Energy is a hot topic at the statehouse these days. The Ohio General Assembly is reviewing several proposals dealing with energy sources, including solar and wind facilities, oil, gas, and gas pipelines. The proposals raise a critical question about where control over energy production activities should lie: with the state or with local communities? The proposals offer contrasting views on the answer to that question.
Solar and wind projects. We reported in March that companion bills H.B. 118 and S.B. 52 were on hold due to conflicts with the proposals, which would have allowed citizens to use the referendum process to reject proposed large scale wind and solar energy developments in their communities. On May 12, the bill sponsors offered a substitute bill to the House Public Utilities Committee. The new approach in the substitute bill would allow a township to adopt a resolution designating all or parts of the township as “energy development districts.” Doing so would allow wind and solar facilities to be constructed within the designated district(s) and would prevent the Ohio Power Siting Board from approving any projects that are not within a designated district. The residents in a township, however, would have the right to petition an energy development district designation and submit it to a vote by township residents. Sponsor Sen. Rob McColley (R-Napoleon) explained that the new approach would allow a township to let energy developers know “up front” that the community is “open for business.” The committee will hear responses to the substitute bill in additional hearings, not yet scheduled.
Fossil fuel and gas pipelines. A proposal regarding energy generation from fossil fuels and gas pipelines takes an opposite approach on local control. H.B. 192, sponsored by Rep. Al Cutrona (R-Canfield) would prohibit counties, townships, and municipal corporations from prohibiting or limited the use of fossil fuels for electricity generation and the construction or use of a pipeline to transport oil or gas. About a dozen opponents testified against the bill at its third hearing before the House Energy and Natural Resources last week, with most arguing that the proposal removes rights of local communities to control their energy sources and violates the home rule authority for municipalities provided in Ohio’s Constitution. The bill is not yet scheduled for an additional committee hearing.
Natural gas. A bill that guarantees access to natural gas passed the House of Representatives on May 6, largely along party lines. H.B. 201, sponsored by Rep. Jason Stephens (R-Kitts Hill), guarantees that every person has a right to obtain any available distribution service or competitive retail natural gas service from gas suppliers, and bars a political subdivision from enacting laws that would limit, prevent, or prohibit a consumer within its boundaries from using distribution services, retail natural gas service, or propane. Opponents argue that the bill violates home rule authority and is unnecessary, since no community in Ohio has ever banned the use of natural gas. The bill was referred to the Senate Energy and Public Utilities Committee on May 12.
We'll keep you posted on the progress of these bills as the Ohio General Assembly continues to deal with the question of local versus state control of energy production and distribution in Ohio.
Longstanding complaints against Rover Pipeline's environmental practices while constructing an interstate natural gas pipeline across Ohio recently culminated in a lawsuit against the company. Attorney General Mike Dewine filed the suit in Stark County on behalf of the Ohio EPA, alleging that Rover illegally discharged drilling fluids, sediment-laden storm water and several million gallons of drilling fluids into Ohio waters, including wetlands in Stark County. The state seeks a court order requiring Rover to apply for state permits, comply with environmental plans approved and ordered by the Ohio EPA, and pay civil penalties of $10,000 per day for each violation.
To read more about the state's claims visit this post by our partner, the National Agricultural Law Center.
Written by Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program
Several pipeline projects are crisscrossing the state. While some landowners are just seeing equipment and workers show up on their property, others are seeing pipelines be buried and the land being reclaimed. Some Ohio landowners question whether pipelines on their property and reclamation of the land are being carried out properly.
Safety Issues Related to Construction of Pipelines
In certain circumstances, landowners with completed pipelines on their property can contact the Public Utilities Commission of Ohio (PUCO) with their concerns. PUCO has the authority to oversee safety issues on completed pipelines in Ohio. If a landowner is concerned that an existing pipeline on their property has a legitimate safety issue, that landowner should contact PUCO to report suspected safety issues. PUCO inspectors may issue a noncompliance letter to pipeline companies, if a violation is discovered.
If the landowner specifically suspects that the pipeline company is not following recommended standards and construction specifications, local Soil and Water Conservation Districts or the Ohio Department of Agriculture (ODA) may be able to assist. By law ODA must cooperate with other agencies to protect the agricultural status of rural lands adjacent to projects such as pipelines. ODA publishes model pipeline standard and construction specifications intended to limit the impact of construction of a pipeline on agricultural productivity.
Contract Disagreement Issues (Non-Safety Issues)
If a landowner has an issue that is not related to safety, that issue may be addressed in the easement agreement between the landowner and the pipeline company. A pipeline easement is a contract. Both parties agree to uphold their obligations under the contract. Essentially, the landowner agrees to provide subsurface land and access rights to a pipeline company in return for monetary compensation.
Of course, an easement is much more complicated than that. As part of this contractual relationship, a landowner has the right to request that the pipeline company uphold their duties under the contract. If a landowner doesn’t believe that a pipeline company is following the terms of an easement, the landowner has the right to enforce the agreement. While the landowner may seek an attorney to do this, it may be best to work with the pipeline company first.
Landowners should consider keeping detailed notes of issues as they arise. For example, a landowner may wish to take written notes on and photographs of the property after noticing a construction issue. This may be helpful in presenting the issue to the pipeline company. It may be cheaper and faster to raise the issue with the pipeline company first, before speaking with an attorney. However, if a landowner’s complaints aren’t resolved in a timely manner after speaking with the company, the landowner will want to speak with an attorney to enforce the contract.
What to Remember When Speaking with a Pipeline Company Representative
As a practical note, it is important for a landowner to realize that the workers on a pipeline might not be from the pipeline company itself. For example, if a landowner has an issue with the way that the easement is re-soiled and re-planted, it could be a third party that did the work. Landowner’s should re-read their easement to ensure that sub-contracting is allowed. When a landowner calls a company, he or she should realize that the company may not have done the work, but rather a subcontractor completed the work. Therefore, the landowner should fully describe the issue to the pipeline company so that the company understands the issue. Any evidence, such as photographs or written notes may be very helpful in resolving an issue with the pipeline company.
It is always best to identify potential issues early. Landowners may want to check the progress of pipeline construction on their property as it occurs. If there is an issue, landowners should promptly contact the company. Landowners should check their easement agreement to see if the easement outlines a process to dispute terms of the agreement.
If the contract does not outline a process to dispute terms of the agreement, it would be best for landowners to speak with the construction foreman first, then moving up the management chain if the company doesn’t react favorably. If the company and the landowner can’t come to a resolution, the landowner may need an attorney at some point.
Reclamation of the Land
After a pipeline is buried, the soil and the surface of the land is ideally placed back in its original condition. This process is sometimes referred to as reclamation. The pipeline easement agreement between a landowner and a pipeline company usually discusses how this process will be completed. Landowners and pipeline companies often agree beforehand how the land will be reclaimed after the pipeline is constructed. Pipelines may disturb trees, soil, and waterways during the construction process. These disturbances may impact crop yields and grazing habits in future years. For this reason, landowners may wish to carefully monitor the reclamation process and enforce the terms of the easement.
Living with a Pipeline Easement
When landowners have concerns or questions regarding a pipeline on their property, the best place to start is the pipeline easement. Landowners may have recently signed an easement, or landowners may be subject to a pre-existing easement signed by a previous owner of the property. Current landowners are subject to pre-existing easements, because easements “run with the land.” Old easements don’t typically expire, unless the original easement language provides for extinguishment of the easement under certain circumstances (for example, abandonment the easement).
Pipelines are a common tool for the transportation of natural resources. Many Ohio landowners have pipelines crisscrossing their property. Landowners should raise any pipeline safety or construction issues with the appropriate state agency, and any contractual issues should be brought to the pipeline company. As always, a landowner should pay careful attention to the language of the pipeline easement in determining how to approach a potential problem.
More information on pipeline easements is here.
Written by: Chris Hogan, Law Fellow, OSU Agricultural & Resource Law Program
Several major pipeline projects, which plan to crisscross the state, are in the final stages of preparation. As part of the planning process for a project, pipeline builders plot the path that the pipeline will travel across the state. That path inevitably crosses private landowners’ property. Some landowners may feel overwhelmed trying to understand the rights of private pipeline companies to cross private property in Ohio. The frequently asked questions discussed below should help answer some of the common questions about pipeline projects in Ohio.
Can a pipeline company come on to my property to conduct a survey?
Yes. Prior to building a pipeline, pipeline companies must select a route where the pipeline is to be constructed. A pipeline project usually crosses private property along a proposed route. When a pipeline must cross private property along the project’s route, the pipeline company will ask the landowner for an easement that allows for pipeline construction on the property. However, even before signing an easement, a survey of the property may be necessary to determine the feasibility of constructing a pipeline on the property. Therefore, a pipeline company may need to enter a landowner’s private property to conduct a survey.
In Ohio, the law allows private companies that are organized “for transporting natural or artificial gas, petroleum, coal or its derivatives . . . through tubing, pipes or conduits” to enter upon private land to examine or survey for pipelines. This means that a pipeline company organized for these specific purposes does have the right in Ohio to enter onto a landowner’s property to conduct a private survey for the purpose of pipeline construction.
A pipeline company is telling me that they might use Eminent Domain to acquire my property. Is that legal?
Most likely, yes. A pipeline company may negotiate an easement with landowners which compensates landowners in exchange for the right to build a pipeline. However, landowners may not want to give a pipeline company the right to cross their property. In that scenario, pipeline companies have the option of crossing a landowner’s property by using eminent domain. Eminent domain is the taking of private property for public purposes with compensation.
In Ohio, the same law that allows for companies that are organized “for transporting natural or artificial gas, petroleum, coal or its derivatives . . . through tubing, pipes or conduits” to enter upon private land for survey also allows those same companies to use eminent domain to take private land. The law states that a company organized for the above purpose “may appropriate so much of such land, or any right or interest [to the land], as is deemed necessary for the laying down or building of pipes . . .” This suggests that pipeline companies have the power of eminent domain in Ohio.
Some argue that the law only grants eminent domain rights for transporting gas, and does not extend the right of eminent domain for the transport of gas derivatives such as ethane. While there is not strong legal support for this argument, it is under litigation in Ohio courts.
To use eminent domain, the pipeline company must prove that the landowner and the company were not able to reach an agreement about granting a pipeline easement and that the taking of the pipeline easement is “necessary.” A pipeline company must establish that the taking of property will serve a “public use.” Ohio courts have noted that the term public use is flexible. Accordingly, Ohio courts have held that private pipelines are a public use if those pipelines provide an economic benefit to Ohio. After establishing necessity and public use, the pipeline company must follow the procedures for eminent domain in Ohio Revised Code Chapter 163.
For an interstate pipeline that runs between Ohio and another state, federal law could allow a company to use eminent domain to obtain land from unwilling landowners. Federal law states that a company may acquire property rights for a gas pipeline if the company has obtained a Certificate of Public Convenience and Necessity from the Federal Energy Regulatory Commission and the company and landowner have not been able to agree on compensation for the pipeline easement. See 15 USC §717(F).
What about the pipeline cases that are in court right now, do those affect my rights?
Ohio landowners have probably heard about several high-profile pipeline projects that are planning to cut across the state. Some landowners have challenged the construction of these pipeline projects on their property. These landowners are challenging the right of the pipeline companies to use eminent domain to acquire an easement on their property. Two pipeline projects in Ohio are of particular interest: Kinder Morgan’s Utopia Project and Rover Pipeline LLC.
A court in Wood County, Ohio decided in 2016 that Kinder Morgan’s Utopia Project, which plans to run across Ohio and into Canada, did not have eminent domain authority. The court concluded that the pipeline did not “serve the public of the State of Ohio or any public in the United States.” The court based its conclusion on the fact that Utopia did not provide a benefit to Ohio. However, Kinder Morgan quickly appealed that case to Ohio’s Sixth Circuit Court of Appeals. Therefore, this opinion is on hold while a higher court decides whether it agrees with the lower court’s interpretation of the eminent domain law.
A second high-profile pipeline case involves the right of Rover Pipeline LLC to use eminent domain for an interstate pipeline project. The Federal Energy Regulatory Commission issued this pipeline project a certificate of public convenience and necessity on February 2, 2017. As a result, Rover Pipeline LLC is moving forward with construction on landowners’ property, because a federal court found that the pipeline company has eminent domain authority.
So how do these court cases affect landowners? First, landowners should be aware that other pipeline projects in Ohio likely have eminent domain authority, if they meet the requirements for eminent domain described by Ohio law. Second, landowners should be aware that that the pipeline case that began in Wood County and is currently being appealed is still pending. It is important to note that this case is reviewing the Utopia Project’s right to use eminent domain in Ohio. Therefore, this does not mean that all pipeline companies in Ohio no longer have the right to use eminent domain to acquire private property in Ohio. Instead, this case will determine the fate of that particular pipeline project and whether or not that project has the right to use eminent domain to acquire an easement. In the meantime, pipeline companies continue to have the right to use eminent domain in Ohio.
More information on pipelines in Ohio and resources for landowners considering signing an easement is available here.