2020 Ohio 4509
Ohio2020Background
- AWMS obtained a leasehold (5.2 acres) and permits to construct two Class II saltwater‑injection wells, invested about $5.6 million, and began injections in March 2014.
- Seismic events occurred near injection activity in late 2011 and in July/August 2014; ODNR’s Division suspended operations at AWMS’s well #2 in September 2014 citing induced‑seismicity concerns while allowing well #1 to resume.
- AWMS submitted remediation/restart plans that the division found inadequate or did not meaningfully respond to; administrative appeals produced mixed results (commission affirmed suspension; common pleas vacated and ordered conditional restart; Tenth District reinstated suspension).
- While AWMS pursued administrative relief, it filed a mandamus action asking the state to initiate appropriation proceedings, alleging a regulatory taking (total or partial) requiring just compensation.
- The Eleventh District granted summary judgment for the state; the Ohio Supreme Court reversed, holding genuine issues of material fact precluded summary judgment on both total‑ and partial‑takings claims and that the state waived its nuisance defense to the Lucas claim.
Issues
| Issue | Plaintiff's Argument (AWMS) | Defendant's Argument (ODNR / the State) | Held |
|---|---|---|---|
| Ripeness: was the takings claim ripe? | AWMS: yes — division had made final decisions and had rejected/ignored AWMS’s plans; futility exception applies. | State: not ripe — AWMS should submit another restart plan to obtain a final administrative decision. | Held: ripe — division’s failure to respond to prior plans and the moving‑target problem justified futility exception; claim was ripe. |
| Temporary vs. permanent taking | AWMS: suspension is effectively permanent/indefinite, depriving property of value. | State: suspension is temporary; AWMS can submit a compliant plan and resume operations. | Held: suspension is open‑ended (no fixed end); court rejects characterization as purely temporary. |
| Total taking (Lucas: deprivation of all economically beneficial use) | AWMS: expert showed >99% loss of investment and that operations without well #2 were not economically viable. | State: competing experts show much smaller losses and that other uses/well #1 remained, so no total taking. | Held: genuine issue of material fact exists (competing expert valuations); summary judgment improper; remanded to weigh evidence. State waived its Lucas nuisance defense. |
| Partial taking (Penn Central factors) | AWMS: significant economic impact; reasonable investment‑backed expectations; character of action (singling out, delay) weighs for AWMS. | State: economic‑impact experts show minimal loss; AWMS entered a highly regulated industry and knew risks; action aimed at preventing harm (public safety). | Held: genuine factual disputes exist (notably economic impact and expectations); character factor leans toward harm‑prevention, but summary judgment improper — remanded to apply Penn Central balancing. |
Key Cases Cited
- Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992) (categorical rule: compensation required when regulation deprives property of all economically beneficial use unless barred by background nuisance principles)
- Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978) (ad hoc three‑factor test for partial regulatory takings)
- Tahoe‑Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302 (2002) (temporary moratoria treated under Penn Central rather than Lucas when finite and reasonable)
- Williamson County Regional Planning Comm. v. Hamilton Bank, 473 U.S. 172 (1985) (ripeness principles for takings claims)
- Knick v. Township of Scott, 139 S. Ct. 2162 (2019) (clarifying state procedures and takings ripeness issues — discussed in opinion)
- State ex rel. Shelly Materials, Inc. v. Clark Cty. Bd. of Commrs., 115 Ohio St.3d 337 (2007) (Ohio discussion of Penn Central factors and takings relief via mandamus)
- State ex rel. R.T.G., Inc. v. State, 98 Ohio St.3d 1 (2002) (plurality discussion of regulatory takings complexity)
- Cienega Gardens v. United States, 331 F.3d 1319 (Fed. Cir. 2003) (treating leasehold and other non‑fee interests as property for Takings Clause purposes)