The Supreme Court of Ohio today affirmed a Board of Tax Appeals (BTA) decision determining the taxable value of the portion of the natural gas Rover Pipeline that passes through Ohio to be $3.669 billion for the 2019 tax year.

The pipeline cost $6.3 billion to construct and is over 700 miles long, running through portions of eastern Ohio to a location in Defiance County in northwest Ohio before going on to markets across the United States and Canada. The BTA rejected the pipeline company’s claim that the taxable value of the pipeline is only about half as much as the tax commissioner's valuation of $3.669 billion. The Supreme Court unanimously upheld the BTA’s decision.

Writing for the Court, Justice Patrick F. Fischer characterized the dispute as a “battle of appraisals,” a type of case in which the BTA must review competing appraisal evidence. He explained that when assessing competing appraisals to determine tax values, the “BTA is vested with wide discretion in determining the weight to be given to the evidence and the credibility of the witnesses that come before it.”

The BTA ruled that Ohio Tax Commissioner Patricia Harris submitted the best evidence of the pipeline’s taxable value as presented by appraiser Brent Eyre. The opinion stated that unless the record indicates the board’s decision was unreasonable or unlawful, the Court will not disturb it. Justice Fischer wrote that Rover had not shown the board had committed an error that justified overturning the BTA’s decision.

Delays Increased Construction Cost
Rover sought Federal Energy Regulatory Commission (FERC) approval to construct a pipeline. The company estimated it would cost $4.2 billion to build. FERC approved the application in February 2017.

Rover completed the pipeline in November 2018, but the actual cost of construction was $6.3 billion. Abnormally high rainfall caused construction delays and increased costs. While the project area historically received about 37 inches of rain annually, during construction, the area received more than 61 inches of rain, annualized.

The company also encountered an environmental problem that delayed construction and added costs. A Rover contractor released two million gallons of drilling fluid while drilling underneath the Tuscarawas River. The fluid surfaced in wetlands near the river. FERC halted some drilling activities. Regulatory actions by FERC and the Ohio Environmental Protection Agency stalled construction for four to five months.

State Assessed Newly Operating Pipeline
With the pipeline starting operation in late 2018, the Ohio tax commissioner began assessing taxes for the Rover property for the 2019 tax year. Under R.C. 5727.111(D), the taxable property of a pipeline is assessed at 88% of its true value.

The tax commissioner’s review culminated in valuing the Ohio portion of the pipeline at $3.983 billion. Rover proposed that the commissioner use an alternative method to value the property and sought to lower the value based on the delays caused by weather and regulatory actions. The commissioner rejected the proposal, and Rover appealed to the BTA.

At the BTA, Rover presented an appraisal by Robert Reilly. He concluded the taxable value of the Ohio portion of the pipeline is $1.792 billion.

The tax commissioner declined to present evidence using the appraisal method that resulted in her original valuation of $3.983 billion. Instead, she submitted Eyre’s report. Eyre used an appraisal method similar to Reilly’s but came to a different conclusion. He determined the taxable value to be $3.669 billion.

Reilly’s value of the entire 700-mile pipeline was about $3.3 billion, while Eyre concluded the value of the whole pipeline was $5.67 billion.

Pipeline Investment Factored Into BTA Decision
The tax commissioner also presented a report by Bradford Cornell, who addressed the effects of the investment firm Blackstone's acquisition of an ownership interest in the pipeline. In 2017, Blackstone acquired a stake in ET Rover Pipeline, L.L.C., owner of about two-thirds of Rover. Blackstone paid $1.51 billion for a 32.435% indirect ownership interest in Rover.

Cornell estimated the overall pipeline’s value to be $4.66 billion. He described it as the “floor value.” He further concluded the pipeline’s value was probably no more than “around $5 billion.”

The board issued a lengthy decision, finding that Eyre’s appraisal was the best evidence of the value. It remanded the matter to the tax commissioner to assess the pipeline based on Eyre’s appraisal.

The board noted the Blackstone transaction and the actual construction costs, clarifying that while the information was not “conclusive,” it established “guideposts” for a decision. The board was highly critical of Reilly’s appraisal. It reasoned that if Reilly’s $3.3 billion valuation was correct, then Blackstone substantially overpaid for its interest, which the board found implausible because of Blackstone’s dealmaking sophistication.

Supreme Court Analyzed Board’s Decision
Justice Fischer wrote the Court must affirm a BTA decision that is reasonable and lawful. He noted that Rover took issue with several aspects of the BTA’s ruling, including the board’s acceptance of Eyre’s appraisal.

The BTA faulted Eyre for some of his analysis. Rover argued this was grounds for remanding the case to the BTA to independently determine the tax value.

“By Rover’s logic, Eyre apparently had to render a perfect appraisal to justify the board’s adoption of his appraised value. But this court has not held the board to so high a standard,” the opinion stated.

The Court noted that given the complexities of the case, “it is hardly surprising that the board was able to identify blemishes on Eyre’s appraisal.” But finding some issues is not evidence that the board was mistaken in adopting Eyre’s valuation, because “analytical perfection” is not required, the opinion stated.

The Court rejected Rover’s request to remand the case.

2024-0484. Rover Pipeline, LLC v. Harris, Slip Opinion No. 2025-Ohio-2806.

View oral argument video of this case.

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