Nexus Pipeline Valuation

The Nexus Pipeline (Nexus), which transports natural gas from eastern Ohio to Canada, was placed in-service in 2018. Nexus appealed its initial tax valuation in November 2019 and ultimately reached a settlement regarding tax valuation for tax years 2019, 2020, and 2021 with the State Tax Commissioner in June 2022. The Lorain County Auditor appealed the settlement to the Board of Tax Appeals, which dismissed the appeal in February 2023. The Lorain County Auditor then appealed the dismissal to the Ohio Supreme Court in March 2023.

Ohio Supreme Court Decision

The Ohio Supreme Court determined that a county auditor could not appeal the settlement between Nexus and the State Tax Commissioner based on the substance of the compromise rather than the legitimacy of the settlement based on fraud, duress or an error in reciting the compromise. Therefore, the Court upheld the original settlement.

When Will Overlapping Subdivisions Receive Back Taxes and Interest?

Nexus has been paying taxes on the uncontested portion of its valuation and will owe back taxes and interest to overlapping subdivisions based on the terms of the settlement agreement. The interest rate is set by statute and is currently 8%. It is likely that it will take several months for counties to calculate amounts owed, prepare invoices, and ultimately receive payments in late 2024 or early 2025. Many affected county auditors are considering a special settlement for Nexus payments, rather than wait until the normal first-half collections in 2025.

Impact on Rover Pipeline

The Ohio Supreme Court case does not affect the Rover Pipeline (Rover) tax valuation appeal. The State Tax Commissioner and Rover had short-lived settlement negotiations in summer 2024. However, the Nexus decision could serve as an impetus to renew settlement negotiations without the concern that the substance of the agreement could be appealed.

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