When is it appropriate to appropriate?
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.