases/20-1605-el-bgn.

Stoney Hill Farm in Miamisburg, Ohio
By: Peggy Kirk Hall, Tuesday, October 18th, 2022

Let’s hope the marriages that began at Stoney Hill Farm in southwestern Ohio fare better than the wedding barn where they started.  Yet another lawsuit over the Stoney Hill wedding barn has ended in an adverse ruling for the owner.  The Second District Court of Appeals recently upheld a permanent injunction that for now, prevents the owner from renting the barn for weddings and other events.  

The case highlights the continuing conflicts across Ohio over what to do with wedding barns on farms.  Should wedding barns be subject to local zoning and state building and fire codes? Or should wedding barns qualify for the exemptions from zoning, building, and fire codes Ohio law provides for agricultural types of land uses?  It’s a question that has often ended up in court, as the statutory zoning exemptions for agriculture and agritourism in Ohio law are unclear and require judicial interpretation. 

How we got here

The legal battles against Powlette, the owner of Stoney Hill Farm, started in 2018.   The owner constructed a new two-story, 8,000 square foot barn on 26 acres he had purchased in Miami Township.  Declaring that the barn would be used for the agricultural purpose of housing horses, Powlette received an exemption from local zoning regulations for the barn.  That’s because Ohio’s “agricultural exemption” removes township zoning authority from agricultural land uses and structures to ensure that agriculture can take place in Ohio’s unincorporated areas. 

But when Powlette later advertised the barn as Stoney Hill Rustic Weddings and began using it to host weddings and events, the township filed a notice of zoning violation.  The township’s zoning resolution did not permit those types of uses in Powlette’s zoning district. The Board of Zoning Appeals and Montgomery County Court of Common Pleas reviewed the facts and determined Powlette was using the barn not just for agriculture but as a place of “public assembly,” in violation of zoning regulations. 

Powlette then planted grapevines on the property and began making wine, claiming those activities allowed him to continue using the barn under another part of the agricultural exemption.  That part gives zoning and building code exemptions for buildings that are used primarily for vinting and selling wine that are on land where there is viticulture, the growing of grapes. The township again disagreed that Powlette could host weddings and events in the barn and sought a permanent injunction against its continued use.  The Montgomery Township Common Pleas court reviewed Powlette’s use of the barn and determined that the winery-based zoning exemptions did not apply or allow him to hold weddings and events.  The trial court issued a permanent injunction, preventing Powlette from renting, leasing, or operating weddings, receptions, parties, or other celebratory events in the barn for a fee.  Powlette appealed the injunction to the Second District Court of Appeals, which brings us to the court’s decision on September 30, 2022.

As a side note, the Montgomery Court of Common Pleas fined Powlette $50,000 last month for continuing to hold weddings in the barn despite the permanent injunction issued by the court.  Powlette’s response is that he is not in violation of the injunction since he no longer charges a fee for the weddings.  He claims an Ohio Supreme Court case allows him to have free weddings for guests who purchase his wine. 

Additionally, note that there have been several other legal actions against Powlette from the Montgomery County Board of Building Regulations and the Fire District for building code and fire code violations, also based on the use of the structure for weddings and events and also resulting in rulings against Powlette.  And public attention has been high, with television and newspaper reporters covering the township and neighborhood conflicts over the late night, noisy wedding parties at Stoney Hill.

The Court of Appeals decision

The question Powlette raised with the Court of Appeals in the recent case is whether the Montgomery County Common Pleas court properly granted the permanent injunction.  Powlette maintains that the trial court erred by failing to find that the Stoney Hill barn is used for agriculture or agritourism, which would exempt the structure from zoning.   The appellate court reviewed the trial court’s finding that the only agricultural use in the barn was the storing of hay in the upper level of the barn, which also contained outdoor decks, decorative windows, chandeliers, two restrooms, a staging area for bridal parties, a prep area with cabinets and a refrigerator, and electrical, heating and cooling systems.  The evidence indicated, however, that the hay was stored in the barn for use as decorations or seating and not as animal feed.  The court did not see error in the trial court’s conclusion that the barn was constructed for events and not for an agricultural purpose.

The appellate court also agreed that the wedding barn should not be exempt from zoning as agritourism.  Ohio law defines agritourism as an agriculturally related educational, cultural, historical, entertainment, or recreational activity on a farm.  Powlette argued that wedding guests were educated about agriculture, were entertained by interacting with animals and taking wagon rides, that rural weddings are historical and cultural events, and that gathering for a rural wedding in a recreational event.  However, the court questioned how those activities were “agriculturally related.” With little explanation, the court stated that it could not see any connection between the wedding venue in the second story of the barn and any agricultural activities occurring on the property.  “Instead, the barn was built in order to serve as an event venue in a rural, agricultural setting,” the court concluded.

The court also disagreed with Powlette’s second argument against the trial court, that the permanent injunction it granted was overbroad and foreclosed him from any future activities that would qualify as agritourism.  Quickly dispensing with that argument, the court stated that Powlette could request that the injunction be dissolved if he properly engaged in an exempt agricultural use, such as establishing a vineyard and vinting operation as the primary use of the barn. 

What now for wedding barns?

Given that Powlette has begun planting grapes and making wine, a request to dissolve the injunction against him may be the next step of the Stoney Hill wedding barn story.  But the bigger questions remain:  should wedding barns like Stoney Hill be exempt from zoning oversight?  Should an owner be permitted to build or renovate a barn for weddings and events in any rural area, or should local zoning be able to regulate where wedding barns can be?  For now, the answer from the Second District Court of Appeals is clear:  barns built to serve as wedding venues aren’t agriculturally related to the land, don’t have an agricultural purpose, and should not be exempt from zoning.  But like marriage, the future of whether wedding barns are subject to rural zoning in Ohio could be subject to change.

Read the court's decision in Miami Twp. Bd. of Trustees v Powlette.

Combine harvesting in a field of soybeans
By: Peggy Kirk Hall, Thursday, October 13th, 2022

Fall harvest is a time of year when we hear complaints from neighbors and community residents about what we do in agriculture.  Dust, grain bin dryers, equipment taking up the road, working late into the night or early in the morning ... these are the inconveniences of living in an agricultural area.  But when do these activities become legally problematic as a “nuisance” to neighbors and others?  Not often, due to Ohio’s Right to Farm Law.  Even so, the Right to Farm Law expects us to conduct our agricultural activities according to regulations and practices that may reduce the nuisance impacts of farming, and it gives us nuisance protection when we do so.

Enacted in 1982, Ohio’s Right to Farm Law offers a nuisance defense for farming activities under certain conditions.  Ohio was one of many states that passed a Right to Farm Law in the 1980s after the highly publicized Arizona case of Spur Industries v. Del E. Webb.  In that case, the developer of a retirement community in Arizona sought to shut down a cattle feedlot that it claimed was a nuisance to its community residents.  But the Arizona Supreme Court noted that the developer “came to the nuisance,” making the previously existing feedlot activities a nuisance only because the developer chose to locate residences near the feedlot, in an agricultural area. 

Ohio adopted this “coming to the nuisance” approach in its Right to Farm Law soon after the Spur Industries case.  The law’s intent is to protect agricultural landowners from nuisance claims made by those who move into an existing agricultural area and later complain about the agricultural activities occurring in the area.  If faced with a nuisance complaint by someone who “came to the nuisance,” an agricultural landowner can use the Right to Farm Law as a defense against the complaint.

How the Right to Farm Law works

The Right to Farm Law has three requirements a landowner must meet to use the law as a defense against a nuisance claim.

  1. The agricultural activities that are the source of the nuisance complaint must be on qualifying land, which includes:
    1. Land enrolled with the county auditor as “agricultural district land,” (which is not a zoning designation) or
    2. Land “devoted exclusively to agricultural use” under Ohio’s Current Agricultural Use Valuation law.

Both of these provisions establish the same criteria for the land:  it must be either ten acres or more of land devoted to commercial agricultural production, or if less than ten acres and devoted to commercial agricultural production, it must generate a gross average annual income of $2500.  Certain land devoted to bioenergy, biomass, methane, or electric or heat energy production also qualifies, if contiguous to other qualifying land, as can land under government conservation and land retirement programs. 

Early versions of the Right to Farm Law required that the land be enrolled in the “agricultural district program” with the county auditor, not to be confused with having a zoning designation of agricultural district.  But changes to the law removed the enrollment requirement, allowing nuisance protection even if the landowner has not enrolled land in that program. 

  1. The agricultural activities were established prior to the plaintiff's activities or interest on which the action is based.

This is the “coming to the nuisance” timing element.  The agricultural activities must have been in the area first, before the person complaining of a nuisance came to the area.

  1. The agricultural activities were not in conflict with federal, state, and local laws and rules relating to the alleged nuisance or were conducted in accordance with generally accepted agriculture practices.

The intent of the law is to protect “good operators” who follow legal requirements or generally accepted agricultural practices for the agricultural activity that is the source of the complaint.  An operator who disregards law, regulations, and acceptable practices that apply to the agricultural activity loses the nuisance protection.

What are “agricultural activities”?

We often receive questions about the kinds of activities the law covers, or whether the protection applies if a farmer changes or expands an operation.  The Right to Farm Law answers these questions with the following:

"Agricultural activities" means common agricultural practices, including all of the following:

(1) The cultivation of crops or changing crop rotation;

(2) Raising of livestock or changing the species of livestock raised;

(3) Entering into and operating under a livestock contract;

(4) The storage and application of commercial fertilizer;

(5) The storage and application of manure;

(6) The storage and application of pesticides and other chemicals commonly used in agriculture;

(7) A change in corporate structure or ownership;

(8) An expansion, contraction, or change in operations;

(9) Any agricultural practice that is acceptable by local custom.

What if a farmer is threatened with a nuisance claim?

A few steps can help a farmer deal with a threatened nuisance claim.

  • Document the activity or area that is the source of the complaint with pictures, videos, notes, weather conditions, etc.
  • Review the situation to determine if there are additional management practices that could reduce any future nuisance impacts of the activity.
  • If the person takes legal action, notify your property insurance provider.  Your insurer will need to be aware of potential litigation because if the issue is one that relates to your insured activities, your insurer will defend you in a lawsuit.
  • Consider educating the person about your farming practices and the Right to Farm law.  Share articles like this one, or have an agricultural attorney draft a letter explaining the law. A person might not pursue a claim after understanding the activities or realizing that the Right to Farm Law would likely dismiss the claim.

Don't forget the good neighbor part

Although Ohio farmers have the Right to Farm Law as a defense against nuisance claims, it’s still good practice to be aware of how our farming activities affect neighbors.  While the law recognizes that we can’t remove all of the dust, noise, road use, and odors of farming, it does expect us to be “good operators.”  Being a good operator and instituting practices that can reduce nuisance impacts is the first line of defense against the potential of a neighbor nuisance claim.

Read the Ohio Right to Farm Law's "defense to a civil action for nuisance" at Ohio Revised Code Section 929.04.

Ohio farm and rural road
By: Peggy Kirk Hall, Tuesday, September 20th, 2022

Did you know yellow grove bamboo is on Ohio’s “noxious weeds” list?  We’ve seen an increase in legal questions about bamboo, a plant that can cross property boundaries pretty quickly and create a neighbor dispute.  Weeds often cause neighbor issues, which is why Ohio has a set of noxious weed laws.  The laws aim to resolve problems around yellow grove bamboo and other species designated as “noxious weeds.”

The noxious weeds list

The Ohio legislature designated shatter cane and Russian thistle as noxious weeds years ago, then granted the Ohio Department of Agriculture (ODA) the authority to determine other noxious weeds that could be prohibited in Ohio.  Since that time, the noxious weed list has grown to include 31 weed species.   Two of the species, yellow grove bamboo and grapevines, are noxious weeds only if not managed in a certain way.  The list includes the following:

  • Shatter Cane
  • Kudzu
  • Russian Thistle
  • Japanese knotweed
  • Johnsongrass
  • Field bindweed
  • Wild parsnip
  • Heart-podded hoary cress
  • Canada thistle
  • Hairy whitetop or ballcress
  • Poison hemlock
  • Perennial sowthistle
  • Cressleaf groundsel
  • Russian knapweed
  • Musk thistle
  • Leafy spurge
  • Purple loosestrife
  • Hedge bindweed
  • Mile-A-Minute Weed
  • Serrated tussock
  • Giant Hogweed
  • Columbus grass
  • Apple of Peru
  • Musk thistle
  • Marestail
  • Forage Kochia
  • Kochia
  • Water Hemp
  • Palmer amaranth
  • Yellow Grove Bamboo, when spread from its original premise of planting and not being maintained
  • Grapevines: when growing in groups of 100 or more and not pruned, sprayed, cultivated, or otherwise maintained for 2 consecutive years

Talking about noxious weeds

Since noxious weeds can be harmful to all, the hope is that all landowners will manage noxious weeds effectively and reduce the possibility that the weeds will invade a neighbor’s property.  But for many reasons, that isn’t always the case.  When it appears that noxious weeds on a neighbor’s property are getting out of hand, first try to address the issue through neighbor communications.  A “friendly” discussion about the weeds might reveal helpful information that can reduce the neighbor conflict.  Maybe the neighbor has recently sprayed the weeds or isn’t aware of the weeds. Maybe the neighbor’s tenant is responsible for managing the land. Or, as is sometimes the case, maybe the suspected plants aren’t actually noxious weeds.  Good communication between the neighbors could bring a quick resolution to the situation.

Agronomic help with noxious weeds

Knowledge and management might be the solution to a noxious weeds problem between neighbors. For assistance identifying and managing noxious weeds, check out OSU’s guide on Identifying Noxious Weeds of Ohio at https://ohiostate.pressbooks.pub/ohionoxiousweeds/ and refer to helpful articles posted on OSU’s Agronomic Crops Network at https://agcrops.osu.edu.

Help with noxious weeds

Knowledge and management might be the solution to a noxious weeds problem between neighbors. For assistance identifying and managing noxious weeds, check out OSU’s guide on Identifying Noxious Weeds of Ohio at https://ohiostate.pressbooks.pub/ohionoxiousweeds/ and refer to helpful articles posted on OSU’s Agronomic Crops Network at https://agcrops.osu.edu.

Legal procedures might be necessary

If communication isn’t helpful or possible, the laws establish procedures for dealing with noxious weeds. Different procedures in the law apply for different weed locations.

  • If the weeds are in the fence row between two properties, a landowner has a right to ask the neighbor to clear the row of weeds within four feet of the line fence.  If the neighbor doesn’t do so within 10 days, the landowner may notify the board of township trustees.  Once notified, the trustees must visit the property and determine whether the fence row should be cleared.  If so, the trustees must hire someone to clean up the fence row.  The costs of the clearing are then assessed on the neighbor’s property taxes.
  • If the weeds are on private land beyond the fence row, a landowner can send written notice of the noxious weeds to the township trustees.  A letter describing the type and location of the weeds, for instance, would serve as written notice.  Once the trustees receive a written notice, they must notify the neighbor to cut or destroy the weeds or alternatively, to show why there is no need for such action.  If the neighbor doesn’t respond to the trustees and take action within 5 days of the notice being given, the trustees must order the weeds to be cut or destroyed.  The cost of destroying the weeds is then assessed on the neighbor’s property taxes.
  • If the neighbor is a railroad, the railroad must cut or destroy noxious weeds along the railway between June 1 and 20, August 1 and 20, and if necessary, September 1 and 20.  If a railroad fails to do so and the township trustees are aware of the problem, the trustees may remove the weeds and recover costs in a civil action against the railroad.  While the law doesn’t state it, a landowner may have to document whether the railroad follows the required cutting schedule and notify the trustees if it does not.
  • If the neighbor is the Ohio Department of Natural Resources or a park owned by the state or a political subdivision, the landowner must provide information about the noxious weeds to the township trustees.  The trustees then notify the county Extension educator, who must meet with a park authority and a representative of the soil and water conservation district within five days to consider ways to deal with the problem.  The Extension educator must report findings and recommendations back to the township trustees, but the law doesn’t require the trustees to take action on the report.  Apparently, the hope is that the problem would be resolved after considering ways to deal with it.

What if the neighbor leases the land?

We mentioned that sometimes a neighbor might not be tending to noxious weeds because it’s actually the responsibility of the neighbor’s tenant under a leasing arrangement, such as a farmland lease or a solar lease.  These types of leases should state which party is responsible for noxious weeds.  Note that the law recognizes the possibility of a leasing situation by requiring the trustee to notify the “owner, lessee, agent, or tenant having charge of the land” when the weeds are on private land and the “owner or tenant” when the weeds are in the fence row.  The “or” in these provisions can be problematic though, as that doesn’t require the township to notify both the neighbor and tenant.  A landowner might need to ask the trustees to communicate with both the neighbor and its tenant so that the parties are both aware and can resolve which is responsible for managing the noxious weeds according to the leasing arrangement. 

For more information about noxious weeds, refer to our law bulletins in the property law library on https://farmoffice.osu.edu.  For assistance identifying and managing noxious weeds, check out OSU’s guide on Identifying Noxious Weeds of Ohio at https://ohiostate.pressbooks.pub/ohionoxiousweeds/ and refer to helpful articles posted on OSU’s Agronomic Crops Network at https://agcrops.osu.edu.

Posted In: Crop Issues, Property
Tags: noxious weeds, Property, neighbor law
Comments: 0
Red barn and wooden fence with anti-solar sign
By: Peggy Kirk Hall, Friday, September 09th, 2022

The siting of renewable energy projects on Ohio farmland is a divisive issue these days, pitting neighbors against neighbors and farmers against farmers.  Some support expanding renewable energy capacity while others oppose losing productive farmland or changing the rural landscape.  A common question arising in this conflict is this: when can a county or township say “no” to a proposed renewable energy development?  Several new laws, old laws, and recent court cases can help answer this question, although the answer is not always clear.

The “public utility exemption” from zoning.  A long-standing provision of Ohio law that limits county and township land use power is the “public utility exemption” from zoning. Ohio Revised Code Sections 303.211(counties) and 519.211 (townships) specifically state that counties and townships have no zoning authority “in respect to the location, erection, construction, reconstruction, change, alteration, maintenance, removal, use, or enlargement of any buildings or structures of any public utilities.” The historical reason for this exemption is to keep local regulations from interfering with the provision of public utility services to Ohio residents.  But what is a “public utility”?  The exemption does not define the term, leaving Ohio courts to determine what is and is not a public utility on a case-by-case basis.  More on that later.

New powers in Senate Bill 52.  Effective in October of 2021, Senate Bill 52 gave new powers to county commissioners over certain renewable energy developments, setting aside the “public utility exemption” in those situations.  The new law states that counties can designate restricted areas where wind and solar development is prohibited and can prohibit an individual proposed wind and solar facility or limit its size.  These new powers, however, apply only to facilities with a single interconnection to the electrical grid and beyond a certain production size.  For solar facilities, that size is 50 MW or more of energy production and for wind facilities, it’s 5 MW or more. Facilities that aren’t connected to the grid or are beneath those amounts are not subject to the new powers granted in S.B. 52.  Additionally, facilities that had reached a certain point in the state approval process aren’t subject to the new law.  Several Ohio counties have already established restricted areas or worked with townships to determine whether the county will approve individual projects as they come forward.

Authority over “small wind farms.”  New wind power development in Ohio a decade ago led to the “small wind farm” provision in Ohio Revised Code Sections 303.213 (counties) and 519.213 (townships).  This law allows counties and townships to use their zoning powers to regulate the location and construction of publicly and privately owned “small wind farms,” regardless of the public utility exemption.  A “small wind farm” is any wind turbine that is not subject to Ohio Power Siting Board jurisdiction, meaning that it produces less than 5 MW of energy.  Some counties and townships have utilized this provision of law to establish setback distances for wind turbines in residential areas.

The “bioenergy” exemptions.  Yet another Ohio law limits county and township zoning authority over bioenergy facilities.  Found in the “agricultural exemption from zoning” statute, Ohio Revised Code Sections 303.21(C) (counties) and 519.21(C) (townships) states that county and township zoning cannot prohibit the use of any land for biodiesel production, biomass energy production, electric or heat energy production, or biologically derived methane gas production if the facility is on land that qualifies as “land devoted exclusively to agricultural use” under Ohio’s Current Agricultural Use Valuation program and if, for biologically derived methane gas, the facility does not produce more than 5 MW or 17.06 million BTUs of energy.  Ohio now has several facilities that fit within this exemption from zoning authority.

Two recent cases examine when a renewable energy facility a “public utility.”  The “public utility exemption” from county and township zoning was at issue in two similar Ohio cases concerning biodigesters, facilities that process manure and other solid wastes into methane gas that is used to generate electricity.  The most recent is Dovetail Energy v. Bath TownshipThe township claimed that the Dovetail biodigester located on farmland in Greene County was an “industrial use” that violated township zoning regulations.  The owners argued that the biodigester was exempt from township zoning under both the “public utility” exemption and the “bioenergy” exemption. 

The case reached the Second District Court of Appeals, which focused a large part of its analysis on the issue of whether the biodigester is a “public utility” that is exempt from township zoning under Ohio Revised Code 519.211.  Relying on earlier cases from the Ohio Supreme Court, the court explained that an entity is a public utility if “the nature of its operation is a matter of public concern” and if “membership is indiscriminately and reasonably made available to the general public” as a public service. 

The court analyzed the “public service” and “public concern” factors for the Dovetail biodigester, examining first whether Dovetail provides a public service, which requires a showing that the facility indiscriminately provides essential goods or services to the public, which has a legal right to demand or receive the goods or services, and that the goods or services can’t be arbitrarily withdrawn.  Because Dovetail generates electricity that is sold into the wholesale energy market and used to provide energy to local utilities and customers and because Dovetail is also required to provide renewable energy credits that it cannot arbitrarily or unreasonable withdraw, the court concluded that the facility is a “public service.”

Factors determining whether Dovetail’s operation is also a matter of “public concern” that the court analyzed included whether Dovetail “serves such a substantial part of the public that its rates, charges and methods of operation become a public concern.” The court looked to Ohio’s incentives for renewable energy development, the lack of competition in the electric grid, the “heavy” regulatory environment for Dovetail, and its payment of public utility taxes as indications that Dovetail and the energy it produces are “public concerns.”  Meeting both the “public service” and “public concern” components, the appeals court agreed with the lower court’s ruling that Dovetail is a public utility and is exempt from Bath Township zoning regulations.

The Dovetail decision echoes an earlier decision in the Fifth Appellate District, Westfield Township v. Emerald Bioenergy, where the appellate court examined a biodigester on farmland in Morrow County and found that the township could not regulate it because it is a “public utility.”  The court cited factors such as Emerald’s provision of electric to the general public through interconnection agreements that distribute the energy to the energy grid, its lack of control over which customers receive or use the energy, its renewable energy credit requirements that can’t be arbitrarily or unreasonably withdrawn, its acceptance of waste from any customer, its governmental regulations and oversight, and its public utility taxes.  The court also noted that it need not address the “bioenergy” exemption because it found the enterprise to be a “public utility.”

Both townships in the Dovetail Energy and Emerald Bioenergy cases requested a review of the decision by the Ohio Supreme Court.  But the Supreme Court decided not to hear either case, although several of the justices dissented from that decision in each case.  Without further review by the Supreme Court, the appellate court decisions stand.

What do these cases mean for solar energy facilities under 50 MW?  Recall that S.B. 52 allows counties to prohibit or restrict solar facilities that are 50 MW or higher, but no other law addresses solar facilities with a single interconnection point to the energy grid that produce less than 50 MW.  Would such a facility be a “public utility” under the public utility exemption?  As with Dovetail and Emerald, a court would have to examine the solar facility and determine whether “the nature of its operation is a matter of public concern” and if “membership is indiscriminately and reasonably made available to the general public” as a public service.  If so, a county or township could not use zoning to prohibit or regulate the location or construction of the solar facility. 

Learn more about renewable energy laws in the Farm Office Energy Law Library at https://farmoffice.osu.edu/our-library/energy-law.

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