Ohio High Court Upholds $3.67 Billion Valuation for State’s Portion of 700-Mile Rover Pipeline

The ruling highlights the high stakes of pipeline taxation and underscores how construction overruns and environmental delays factored into the dispute.

(P&GJ) — The Supreme Court of Ohio has upheld a $3.67 billion property tax assessment on the Rover natural gas pipeline, a decision that underscores how regulatory and legal rulings can significantly impact large-scale midstream infrastructure, according to Court News Ohio.

The 700-mile pipeline, which cost $6.3 billion to construct and moves natural gas from eastern Ohio through Defiance County to markets across the U.S. and Canada, was valued at $3.669 billion for the 2019 tax year. Rover argued the taxable value should be closer to $1.79 billion, but the Ohio Board of Tax Appeals (BTA) found the state’s appraisal more credible.

Justice Patrick F. Fischer, writing for a unanimous court, called the case a “battle of appraisals,” according to Court News Ohio. The ruling affirmed the BTA’s broad discretion in weighing expert testimony and adopting valuations it deems most reliable.

The state tax commissioner’s evidence, including an appraisal by Brent Eyre, supported the $3.67 billion valuation. Rover’s expert, Robert Reilly, had pegged the value at less than half that figure. The board also pointed to Blackstone’s $1.51 billion purchase of a one-third ownership stake in Rover in 2017 as further evidence that the pipeline’s value far exceeded Rover’s claim.

Rover faced added costs during construction, including heavy rainfall that caused delays and an incident in which drilling fluid spilled into wetlands near the Tuscarawas River. Still, the BTA concluded those factors did not warrant lowering the taxable value.

In affirming the decision, the Ohio Supreme Court noted that “analytical perfection” is not required in complex appraisals and that Rover had not shown the BTA acted unlawfully or unreasonably, according to Court News Ohio.