Ohio has long promoted itself as a state that welcomes investment, encourages innovation, and rewards the companies that fuel its economy. Unfortunately, recent actions by Ohio Tax Commissioner Patricia Harris are sending a very different message – one that threatens to undermine commercial trust and trigger long-term capital flight across the state.
At the heart of the issue is the Rover natural gas pipeline, a major interstate project completed in 2018 to meet rising energy demand in Ohio and several surrounding states. When planning the budget and projected rate of return for this multibillion-dollar investment, Rover relied on a simple and long-standing principle enshrined in the Ohio Constitution: property must be taxed based on its true market value. That means a property’s taxable value is determined by what a willing buyer would actually pay for it, not by what it cost to build. Unfortunately, it appears that this principle has been unceremoniously discarded by Commissioner Harris.
A new lawsuit filed by Rover is now seeking to right the apparent wrongs of this economically questionable decision. According to thecomplaint, extraordinary rainfall reaching over 60% above historic averages severely impacted the pipeline’s construction. These delays didn’t improve the pipeline or enhance its value; they simply forced the company to spend more time and money to finish the project. Work crews spent countless hours draining flooded sites, while welders were paid to wait for rare stretches of dry weather to continue operations. As a result, despite Rover’s extensive efforts to account for weather impacts well before construction even began, construction costs rose from a projected $4.08 billion to over $6 billion.
Instead of recognizing these overruns as the unavoidable consequence of extreme conditions, Commissioner Harris used them to justify an inflated tax assessment – treating excess costs as if they somehow increased the pipeline’s market value. Adding insult to injury, the Commissioner’s office further exaggerated the pipeline’s value by relying on an even more unrealistic assumption: that the pipeline would operate and generate revenue indefinitely.
Courts have repeatedly acknowledged that pipelines, like other physical infrastructure, degrade over time and eventually must be replaced. Ignoring that reality boosts the pipeline’s supposed taxable worth. Commissioner Harris’ own appraisal expert admitted that if they have not used an “infinite-life assumption” on the pipeline’s valuation, it would have been more than $1.7 billion lower than what its final analysis suggested.
The stakes of this lawsuit extend far beyond the pipeline itself, and investors are likely to take caution. Beyond the threats to energy reliability and affordability is a core legal concern regarding the constitutionality of these actions. Was Rover properly notified when it was constructing the pipeline that the state intended to dramatically inflate its valuation by treating cost overruns that contributed nothing to the value of the pipeline as determinative of value? It appears not.
Companies prepared to invest billions in major infrastructure projects need stability. They need predictability. Above all, they need confidence that a state will not change the rules after a significant commitment has been made to invest in Ohio. When investors hesitate to bring projects to Ohio, jobs are the first casualty.
The Rover Pipeline alone created 15,000 good-paying jobs, and the broader oil and gas sector supports more than 351,000 across the state. If officials continue shifting the goalposts on tax valuation, these jobs and the property tax revenues such projects provide will be at risk. The Commissioner’s attempt to generate more revenue may in the long run do the opposite by discouraging investment and diminishing the tax base.
The time has come for Ohio’s policymakers to end Commissioner Harris’s assault on the Ohio Constitution and reaffirm the principles that have long guided responsible growth in this great state. The future of investment, infrastructure development, and economic stability depends on how these tax tactics are resolved.
