You may have been involved in or known someone that was involved in an eminent domain dispute with a utility company or other state agency. When the government tries to take an individual’s property, emotions are understandably heightened. In Ohio, state agencies and other specific entities – like a public utility company – can appropriate or “take” a person’s property, but only if the taking is necessary and for a public use. If the government or governmental agency does appropriate a landowner’s property, then the landowner is entitled to compensation for the taking.
In the case below, a group of landowners disputed a power company’s ability to appropriate their property and the ability of the power company to assume it is entitled to an appropriation simply because a project for public use was approved by state authorities. The landowners also sought to clarify when a landowner is entitled to recover the costs associated with defending their property interests against an attempted appropriation by the state or state agency.
Ohio Power Company v. Burns, et al.
In 2017, the Ohio Power Board of Directors (“Ohio Power Board”) gave initial approval for a project located in Marietta, Ohio to enhance the electric transmission network (the “Project”). The Project included miles of new transmission lines and required siting, rights of ways, and some property purchases. In 2018 the Ohio Siting Board (“Siting Board”) issued a certificate of environmental compatibility and public need for the Project. In 2019, the Project was given final approval by the Ohio Power Board.
After failed easement negotiations, the Ohio Power Company (Plaintiff) filed petitions for appropriation against several landowners (“Defendants”) to take easements on the Defendants’ property. As required by Ohio law, the trial court held a hearing on the appropriation petitions (the “Appropriation Proceedings”). Plaintiff argued that it currently possesses an easement across the property of each Defendant, but it was seeking to replace the existing easement with a new, wider easement for the Project. Plaintiff claimed that the new easements were necessary for a public good and that the Siting Board recognized the necessity of the Project and of acquiring easements, rights of way, and other interests in property along the new power line.
Defendants, however, responded by saying that the Siting Board declared the Project a necessity, not the appropriations. Further, Defendants argued that the easements sought by Plaintiff were overly broad and that the terms of the proposed easements went beyond the necessity to promote the public use. Lastly, Defendants claimed that when Plaintiff was ordered to remove distribution line rights from its appropriation petition, Plaintiff voluntarily abandoned its appropriation which required the trial court to enter a judgement against Plaintiff for the costs associated with defending against the distribution line rights contained within the proposed easements.
The trial court determined that the Siting Board’s certification of the Project and the testimony presented at the hearing established that the appropriations were necessary under Ohio law. Additionally, the trial court found that even if the Siting Board’s certificate did not create an irrebuttable presumption, the appropriations were still necessary because Plaintiff, as a public utility company, is in the best position to determine what is necessary and what is not. The trial court also held that Plaintiff did not abandon the appropriations simply by removing certain provisions from the petitions. Defendants then appealed to the 4th District Court of Appeals.
The following is brief explanation of the 4th District’s opinion that both agreed and disagreed with the trial court.
Rebuttable and irrebuttable presumption
Normally under Ohio law, a public utility company, like the Plaintiff, has to prove that it has the right to make an appropriation and/or that the appropriation is necessary. Plaintiff can do this by presenting evidence at an appropriation hearing and if the judge is persuaded, then Plaintiff will be allowed to take the property. The important part is that the burden of proof is on the public utility company.
However, there are a few situations where the law assumes that a public utility company or other state agency has the right to make an appropriation. Further, those presumptions are either rebuttable or irrebuttable. If the state agency has a rebuttable presumption, then the law will assume that agency has the right to make the appropriation or that the appropriation is necessary unless another party, like a landowner, can prove otherwise. In these situations, the burden of proof switches from the state agency to the landowner to prove that the state agency does not have the right to an appropriation or that the appropriation is not necessary. A state agency gets a rebuttable presumption when:
- A resolution or ordinance of the governing or controlling body, council, or board of the agency declares the necessity for the appropriation; or
- The public utility company presents evidence of the necessity for the appropriation.
A public utility company can also get an irrebuttable presumption about its right to an appropriation or the necessity of an appropriation. This means that no evidence can be presented to prove that the state agency does not have the right to an appropriation or that the appropriation is not necessary. A state agency receives an irrebuttable presumption when it receives approval by a state or federal regulatory authority of an appropriation.
In this case, the Defendants claimed that the Siting Board, which is a state regulatory authority, and the Ohio Power Board, the board of the agency, approved the project, not the appropriation. Therefore, Defendants argued that the rebuttable or irrebuttable presumptions did not apply to Plaintiff. Plaintiff on the other hand thought that both the rebuttable presumption and the irrebuttable presumption applied, and because the irrebuttable presumption applied, Plaintiff argued that the trial court did not need to review the easements. Plaintiff maintained judicial review of the easements was not necessary because a jury would decide the scope of the easement at a compensation hearing for the taking.
The trial court agreed with the Plaintiff and found that Plaintiff was entitled to an irrebuttable presumption of the necessity for the appropriation because of the Siting Board certification. Additionally, the trial court also found that Plaintiff was entitled to a rebuttable presumption because the Ohio Power Board declared the necessity for the appropriation of property interests for the Project.
However, the appeals court disagreed. The 4th District noted that the Plaintiff’s argument ultimately allows it to “take whatever property rights it wants. . .” and the only constraint on Plaintiff’s power to take would be how much a jury determines Plaintiff must pay for the taking. The appellate court found Defendants’ argument to be persuasive. The appellate court held that because the Siting Board and the Ohio Power Board only approved the project and not the specific appropriations at issue in this case, Plaintiff was not entitled to either a rebuttable or irrebuttable presumption. Although the Ohio Power Board recognized “the necessity of acquiring easements or rights of way in connection with” the project, the board only recognized such a necessity in a broad sense. The appellate court held that specific appropriations must be reviewed and approved before a state agency is entitled to the rebuttable or irrebuttable presumption under Ohio law.
The Defendants also argued that the trial court erred when it did not review the proposed easements. The trial court found that the Plaintiff is in the best position to determine the necessity of the easements. The trial court, therefore, did not review the proposed easments and defered to the expertise of the Plaintiff to determine the legality of the easements. Additionally, the court deferred any issues regarding the scope of the easements to a jury at the future compensation hearing.
The court of appeals disagreed with the trial court and held that the trial court should have reviewed the easements and should have made a separate necessity finding as to each one. The 4th District determined that courts are required to engage in the review of easements under Ohio law to make sure that (1) the state is not taking more property than necessary; and that the state is acting (2) fairly; (3) without bad faith; (4) without pretext; (5) without discrimination; and (6) without improper purpose. The appeals court reasoned that a trial court’s role is a critical constitutional check on the state’s power. The appellate court noted that it is a trial court’s duty to determine the extent of the taking and a jury’s duty to determine the amount of damages owed to a landowner as a result of the taking.
Another issue in this case was whether Plaintiff “abandoned” its appropriation for distribution lines. If Plaintiff was found to have abandoned its appropriation, then Defendants would be entitled to fees and other costs associated with defending their property interest.
In its initial appropriation petition, Plaintiff included an appropriation for distribution lines across the Defendants’ properties. However, during the appropriation hearing, Plaintiff conceded that it did not need an appropriation for distribution lines and only included the distribution line rights in its appropriation petition just in case it was needed. Plaintiffs admitted that their proposed easement was broader in scope than necessary, and the trial court ordered that Plaintiff remove the distribution line rights from its petitions. However, the trial court did not find that Plaintiff abandoned its appropriation for distribution lines and did not award Defendants any fees and costs for the alleged abandonment.
On appeal, Defendants argued that the trial court was wrong for not entering a judgment against the Plaintiff for fees and costs associated with defending against the appropriation for distribution lines. Plaintiff claimed that it did not abandon its petition because it essentially amended its petition, it didn’t drop its petition entirely. The trial court agreed with Plaintiff, reasoning that removing the word “distribution” from Plaintiff’s petition did not amount to an abandonment.
The court of appeals agreed with the trial court that Plaintiff did not abandon its appropriation petition but still found that Defendants were entitled to recover costs associated with defending their property interests. The 4th district found three scenarios when a landowner would be entitled to the costs associated with defending its property interest against a taking. Those three scenarios are:
- When an agency, like a public utilities company, voluntarily abandons the appropriation proceedings;
- When a trial court determines that the appropriation is not necessary or not for public use; and
- When a trial court determines, at any time during the appropriation proceedings, that the agency is not entitled to appropriate “particular property.”
Defendants argued that the court ordering Plaintiff to remove the distribution line rights from its petition constituted a voluntary abandonment under scenario 1. However, the 4th District found that Plaintiff could have only voluntarily abandoned the appropriation proceedings before the trial court’s order. The appellate court reasoned that the voluntary part of scenario 1 is absent once a court orders a party to remove an appropriation from its petition. The 4th District also found that scenario 2 did not apply to this case either. According to the appellate court, the trial court must dismiss the entire matter because the appropriations are not necessary or not for public use. Because that did not happen in this case, the 4th District determined that Defendants cannot recover costs under scenario 2.
Under scenario 3, however, the 4th District did find that Defendants were entitled to costs for defending against the distribution line rights in Plaintiff’s petition. In this scenario, an agency can bring appropriation proceedings for various parcels, property rights, or other property interests. Understanding that different rights can be disputed, the appellate court found that if a court determines an agency is not entitled to appropriate “particular property”, or in other words take a particular property interest, then the agency must reimburse the landowner for its costs and fees associated with defending that property interest. The 4th District determined that because the trial court ordered the Plaintiff to remove the distribution line rights from its petition, the trial court determined that the Plaintiff is not entitled to appropriate the “particular property” – or in this case, the distribution line rights. Therefore, the 4th District determined that Plaintiff must be ordered to pay Defendants for the costs associated with defending against the distribution line rights.
Although this ruling doesn’t dramatically change Ohio law, it helps clarify the requirements and procedures that must be followed when a state agency petitions for an appropriation. This ruling will be closely reviewed by public utility companies and other state agencies to ensure that they have all the required approvals before filing any petition for future appropriations. View the 4th District’s opinion for more details.
Did you know that the “wise old owl” saying is a myth? Generally speaking, owls are no wiser than other birds of prey. In fact, other bird species like crows and parrots have shown greater cognitive abilities than the owl. An owl’s anatomy also helps dispel the myth because most of the space on an owl’s head is occupied by their large eyes, leaving little room for a brain.
This week’s Ag Law Harvest brings you EPA bans, Ohio case law, USDA announcements, and federal case law which could make your head spin almost as far as an owl’s.
EPA banning use of chlorpyrifos on food crops. The EPA announced that it will stop the use of the pesticide chlorpyrifos on all food to better protect producers and consumers. In its final rule released on Wednesday, the EPA is revoking all “tolerances” for chlorpyrifos. Additionally, the EPA will issue a Notice of Intent to Cancel under the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”) to cancel all registered food uses of chlorpyrifos. Chlorpyrifos is an insecticide used for a variety of agricultural uses, including soybeans, fruit and nut trees, broccoli, cauliflower, and other row crops, in addition to non-food uses. The EPA’s announcement comes in response to the Ninth Circuit’s order directing the EPA to issue a final rule in response to a petition filed by opponents to the use of chlorpyrifos. The petition requested that the EPA revoke all chlorpyrifos tolerances because those tolerances were not safe, particularly because of the potential negative effects the insecticide has on children. For more information about chlorpyrifos and the EPA’s final rule, visit the EPA’s website.
Trusts aren’t to be used as shields. An Ohio appeals court recently reinforced the concept that under Ohio law, trusts are not be used as a way to shield a person’s assets from creditors. Recently, a plaintiff filed a lawsuit against a bank alleging breach of contract and conversion, among other things. Plaintiff, an attorney and real estate developer, claimed that the bank removed money from his personal account and a trust account in violation of Ohio law and the terms of the loan agreement between the parties. Prior to the lawsuit, plaintiff established a revocable trust for estate planning purposes and to acquire and develop real estate. This dispute arose from a $200,000 loan from the bank to the plaintiff to help establish a restaurant. A provision of the loan agreement, known as the “Right to Setoff” provision, allowed the bank to “setoff” or effectively garnish all accounts the plaintiff had with the bank. The setoff provision explicitly prohibited any setoff from any IRA or trust accounts “for which setoff would be prohibited by law.” Plaintiff made all monthly payments but failed to make the final balloon payment on the loan. Plaintiff argued that the bank broke the loan contract and violated Ohio law by taking funds from the trust account to pay off the remaining balance of the loan. The court disagreed. The court noted that under Ohio law, a settlor’s property in a revocable trust is subject to the claims of the settlor’s creditors. A settlor is a person who creates or contributes property to a trust. In this case, plaintiff was the creator, settlor, and sole beneficiary of the revocable trust. Because of that, the court concluded the bank did not violate Ohio law when using the trust account to setoff the balance of the loan. Additionally, the court found that the bank did not violate the terms of the loan agreement because a setoff from the trust account was not prohibited by law. The court noted that Ohio law did not intend to allow a settlor who is also a beneficiary of the trust to use a trust as a “shield” against creditors. Although trusts can be a useful estate planning tool, there are limits to what a trust can do, as evidenced by this case.
Renewable fuel supporters file appeal on E15 summer sales. Corn farmers have joined forces with the biofuel industry (“Petitioners”) to ask the D.C. Circuit Court of Appeals for a new hearing on a ruling that struck down the EPA’s 2019 decision to allow year-round E15 sales. Earlier this year, the same D.C. Circuit Court of Appeals issued an opinion that ruled the legislative text in the law supporting the biofuel mandate does not support the Trump administration’s regulatory waiver that allowed E15 to be sold during the summer months. In their petition, Petitioners argue that the D.C. Circuit Court made “significant legal errors.” Petitioners contend that the court should rehear the case because the intent behind the nation’s biofuel mandate is better served by the sale of E15 through the summer months because it is less volatile, has less evaporative emissions, and is overall better for the environment than other fuel sources. Petitioners also believe the court’s original decision deprives American drivers the choice of lower carbon emitting options at the gas pump.
Monsanto asks Supreme Court to review Ninth Circuit’s Roundup Decision. In its petition to the Supreme Court of the United States Monsanto Company (“Monsanto”) asked the Supreme Court to review the $25 million decision rendered by the Ninth Circuit Court of Appeals. In that decision, the Ninth Circuit held that the Federal Insecticide Fungicide and Rodenticide Act (“FIFRA”) did not preempt, or otherwise prevent, the plaintiff from raising California failure-to-warn claims on Roundup products and allowed plaintiff to introduce expert testimony that glyphosate causes cancer in humans. In trial, the plaintiff argued that Monsanto violated California’s labeling requirements by not including a warning on the Roundup label that glyphosate, which is found in Roundup, causes cancer. Monsanto argues that FIFRA expressly preempts any state law that imposes a different labeling or packaging requirement. Under FIFRA, Monsanto argues that the EPA did not require Monsanto to include a cancer warning on its Roundup label. Therefore, Monsanto maintains, that because California law differed from FIFRA, Monsanto was not required to follow California law when it came to labeling its Roundup product. Secondly, the Ninth Circuit allowed plaintiff to present expert evidence that glyphosate could cause non-Hodgkin’s lymphoma in the general public and that glyphosate caused the plaintiff’s lymphoma. Monsanto contends that the lower courts have distorted established precedent by allowing the expert testimony because the testimony is not based on generally accepted scientific principles and the scientific community has consistently found that glyphosate does not cause cancer in humans.
USDA working to protect nation’s dairy industry. The USDA’s Agricultural Marketing Service (“AMS”) has struck a deal with the European Union (“EU”) to satisfy the EU’s new import requirements on U.S. dairy. The EU will require new health certificates for U.S. dairy products exported to the EU to verify that the U.S. milk used for products exported to the EU is sourced from establishments regulated under the Grade “A” Pasteurized Milk Ordinance or the USDA AMS Milk for Manufacturing Purposes. Officials representing the U.S. Dairy Export Council and International Dairy Foods Association claim that the deal will allow U.S. producers to comply with the EU’s mandates while also satisfying the concerns within the American dairy industry. The deal pushes back the EU’s deadline for new health certificates to January 15, 2022, to allow U.S. producers and exporters enough time to bring their products into compliance. The USDA also announcedthat it is providing around $350 million to compensate dairy producers who lost revenue because of market disruptions due to the COVID-19 pandemic and a change to the federal pricing formula under the 2018 farm bill. Additional details are available at the AMS Dairy Program website.
Tale as old as time. An Ohio appeals court recently decided a dispute between neighbors about a driveway easement. The driveway in dispute is shared by both neighbors to access their detached garages. Defendants used the driveway to access their garage and then the driveway extends past the Defendants’ garage onto Plaintiff’s property and ends at Plaintiff’s garage. The dispute arose after Defendants built a parking pad behind their garage and used parts of the driveway they never used before to access the parking pad. The original easement to the driveway was granted by very broad and general language in a 1918 deed, when the property was divided into two separate parcels. In 1997, a Perpetual Easement and Maintenance Agreement (“Agreement”) was entered into by the two previous property owners. The Agreement was much more specific than the 1918 deed and specifically showed how far the easement ran and what portions of the driveway could be used by both parties. The 1997 Agreement did not allow for Defendants to use the portion of the driveway necessary to access their parking pad. Plaintiffs argue that the 1997 Agreement controls the extent of the easement, whereas Defendants argue that the broad general language in the 1918 deed grants them authority to use the whole length of the driveway. The Court found the more specific 1997 Agreement to be controlling and ruled in favor of the Plaintiffs. The Court reasoned that the 1918 deed creates an ambiguity as to the extent of the easement and there is no way of knowing what the original driveway looked like or how it was used. The Court concluded that the 1997 Agreement does not contradict or invalidate the 1918 deed, rather the 1997 Agreement puts specific parameters on the existing easement and does not violate any Ohio law. The Defendants were found liable for trespass onto the Plaintiffs’ property and is expected to pay $27,500 in damages. The lesson to be learned from all of this? Make sure your easements are as specific and detailed as possible to ensure that all parties are in compliance with the law.