IN THE SUPREME COURT OF OHIO
Sunoco Pipeline, L.P. :
: Case No. 2016-1486
Plaintiff-Appellee, :
: On Appeal from the Harrison County
vs. : Court of Appeals, Seventh Appellate
: District
Carol A. Teter, Trustee, et al. :
: Court of Appeals Case Nos.
Defendants-Appellants. : 16 HA 0002 and 16 HA 0005
MEMORANDUM IN SUPPORT OF JURISDICTION
OF DEFENDANT-APPELLANT CAROL A. TETER, TRUSTEE OF THE CAROL A.
TETER REVOCABLE LIVING TRUST
Nicholas I. Andersen (0077732) Gregory D. Brunton (0061722)
(COUNSEL OF RECORD) (COUNSEL OF RECORD)
Eric R. McLoughlin (0082167) Daniel J. Hyzak (0091298)
Jessica L. Sohner (0089232) Bruce A. Moore (0093334)
ARENSTEIN & ANDERSEN CO., LPA REMINGER CO., LPA
5131 Post Rd., Ste 350 200 Civic Dr., Ste 800
Dublin, OH 43017 Columbus, OH 43215
P: (614) 602-6550 P: (614) 228-1311
F: (866) 309-0892 F: (614) 232-2410
[email protected] [email protected]
[email protected] [email protected]
[email protected] [email protected]
Counsel for Defendant-Appellant, Counsel for Plaintiff-Appellee,
Carol A. Teter, Trustee Sunoco Pipeline, L.P.
of the Carol A. Teter
Revocable Living Trust
(Additional counsel appear on following page)
Supreme Court of Ohio Clerk of Court - Filed November 14, 2016 - Case No. 2016-1486
Jordan S. Berman (0093075) C. Craig Woods (0010732)
(COUNSEL OF RECORD) (COUNSEL OF RECORD)
Assistant Attorney General Andrew H. King (0092539)
Constitutional Offices Section SQUIRE PATTON BOOGS (US) LLP
30 E. Broad St., 16th
Fl. 2000 Huntington Center
Columbus, OH 43215 41 S. High St.
P: (614) 466-2872 Columbus, OH 43215
F: (614) 728-7592 P: (614) 365-2700
[email protected] F: (614) 265-2499
Counsel for Ohio Attorney General, [email protected]
Mike DeWine [email protected]
Counsel for Defendant-Appellee, Enterprise
TE Products Pipeline Company, LLC
Chad A. Endsley (0080648) James B. Hadden (0059315)
(COUNSEL OF RECORD) (COUNSEL OF RECORD)
Leah F. Curtis (0086257) Murray Murphy Moul + Basil LLP
Amy M. Milam (0082375) 1114 Dublin Rd.
Ohio Farm Bureau Federation, Inc. Columbus, OH 43215
280 N. High St., 6th
Floor T: (614) 488-0400
P.O. Box 182383 [email protected]
Columbus, OH 43218 Counsel for Association of Oil Pipe Lines,
T: (614) 246-8258 American Petroleum Institute, and
F: (614) 246-8656 Ohio Chemistry Technology Council,
[email protected] Amici Curiae in Support of Appellee
Counsel for Ohio Farm Bureau Federation, Inc.
and Harrison County Farm Bureau, Inc.,
Amici Curiae in Support of Appellant
IN THE SUPREME COURT OF OHIO
Sunoco Pipeline, L.P. :
: Case No. 2016-1486
Plaintiff-Appellee, :
: On Appeal from the Harrison County
vs. : Court of Appeals, Seventh Appellate
: District
Carol A. Teter, Trustee, et al. :
: Court of Appeals Case Nos.
Defendants-Appellants. : 16 HA 0002 and 16 HA 0005
MEMORANDUM IN SUPPORT OF JURISDICTION
OF DEFENDANT-APPELLANT CAROL A. TETER, TRUSTEE OF THE CAROL A.
TETER REVOCABLE LIVING TRUST
TABLE OF CONTENTS
EXPLANATION OF WHY THIS CASE IS A CASE OF PUBLIC OR GREAT GENERAL
INTEREST AND INVOLVES SUBSTANTIAL CONSTITUTIONAL QUESTIONS ................ 1
STATEMENT OF THE CASE AND FACTS ............................................................................... 4
ARGUMENT IN SUPPORT OF PROPOSITIONS OF LAW....................................................... 6
Proposition of Law Number 1 – The term “petroleum” does not include the finished product
natural gas liquids propane and butane for purposes of R.C. Chap. 1723. .............................. 6
Proposition of Law Number 2 – When considering takings for private pipeline projects
initiated by private parties, the Ohio Constitution forbids Ohio courts from relying solely
upon speculation and potential economic benefits to determine public use. ........................... 9
Proposition of Law Number 3 – The necessity of a taking cannot be established by the
determination solely of a private entity that the property and the project will be “reasonably
convenient and useful.” ......................................................................................................... 12
Proposition of Law Number 4 – A private party is entitled to receive a stay of a judgment in
an appropriation action as a matter of right upon the posting of a bond in the amount
determined by the court. ........................................................................................................ 15
CONCLUSION ............................................................................................................................. 15
1
EXPLANATION OF WHY THIS CASE IS A CASE OF PUBLIC OR GREAT GENERAL
INTEREST AND INVOLVES SUBSTANTIAL CONSTITUTIONAL QUESTIONS
This case presents a compelling legal issue of first impression for this court that is the
result of the convergence of the following events: (1) this court’s unequivocal holding that the
public use requirement of Article 1, Section 19 of the Ohio Constitution is not satisfied by the
potential economic benefits from an appropriation alone in Norwood v. Horney, 110 Ohio St.3d
353, 853 N.E.2d 1115, 2006-Ohio-3799, paragraph one of syllabus; (2) the recent advances in
the oil and gas extraction technology that have allowed for the rapid expansion of the oil and gas
industry in Eastern Ohio; and (3) the General Assembly’s passage of SB 315 in 2012, which
excludes “finished product natural gas liquids”1 pipelines from the public oversight of the Public
Utility Commission of Ohio (“PUCO”) and the Ohio Power Siting Board (“OPSB”), and thereby
invites private pipeline companies to appropriate private property without the impact or necessity
of the appropriation being determined by an accountable public agency. R.C. 4905.03(F) and
4906.01(B)(1)(g).
In this case, the lower courts held that Plaintiff-Appellee Sunoco Pipeline, L.P.
(“Sunoco”) has the right to appropriate easements from Defendant-Appellant Carol A. Teter,
Trustee of the Carol A. Teter Revocable Living Trust (“Teter”), for Sunoco’s Mariner East 2
Pipeline (the “Pipeline”), pursuant to R.C. Chaps. 163 and 1723. To reach this result, the courts
held that the finished product natural gas liquids propane and butane that Sunoco intends to
transport through the Pipeline are “petroleum” and that the Pipeline will serve a “public use.”
1 R.C. 4906.01(J) defines “finished product natural gas liquids” as “an individual finished
product produced by a natural gas liquids fractionation plant as a liquid * * *. Those products
include ethane, propane, iso-butane, normal butane and natural gasoline.”
2
The statute upon which Sunoco claims eminent domain authority is R.C. 1723.01, which
states in relevant part as follows:
If a company is organized for the purpose of * * * transporting natural or artificial
gas, petroleum, coal or its derivatives * * * through tubing, pipes, or conduits * *
*; then such company * * * may appropriate so much of such land, or any right or
interest therein, as is deemed necessary for the laying down or building of such
tubing, conduits, pipes * * *. (Emphasis added.)
This court has held that courts must strictly construe statutes that delegate eminent
domain authority to private enterprises to protect the constitutional guarantee of the right to
private property. Parkside Cemetery Assn. v. Cleveland, Bedford & Geauga Lake Traction Co.,
93 Ohio St. 161, 112 N.E. 596, paragraph one of syllabus (1915); Accord Pontiac Improvement
Co. v. Bd. of Commrs. of Cleveland Metro. Park Dist., 104 Ohio St. 447, 135 N.E. 635,
paragraph one of syllabus (1922); Norwood v. Horney, 110 Ohio St.3d 353, paragraph three of
syllabus, ¶ 70. Accordingly, it was improper for the lower courts to, and this court need not,
stretch the definition of “petroleum” to include finished product natural gas liquids to allow for
the appropriation of private property for pipelines that transport such liquids, because that is a
legislative function. Additionally, the question of whether a future hypothetical statute – one that
would specifically authorize the use of eminent domain for finished product natural gas liquids
pipelines – could even satisfy the public use requirement, is a separate question that need not be
addressed or decided here.
The court of appeals’ construction of the term “petroleum” in the broadest possible
manner to include “its pure component parts [including] pure propane and pure butane” defies
the above precedent and has opened the flood gates for private companies to use eminent domain
to take property to build pipelines to transport any molecule or product that can be derived from
“petroleum” that best fits their commercial interests without government oversight or public
3
accountability. (Appx. Ex. 1, 15, ¶ 45.) This not only runs afoul of the Ohio Constitution, but
also will result in an impractical and unworkable pipeline system.
In 2001, this court accepted appeals from two cases that held that the term “petroleum” as
used in R.C. 1723.01 included petroleum by-products. However, this court could not decide the
issues in those cases because both settled. Ohio River Pipe Line, LLC v. Henley, 94 Ohio St.3d
1403, 2001-Ohio-6977 (entry granting joint application for dismissal of appeal); Ohio River Pipe
Line, LLC v. Gutheil, 94 Ohio St.3d 1403, 2001-Ohio-6977 (same). This issue is even more
important today given the increased oil and gas activity in Eastern Ohio that has led to the filing
of over two hundred eminent domain actions this year. (See Ex. 9 to Mot. to Stay.)2 Moreover,
this case presents three important issues that the Ohio River Pipe Line cases did not.
First, the lower courts found that the Pipeline met the necessity requirement of R.C.
163.021(A) by the application of a “reasonably convenient and useful to the public” test that has
not been adopted by this court. The evidence that was offered to prove the necessity of the
Pipeline was a Sunoco resolution and speculative testimony from Sunoco’s own employees, all
with an extreme self-interest and no accountability to the public. Simply put, allowing such self-
serving evidence to shift the burden of proof to the landowner to disprove the necessity of a
taking reduces the necessity requirement to a nullity.
Second, this case presents an issue that is similar to the issue this court considered in
Norwood; namely, whether speculative economic benefits that may result from a private project
2 One such case was recently dismissed by Judge Pollex of the Wood County Court of Common
Pleas after he found that Kinder Morgan Utopia, LLC lacked authority to appropriate property
for its Utopia Pipeline because Kinder Morgan is not a common carrier and because the pipeline
was not necessary and did not serve a public use. Kinder Morgan Utopia, LLC v. PDB Farms of
Wood County, LLC, Wood Cty. No. 2016CV0220 (Oct. 12, 2016), available at
http://www.ohioconstitution.org/wp-content/uploads/2016/10/SKM_284e16101212350.pdf
(accessed Nov. 10, 2016).
4
satisfy the public use requirement. This court has already answered this question as “no,” but the
lower courts failed to follow this precedent.
Finally, the trial court’s application of the four-part balancing test for an injunction to
deny Teter’s initial Motion to Stay presents issues of great public and general interest. (Appx.
Ex. 3, 44.) This court has held numerous times that a public entity is entitled to a stay as a matter
of right without any requirement that it post a bond. See, e.g., State Ex. rel Electronic Classroom
of Tomorrow v. Cuyahoga Cty. Ct. of Common Pleas, 129 Ohio St.3d 30, ¶ 29, 2011-Ohio-626,
950 N.E.2d 149. This strongly suggests that the only matter within the trial’s discretion when a
private party requests a stay is the amount of the bond. However, this court has not yet directly
considered the issue of whether a court has discretion to deny a stay requested by a private party.
The public has a great interest in establishing this precedent.
STATEMENT OF THE CASE AND FACTS
This case arises from Sunoco’s attempt to appropriate two easements from Teter’s farm
located in Harrison County, Ohio for its Pipeline.3 The Pipeline at issue is a 350 mile pipeline
known as the Mariner East 2, a proposed expansion of the existing Mariner East 1 pipeline that
runs from Houston, Pennsylvania to a commercial refinery and storage facility located in Marcus
Hook, on the border of Pennsylvania and Delaware. (Tr. 21:2-7.) The Marcus Hook facility is
owned by Sunoco’s parent company, Sunoco Logistics. (Id. at 70:1-7.) The Pipeline will begin at
3 This court should reject any arguments Sunoco may make that any decision to route the
Pipeline around the Teter farm moots this appeal because their remains a debatable constitutional
question to resolve, and the issues herein are ones of great public or general interest. See
Franchise Developers, Inc. v. Cincinnati, 30 Ohio St.3d 28, paragraph one of the syllabus
(1987); see also Bluegrass Pipeline Co., LLC v. Kentuckians United to Restrain Eminent
Domain, Inc., 478 S.W.3d 386, 390 (Ky. App. 2015) (holding that there was standing and a
justiciable controversy to challenge a pipeline company’s eminent domain authority through a
declaratory judgment action even though the pipeline company had routed around the
landowner.)
5
the fractionation facility in Scio, Ohio and will not contain any off ramps where the products can
be offloaded for use before leaving Ohio. (Id. at 22:21 – 23:1-19, 110:6-11.)
The only molecules that will be shipped through the Pipeline are propane and butane that
have been refined to be at least 99% pure. (Id. at 29:6-9, 110:16 – 111:3.) Pure propane’s
primary and best use is as a “feedstock” in propane dehydrogenation plants (aka cracker plants),
which transform the propane into propylene to be used to make plastics for commercial
manufacturing. (Id. at 163:8-25.) Similarly, pure butane is often used as a “feedstock” to make
plastics for commercial manufacturing. (Id. at 31:11-15.) Sunoco hopes to build a cracker plant
at its Marcus Hook facility. (Id. at 73:9-22.) However, Sunoco has claimed, through unsupported
speculation, that the Pipeline might benefit the public by providing transportation for propane
that it alleges will be used to heat homes. (Id. at 30:3 – 31:17.) Although Sunoco did obtain the
necessary approval of its rate structure from the Federal Energy Regulatory Commission
(“FERC”), it did not approve the Pipeline route or hold any adversarial hearings, nor did OPSB.
(Id. at 34:8 – 36:22.)
On December 15, 2015, the Harrison County Court of Common Pleas granted Sunoco’s
Petition for Appropriation based on the following findings: (1) “propane and butane meet the
statutory definition of petroleum under Ohio [eminent domain] law”; (2) Sunoco is a “common
carrier” under R.C. 1723.01 and 1723.08; and (3) the Pipeline is “necessary” and will serve a
“public use.” (Appx. Ex. 2, 37, 39, 41.)
Teter then filed a Motion to Stay with the trial court and appealed to the Seventh District
Court of Appeals. The trial court denied Teter’s Motion to Stay. (Appx. Ex. 3, 44.) Subsequently,
the court of appeals granted the stay without bond. (Appx. Ex. 4, 47.)
6
The court of appeals affirmed the trial court’s decision that Sunoco had the right to
appropriate the easements based on the same three holdings. (Appx. Ex. 1, 1.)
ARGUMENT IN SUPPORT OF PROPOSITIONS OF LAW
Proposition of Law Number 1 – The term “petroleum” does not include the finished
product natural gas liquids propane and butane for purposes of R.C. Chap. 1723.
This court has long held that courts must strictly construe statutes that delegate the
authority of eminent domain to private enterprises in favor of the landowner to protect the
constitutional guarantee of the right to private property. Parkside, 93 Ohio St. 161, paragraph
one of syllabus; Accord Pontiac, 104 Ohio St. 447, paragraph one of syllabus; Norwood, 110
Ohio St.3d 353, paragraph three of syllabus, ¶ 70. While Teter agrees with the court of appeals
that the rule of strict construction does not require the construction of a term to be so strict as to
be unreasonable or strained, it is the court of appeals’ construction of the term “petroleum” to
include its “pure component parts such as pure propane and pure butane” based on definitions
that are not found in R.C. Chap. 1723 and that did not exist at the time the statute was originally
enacted that creates an unreasonable result. (Appx. Ex. 1, 9-15, ¶¶ 25, 28, 31-36, 45.) Ohio
Power Co. v. Deist, 154 Ohio St. 473, 477, 96 N.E.2d 771 (1951) (“[W]e do not believe such
construction should be so strict as to be unreasonable or strained.”).
The predecessor statute to R.C. Chap. 1723 dates back to 1868. The first version of the
statute authorized companies to incorporate for the purpose of “transporting oils through tubing
and pipes” and to “appropriate so much [land] as may be deemed necessary for the laying down
of such tubing and piping * * *.” (Emphasis added.) 65 Ohio Laws 109-10 (eff. Apr. 25, 1868).
At that time, there is no question that the General Assembly understood and intended the terms
“oil” and “petroleum” to be synonymous and to mean the liquid substance that is naturally
occurring in the earth. Indeed, a decision from this court in 1903 supports this proposition.
7
Langabaugh v. Anderson, 68 Ohio St. 131, 67 N.E. 286 (1903). Specifically, in Langabaugh, this
court uses the terms “oil,” “crude oil” and “crude petroleum” interchangeably to refer to the
naturally occurring liquid substance that was being extracted from a well. Id. at 140 (“oil”), 141
(“crude oil”), 145 (“crude petroleum”).
The definition of the term “petroleum” found in the leading dictionary from around the
turn of the 19th century also strongly supports Teter’s assertion that the common usage of the
term “petroleum” only included the naturally occurring liquid substance that is also commonly
referred to as crude oil. Specifically, in 1890, the common meaning of the term “petroleum” was:
“Rock oil, a liquid, inflammable substance or bitumen extruding from the earth and on the
surface of the water in wells and fountains, in various parts of the world, or oozing from cavities
in rocks. It is essentially composed of carbon and hydrogen.” An American Dictionary of the
English Language, 820 (Webster, Noah; 1890).
Additionally, the legislative history of R.C. 1723.01 supports the proposition that the
General Assembly did not intend the term “petroleum” to include every molecule found within
crude oil, as the lower courts’ holdings imply. If it did, there would have been no reason for it to
amend the statute numerous times to add new types of pipelines each time there was a
technological advance that involved molecules that are already found naturally occurring in
crude oil. Specifically, in 1888, the General Assembly amended the statute to add “natural gas”
to the statute. 85 Ohio Laws 114-15 (eff. Mar. 24, 1888). Then, in 1904, it amended the statute
again to add electricity. 97 Ohio Laws 300-01 (eff. Apr. 23, 1904). In 1927, the statute was
amended to add “artificial gas.” 112 Ohio Laws 143-44 (eff. April 26, 1927). Finally, in 1951,
the statute was amended to add “coal or its derivatives.” 124 Ohio Laws 170 (eff. 1951). This
8
final version of the statute was codified in 1953 as R.C. 1723.01 and has remained unchanged for
the last 63 years. R.C. 1723.01 (1964) (eff. Oct. 1, 1953).
The definitions of “petroleum” in R.C. 3746.01(L) and O.A.C. 3745-300-01(93)4 that the
lower courts’ relied upon include “natural gas” and “synthetic gas usable as fuel.” One of the
cardinal rules of statutory construction is that statutes “should be construed so that effect is
given to all its provisions, so no part will be inoperative or superfluous, void or insignificant * *
*.” (Citations omitted.) Hibbs v. Winn, 542 U.S. 88, 101, 1224 S.Ct. 2276 (2004). Thus, courts
“assume that [a legislative body] used two terms because it intended each term to have a
particular, nonsuperfluous meaning.” Bailey v. United States, 516 U.S. 137, 146, 116 S.Ct. 501
(1995). A related principal applies to statutory amendments: “[w]hen [a legislative body] acts to
amend a statute, [courts] presume [the legislature] intends its amendment to have real and
substantial effect.” Stone v. Immigration and Naturalization Servs., 514 U.S. 386, 387, 115 S.Ct.
1537 (1995). The use of the definitions of “petroleum” found in R.C. 3746.01(L) and O.A.C.
3745-300-01(93) renders the words “natural gas” and “artificial gas” that appear in the R.C.
1723.01 superfluous. These are terms which the General Assembly specifically added to the
statute by amendments in 1888 and 1927 and therefore cannot simply be ignored by defining
“petroleum” in a way that includes them. 85 Ohio Laws 114-15 (eff. Mar. 24, 1888); 112 Ohio
Laws 143-44 (eff. April 25, 1927).
4 The definition of “petroleum” in R.C. 3737.87(J) the court of appeals also relied upon does not
even support its holding that propane and butane are petroleum. That statute defines “petroleum”
as: “Petroleum, including crude oil or any fraction thereof, that is a liquid at the temperature of
sixty degrees Fahrenheit and the pressure of fourteen and seven-tenths pounds per square inch
absolute. ‘Petroleum’ includes, without limitation, motor fuels, jet fuels, distillate fuel oils,
residual fuel oils, lubricants, petroleum solvents, and used oils.” (Emphasis added.) Propane and
butane are gases, not liquids, at standard temperature and pressure and therefore are excluded
from this definition. (Tr. 154:12-15, 155:2-21, 158:9-12, 159:6-9.)
9
Moreover, the lower courts ignored the fact that the definitions of “petroleum” found in
other areas of the Revised Code and Administrative Code are specifically limited to the chapters
in which they are found and are wholly inappropriate to apply to the context of eminent domain.
Finally, the lower courts ignored the testimony of Teter’s expert, Dr. Paul Matter, the
only expert witness to testify at the appropriation hearing for either side, that neither pure butane
nor pure propane would be considered “petroleum” in the oil and gas industry. (Tr. 154:12 –
155:21.)
Given this court’s clear mandate that appropriation statutes must be construed in favor of
the landowner, it was improper for the lower courts to expand the definition of “petroleum” to
include the finished product natural gas liquids propane and butane. That issue should be left up
to the General Assembly.
Accordingly, this Court should accept this Proposition of Law and reverse the decision of
the court of appeals.
Proposition of Law Number 2 – When considering takings for private pipeline
projects initiated by private parties, the Ohio Constitution forbids Ohio courts from
relying solely upon speculation and potential economic benefits to determine public
use.
The court of appeals’ decision is contrary to at least three long-standing principles of
Ohio eminent domain law. The first such principle is where, as here, “the public use is
contingent and prospective and the private use or benefit is actual and present, the public use [is]
incidental to the private use, and * * * the power of eminent domain clearly [cannot] lawfully be
exercised.” (Citations omitted.) Norwood, 110 Ohio St.3d 252, ¶ 102. Second, “the fact that the
appropriation would provide an economic benefit, standing alone, does not satisfy the public-use
requirement * * *.” Id. at paragraph one of syllabus. Third, property cannot be appropriated for
“a contemplated or speculative use in the future.” (Citations omitted.) Id. at ¶ 100.
10
The court of appeals identified the following proposed “public uses,” which are, in
reality, only private economic benefits:
“[W]ithout the pipeline ‘you have to pay to pay a dollar to get a product you can sell for
50 cents to market and that’s just not efficient and will stifle production and that will
stifle drilling and that will stifle royalties[.]’” (Appx. Ex. 1, 22, ¶ 71.)
A cracker plant planned for Pennsylvania is “likely to send economic reverberations
through the entire region.” (Id. at ¶ 72.)
“The pipeline actually services Ohio in that it takes products to market. This benefits
Ohioans by maintaining a supply for the demand; wells are drilled and Ohioans and are
receiving royalties.” (Id. at ¶ 79.)
Higher royalties, economic reverberations, production by and for private interests, and
maintaining supply for demand are all purely economic benefits, and are not a public use.
Moreover, the other purported “public uses” the court of appeals relied upon are purely
speculative. At the necessity hearing, Sunoco’s representative, Hank Alexander, consistently
maintained that Sunoco does not “have any control over where the shippers take their products *
* * [or] ultimately where these products go.” (Tr. 64:20-25; 66:23.) Nonetheless, Mr. Alexander
proceeded to offer self-serving hypotheticals about what the propane and butane could be used
for. Specifically, Mr. Alexander testified that “propane could be used to heat homes[,]” “could be
broken down into other products like propylene[,]” “could be used for every day products like
[water bottles,]” and that “butane can be used as lighter fluid [and] it also has a role in terms of
the automotive industry.” (Emphasis added.) (Id. at 30:24 – 31:15.) The court of appeals
impermissibly relied upon this speculative testimony to find that the Pipeline serves a public use,
which is clearly seen in the following statements in its decision:
“[T]he Mariner East 2 Pipeline has no off ramps in Ohio. Once the product reaches
any off ramp, including the last off ramp at Marcus Hook, Pennsylvania, where the
product will go is speculative. There was testimony it could be shipped overseas and
sold. Testimony indicated it could also be transported all over the northeast, including
Ohio, for use in heating homes and as an additive to gasoline so that automobiles can
11
start in colder temperatures. Testimony indicated [Sunoco] owns a plant in Marcus
Hook that might have the potential to be converted into a cracker plant.”
“Given propane and butane use, it seems certain that some products containing Ohio
propane and butane will return to Ohio; it may be through additives to gasoline or
plastics made from cracker plants.”
“Although there is no off ramp in Ohio’s plan as of now there may come a time when
an off ramp is added because a cracker plant is built in this area.” (Emphasis added.)
(Appx. Ex. 1, 22, ¶¶ 70-72.)
The legislative history of R.C. 1723.01 above shows that the General Assembly intended
the statute to authorize the use of eminent domain for the construction of energy infrastructure
that directly benefits the general public by providing it with resources that are needed to meet the
public’s daily living needs, not to facilitate economic growth and commercial enterprise.
Although the court of appeals attempted to justify its holding that the Pipeline serves a public use
by stating that “it provides some of the necessities of life,” in reality, finished product natural gas
liquids pipelines like the one at issue here are materially different than public utility pipelines
and powerlines. Whereas the purpose of public utility pipelines and powerlines is to actually
provide resources directly to the public, the purpose of a finished product natural gas liquids
pipeline is commercial because the molecules they transport are primarily used as feedstocks in
commercial manufacturing to make various types of plastic. (Tr. 163:8-25.) Moreover, it is
undisputed that the Pipeline does not have any off ramps in Ohio and thus cannot provide the
products that will be shipped through it to the Ohio general public. (Id.at 110:1-7.)
Sunoco’s pretext that the propane that is shipped could be used to heat homes is nothing
more than legal gerrymandering to obtain eminent domain authority in Pennsylvania (and now
Ohio). See In re Sunoco Pipeline, L.P., 143 A.3d 1000, 1025-29 (Penn. App. Jul. 14, 2016)
(Brobson, J. dissenting and McCullough, J. dissenting) (explaining that after a Pennsylvania trial
court held that Sunoco did not have eminent domain authority for the Pipeline because it was not
12
providing public utility services, it added on and off ramps within Pennsylvania and obtained
public utility permits from the Pennsylvania Public Utilities Commission so that it could
appropriate property for the Pipeline). When this pretext is stripped away, all that is left to
attempt justify the use of eminent domain to build the Pipeline are economic benefits.
In conclusion, the court of appeals’ economic benefit analysis and its impermissible
reliance on speculative testimony to find that the Pipeline serves a public use runs afoul with
this court’s precedent. Accordingly, this court should accept this Proposition of Law and
reverse the decision of the court of appeals, or alternatively, remand with instructions to
apply the law without speculation or consideration of the economic benefits alone.
Proposition of Law Number 3 – The necessity of a taking cannot be established by
the determination solely of a private entity that the property and the project will be
“reasonably convenient and useful.”
In Norwood, this court clearly stated that courts “owe no deference to a legislative
finding that the proposed taking will provide a financial benefit to the community.” 110 Ohio
St.3d 353, ¶ 80. This court has also recognized:
that due to the mutuality of public and private interests in [cases where the
government takes property and transfers it to a private entity], a danger exists that
the state’s decision to take may be influenced by the financial gain that would
flow to it or to the private entity because of the taking * * *. (Citations omitted.)
Norwood, 110 Ohio St. 353, ¶ 73.
It should be obvious that this danger is ever more present where, as here, it is the private
enterprise itself that determines the alleged necessity of the taking without public oversight.
In this case, the test the lower courts applied to find that the Pipeline is “necessary”
was whether it is “reasonably convenient and useful to the public.” (Appx. Ex. 1, 24, ¶ ¶ 86;
Ex. 2, 40-41.) This test has never been adopted by this court. Additionally, this test’s origin
appears to be a misreading of Solether v. Turnpike Comm., 999 Ohio App. 228 (6th Dist.
1954), which this court reversed on other grounds upon consideration of a motion to certify
13
in Ellis v. Turnpike Comm., 162 Ohio St. 86, 120 N.E.2d 719 (1954), by the Montgomery
County Court of Common Pleas in Dayton v. Keys, 21 Ohio Misc. 105, 252 N.E.2d 655
(1969). This apparent misreading has subsequently been followed and applied by other Ohio
courts. See, e.g., Bd. of Trs. of Sinclair Cmty. College Dist. v. Farra, 2nd Dist. No. 22886,
2010-Ohio-568, ¶ 37 (Feb. 19, 2010). This test provides broad deference to a private entity
and renders the necessity requirement a nullity because a private enterprise would never
conclude that its own project is not “reasonably convenient and useful.” Accordingly, this
test conflicts with this court’s precedent that “no deference [should be given to a] finding that
the proposed taking will provide a financial benefit to the community.” Norwood, 110 Ohio
St.3d 353, ¶ 80.
This issue is exacerbated by the preponderance of the evidence standard and the
rebuttable and irrebuttable evidentiary presumptions contained in current version of R.C.
163.09(B). In Norwood, this court stated as follows:
Recognizing that the General Assembly is currently reviewing legislation in this
area of law, we have limited our decision to those points of law that we feel must
be decided at this juncture. We note, however, that given our reaffirmation that
the Ohio Constitution confers on the individual fundamental rights to property
that may be violated only when a greater public need requires it, there are
significant questions about the validity of the presumption in favor of the state
that is set forth in R.C. 163.09(B), which provides that a resolution or ordinance
of an agency declaring the necessity of an appropriation shall be prima facie
evidence of necessity in the absence of a showing by the property owner of an
abuse of discretion. See Grace v. Koch (1998), 81 Ohio St.3d 577, 692 N.E.2d
1009, syllabus (holding that elements of adverse possession must be proved by
clear and convincing evidence); Addington v. Texas (1979), 441 U.S. 418, 424, 99
S.Ct. 1804, 60 L.Ed.2d 323 (noting that the clear and convincing standard of
proof is often used in cases in which the ‘interests at stake * * * are deemed to be
more substantial than mere loss of money’ and ‘to protect particularly important
individual interests in various civil cases’). 110 Ohio St.3d 353, fn. 16.
The General Assembly did amend R.C. 163.09(B), effective May 6, 2005, which now provides:
14
(1) * * * the burden of proof [on the issue of the necessity of the appropriation] is
upon the agency by a preponderance of the evidence except as follows:
(a) A resolution or ordinance of the governing or controlling body, council, or
board of the agency declaring the necessity for the appropriation creates a
rebuttable presumption of the necessity for the appropriation if the agency is not
appropriating the property because it is a blighted parcel or part of a blighted area
or slum.
(b) The presentation by a public utility or common carrier of evidence of the
necessity for the appropriation creates a rebuttable presumption of the necessity
for the appropriation.
(c) Approval by a state or federal regulatory authority of an appropriation by a
public utility or common carrier creates an irrebuttable presumption of the
necessity for the appropriation.
The amended statute falls far short of requiring an appropriating agency to prove necessity by
clear and convincing evidence and therefore gives the appropriating agency too much deference,
where, as here, the agency is a private enterprise with a profit motive.
The court of appeals held that Teter waived the argument that R.C. 163.09(B) is
unconstitutional. (Appx. Ex. 1, 31, ¶ 101.) While Teter concedes that it did not specifically argue
that R.C. 163.09(B) was unconstitutional at the trial court level, it did specifically argue that the
appropriation of the easements from the Teter farm did not satisfy the necessity requirement at
the trial court level and that the trial court’s use of the “reasonably convenient and useful” test to
determine necessity was improper in the court of appeals.
Moreover, this court has held that the application of the waiver doctrine is discretionary.
In re M.D., 38 Ohio St.3d 149, 527 N.E.2d 286, syllabus (1988). If there ever was a case
“involving exceptional circumstances, where error, to which no objection was made at the trial
court, seriously affects the basic fairness integrity, or public reputation of the judicial process,
thereby challenging the legitimacy of the underlying judicial process itself[,]” this is it. Goldfuss
v. Davidson, 79 Ohio St.3d 116, 679 N.E.2d 1099, syllabus (1997).
15
The inherently unequal bargaining power and resources between a politically powerful
private enterprise like Sunoco that seeks to use eminent domain as a sword to reduce the
acquisition costs of property, rather than as a last resort as a publically accountable government
agency does, creates a significant and undeniable chilling effect on the landowner’s ability to
challenge the offered price and the company’s authority to appropriate their property.
Kentuckians United to Restrain Eminent Domain, Inc. v. Bluegrass Pipeline Co., 2014 WL
10246980, *4 (Ky.Cir.Ct. Mar. 25, 2014). Moreover, the immense cost of litigating a case like
this all the way to this court means this issue may not reach this court again for many years, if
ever. Indeed, to counsel’s knowledge, this is the first eminent domain case to reach the court
since Norwood, which was a decade ago. It is hard to imagine a circumstance that implicates the
basic fairness and integrity of the judicial process more than the test and burden of proof that is
required to establish the right of a private entity to take property by eminent domain.
Accordingly, this court should accept this Proposition of Law for review.
Proposition of Law Number 4 – A private party is entitled to receive a stay of a
judgment in an appropriation action as a matter of right upon the posting of a bond
in the amount determined by the court.
This issue was fully briefed in Teter’s Motion to Stay that this court granted without
bond. The trial court and other Ohio trial courts are clearly confused about whether they have
discretion to deny a stay requested by a private party altogether or if the stay is a matter of right
with an appropriate bond. The public has a great interest in this court establishing this precedent
and therefore this court should accept this Proposition of Law for review.
CONCLUSION
In conclusion, this case presents numerous unsettled issues of great interest and of
constitutional significance and Teter respectfully requests this court to accept its appeal.
Respectfully submitted,
ARENSTEIN & ANDERSEN CO., LPA
/s/ Nicholas I. Andersen
Nicholas I. Andersen (0077732)
(COUNSEL OF RECORD)
Eric R. McLoughlin (0082167)
Jessica L. Sohner (0089232)
5131 Post Rd., Ste 350
Dublin, OH 43017
P: 614-602-6550
F: 866-309-0892
Counsel for Defendant-Appellant,
Carol A. Teter, Trustee of the Carol A.
Teter Revocable Living Trust
CERTIFICATE OF SERVICE
I hereby certify that a true and accurate copy of the forgoing document was served upon
the following by email on November 14, 2016.
Gregory D. Brunton
(COUNSEL OF RECORD)
Daniel J. Hyzak
Bruce A. Moore
REMINGER CO., LPA
200 Civic Dr., Ste 800
Columbus, OH 43215
Counsel for Plaintiff-Appellee,
Sunoco Pipeline, L.P.
Jordan S. Berman C. Craig Woods
(COUNSEL OF RECORD) (COUNSEL OF RECORD)
Assistant Attorney General Andrew H. King
Constitutional Offices Section SQUIRE PATTON BOOGS (US) LLP
30 E. Broad St., 16th
Fl. 2000 Huntington Center
Columbus, OH 43215 41 S. High St.
[email protected] Columbus, OH 43215
Counsel for Ohio Attorney General, [email protected]
Mike DeWine [email protected]
Counsel for Defendant-Appellee, Enterprise
TE Products Pipeline Company, LLC
Chad A. Endsley James B. Hadden
(COUNSEL OF RECORD) (COUNSEL OF RECORD)
Leah F. Curtis Murray Murphy Moul + Basil LLP
Amy M. Milam 1114 Dublin Rd.
Ohio Farm Bureau Federation, Inc. Columbus, OH 43215
280 N. High St., 6th
Floor [email protected]
P.O. Box 182383 Counsel for Association of Oil Pipe Lines,
Columbus, OH 43218 American Petroleum Institute, and
[email protected] Ohio Chemistry Technology Council,
[email protected] Amici Curiae in Support of Appellee
Counsel for Ohio Farm Bureau Federation, Inc.
and Harrison County Farm Bureau, Inc.,
Amici Curiae in Support of Appellant
/s/ Nicholas I. Andersen
Nicholas I. Andersen (0077732)
(COUNSEL OF RECORD)
Eric R. McLoughlin (0082167)
Jessica L. Sohner (0089232)
IN THE SUPREME COURT OF OHIO
Sunoco Pipeline, L.P. :
: Case No. 2016-1486
Plaintiff-Appellee, :
: On Appeal from the Harrison County
vs. : Court of Appeals, Seventh Appellate
: District
Carol A. Teter, Trustee, et al. :
: Court of Appeals Case Nos.
Defendants-Appellants. : 16 HA 0002 and 16 HA 0005
APPENDIX FOR MEMORANDUM IN SUPPORT OF JURISDICTION
OF DEFENDANT-APPELLANT CAROL A. TETER, TRUSTEE OF THE CAROL A.
TETER REVOCABLE LIVING TRUST
Nicholas I. Andersen (0077732) Gregory D. Brunton (0061722)
(COUNSEL OF RECORD) (COUNSEL OF RECORD)
Eric R. McLoughlin (0082167) Daniel J. Hyzak (0091298)
Jessica L. Sohner (0089232) Bruce A. Moore (0093334)
ARENSTEIN & ANDERSEN CO., LPA REMINGER CO., LPA
5131 Post Rd., Ste 350 200 Civic Center Dr., Ste 800
Dublin, OH 43017 Columbus, OH 43215
P: (614) 602-6550 P: (614) 228-1311
F: (866) 309-0892 F: (614) 232-2410
[email protected] [email protected]
[email protected] [email protected]
[email protected] [email protected]
Counsel for Defendant-Appellant, Counsel for Plaintiff-Appellee,
Carol A. Teter, Trustee Sunoco Pipeline, L.P.
of the Carol A. Teter
Revocable Living Trust
(Additional counsel appear on following page)
Jordan S. Berman (0093075) C. Craig Woods (0010732)
(COUNSEL OF RECORD) (COUNSEL OF RECORD)
Assistant Attorney General Andrew H. King (0092539)
Constitutional Offices Section SQUIRE PATTON BOOGS (US) LLP
30 E. Broad St., 16th
Fl. 2000 Huntington Center
Columbus, OH 43215 41 S. High St.
P: (614) 466-2872 Columbus, OH 43215
F: (614) 728-7592 P: (614) 365-2700
[email protected] F: (614) 265-2499
Counsel for Ohio Attorney General, [email protected]
Mike DeWine [email protected]
Counsel for Defendant-Appellee, Enterprise
TE Products Pipeline Company, LLC
Chad A. Endsley (0080648) James B. Hadden (0059315)
(COUNSEL OF RECORD) (COUNSEL OF RECORD)
Leah F. Curtis (0086257) Murray Murphy Moul + Basil LLP
Amy M. Milam (0082375) 1114 Dublin Rd.
Ohio Farm Bureau Federation, Inc. Columbus, OH 43215
280 N. High St., 6th
Floor T: (614) 488-0400
P.O. Box 182383 [email protected]
Columbus, OH 43218 Counsel for Association of Oil Pipe Lines,
T: (614) 246-8258 American Petroleum Institute, and
F: (614) 246-8656 Ohio Chemistry Technology Council,
[email protected] Amici Curiae in Support of Appellee
Counsel for Ohio Farm Bureau Federation, Inc.
and Harrison County Farm Bureau, Inc.,
Amici Curiae in Support of Appellant
TABLE OF CONTENTS
Exhibit No. Description Page No.
1 Seventh District Court of Appeals’ Judgment Entry and Opinion
Affirming Trial Court Decision dated September 29, 2016
1
2 Trial Court’s Judgment Entry Granting Sunoco’s Petition for
Appropriation dated December 14, 2016
32
3 Trial Court’s Judgment Entry Denying Teter’s Motion to Stay
dated April 11, 2016
44
4 Court of Appeal’s Judgment Entry Granting Teter’s Motion to
Stay dated April 28, 2016
47
CERTIFICATE OF SERVICE
I hereby certify that a true and accurate copy of the forgoing document was served upon
the following by email on November 14, 2016.
Gregory D. Brunton
(COUNSEL OF RECORD)
Daniel J. Hyzak
Bruce A. Moore
REMINGER CO., LPA
200 Civic Center Dr., Ste 800
Columbus, OH 43215
Counsel for Plaintiff-Appellee,
Sunoco Pipeline, L.P.
Jordan S. Berman C. Craig Woods
(COUNSEL OF RECORD) (COUNSEL OF RECORD)
Assistant Attorney General Andrew H. King
Constitutional Offices Section SQUIRE PATTON BOOGS (US) LLP
30 E. Broad St., 16th
Fl. 2000 Huntington Center
Columbus, OH 43215 41 S. High St.
[email protected] Columbus, OH 43215
Counsel for Ohio Attorney General, [email protected]
Mike DeWine [email protected]
Counsel for Defendant-Appellee, Enterprise
TE Products Pipeline Company, LLC
Chad A. Endsley James B. Hadden
(COUNSEL OF RECORD) (COUNSEL OF RECORD)
Leah F. Curtis Murray Murphy Moul + Basil LLP
Amy M. Milam 1114 Dublin Rd.
Ohio Farm Bureau Federation, Inc. Columbus, OH 43215
280 N. High St., 6th
Floor [email protected]
P.O. Box 182383 Counsel for Association of Oil Pipe Lines,
Columbus, OH 43218 American Petroleum Institute, and
[email protected] Ohio Chemistry Technology Council,
[email protected] Amici Curiae in Support of Appellee
Counsel for Ohio Farm Bureau Federation, Inc.
and Harrison County Farm Bureau, Inc.,
Amici Curiae in Support of Appellant
/s/ Nicholas I. Andersen
Nicholas I. Andersen (0077732)
(COUNSEL OF RECORD)
Eric R. McLoughlin (0082167)
Jessica L. Sohner (0089232)
1
[Cite as Sunoco Pipeline L.P. v. Teter, 2016-Ohio-7073.] STATE OF OHIO, HARRISON COUNTY
IN THE COURT OF APPEALS
SEVENTH DISTRICT
SUNOCO PIPELINE L.P., ) CASE NO. 16 HA 0002 ) 16 HA 0005
) PLAINTIFF-APPELLEE, )
) VS. ) OPINION
) CAROL A. TETER TRUSTEE, et al., )
) DEFENDANTS-APPELLANTS. )
CHARACTER OF PROCEEDINGS: Civil Appeal from the Court of Common
Pleas General Division of Harrison County, Ohio
Case No. CVH-2015-0058 JUDGMENT: Affirmed. JUDGES:
Hon. Carol Ann Robb Hon. Gene Donofrio Hon. Mary DeGenaro
Dated: September 29, 2016
2
[Cite as Sunoco Pipeline L.P. v. Teter, 2016-Ohio-7073.] APPEARANCES: For Plaintiff-Appellee: Atty. Gregory Brunton Atty Daniel Hyzak Atty. Bruce Moore
Reminger Co., LPA 200 Civic Center Drive, Suite 800 Columbus, Ohio 43215
Atty. James Hadden
Murray Murphy Moul + Basil LLP 1114 Dublin Road Columbus, Ohio 43215
For Defendant-Appellee Atty. C. Craig Woods Atty. Andrew H. King
Squire Patton Boggs (US) LLP 2000 Huntington Center 41 South High Street Columbus, Ohio 43215
For Defendants-Appellants: Atty. Eric McLoughlin
Atty. Jessica Sohner Atty. Nicholas Anderson Arenstein & Anderson Co., LPA 5131 Post Road, Suite 350 Dublin, Ohio 43017 Atty. Amy Milam Atty. Chad Endsley Atty. Leah Curtis Ohio Farm Bureau Federation, Inc. 280 North High Street, 6th Floor P.O. Box 182383 Atty. Jordan Berman Assistant Attorney General Constitutional Offices Section 30 East Broad Street, 16th Floor Columbus, Ohio 43215
3
[Cite as Sunoco Pipeline L.P. v. Teter, 2016-Ohio-7073.] ROBB, J.
{¶1} Defendant-Appellant Carol Teter, Trustee of the Carol A. Teter
Revocable Living Trust appeals the decision of Harrison County Common Pleas
Court granting Plaintiff-Appellee Sunoco Pipeline L.P.’s petition for appropriation and
complaint for condemnation. There are two core issues in this case. The first is
whether pure propane and pure butane are petroleum for the purposes of R.C.
1723.01, which permits common carriers to appropriate land. The second issue is
whether the appropriation is necessary for public use.
{¶2} Although there is no definition of petroleum in R.C. 1723.01,
consideration of the current statutory definitions and the common historical definitions
of petroleum leads us to conclude pure propane and pure butane are included in
those definitions. Furthermore, the term “petroleum” has taken on a technical or
industry definition. This industry definition indicates petroleum includes pure propane
and pure butane. As to the second issue before us, the evidence submitted to the
trial court proved appropriation was necessary for public use. Consequently, for
those reasons and the ones espoused below, the trial court’s decision is affirmed.
Statement of the Facts and Case
{¶3} This appeal involves two trial court case numbers that concern
Appellee’s right to appropriate an easement from Appellant to run a pipeline across
the Teter property that will transport pure propane and pure butane. The pure
propane and pure butane are derived from fractionation of petroleum (the raw
material) that was extracted from the Utica and Marcellus shale deposits in Ohio
through hydraulic fracturing. The fractionation plants are located in Scio, Ohio and
Jewett, Ohio.
{¶4} After trying and failing to obtain a voluntary easement from Appellant,
Appellee filed a petition for appropriation and complaint for condemnation in Harrison
County Common Pleas Court. CVH 2015 0058 5/19/15 Complaint. Appellant was
named as defendant along with Enterprise TE Products Pipeline Co. LLC, Wellington
Resource Group LLC, Texas Eastern Products Pipeline Co., Sinclair Oil & Gas Co.,
4
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Chesapeake Exploration LLC, CHK Utica, LLC, and Total E&P USA Inc. 5/19/15
Complaint; 7/15/15 Amended Complaint. Sunoco sought the easement because it
was building the “Mariner East 2 Pipeline,” which will run from the fractionation plant
in Scio, Ohio to Marcus Hook, Pennsylvania and Claymont, Delaware.
{¶5} Appellant filed an answer to the amended complaint to appropriate.
8/3/15 Answer.
{¶6} Around the same time Appellee filed its petition for appropriation and
complaint for condemnation, Appellant filed her complaint in Harrison County
Common Pleas Court against Appellee. 3/24/15 Complaint Case Number CVH 2015
0034. Appellant sought a declaratory judgment; she requested an order indicating
eminent domain could not be used to appropriate an easement to her land. 3/24/15
Complaint.
{¶7} The cases were consolidated. 8/13/15 J.E. Thereafter, Appellee and
Chesapeake, CHK Utica, and Total E&P stipulated the acquisition of an easement
would not affect the validity or enforcement of leases. 9/10/15 Stipulation.
Chesapeake, CHK Utica, and Total E&P were dismissed without prejudice. 9/15/15
Notice.
{¶8} A hearing was held on the complaint to appropriate in October 2015.
The trial court identified the issues as: 1) does the definition of petroleum include
propane and butane; 2) is the pipeline a common carrier; and 3) does the pipeline
serve a public purpose. 12/14/15 J.E.
{¶9} As to the first issue, the trial court determined propane and butane are
petroleum. Although the trial court acknowledged R.C. 1723.01 does not define
petroleum, it used the General Assembly’s definition found in other portions of the
Ohio Revised Code. The trial court reasoned propane and butane are petroleum
because R.C. 3746.01(L) indicates petroleum includes liquefied natural gas.
Liquefied natural gas specifically includes propane and butane pursuant to Ohio
Adm.Code 1301:7-7-38. Furthermore, the U.S. Energy Information Administration
(EIA) defines petroleum to include petroleum natural gas plant liquids. According to
EIA, natural gas plant liquids include propane and butane. The trial court
5
-3-
acknowledged the Ohio Administrative Code and the EIA’s definition permitted the
gases to be fractionated and liquefied. 12/14/15 J.E.
{¶10} The next issue was whether Appellee qualified as a common carrier.
The trial court found it did. Pursuant to R.C. 1723.08 a common carrier is a company
organized to transport petroleum through pipelines. The evidence indicated Appellee
met the definition of a common carrier as set forth by Ohio case law and statutory
law. 12/14/15 J.E.
{¶11} The third issue was whether the taking was necessary and for public
use. The trial court began by setting forth the standard of proof. It found the burden
of proof rests with Appellee to show, by a preponderance of the evidence, the taking
was necessary and for public use. It explained that the presentation of evidence of
necessity by a common carrier created a rebuttable presumption of the necessity for
appropriation. The trial court then found the pipeline was necessary because the
Mariner East 2 Pipeline project is reasonably convenient or useful to the public. It
reasoned:
The Court finds that it is undisputed that Eastern Ohio has an
abundance of wet gas in its Utica shale. The Court takes note of the
expanding drilling operations and the construction of oil and gas
fractionating facilities in Harrison County, Ohio.
The Court is further cognizant that in order for the Utica shale play to
develop, pipelines must be constructed to move the wet gas to the
fractionating plants in their raw form and from the fractionating plants in
their useful forms to consumers.
12/14/15 J.E.
{¶12} The court further noted the pipeline is open to any member of the public
who wishes to transport product. 12/14/15 J.E. The pipeline creates a means to
deliver Eastern Ohio resources to market and provides a heating source to
consumers by delivering propane. 12/14/15 J.E.
6
-4-
{¶13} Consequently, the trial court granted the request for appropriation of an
easement.
{¶14} Prior to the compensation hearing, the parties reached a settlement on
the amount of compensation. The settlement was memorialized in the trial court’s
February 16, 2016 final judgment entry.
{¶15} Appellant timely appealed the trial court’s December 14, 2015
appropriation order. The trial court denied Appellant’s stay request; however, this
court granted the request. 4/11/16 Tr. Ct. J.E.; 4/28/16 COA J.E.
{¶16} Pursuant to R.C. 163.22 this appeal is “a matter of immediate public
interest” and is to be heard “at the earliest practicable moment.” R.C. 163.22. See also Norwood v. Horney, 110 Ohio St.3d 353, 2006-Ohio-3799, 853 N.E.2d 1115, ¶
110.
{¶17} The Ohio Farm Bureau Federation and Harrison County Farm Bureau
(Farm Bureau) filed a joint amici curiae brief in support of Appellant. The Association
of Oil Pipelines, American Petroleum Institute, Ohio Manufacturers’ Association and
Ohio Chemistry Technology Council (Oil Pipelines) filed a joint amici curiae brief in
support of Appellee.
First Assignment of Error
“The trial court erred by holding that pure propane and pure butane are
‘petroleum’ for purposes of the eminent domain statutes.”
{¶18} The basis of Appellee’s appropriation claim is R.C. 1723.01. This
statute is titled “Power to enter upon and appropriate land.” It provides, in pertinent
part:
If a company is organized * * * for transporting natural or artificial gas,
petroleum, coal or its derivatives, water, or electricity, through tubing,
pipes, or conduits, or by means of wires, cables, or conduits; * * * then
such company may enter upon any private land to examine or survey
lines for its tubing, pipes, conduits, poles, and wires, * * * and may
appropriate so much of such land, or any right or interest therein, as is
7
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deemed necessary for the laying down or building of such tubing,
conduits, pipes, * * *.
R.C. 1723.01.
{¶19} The issue in this assignment of error revolves around the word
“petroleum” and what constitutes “petroleum” for purposes of R.C. 1723.01.
{¶20} Our district is rich in Utica and Marcellus shale deposits. Hydraulic
fracturing, commonly referred to as fracking, is used to extract raw material such as
“wet gas” from the shale deposits. The parties appear to agree the raw material or
wet gas that comes out of the ground during the fracking process qualifies as
petroleum or natural gas for purposes of R.C. 1723.01.1 However, the pipeline at
issue is not transporting wet gas. Rather, the wet gas is transported to a fractionation
plant where it is broken down into component parts. Two of those component parts
are pure propane and pure butane. The pipeline at issue is going to be used to
transport the pure propane and pure butane. It may also be used to transport
ethane. The parties disagree about whether these components, specifically pure
propane and pure butane, constitute petroleum under R.C. 1723.01.
{¶21} The trial court determined petroleum included pure propane and pure
butane. It acknowledged R.C. 1723.01 does not contain a definition of petroleum.
However, it looked to other portions of the Ohio Revised Code and the Ohio
Administrative Code where petroleum was defined. It concluded based on those
definitions, and the definitions from the EIA, pure propane and pure butane
constituted petroleum. The trial court also relied on two Ohio Appellate Court
decisions where the courts concluded other legislative sections could be used to
define petroleum. 12/14/15 J.E.
{¶22} Appellant finds fault with that determination and asserts the statute
must be strictly construed. Appellant argues the common definition of petroleum
when the statute was enacted should have been used. R.C. 1723.01 was enacted in
1953 and has not been amended. This would mean the recent statutes defining
1Appellant’s own witness testified that if the raw material was not processed though a fractionation plant, it would constitute petroleum. Tr. 170-171.
8
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petroleum favorable to Appellee should not have been used to determine if pure
propane and pure butane are petroleum. Likewise, Appellant asserts the Ohio
Appellate decisions are inapplicable because none of the definitions for petroleum
they relied upon included refined petroleum products that had been developed in
1953. Alternatively, Appellant argues pure butane and pure propane cannot be
considered petroleum because they are not complex mixtures of hydrocarbons and
are not liquids at standard temperature and pressure. Amici curiae Farm Bureau
agrees with this reasoning.
{¶23} Appellee asserts the trial court’s reasoning is sound. It contends while
the statute should be strictly construed, the construction cannot be so strict that it
renders an unreasonable result. Thus, Appellee and the amici curiae Oil Pipelines
argue the trial court’s use of other statutory and administrative definitions of
petroleum was correct.
{¶24} We apply a de novo standard of review to the trial court’s decision that
petroleum, as used in R.C. 1723.01, includes pure propane and pure butane. Ellis v. Ellis, 7th Dist. No. 08 MA 133, 2009-Ohio-4964, ¶ 45, citing State v. Consilio, 114
Ohio St.3d 295, 2007-Ohio-4163, 871 N.E.2d 1167, ¶ 8 (statutory interpretation is a
question of law reviewed de novo). The parties’ disagreement in this case begins
with how strictly we must construe R.C. 1723.01, the appropriation statute at issue.
{¶25} In 1951, the Ohio Supreme Court stated appropriation statutes must be
strictly construed, but not to the point that the interpretation is unreasonable. Ohio Power Co. v. Deist, 154 Ohio St. 473, 477, 96 N.E.2d 771 (1951). It indicated a
reasonable construction is necessary especially when considering the practical
problems public utilities face as a result of mechanical and scientific progress. Id. at
481.
{¶26} More recently, when determining whether appropriation was necessary
in an urban blight case, the Court noted, although narrow in scope, judicial review in
eminent-domain cases is not meaningless. Norwood v. Horney, 110 Ohio St.3d 353,
2006-Ohio-3799, 853 N.E.2d 1115, ¶ 67. The courts are free to define the proper
limits of the doctrine. Id. “A court's independence is critical, particularly when the
9
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authority for the taking is delegated to another or the contemplated public use is
dependent on a private entity.” Id. at ¶71. In those cases any doubt over the
property of the taking is resolved in the property owner’s favor. Id.
{¶27} Appellant emphasizes the holding in Norwood, while Appellee focuses
on the holding in Ohio Power Co. The parties’ emphasis of one case over the other
leaves the impression that the holdings are in conflict with each other.
{¶28} We disagree with that implication; these holdings do not conflict with
each other. Both cases stand for the proposition that the statute is to be strictly
interpreted. However, a strict interpretation does not mean stretching to a point
where the statute is interpreted in an unreasonable manner.
{¶29} With that standard in mind, our analysis turns to the definition of the
word “petroleum” as used in R.C. 1723.01. Because petroleum was not defined in
R.C. 1723.01, the trial court looked to other sources for a definition. Specifically,
definitions found in other portions of the Ohio Revised Code, definitions found in the
Ohio Administrative Code, and the EIA’s definitions.
{¶30} The trial court correctly looked to other sources for guidance. If the
legislature has not defined a term in one chapter of the code, but has defined that
term in other chapters of the code, those definitions can be used to guide what is
meant by the term. Ohio River Pipe Line, LLC v. Gutheil, 144 Ohio App.3d 694, 700,
761 N.E.2d 633 (4th Dist.2001), citing Cablevision of the Midwest, Inc. v. Gross, 70
Ohio St.3d 541, 545, 639 N.E.2d 1154 (1994); Ohio River Pipe Line LLC v. Henley,
144 Ohio App.3d 703, 708, 761 N.E.2d 640 (5th Dist.2001).
{¶31} In multiple sections of the Ohio Revised and Ohio Administrative Codes
petroleum is defined. R.C. 3746.01, the definitional statute for Voluntary Cleanup of
Contaminated Property states:
“Petroleum” means oil or petroleum of any kind and in any form,
including, without limitation, crude oil or any fraction thereof, petroleum,
gasoline, kerosene, fuel oil, oil sludge, oil refuse, used oil, substances
or additives utilized in the refining or blending of crude petroleum or
petroleum stock, natural gas, natural gas liquids, liquefied natural gas,
10
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synthetic gas usable for fuel, and mixtures of natural gas and synthetic
gas.
R.C. 3746.01(L).
{¶32} In R.C. 3737.87, the definition section for the chapter on Petroleum
Underground Storage Tanks, petroleum is defined as:
“Petroleum” means petroleum, including crude oil or any fraction
thereof, that is a liquid at the temperature of sixty degrees Fahrenheit
and the pressure of fourteen and seven-tenths pounds per square inch
absolute. “Petroleum” includes, without limitation, motor fuels, jet fuels,
distillate fuel oils, residual fuel oils, lubricants, petroleum solvents, and
used oils.
R.C. 3737.87(J).
{¶33} In the Ohio Administrative Code section 3745-300-01, titled Voluntary
Cleanup of Contaminated Property, it is defined as:
“Petroleum” is oil or petroleum of any kind and in any form, including,
without limitation, crude oil or any fraction thereof, petroleum, gasoline,
kerosene, fuel oil, oil sludge, oil refuse, used oil, substances or
additives utilized in the refining or blending of crude petroleum or
petroleum stock, natural gas, natural gas liquids, liquefied natural gas,
synthetic gas usable for fuel, and mixtures of natural gas and synthetic
gas.
Ohio Adm.Code 3745-300-01(93).
{¶34} The above definitions state petroleum includes natural gas liquids.
“Raw natural gas liquids” are defined in the definitional section of the Power Siting
Chapter of the Revised Code:
(I) “Raw natural gas liquids” means naturally occurring hydrocarbons
contained in raw natural gas that are extracted in a gas processing
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plant and liquefied and generally include mixtures of ethane, propane,
butanes, and natural gasoline.
R.C. 4906.01(I).
{¶35} Furthermore, Liquid Petroleum Gas, also known as LPG, is defined in
the Fire Code of the Ohio Administrative Code. It includes propane and butane.
Ohio Adm.Code 1301:7-7:38(B)(1) (“A material which is composed predominately of
the following hydrocarbons or mixtures of them: propane, propylene, butane (normal
butane or isobutane) and butylenes having a vapor pressure not exceeding that of
commercial propane.”
{¶36} Likewise, the definition of the “Natural gas liquids fractionation facilities”
indicates pure propane and butane are separated mixtures of light hydrocarbons or
natural gas liquids at these facilities:
(2) “Natural gas liquids fractionation facilities” means installations,
including associated buildings, pipes, valves, tanks, and other
equipment, used for the separation of mixtures of light hydrocarbons or
natural gas liquids into individual, purity natural gas liquid products,
which include ethane, propane, normal butane, iso-butane, and natural
gasolines.
R.C. 3737.832(A)(2) (statute titled “Fire safety standards relating to shale oil
processing premises; jurisdiction; fees”).
{¶37} Appellant asserts the statutory definitions of petroleum support the
conclusion pure propane and pure butane are not petroleum. She argues the use of
words “mixtures” and “gases” in the above definitions excludes pure propane and
pure butane from being considered petroleum. In the statutory and administrative
code definitions referenced above, petroleum is defined as hydrocarbon mixtures.
Pure propane and pure butane by definition are hydrocarbons because they are each
composed solely of carbon and hydrogen.2 According to Appellant, pure propane is
2Propane is three parts carbon and eight parts hydrogen; butane is four parts carbon and ten parts hydrogen.
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not a mixture because it is just one hydrocarbon. Therefore, Appellant asserts the
use of the word “mixture” means pure propane and pure butane do not fall under the
definition of petroleum.
{¶38} Appellant further supports her position with testimony from Dr. Paul
Matter. He was deemed to be an expert concerning petroleum, petroleum mixtures,
liquid petroleum mixtures, natural gas mixtures, and the process by which they are
separated. Tr. 144. He explained that petroleum is a complex mixture and is a liquid
at standard pressure. Tr. 154. He asserted pure propane and pure butane are
hydrocarbons, but are not petroleum because they are not a mixture and are each a
gas at standard pressure. Tr. 155. Dr. Matter was of the opinion that pure propane is
a component of petroleum, but once that component is separated from the other
components it is no longer petroleum.
{¶39} Appellant’s position fails. The definitions cited above provide an
expansive definition of petroleum. The statutory and administrative code sections
use the phrase “without limitation” multiple times, as well as acknowledge the
definition of petroleum is evolving as the science evolves. The meaning of
“petroleum” is not limited to the examples set forth in those statutory and
administrative sections. The definition is not limited solely to hydrocarbon mixtures; it
can also include pure hydrocarbons that result from the fractionation process.
{¶40} Considering all the above definitions in conjunction with each other
leads this court to conclude that pure propane and pure butane are petroleum for
purposes of R.C. 1723.01 when they are derived from splitting raw material or wet
gas into its component parts.
{¶41} This conclusion is supported by decisions from our sister districts. In
2001, the Fourth and Fifth Appellate Districts were asked to determine whether
petroleum products constituted petroleum as defined by R.C. 1723.01. Gutheil, 144
Ohio App.3d 694; Henley, 144 Ohio App.3d 703. Those courts found petroleum
products did constitute petroleum and in doing so looked to other statutes. Gutheil at
699-701; Henley at 708. Admittedly, Gutheil and Henley dealt with petroleum by-
products such as gasoline, kerosene, diesel fuel and other refined petroleum
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products. Those products are considered mixtures of hydrocarbons. Here, we are
dealing with pure component parts. However, that distinction is inconsequential. A
product of petroleum is a product of petroleum regardless of whether it is pure or a
mixture, with or without an additive. Recently, the Fifth Appellate District was asked
to decide whether pure propane and ethane are petroleum under R.C. 1723.01.
Kinder Morgan Cochin LLC v. Simonson, 5th Dist. No. 15 COA 044, 2016-Ohio-4647.
The court determined it was based on the statutes discussed above and its Henley
decision. Id. at ¶ 19-29. The court also used the 1993 definition from Webster’s
Dictionary which defined propane as a natural gas. Id. at ¶ 27.
{¶42} Appellant finds fault with the above decisions. Appellant points out both
Gutheil and Henley were accepted as discretionary appeals to the Ohio Supreme
Court. However, both were voluntarily dismissed by the parties. Ohio River Pipe Line LLC v. Henley, 94 Ohio St.3d 1403, 759 N.E.2d 781 (2001); Ohio River Pipe Line, LLC v. Gutheil, 94 Ohio St.3d 1403, 759 N.E.2d 781 (2001). Appellant argues
the Ohio Supreme Court’s acceptance of the cases for discretionary review is an
indication the holdings would have been reversed. We disagree. This court will not
draw a conclusion on whether or not the law espoused by an appellate court was
correct based on the Ohio Supreme Court’s decision to accept the issue for review.
Our determination of whether we find a sister district’s holding and reasoning
persuasive is based on the law. In this instance, we agree with our sister districts’
analysis supporting the conclusion that pure propane and pure butane are petroleum
under R.C. 1723.01.
{¶43} Our conclusion is further supported by the fact that the word
“petroleum” has taken on a technical and/or industry meaning. The General
Assembly has explained, “Words and phrases shall be read in context and construed
according to the rules of grammar and common usage. Words and phrases that
have acquired a technical or particular meaning, whether by legislative definition or
otherwise, shall be construed accordingly.” R.C. 1.42.
{¶44} Testimony was elicited as to what “petroleum” means in the pipeline
industry. Matthew Gordon is Principal Engineer for Appellee and is the project
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manager for the Mariner East 2 Pipeline. Tr. 104. He testified he has been in the oil
and gas industry for approximately 10 years and has worked for Appellee for almost
his entire professional career. Tr. 105-106. He avowed he considers himself part of
the oil and gas industry, and in the industry any component of petroleum is
considered petroleum. Tr. 117, 119.
{¶45} His conclusion is supported by the EIA’s definition of petroleum. The
EIA is an agency of the U.S. Federal Statistical System. It “collects, analyzes, and
disseminates independent and impartial energy information to promote sound
policymaking, efficient markets, and public understanding of energy and its
interaction with the economy and the environment.” http://www.eia.gov/about/. The
EIA’s definition of petroleum includes natural gas plant liquids.
https://www.eia.gov/tools/glossary/?id=petroleum. Natural gas plant liquids are
defined as hydrocarbons in natural gas that are separated as liquids at fractionating
plants and include petroleum gases. Id. Petroleum gases are products of that
process and are propane and butane. Id. The definition of natural gas plant liquids
indicates “component products may be fractionated or mixed.” Id. Consequently,
according to the EIA, pure propane and pure butane fall under the definition of
petroleum.
{¶46} When the EIA’s function, its definitions, Matt Gordon’s testimony, and
the General Assembly’s definitions are considered in conjunction with each other
“petroleum” has a technical or particular meaning in the industry. That definition
includes pure component parts such as pure propane and pure butane.
{¶47} Appellant is of the position that we should not consider these current
definitions, but instead should look at the definition of petroleum as it was used in
1953, which was the last time R.C. 1723.01 was amended. Appellant points out that
all of the above statutes referenced were enacted or amended after 1953.
{¶48} For the reasons espoused above, such as the language “without
limitation” in the current statutes, we disagree with Appellant’s argument. However,
even if we only consider the definition of “petroleum” as it was used in 1953, we still
reach the same conclusion – propane and butane are petroleum.
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{¶49} In the 1947 version of Webster’s New International Dictionary,
petroleum is defined as:
An oil, inflammable liquid, almost colorless to black, but usually of a
dark-brown or greenish hue, existing at many places in the upper strata
of the earth. It has a sp. gr. of 0.6829 to 1.023 and a viscosity from less
than that of water to more than that of heavy molasses. It is essentially
a complex mixture of hydrocarbons with small quantities of other
material, as sulphur (usually combined), nitrogen compounds, water
and silica. * * * Petroleum is usually obtained by pumping or is forced
out of drilled wells by the pressure of the gas occurring with it. It is
prepared for use by fractional distillation into gasoline and naphthas,
burning oil (kerosene), lubricating oils and waxes, fuel oils, asphalts and
road oils, coke, etc. These products may be further separated and
refined. See CRACKING. Its principal use is as a fuel for heating or in
internal-combustion engines. Some of the fractions are used
medicinally. Certain alcohols are now made from petroleum and its use
as chemical raw material is expected to increase.
Webster’s New International Dictionary 1833 (2d Ed.1947).
{¶50} This is the definition Appellant directs us to consider; Appellant
contends in 1953 pure propane and butane were not considered petroleum. While it
is true the above definition did not reference propane and butane as petroleum, the
definition recognized petroleum was evolving. Not only did it indicate the chemical
raw material is expected to increase, but it also referenced the products that come
from petroleum though fractional distillation. In listing those products the definition
used the word “etc.,” which means the list is not a limited one. Furthermore, the
definition also indicated those products may be further separated and refined through
the cracking process. The definition of cracking at that time was, “A process in which
the complex hydrocarbons composing petroleum, or other similar oils, are broken up
by heat and, usually, pressure, into lighter hydrocarbons of simpler molecule
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formulae.” Id. at 616. Given the aforementioned definitions, the fractionation process
was known in 1953, although it may not have been as advanced as it is today.
{¶51} The development and use of petroleum, including liquefied petroleum
gas, has been ongoing in this country since the early 1900s. The Ohio Supreme
Court has noted, “Although liquefied petroleum gas was discovered by chemists
about 1910, it remained a waste product at the oil wells until the mid-1920s. Then,
with the discovery of a more economical and convenient method for the capture and
compression of the gas, the oil companies began to ship the new product in cylinders
to individual customers.” Haning v. Pub. Util. Comm., 86 Ohio St.3d 121, 126, 1999-
Ohio-90, 712 N.E.2d 707, 711 (1999), citing Annotation (1972), 41 A.L.R.3d 782,
787. In fact, the first large scale liquefaction of natural gas in the U.S. was in 1918.
Hrastar, John (2014). Liquid Natural Gas in the United States: A History (First ed.).
The East Ohio Gas Company built a full-scale commercial liquid natural gas plant in
Cleveland, Ohio in 1940. Id. This plant pressurized the natural gas to the point it
was liquid and stored it. This information demonstrates the science of petroleum and
petroleum gases has consistently been evolving and in use in Ohio.
{¶52} Most importantly, we note the definition of propane in 1953 indicated
propane is a component of petroleum. The 1947 version of Webster’s New
International Dictionary defined propane as, “A heavy gaseous hydrocarbon,
CH3CH2CH3, of the paraffin series, occurring naturally dissolved in crude
petroleum.” Id. at 1983.
{¶53} Consequently, although the 1947 definition of “petroleum” did not use
the words “propane” and “butane,” we find the historical definition did contemplate
propane and butane being considered petroleum.
{¶54} In conclusion, this assignment of error lacks merit. Although petroleum
is not defined in R.C. 1723.01, other Ohio Revised and Administrative Code sections
indicate pure propane and pure butane are considered petroleum. Furthermore, we
conclude the word “petroleum” has taken on a technical or industry definition, which
includes pure propane and pure butane. Lastly, even under a historical view of the
word “petroleum,” we determine it included propane and butane.
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Second Assignment of Error
“The trial court erred by holding that Sunoco is a ‘common carrier.”
{¶55} In granting the appropriation request, the trial court found Appellee was
a common carrier because Appellee is a company organized to transport petroleum,
the product to be transported is petroleum, the shipping was offered to the general
public at a Federal Energy Regulating Commissions’ open season period, and 10%
of the pipeline’s capacity remains open to the general public. 12/14/15 J.E.
{¶56} Testimony elicited at trial incontrovertibly established the first finding
and the last two findings. On appeal Appellant does not find fault with those findings;
Appellant’s argument focuses on the second finding. Appellant contends Appellee
cannot be considered a common carrier because Appellee is not transporting
petroleum. This argument is based on R.C. 1723.08 and R.C. 1723.01.
{¶57} In the first assignment of error R.C. 1723.01 and the definition of
petroleum were analyzed. R.C. 1723.08 refers to R.C. 1723.01 in defining common
carrier and provides:
With respect to the transporting by it of natural gas, petroleum, coal or
its derivatives, water, and electricity, a company described in section
1723.01 of the Revised Code is a common carrier and is subject to the
duties and liabilities of a common carrier under the laws of this state. A
company described in section 1723.01 of the Revised Code includes
any firm, partnership, voluntary association, joint-stock association,
company, or corporation, wherever organized or incorporated, when
engaged in the business of transporting petroleum through tubing,
pipes, or conduits as a common carrier.
R.C. 1723.08.
{¶58} Appellant’s argument is simple and depends on the resolution of the
first assignment of error. Appellant argues pure propane and pure butane do not
constitute petroleum under R.C. 1723.01 and as such, Appellee is not a common
carrier under R.C. 1723.08.
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{¶59} In the first assignment of error, we held pure propane and pure butane
are petroleum for purposes of R.C. 1723.01. Accordingly, Appellee is a common
carrier. This assignment of error lacks merit.
Third Assignment of Error
“The trial court erred by holding that the pipeline is ‘necessary’ and for ‘public
use.’”
{¶60} In determining whether the appropriation was necessary and for public
use, the trial court indicated, pursuant to R.C. 163.021(A), Appellee has the burden to
prove by a preponderance of the evidence appropriating the real property is
necessary and for public use. The trial court then recognized Appellee is a common
carrier and pursuant to R.C. 163.09(B)(1)(b), evidence of necessity created a
rebuttable presumption for the appropriation.
{¶61} Using those standards, the trial court found the pipeline was necessary
because it was “reasonably convenient or useful to the public to provide a
streamlined means to take raw materials from the wells [sic] site to the plant and from
the plant to consumers.” It also stated the pipeline will service multiple public uses.
Specifically, it noted Appellee is a common carrier whose use is open to any member
of the public, the pipeline creates a means to deliver Eastern Ohio resources to
market, and the pipeline provides a heating source to consumers by delivering
propane. 12/14/15 J.E.
{¶62} At trial, Appellee asserted the propane and butane transported by the
pipeline will be used to heat homes, as an additive to gasoline to help automobiles
start in the cold winter months, and will be used at cracker plants. A cracker plant
utilizes petrochemical manufacturing to split or crack molecules. Ethane, propane
and butane are common feedstocks for petrochemical manufacturing. For example,
ethane is cracked into ethylene, propane is cracked into propylene and butane into
butenes. Those petrochemicals are then used to make common household products,
including plastics. Appellee contends those products, the propane to heat homes
and the gasoline, will come back to Ohio consumers.
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{¶63} Appellant’s argument under this assignment of error focuses on public
use. She contends the uses espoused by Appellee are speculative and inaccurate,
and thus, do not constitute public use. She claims the pipeline has no “off ramps” in
Ohio, which means 100% of the product will be shipped and consumed outside of
Ohio. Ohio will only get an economic benefit, which is insufficient to satisfy public
use. Furthermore, there is no indication the propane or butane shipped to Marcus
Hook will come back to Ohio for heating or gasoline use. Appellant asserts the
benefit to Appellee, a private company, is certain while the benefit to Ohio is
speculative. Appellant also argues the intended purpose of allowing private
companies to appropriate land when they are a common carrier was to build
intrastate energy infrastructure, not to authorize the building of interstate
infrastructure or interstate transportation of Ohio’s resources.
{¶64} Appellee disagrees and divides its arguments into two; public use and
necessity.
{¶65} As to public use, Appellee contends being a common carrier under R.C.
163.01(H) created a rebuttable presumption the pipeline is for public use, and the
rebuttable presumption was not overcome at trial. It argues the pipeline furthers
Ohio’s development of shale and without the pipeline Utica and Marcellus shale
development and production will likely stagnate. Appellee points to the evidence it
provided at trial that the propane and butane would be for public consumption by
providing heat to homes, additives to gasoline, and the production of plastics.
Appellee also asserts there is no indication the General Assembly intended
appropriation to apply only to intrastate infrastructure, i.e. intrastate pipelines.
{¶66} As to necessity, Appellee asserts it passed a resolution declaring the
necessity of the appropriation and therefore, it satisfied the burden of demonstrating
necessity. However, even without the resolution, Appellee contends it showed that
the proposed project is reasonably convenient or useful to the public. Contending the
pipeline could have gone across another property or another means of transportation
could be used does not defeat the determination that it is “convenient or useful to the
public.”
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{¶67} Public use is discussed first. In considering the parties arguments, it is
noted the trial court correctly set forth the standard. Appellee had the burden to
prove by a preponderance of the evidence appropriating the real property was
necessary and for a public use. R.C. 163.021(A) (“No agency shall appropriate real
property except as necessary and for a public use. In any appropriation, the taking
agency shall show by a preponderance of the evidence that the taking is necessary
and for a public use.). However, “the presentation by a public utility or common
carrier of evidence of the necessity for the appropriation creates a rebuttable
presumption of the necessity for the appropriation.” R.C. 163.09(B)(1)(b). Under
R.C. 163.01(H)(1)(a) public use does not include a taking for conveyance to a private
commercial enterprise unless the property is conveyed to a public utility, municipal
power agency, or common carrier.
{¶68} One of the most insightful cases on public use is the Ohio Supreme
Court’s decision in Norwood. Norwood v. Horney, 110 Ohio St.3d 353, 2006-Ohio-
3799, 853 N.E.2d 1115. The analysis began with an explanation of eminent domain
in the United States and Ohio. The Court stated, “the federal and Ohio constitutions
forbid the state to take private property for the sole benefit of a private individual even
when just compensation for the taking is provided.” Id. ¶ 43. In Ohio, it is the
understanding “that the sovereign may use its appropriation powers only upon
necessity for the common good.” Id. “[T]he exercise of sovereignty in eminent-
domain cases is predicated on the notion that such a taking can be permitted only ‘for
the use and benefit of the people,’ which is ‘distinct from government interest, profit,
or concern.’” Id., citing Cooper v. Williams, 4 Ohio 253, 290 (1831) (not typo in cite,
old case just reported in Ohio not Ohio St.). That said, the Court noted the concept
of public use is malleable and elusive. Norwood at ¶ 44.
{¶69} The Norwood Court then set forth a detailed background of the
evolution of eminent domain in Ohio. Id. at ¶ 45-53. Following that account, the
Court observed the doctrinal evolution of appropriation reflects judicial understanding
that the public-use test requires flexibility and consideration of diverse local
conditions rather than rigid, uniform application. Id. at ¶ 55. However, the Court also
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noted while economic concerns may be considered in addition to other factors,
economic benefits alone are not sufficient public use for a valid taking. Id. at ¶ 75.
{¶70} At trial, evidence was offered about the public use of the Mariner East 2
Pipeline. It was explained that the Mariner East 2 Pipeline is going to transport
liquefied pure molecules of propane and butane from fractionation plants in Harrison
County, Ohio to Marcus Hook, Pennsylvania. The pipeline was described as an
interstate or highway. Interstates and highways have on ramps and off ramps. Here,
as it is currently planned, the Mariner East 2 Pipeline has no off ramps in Ohio. Once
the product reaches any off ramp, including the last off ramp at Marcus Hook,
Pennsylvania, where the product will go is speculative. There was testimony it could
be shipped overseas and sold. Testimony indicated it could also be transported all
over the northeast, including Ohio, for use in heating homes and as an additive to
gasoline so that automobiles can start in colder temperatures. Testimony indicated
Appellee owns a plant in Marcus Hook that might have the potential to be converted
into a cracker plant. Tr. 71.
{¶71} Testimony also elicited evidence regarding the Utica and Marcellus
shale development within our district. Without the pipeline infrastructure, the
production would be stifled. Tr. 27. There is more liquid coming out of the ground
than most thought. Tr. 27. If there is no effective means to transport the propane
and butane, then there is no need to separate the 135,000 barrels a day of liquids.
Tr. 27. Appellee’s employee testified that without the pipeline “you may have to pay
a dollar to get a product that you can sell for 50 cents to market and that’s just not
efficient and that will stifle production and that will stifle drilling and that will stifle
royalties, and at the end of the day you have a local market that’s just this big, small
as compared.” Tr. 27-28.
{¶72} All the above evidence establishes public use. Given propane and
butane use, it seems certain that some products containing Ohio propane and butane
will return to Ohio; it may be through additives to gasoline or plastics made from
cracker plants. Furthermore, shale development continues to advance in our area.
As of now there are no cracker plants in our area requiring an off ramp. However,
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Shell is building a $4 billion ethane cracker plant near Monaca, Pennsylvania.
http://businessjournaldaily.com/shell-cracker-seen-as-game-changer-for-region/. The
Business Journal has indicated that this is “likely to send economic reverberations
through the entire region.” Id. As with any exploration of oil and gas, there is some
speculation. Although there is no off ramp in Ohio’s plan as of now, there may come
a time when an off ramp is added because a cracker plant is built in the area. The
Ohio Supreme Court in Norwood indicated the public use test requires flexibility and
consideration of diverse local conditions. Norwood, 2006-Ohio-3799, ¶ 55. These
are diverse local conditions which we must consider.
{¶73} Furthermore, Appellee is a common carrier, not a megastore or a
private enterprise that would only be providing economic benefit to Ohio. The reason
the General Assembly gave common carriers a rebuttable presumption is because
common carriers, as defined by statute, provide our citizens with necessities such as
electricity and water. The products, propane and butane, being transported are used
to heat homes and as an additive to gasoline. Propane and butane are also used in
the production of many products our society uses every day. Thus, the transportation
of propane and butane provides more than economic benefit to Ohio, it provides
some of the necessities of life.
{¶74} Admittedly, the pipeline is not an intrastate pipeline. Rather, it is an
interstate pipeline. Appellant asserts R.C. 1743.01 does not permit appropriation for
interstate infrastructure. In support of her position, Appellant asks us to read R.C.
1743.01 in conjunction with R.C. 743.39. R.C. 1743.01 is the statute on a private
company appropriating land. R.C. 743.39 is the appropriation statute for a
municipality and it is worded similarly to R.C. 1743.01:
For the purpose of * * * transporting natural gas, petroleum, water, or
electricity through or by means of tubing, pipes, conduits, wires, or
cables, storing, transporting, or transmitting water, natural gas, or
petroleum, or generating and transmitting electricity, a municipal
corporation may enter upon any private land to examine or survey lines
for such tubing, pipes, conduits * * *. The municipal corporation may
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appropriate so much thereof as is necessary for the laying down or
building of such facilities * * * and such buildings as are necessary for
such purpose, as well as land overflowed.
R.C. 743.39.
If a company is organized * * * for transporting natural or artificial gas,
petroleum, coal or its derivatives, water, or electricity, through tubing,
pipes, or conduits, or by means of wires, cables, or conduits; * * * then
such company may enter upon any private land to examine or survey
lines for its tubing, pipes, conduits, poles, and wires, * * * and may
appropriate so much of such land, or any right or interest therein, as is
deemed necessary for the laying down or building of such tubing,
conduits, pipes, * * *.
R.C. 1723.01.
{¶75} Appellant contends R.C. 743.39 authorizes a municipality to appropriate
for intrastate infrastructure and since the language of R.C. 1743.01 is nearly identical
to R.C. 743.39, R.C. 1743.01 also only gives a private company authority to
appropriate for intrastate infrastructure.
{¶76} We disagree with this proposition. There is no designation between
interstate and intrastate in the statutes; the express wording of the statutes do not
state they only apply to intrastate infrastructure. Furthermore, even if R.C. 743.39
prevents a municipality from appropriating land for interstate infrastructure based on
the municipality’s function, a private company is not included in that statute. By
having two separate statutes, one concerning a municipality and one concerning a
private company, it could be deemed there is a designation that the two are different.
Otherwise, one statute could have been enacted to cover both municipalities and
private companies. If the two are different and municipalities by their nature cannot
have interstate infrastructure, then it logically flows that private companies that do not
have jurisdictional limitation could have interstate infrastructure and would be
permitted to appropriate for interstate infrastructure.
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{¶77} For those reasons, we disagree with Appellant’s position that R.C.
1723.01 does not authorize appropriation for interstate infrastructure.
{¶78} Lastly, Appellant relies on a Kentucky appellate court case for the
proposition that interstate infrastructure that has no off ramps in the state does not
constitute public use. In Bluegrass Pipeline Co., LLC, the court held eminent domain
could not be used to acquire property for a pipeline across Kentucky that would
transport Ohio products to the Gulf of Mexico. Bluegrass Pipeline Co., LLC v. Kentuckians United to Restrain Eminent Domain, Inc., 478 S.W.3d 386,
(Ky.App.2015) (Kentucky Supreme Court did not accept the appeal for review). The
appellate court held eminent domain was not available for two reasons. First, the
statute the pipeline was using to appropriate was in a chapter of the code titled
“Public Service Commission.” Id. at 392. That chapter was dedicated to public
utilities. Id. The court held the legislature only intended to delegate the state’s power
of eminent domain to those pipeline companies that are or will be regulated by the
Public Service Commission. Id. The Bluegrass Pipeline Co. was not regulated by
the Public Service Commission and accordingly, it could not use the eminent domain
statutes. Id. Also, the court held the product in the pipeline was not reaching
Kentucky consumers. Id. The product was only traveling through Kentucky; there
were no on ramps or off ramps in Kentucky. Thus, the court held there was no public
service of Kentucky. Id.
{¶79} Bluegrass Pipeline Co., LLC is not controlling authority and it is
distinguishable from the case at hand. Here, there is no requirement for the pipeline
to be regulated by PUCO. Also, this is not a pipeline that merely runs through Ohio.
This pipeline actually services Ohio in that it takes the product to market. This
benefits Ohioans by maintaining a supply for the demand; wells are being drilled and
Ohioans are receiving royalties.
{¶80} Furthermore, Bluegrass Pipeline Co., LLC, has been discussed and
elaborated in K. Petroleum, Inc. v. Property Tax Map No. 7 Parcel 12, E.D. Kent.
6:14-201-DCR, 2016 WL 937329 (Mar. 10, 2016). In that case, the Federal Court
held that a pipeline that is available for public use meets the public service
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requirements, at least as to common carriers. Id. That holding would suggest, for
our purposes, since the Mariner East 2 Pipeline is open for public use and Appellee
is a common carrier, there is public use.
{¶81} Consequently, for all the above stated reasons, the evidence submitted
established public use.
{¶82} Necessity is discussed next. Appellee asserts the trial court’s finding of
necessity was correct. Although Appellant does not make any specific arguments
regarding necessity under this assignment of error, necessity is addressed.
{¶83} At trial, Appellee provided evidence it passed a resolution declaring the
necessity of the appropriation for the Mariner East 2 Pipeline. The Federal Energy
Regulatory Commission has acknowledged that public necessity:
[Appellee] SPLP has demonstrated that additional NGL transportation is
necessary in the active natural gas production areas to be served by
the [Mariner East 2] Project. [Appellee] SPLP has demonstrated that
excess NGLs are being produced in the Marcellus and Utica Shale
areas, which may impede natural gas production unless additional NGL
transportation can be developed. [Appellee] SPLP also seeks the right
to add more origin and delivery points, which will aid in meeting the
demand for transportation from these production areas. These rights
will benefit both [Appellee] SPLP and its shippers in bringing additional
NGLs to market and minimizing any impairment to natural gas
production in those areas.
Federal Energy Regulatory Commission, Declaratory Order OR14040-000 (Dec. 1,
2014).
{¶84} Pursuant to R.C. 163.09(B)(1)(b) if Appellee provided evidence of
necessity, then a rebuttable presumption of necessity for the appropriation was
created because Appellee is a common carrier. In Gutheil, the Fourth Appellate
District held a corporate resolution to construct the pipeline was prima facie evidence
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of a public necessity. Gutheil, 144 Ohio App.3d at 702. Consequently, a rebuttable
presumption of necessity was created.
{¶85} At the hearing, Appellant asserted the pipeline was not necessary
because trucks or railroads could be used to transport the product, or a cracker plant
could be built next to the fractionation plants. Appellant also asserted the pipeline
could be reconfigured to bypass her land.
{¶86} These arguments and evidence were not sufficient to overcome the
rebuttable presumption. Necessity means reasonably convenient or useful to the
public; it is not limited to an absolute physical necessity. Bd. of Trustees of Sinclair Community College Dist. v. Farra, 2d Dist. No. 22886, 2010-Ohio-568, ¶ 37.
Furthermore, “a contention that some other location or configuration might have
served the same purpose is not a valid objection regarding whether the appropriation
is necessary.” Eschtruth Invest. Co. L.L.C. v. Amherst, 9th Dist. No. 10CA009870,
2011-Ohio-3251, ¶ 10. The logical extension of that position is, it is not a valid
objection to claim the product could be transported a different way or a cracker plant
can be built next to the fractionation plant.
{¶87} However, even if those were valid objections, those claims do not
overcome the rebuttable presumption given the evidence submitted at trial. Appellee
offered testimony indicating the pipeline was the most efficient option to move the
propane and butane. Although testimony indicated transportation of the pure
propane or pure butane to a cracker plant by means of truck or railroad was an
option, it was explained rail and truck were less safe and inefficient. Tr. 28-29. This
was especially the case considering Ohio winters (polar vortex) and the ability to use
the highways and railways when there is an abundance of snow and ice. Tr. 28. In
past years, winter delays caused by snow and ice resulted in price spikes. Tr. 28.
Also testimony indicated the sheer volume of liquids would overwhelm highways and
the cost of trucking is four to five times as much as a pipeline tariff. Tr. 28.
{¶88} Consequently, there was sufficient evidence to show necessity.
{¶89} In conclusion, this assignment of error lacks merit. Appropriation was
necessary and for public use.
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Fourth Assignment of Error
“The trial court’s holding that the term ‘petroleum’ includes pure propane and
pure butane makes R.C. 1723.01 unconstitutional because it renders the limitations
on a private company’s ability to use eminent domain vague and meaningless.”
{¶90} Appellant argues the trial court’s interpretation of the word “petroleum”
as used in R.C. 1723.01 renders the statute unconstitutional under the void for
vagueness doctrine. Appellant is not asserting the statute is void for vagueness on
its face; petroleum has a plain and ordinary meaning and thus, the statute would not
be void on its face. Rather, she contends defining petroleum to include pure propane
and pure butane would mean every molecule derived from petroleum would
constitute petroleum, which would include millions of different molecules. This,
according to her, renders the limitations of a private company’s ability to use eminent
domain vague and meaningless.
{¶91} Appellee claims this constitutional issue was not raised to the trial court,
and therefore, is waived. Alternatively, it argues the trial court’s interpretation of R.C.
1723.01 does not include every molecule of petroleum, but rather was specific as to
propane and butane because those molecules were specifically listed in the Revised
Code.
{¶92} In response to the waiver claim, Appellant asserts she could not have
made the void for vagueness argument to the trial court because it could not have
raised this argument before the trial court rendered its decision.
{¶93} Considering the arguments presented to the trial court, the void for
vagueness argument is waived. The majority of the arguments presented to the trial
court during the appropriation hearing concerned the definition of the word
“petroleum” as used in R.C. 1723.01 and whether it included pure propane and pure
butane. Each party called its own witness to testify at the hearing about whether
propane and butane were considered petroleum under R.C. 1723.01. The parties
post trial briefs also focused on that same issue. Appellee consistently and
relentlessly argued propane and butane are considered petroleum as used in R.C.
1723.01. It cited numerous statutory definitions of petroleum to support that
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conclusion. The trial court agreed with Appellee’s argument. Appellant now claims
the interpretation renders the statute unconstitutional. However, in arguing what the
term “petroleum” meant in R.C. 1723.01, Appellant never argued to the trial court that
Appellee’s interpretation would render the statute unconstitutionally void for
vagueness. However, the argument was apparent and could have been asserted.
{¶94} We have recently explained:
The Ohio Supreme Court has held that “[f]ailure to raise at the trial court
level the issue of the constitutionality of a statute or its application,
which issue is apparent at the time of trial, constitutes a waiver of such
issue.” State v. Awan, 22 Ohio St.3d 120, 489 N.E.2d 277 (1986),
syllabus. However, the Ohio Supreme Court has also held that the
waiver doctrine announced in Awan is discretionary. In re M.D., 38
Ohio St.3d 149, 527 N .E.2d 286 (1988), syllabus. “Even where waiver
is clear, [a reviewing court may] consider constitutional challenges to
the application of statutes in specific cases of plain error or where the
rights and interests involved may warrant it.” Id.
But recognizing plain error in a civil case occurs only in extremely rare
situations “involving exceptional circumstances” where the error
“seriously affects the basic fairness, integrity, or public reputation of the
judicial process, thereby challenging the legitimacy of the underlying
judicial process itself.” Goldfuss v. Davidson, 79 Ohio St.3d 116, 679
N.E.2d 1099 (1997), syllabus. In this case, we cannot conclude that the
trial court committed plain error by failing to consider the
constitutionality of the 1989 version of R.C. 5301.56 when neither party
raised this argument. Not only did neither party raise this argument, but
both parties argued how they would prevail under the 1989 version.
Thus, we need not address appellant's constitutional argument.
Walker v. Shondrick-Nau, 7th Dist. No. 13 NO 402, 2014-Ohio-1499, ¶ 56-57,
reversed on other grounds, 2016-Ohio-5793.
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{¶95} That holding is equally applicable here. Appellant waived the
constitutional issue. Furthermore, in this instance, we decline to recognize plain
error. In the context of civil appeals, the plain error doctrine is not favored and should
be recognized only in extremely rare situations. Goldfuss v. Davidson, 79 Ohio St.3d
116, 679 N.E.2d 1099 (1997), syllabus.
{¶96} This assignment of error is meritless.
Fifth Assignment of Error
“The trial court’s failure to require Sunoco to prove the necessity of the
pipeline by clear and convincing evidence is plain error and is an unconstitutional
infringement of Teter’s fundamental property rights.”
{¶97} This assignment of error deals with the necessity element of
appropriation. Two arguments are presented. The first concerns the trial court’s use
of the “reasonably convenient or useful to the public” test to determine the pipeline
was necessary. The trial court quoted the Sloether v. Turnpike Comm., 99 Ohio App.
228 (6th Dist.1954) decision for that proposition. However, that decision does not
quote that test. Accordingly, Appellant contends the trial court committed plain error
when it used the test and cited the wrong case.
{¶98} This argument lacks merit. Although the trial court does indicate the
reasonably convenient test comes from Solether, it appears to be a misquote. The
reasonably convenient test comes from the Second District’s Farra case, which
states:
“Necessity means that which is indispensible [sic] or requisite especially
toward the attainment of some end. * * * In statutory eminent domain
cases it cannot be limited to an absolute physical necessity. It means
reasonably convenient or useful to the public.” City of Dayton v. Keys
(1969), 21 Ohio Misc. 105, 112, 252 N.E.2d 655, citing Solether v. Ohio Turnpike Commission (1954), 99 Ohio App. 228, 133 N.E.2d 148.
Accord, City of Pepper Pike v. Hirschauer (Feb. 1, 1990), Cuyahoga
App. Nos. 56963, 56964, 56965 and 57667, and City of Toledo v. Kim's
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Auto & Truck Service, Inc., Lucas App. No. L-02-1318, 2003-Ohio-
5604, at ¶ 27.
Farra, 2010-Ohio-568 at ¶ 37.
{¶99} As can be seen, Farra quoted Keys which cited to Solether. It appears
the trial court incorrectly cited the Solether court when it should have cited Farra or
Keys. The act of incorrectly citing Solether does not mean plain error resulted. Farra
does lay out the test. Therefore, there is support for the position that the test is
“reasonably convenient or useful to the public.”
{¶100} The second argument addresses the burden of proof for necessity.
Appellant contends the rebuttable presumption of necessity in R.C. 163.09(B)(1)(b) is
unconstitutional.
{¶101} Similar to the argument presented in the Fourth Assignment of Error,
this argument is waived. The rebuttable presumption of necessity is created by
statute. Appellant was or should have been aware of the rebuttable presumption.
Thus, Appellant could have argued the alleged unconstitutionality of the presumption
to the trial court. Walker, 2014-Ohio-1499 at ¶ 56-57. However, that argument was
not made and thus, it is deemed waived. Furthermore, as with the Fourth
Assignment of Error, we decline to recognize plain error.
{¶102} This assignment of error is meritless.
Conclusion
{¶103} The trial court’s decision is affirmed. All assignments of error lack
merit.
Donofrio, P.J., concurs. DeGenaro, J., concurs.
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