[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as State 

ex rel. AWMS Water Solutions, L.L.C. v. Mertz, Slip Opinion No. 2020-Ohio-5482.] 

NOTICE 

This slip opinion is subject to formal revision before it is published in an 

advance sheet of the Ohio Official Reports. Readers are requested to 

promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65 

South Front Street, Columbus, Ohio 43215, of any typographical or other 

formal errors in the opinion, in order that corrections may be made before 

the opinion is published. 

SLIP OPINION NO. 2020-OHIO-5482

THE STATE EX REL. AWMS WATER SOLUTIONS, L.L.C., ET AL., APPELLANTS,

v. MERTZ,

1 DIR., ET AL., APPELLEES.

[Until this opinion appears in the Ohio Official Reports advance sheets, it 

may be cited as State ex rel. AWMS Water Solutions, L.L.C. v. Mertz, Slip 

Opinion No. 2020-Ohio-5482.] 

Oil and gas—Regulatory takings—Summary judgment—Genuine issues of material 

fact exist regarding whether state’s suspension of operations at private 

company’s saltwater-injection well constituted total or partial 

governmental taking of property—Judgment reversed and cause remanded.

(No. 2019-0493—Submitted April 7, 2020—Decided September 23, 2020—

Reconsideration Granted and Slip Opinion Reissued December 2, 2020.2

) 

 

1. James Zehringer, the former director of the Ohio Department of Natural Resources (“ODNR”), 

was originally named as a respondent in this case. Mary Mertz has since replaced Zehringer as 

ODNR’s director. 

2. On September 23, 2020, this court issued its judgment and original opinion in this case. Mertz 

filed a motion for reconsideration asserting as follows: 

[Mertz] does not move to reconsider the judgment. But one statement in the 

opinion is inconsistent with settled practice and settled precedent. In particular, 
January Term, 2020 

2

APPEAL from the Court of Appeals for Trumbull County, No. 2016-T-0085, 

2019-Ohio-923. 

_________________ 

FISCHER, J. 

{¶ 1} In this regulatory-takings case, appellants, AWMS Water Solutions, 

L.L.C.; AWMS Holdings, L.L.C.; and AWMS, Rt. 169, L.L.C. (collectively, 

“AWMS”), filed a petition for a writ of mandamus in the Eleventh District Court 

of Appeals to compel appellees, the Ohio Department of Natural Resources 

(“ODNR”); ODNR’s director, Mary Mertz; ODNR’s Division of Oil and Gas 

Resources Management (“the division”); and the division’s chief, Richard Simmers 

(collectively, “the state”), to initiate property-appropriation proceedings. AWMS 

alleged that it had suffered a taking of its property when the division suspended 

AWMS’s operation of one of its two saltwater-injection wells. The division 

suspended the operation of the well because of concerns that the well had induced 

a pair of earthquakes in its vicinity. The Eleventh District granted summary 

judgment to the state and denied the writ, determining that AWMS had suffered 

neither a total nor a partial governmental taking. 

 

[Mertz] moves to have the Court delete its instruction that the appeals court 

“disregard” the nuisance defense. While the Department may have waived that 

defense for summary judgment—and the appeal to this Court of that judgment—

a defense pleaded in an answer is not waived for trial merely because it was not 

raised on summary judgment. 

See Civ.R. 12(B); First Bank of Marietta v. Cline, 12 Ohio St.3d 317, 318, 466 N.E.2d 567 (1984); 

Bridges v. Natl. Eng. & Contracting Co., 49 Ohio St.3d 108, 111, 551 N.E.2d 163 (1990); Gliozzo 

v. Univ. Urologists of Cleveland, Inc., 114 Ohio St.3d 141, 2007-Ohio-3762, 870 N.E.2d 714, ¶ 12. 

A majority of the court agrees with Mertz and therefore grants the motion for reconsideration. See

__ Ohio St.3d __, 2020-Ohio-5454, __ N.E.3d __ [page 5] (granting motion for reconsideration, 

with Justices Kennedy, Fischer, and Stewart, JJ., dissenting). This reissued opinion omits the last 

six words of paragraphs 56 and 88 of our original opinion: “On remand, the court of appeals must 

weigh the parties’ evidence relating to AWMS’s total-takings claim and disregard the state’s 

nuisance defense.” 
January Term, 2020 

3

{¶ 2} Regulatory-takings cases present “complex and difficult” questions 

that often elude a “simple solution.” State ex rel. R.T.G., Inc. v. State, 98 Ohio 

St.3d 1, 2002-Ohio-6716, 780 N.E.2d 998, ¶ 1 (plurality opinion). This case is no 

different. As we will explain below, the court of appeals erred by entering summary 

judgment in favor of the state when genuine issues of material fact remained 

regarding whether AWMS had suffered a total or partial taking. Accordingly, we 

reverse the Eleventh District’s judgment and remand this cause to the court of 

appeals for further proceedings consistent with this opinion. 

I. FACTUAL AND PROCEDURAL BACKGROUND 

A. AWMS obtains permits to drill and inject wells, earthquakes ensue, and 

the division suspends the operation of one of AWMS’s wells 

{¶ 3} On December 19, 2011, AWMS, a disposer of waste from oil-and-gas 

production and drilling sites, secured a leasehold right to operate one or more Class 

II saltwater-injection wells on 5.2 acres of industrial property in Weathersfield 

Township, Trumbull County, Ohio. A Class II saltwater-injection well is used for 

the purpose of disposing of saltwater, a byproduct of oil- and natural-gas 

production. A saltwater-injection well is designed to isolate the injected fluid in a 

specific formation and prevent the contamination of freshwater. United States 

Environmental Protection Agency, Class II Oil and Gas Related Injection Wells, 

https://www.epa.gov/uic/class-ii-oil-and-gas-related-injection-wells#dw_protect 

(accessed Sept. 14, 2020) [https://perma.cc/CH23-MYWS]. The lease obligated 

AWMS to pay the lessor a 5 percent royalty on its disposal revenue. 

{¶ 4} On December 23, 2011, AWMS applied to the division for permits to 

construct and operate two wells on the site: “well #1” and “well #2.” The next day, 

a 2.7-magnitude earthquake was recorded in Youngstown, Ohio, about seven miles 

from AWMS’s Weathersfield Township site and about one mile from an injection 

well known as “Northstar #1” that was not related to AWMS’s wells. On December 

30, 2011, the division decided that Northstar #1 should be “shut in”—that is, taken 
January Term, 2020 

4

out of operation. On December 31, 2011, a 4.0-magnitude earthquake was recorded 

within one mile of Northstar #1. That earthquake was felt by over 4,000 people in 

parts of northeastern Ohio, western Pennsylvania, and Ontario, Canada. The 

division later issued a report in which it found that a “compelling argument” existed 

linking the activities at Northstar #1 to the two December 2011 earthquakes. 

{¶ 5} To put these events in context, we note that the United States 

Geological Survey estimates that more than one million earthquakes of magnitude 

2.0 or greater occur naturally per year globally. Ground Water Protection Council 

& Interstate Oil & Gas Compact Commission, Potential Injection-Induced 

Seismicity Associated with Oil & Gas Development: A Primer on Technical and 

Regulatory Considerations Informing Risk Management and Mitigation 44 (2015), 

http://www.gwpc.org/sites/default/files/finalprimerweb.pdf (accessed Sept. 14, 

2020) [https://perma.cc/H9SS-FVKF]. Earthquakes of about magnitude 2.0 or less 

are called “microseismic events” because they usually cannot be felt by people. Id. 

Buildings usually do not suffer structural damage unless an earthquake in their 

vicinity reaches a magnitude of 5.0, although nonstructural damage can occur to a 

building during a 4.0-magnitude earthquake depending on the building’s age and 

the materials used to construct it. Id. at 50. AWMS’s expert witness on seismicity, 

Michael A. Hasting, testified at a March 2015 hearing in this case that Ohio 

probably experiences a couple of 2.0-magnitude earthquakes per day. 

{¶ 6} Immediately after the December 31, 2011 earthquake occurred, 

former Governor John Kasich imposed a moratorium on certain injection-well 

activities, thereby enabling the division to study whether the earthquakes were due 

to “induced seismicity,” a term used to describe earthquakes triggered by human 

activity. Thereafter, the division adopted rules regarding induced seismicity, 

developed a seismic monitoring network, hired a seismologist, and participated in 

workgroups to enhance its understanding of induced seismicity. 
January Term, 2020 

5

{¶ 7} The former governor’s moratorium delayed the processing of 

AWMS’s application for its operating permits. But on July 18, 2013, the division 

authorized AWMS to drill wells #1 and #2. AWMS spent approximately $5.6 

million constructing its facilities, which included the costs of wells #1 and #2, 

infrastructure, drilling, tanks, pumps, installation, and start-up. Well #2, the deeper 

of the two wells, was drilled to a depth of 8,502 feet, which enabled it to accept 95 

percent of total injections. 

{¶ 8} In September 2013, AWMS prepared a “confidential offering 

memorandum” for prospective investors in which it offered membership shares for 

$50,000 each. AWMS disclosed several investment risks in the memorandum, 

including that the government’s regulation of injection wells could increase in 

scope and complexity due to growing industry awareness, that AWMS’s wells 

could cause a seismic event similar to the events that had occurred in Youngstown, 

and that a seismic event caused by AWMS’s wells could lead to the suspension of 

its injection operations. 

{¶ 9} On March 24, 2014, the division authorized AWMS to commence 

injections into wells #1 and #2. AWMS’s permits did not contain express language 

empowering the division to suspend AWMS’s operations due to a seismic event of 

a specific magnitude. 

{¶ 10} The risks that AWMS outlined in its offering memorandum turned 

out to be well founded. On July 28, 2014, a 1.7-magnitude earthquake was recorded 

near well #2. And on August 31, 2014, a 2.1-magnitude earthquake was recorded 

in the same area. The Ohio Oil and Gas Commission (“the commission”) later 

determined that the “July and August events were not detectable on the surface, and 

no property damage was reported.” 

{¶ 11} On September 3, 2014, the division issued orders requiring AWMS

to suspend its operations at wells #1 and #2, stating that the two earthquakes from 

July and August 2014 were related to AWMS’s operations at the wells. The 
January Term, 2020 

6

division also required AWMS to “submit a written plan to the Division for 

evaluating the seismic concerns associated with the operation of” well #2. Two 

days later, the division issued new orders clarifying that the seismic events “may” 

have been related to AWMS’s wells. The division later determined that well #1 

likely did not contribute to seismicity in the area, terminated its suspension of 

operations at well #1, and allowed AWMS to resume operations at well #1. It left 

the suspension of operations at well #2 in place. 

{¶ 12} On September 17, 2014, AWMS submitted to the division its written 

plan for well #2. In its plan, AWMS explained that it had not received direction 

from the division about what to include in the plan. Nevertheless, AWMS’s plan 

included several proposals addressing the division’s concerns, including a proposal 

to establish certain operational and management controls over injections at well #2. 

The division found AWMS’s plan to be “generic and inadequate.” 

{¶ 13} On October 2, 2014, AWMS appealed the division’s suspension of 

operations at well #2 to the commission. During the pendency of the appeal, 

AWMS and the division held two meetings during which they discussed the 

induced-seismicity issue. In the first meeting, which took place near the end of 

October 2014, the division communicated to AWMS that it was planning to adopt 

a statewide policy on induced seismicity that it expected to be completed in “four 

to six” months. According to Stephen G. Kilper, vice president of AWMS, the 

division stated at that meeting that it was not prepared to address the suspension 

order regarding well #2 or AWMS’s plan until the statewide policy was in place. 

{¶ 14} In the second meeting, which was held near the end of February 

2015, the division presented AWMS a single sheet of paper containing 14 criteria 

that the division was considering for evaluating induced seismicity in its statewide 

policy. According to Kilper, the division stated at that meeting that it would not 

implement the statewide induced-seismicity policy for at least eight months and 
January Term, 2020 

7

that it would not recommend a policy to ODNR unless the policy “guaranteed zero 

risk.” 

{¶ 15} A few days after the February 2015 meeting, AWMS sent an e-mail

to the division seeking clarification of some of the division’s proposed criteria, to 

which Robert Worstall, deputy chief of the division, responded that AWMS should 

propose whatever it thought was appropriate. In early March 2015, AWMS 

submitted a plan to the division addressing the division’s proposed criteria. 

Nothing in the record suggests that the division responded to AWMS’s plan. 

B. Administrative and judicial proceedings regarding the division’s 

suspension order 

{¶ 16} On August 12, 2015, the commission issued a decision affirming the 

division’s suspension of operations at well #2. The commission noted that two of 

AWMS’s expert witnesses had testified that the seismic events in July and August 

2014 were likely associated with well #2. The commission also observed that while 

both experts had opined that operations at well #2 could be safely resumed subject 

to certain conditions, neither could state that the division’s suspension order was 

unreasonable under the circumstances that had led to the order. Turning to the 

testimony of Simmers, the division’s chief, the commission noted that he favored a 

temporary cessation of injections at well #2 pending further investigation and the 

implementation of a statewide policy on induced seismicity. 

{¶ 17} In upholding the suspension order, the commission acknowledged 

that under the circumstances, the division could be perceived as acting slowly in 

implementing a statewide policy to address induced seismicity. But the 

commission stressed that regulating induced seismicity caused by saltwater 

injection is a “complicated process that does not happen overnight.” The 

commission also determined that while there had been no evidence presented 

establishing that AWMS had violated the terms and conditions of its permit, the 

absence of a violation could not justify its lifting the suspension in light of the 
January Term, 2020 

8

division’s determination that further injection operations at well #2 could result in 

imminent danger to public health and safety or damage to the environment. 

{¶ 18} AWMS appealed the commission’s order to the Franklin County 

Court of Common Pleas, which vacated the order. The court determined that 

although the division had the authority to issue the suspension order, the division’s 

failure to respond to AWMS’s plan for resuming operations was unreasonable. The 

court stated, “[I]t defies logic as to how [the division] can expect [AWMS] to 

formulate and submit a comprehensive plan that would comply with a statewide 

policy that has yet to be formulated and completed.” The court then ordered the 

parties to submit proposed plans for restarting operations at well #2, which both 

parties did. Thereafter, the court ordered that operations at well #2 could be 

restarted under certain conditions, including that AWMS would cease injection 

operations if an imminent threat to public safety and health or to the environment 

occurred at or near the well. In the event of such a threat, the court’s order dictated 

that operations could not be restarted unless two AWMS representatives and two 

commission representatives determined that the threat had passed. 

{¶ 19} The division appealed the common pleas court’s judgment to the 

Tenth District Court of Appeals. In a two-to-one decision, the court of appeals 

affirmed in part, reversed in part, and after modifying the common pleas court’s 

judgment, affirmed the commission’s decision and reimposed the suspension of 

operations at well #2. Am. Water Mgt. Servs., L.L.C. v. Div. of Oil and Gas 

Resources Mgt., 2018-Ohio-3028, 118 N.E.3d 385, ¶ 59-60 (10th Dist.) (“AWMS 

I”). The court of appeals held that the common pleas court had erred in requiring 

two commission members to determine that an imminent threat had passed before 

operations at well #2 could be restarted. Id. at ¶ 28-31. The court of appeals also 

held that the court had erred in drawing certain conclusions from the record about 

the seismic risks posed by restarting operations at well #2. Id. at ¶ 39-49. AWMS 

appealed the judgment in AWMS I to this court, which denied AWMS’s 
January Term, 2020 

9

discretionary appeal, see 154 Ohio St.3d 1431, 2018-Ohio-4670, 111 N.E.3d 1192, 

and subsequent motion for reconsideration, see 154 Ohio St.3d 1467, 2018-Ohio5209, 114 N.E.3d 216. 

C. AWMS’s mandamus action 

{¶ 20} On August 26, 2016, while AWMS’s appeal in AWMS I was 

pending, AWMS filed a petition for a writ of mandamus in the Eleventh District to 

compel the state to commence property-appropriation proceedings. AWMS alleged 

that the suspension order effected a governmental taking of its property requiring 

the state to pay AWMS just compensation. In support, AWMS argued that it had 

complied with the relevant law and AWMS’s permit conditions, had not 

endangered public health and safety or the environment, and had been subjected to 

a “permanent shutdown” (rather than a temporary suspension) of its operations. 

AWMS emphasized that its mandamus action was not an attempt to challenge the 

suspension order. 

{¶ 21} The state moved for summary judgment, asserting that AWMS had 

failed to establish that a taking occurred. After the Tenth District issued its decision 

in AWMS I, the Eleventh District granted the state’s summary-judgment motion and 

denied AWMS’s mandamus petition, 2019-Ohio-923, 132 N.E.3d 1151, ¶ 50-51. 

First, the Eleventh District determined that the state had not effected a total 

regulatory taking because AWMS had not been deprived of all economically 

beneficial use of its property. In support, it reasoned that after the state had 

suspended operations at well #2, well #1 remained in operation for a period of time; 

that AWMS had derived revenue from processing, storing, recycling, treating, and 

disposing brine; that third parties had contacted AWMS about using the property; 

and that AWMS could put the property to other uses related to the oil-and-gas 

industry. Id. at ¶ 15-17. Second, the court of appeals determined that the state had 

not effected a partial regulatory taking. The court found it significant that the 

suspension order had been designed to “protect[] the public’s health and safety from 
January Term, 2020 

10 

the realistic potential of increased induced seismicity resulting from injection 

activities” at well #2. Id. at ¶ 40. It also found it significant that AWMS’s investors 

had been aware of the seismic activities in the Youngstown area and of the risks 

involved with the operation of AWMS’s injection wells. Id. at ¶ 44, 49. 

{¶ 22} AWMS appealed the Eleventh District’s judgment to this court. 

II. APPLICABLE LEGAL STANDARDS 

A. Summary-judgment standard 

{¶ 23} This court reviews a grant of summary judgment de novo. Ratonel 

v. Roetzel & Andress, L.P.A., 147 Ohio St.3d 485, 2016-Ohio-8013, 67 N.E.3d 775, 

¶ 18. Under Civ.R. 56(C), summary judgment is appropriate when (1) there is no 

genuine issue of material fact, (2) the moving party is entitled to judgment as a 

matter of law, and (3) it appears that after construing the evidence most strongly in 

the nonmoving party’s favor that reasonable minds can come to but one conclusion. 

“Neither we nor the trial court may weigh the proof or choose among reasonable 

inferences in deciding whether summary judgment should be granted.” Perez v. 

Scripps-Howard Broadcasting Co., 35 Ohio St.3d 215, 218, 520 N.E.2d 198 

(1988). At the summary-judgment stage, a “court should not reject one expert 

opinion for another simply because it believes one theory over the other.” Miller 

v. Bike Athletic Co., 80 Ohio St.3d 607, 613, 687 N.E.2d 735 (1998). 

B. Mandamus standard 

{¶ 24} To prevail on its mandamus claim, AWMS must show (1) a clear 

legal right to compel the state to commence property-appropriation proceedings, 

(2) a clear legal duty on the part of the state to institute that action, and (3) the lack 

of an adequate remedy in the ordinary course of the law. State ex rel. Gilmour 

Realty, Inc. v. Mayfield Hts., 122 Ohio St.3d 260, 2009-Ohio-2871, 910 N.E.2d 

455, ¶ 15. “Mandamus is the appropriate action to compel public authorities to 

commence appropriation cases when an involuntary taking of private property is 
January Term, 2020 

11 

alleged.” State ex rel. Shelly Materials, Inc. v. Clark Cty. Bd. of Commrs., 115 

Ohio St.3d 337, 2007-Ohio-5022, 875 N.E.2d 59, ¶ 15. 

C. Regulatory-takings doctrine 

{¶ 25} AWMS has asserted that it is entitled to compensation for the state’s 

regulatory taking of its property under the Takings Clause of the Fifth Amendment 

to the United States Constitution. The Takings Clause provides that private 

property shall not “be taken for public use, without just compensation.” The clause 

applies to the states through the Fourteenth Amendment. Chicago, Burlington & 

Quincy RR. Co. v. Chicago, 166 U.S. 226, 239-241, 17 S.Ct. 581, 41 L.Ed. 979 

(1897). 

{¶ 26} We acknowledge that “ ‘[e]very sort of [real property] interest the 

citizen may possess’ counts as a property interest under the Fifth Amendment.” 

(Brackets sic.) Cienega Gardens v. United States, 331 F.3d 1319, 1329 

(Fed.Cir.2003) (“Cienega Gardens I”), quoting United States v. Gen. Motors Corp., 

323 U.S. 373, 378, 65 S.Ct. 357, 89 L.Ed. 311 (1945). Accordingly, “the holder of 

an unexpired leasehold interest in land is entitled” to invoke the Takings Clause’s 

guarantees. Alamo Land & Cattle Co., Inc. v. Arizona, 424 U.S. 295, 303, 96 S.Ct. 

910, 47 L.Ed.2d 1 (1976). 

{¶ 27} AWMS has also referred to its right to compensation for the state’s 

alleged taking of its property under the Ohio Constitution. “Section 19, Article I 

of the Ohio Constitution also provides that private property shall not be taken for 

public use without just compensation.” Shelly Materials, 115 Ohio St.3d 337, 

2007-Ohio-5022, 875 N.E.2d 59, at ¶ 16. Although AWMS makes a passing 

reference to that provision, its substantive arguments rely on Fifth Amendment 

takings jurisprudence so we focus our analysis here on that jurisprudence. 

{¶ 28} Although the federal Takings Clause had been originally understood 

to apply only to situations involving the direct appropriation of property or the 

functional equivalent of a practical ouster of an owner’s possession, Lucas v. South 
January Term, 2020 

12 

Carolina Coastal Council, 505 U.S. 1003, 1014, 112 S.Ct. 2886, 120 L.Ed.2d 798 

(1992) (collecting cases), the United States Supreme Court has recognized that the 

clause may also be applied to overly burdensome governmental regulations of 

property, Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S.Ct. 158, 67 

L.Ed. 322 (1922) (“while property may be regulated to a certain extent, if regulation 

goes too far it will be recognized as a taking”). Since Mahon, principles have been 

established for identifying regulations that go too far. See Lingle v. Chevron U.S.A., 

Inc., 544 U.S. 528, 538-540, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005). 

{¶ 29} Two of those principles bear on this case. The first is the 

“categorical rule” discussed in Lucas, which applies to “total regulatory takings.” 

Lucas at 1026. Under that rule, the government’s payment of just compensation is 

required when its regulation “deprives land of all economically beneficial use,” id. 

at 1027, unless “background principles of the State’s law of property and nuisance” 

impose independent restrictions on the owner’s usage, id. at 1029. The second 

principle derives from the Supreme Court’s decision in Penn Cent. Transp. Co. v. 

New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978), which applies 

to “ ‘partial’ regulatory taking[s],” Shelly Materials at ¶ 19. The ad hoc, factspecific analysis established in Penn Cent. requires a court to consider three factors: 

“(1) the economic impact of the regulation on the claimant, (2) the extent to which 

the regulation has interfered with distinct investment-backed expectations, and (3) 

the character of the governmental action.” Id.

III. ANALYSIS 

{¶ 30} We begin our analysis by addressing two preliminary questions, the 

answers to which will influence our regulatory-takings analysis. First, we consider 

the state’s argument that this case is unripe. Second, we consider the state’s 

argument that it effected at most a temporary suspension, rather than a permanent 

shutdown, of well #2. After addressing those questions, we turn to the main issue 

in this case, i.e., whether the state effected either a total taking of well #2 under the 
January Term, 2020 

13 

standard established in Lucas or a partial taking of it under the standard established 

in Penn Cent.

A. Ripeness 

{¶ 31} The state faults AWMS for having failed to submit a comprehensive 

plan for restarting operations at well #2, stating that it “stands by willing to allow 

operation of the AWMS #2 Well if [AWMS] submits a comprehensive plan 

protective of public health and safety.” (Emphasis sic.) Although the state does 

not precisely identify a legal doctrine in support of its argument, the crux of its 

position, as we understand it, is that AWMS’s takings claim is unripe. 

{¶ 32} “[A] claim that the application of government regulations effects a 

taking of a property interest is not ripe until the government entity charged with 

implementing the regulations has reached a final decision regarding the application 

of the regulations to the property at issue.” Williamson Cty. Regional Planning 

Comm. v. Hamilton Bank of Johnson City, 473 U.S. 172, 186, 105 S.Ct. 3108, 87 

L.Ed.2d 126 (1985), overruled on other grounds, Knick v. Twp. of Scott, ___ U.S. 

___, 139 S.Ct. 2162, 2179, 204 L.Ed.2d 558 (2019). “Where further administrative 

process could reasonably result in a more definite statement of the impact of the 

regulation, the property owner is generally required to pursue that avenue of relief 

before bringing a takings claim.” Morris v. United States, 392 F.3d 1372, 1376 

(Fed.Cir.2004). 

{¶ 33} The “[r]ipeness doctrine does not,” however, “require a landowner 

to submit applications for their own sake.” Palazzolo v. Rhode Island, 533 U.S. 

606, 622, 121 S.Ct. 2448, 150 L.Ed.2d 592 (2001). Accordingly, “[a] failure to 

secure a final decision may be excused under the futility exception, ‘where [an] 

agency’s decision makes clear that pursuing remaining administrative remedies 

will not result in a different outcome.’ ” (Second bracket sic.) Freeman v. United 

States, 875 F.3d 623, 628 (Fed.Cir.2017), quoting Morris at 1376. “A landowner 

need not resort to futile piecemeal litigation or submit to repetitive application 
January Term, 2020 

14 

requirements to make a taking claim ripe.” Cooley v. United States, 324 F.3d 1297, 

1302 (Fed.Cir.2003). Because a takings claim is ripe after a governmental entity’s 

final decision, “an applicant need not submit further applications” before it can 

pursue its claim. Id. at 1302-1303. 

{¶ 34} In this case, the state suggests that if AWMS would submit a restart 

plan for well #2 that meets the standards it set out during the parties’ commonpleas-court litigation (standards the state settled on after AWMS filed its mandamus 

petition), then AWMS would be able to restart its operations. Broadly speaking, 

the state’s standards outlined a five-step restart plan directing AWMS to (1) gather 

information, (2) perform well-construction modifications, (3) install monitoring 

equipment, (4) perform pre-operation testing, and (5) follow a schedule of 

operations with defined injection pressures and maximum amounts to be injected, 

subject to modifications or the suspension of operations depending on seismicity in 

the area of well #2. 

{¶ 35} The state ignores that AWMS twice tried—and failed—to persuade 

the division to allow it to restart operations at well #2. AWMS first tried to do this 

by submitting its September 2014 plan. According to Simmers, the division had 

found that plan to be “generic and inadequate,” although, as noted by the court of 

appeals in AWMS I, the division did not contact AWMS to collaborate on the plan 

or to critique the plan, 2018-Ohio-3028, 118 N.E.3d 385, at ¶ 7, and the record does 

not show that the division responded to the plan. Moreover, AWMS submitted a 

second plan in March 2015 to which the division apparently never responded either, 

id. at ¶ 8. 

{¶ 36} Now, the state argues that AWMS should be faulted for having failed 

to submit a third restart plan for well #2 based on standards the state set out after 

AWMS filed its mandamus complaint and after it twice tried to satisfy the state’s 

standards. The state’s argument, if we were to accept it, would invite protracted 

litigation. Also, because there is no indication that the state’s standards, if met, 
January Term, 2020 

15 

would be binding on the state, the division could change them at any time, which, 

under the state’s logic, could create yet another opportunity for it to say that all 

AWMS needs to do is submit another plan. We decline the state’s invitation to 

issue a decision establishing precedent permitting the state to create moving targets. 

{¶ 37} In summary, the division either rebuffed or ignored the two plans 

that AWMS had submitted to restart well #2. We conclude that AWMS was 

justified in pursuing compensation through a takings action rather than submitting 

a third restart plan and that AWMS’s claim was ripe at the time it instituted its 

takings action. See Cooley, 324 F.3d at 1302-1303. 

B. Permanent versus temporary takings 

{¶ 38} The state next argues that the suspension of operations at well #2 is 

merely temporary and cannot amount to a categorical taking. In casting the 

suspension as temporary, the state seeks the benefit of the rule articulated in TahoeSierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 

302, 122 S.Ct. 1465, 152 L.Ed.2d 517 (2002), in which the United States Supreme 

Court determined that the principles espoused in Penn Cent., rather than those set 

forth in Lucas, should apply to a moratorium on property development of finite 

duration, provided the duration of the moratorium is reasonable under the 

circumstances. Tahoe-Sierra at 341-342 (considering a 32-month moratorium). 

The court reasoned that Lucas’s categorical rule should not apply to that situation 

because a temporary prohibition on property use could not permanently deprive the 

property of all its value. “Logically, a fee simple estate cannot be rendered 

valueless by a temporary prohibition on economic use, because the property will 

recover value as soon as the prohibition is lifted.” Id. at 332. 

{¶ 39} The state contends that its suspension of operations at well #2 is 

temporary for two reasons. First, it argues that the division did not order the well 

to be permanently plugged under R.C. 1509.12(B). But from a functional 

standpoint, there is no material difference between a plugged well and a suspended 
January Term, 2020 

16 

well—neither can be used. Second, it argues that the restart of operations at well 

#2 is entirely within the control of AWMS because all AWMS needs to do is submit 

another restart plan. But that is simply untrue. Even if AWMS were to submit 

another plan, the division might again fail to respond to it or disapprove it. 

{¶ 40} The state’s attempt to characterize the suspension of operations at 

well #2 as temporary founders on its open-endedness. See Wyatt v. United States, 

271 F.3d 1090, 1097 (Fed.Cir.2001), fn. 6 (“The essential element of a temporary 

taking is a finite start and end to the taking”). Unlike in Tahoe-Sierra, which 

involved a prohibition on land use of finite duration, this case involves a suspension 

of operations without a fixed expiration date. Indeed, the record shows that the 

suspension will remain in effect unless and until the division decides that operations 

at well #2 may be restarted. 

{¶ 41} Also instructive here is our decision in State ex rel. BSW Dev. Group. 

v. Dayton, 83 Ohio St.3d 338, 699 N.E.2d 1271 (1998). In that case, we rejected a 

property owner’s argument that the government had permanently taken the owner’s 

property because the government indicated that it would have granted the owner’s 

application for a permit upon the owner’s fulfilment of certain ministerial 

requirements. Id. at 342-343. Here, the conditions that the division has asked 

AWMS to meet to restart operations at well #2 are hardly ministerial. 

{¶ 42} In summary, we reject the state’s argument that the suspension of 

operations at well #2 is temporary. 

C. Whether the division effected a total taking 

1. Economically beneficial use 

{¶ 43} We start our analysis of AWMS’s total-takings claim with the rule 

espoused in Lucas, which applies to the “relatively rare situations where the 

government has deprived a landowner of all economically beneficial uses.” 505 

U.S. at 1018, 112 S.Ct. 2886, 120 L.Ed.2d 798. Under Lucas, the “determinative 

factor” is whether the regulation effects a “complete elimination of a property’s 
January Term, 2020 

17 

value.” Lingle, 544 U.S. at 539, 125 S.Ct. 2074, 161 L.Ed.2d 876. See also R.T.G., 

Inc., 98 Ohio St.3d 1, 2002-Ohio-6716, 780 N.E.2d 998, at ¶ 39 (plurality opinion) 

(“Lucas applies where the regulation has deprived the property of all economic 

value”). 

{¶ 44} AWMS supports its argument that it suffered a total taking with the 

report of its expert witness, Dr. William W. Wade, who determined, using a netpresent-value calculation that AWMS had lost 99.4 percent of its investment by 

September 2015 and 101.5 percent of its investment by June 2017. Dr. Wade 

determined that the division’s continued enforcement of its suspension order for 

well #2 created a situation in which AWMS could not cover its operating costs 

despite any operating revenues generated by well #1. As he explained, “operations 

without Well #2 are not economically viable” because “Well #2 is essential to the 

business operations.” 

{¶ 45} The state’s expert witnesses faulted Dr. Wade’s analysis as relying 

on an overly optimistic projection of the volume of wastewater that AWMS’s wells 

would have accepted. In their view, the well-capacity limitations of AWMS’s 

wells, not the division’s suspension order, had been one of the leading culprits for 

AWMS’s decline in operating revenues. Had Dr. Wade accounted for those 

limitations, the state says, he would not have concluded that AWMS suffered a total 

taking. 

{¶ 46} We need not decide which expert witness was right, for a court may 

not weigh competing expert-witness opinions at the summary-judgment stage. 

Miller, 80 Ohio St.3d at 613, 687 N.E.2d 735. We hold, however, that these 

differences of opinion are enough to establish a genuine issue of material fact 

concerning whether AWMS suffered a total taking under Lucas. For that reason, 

we reverse the Eleventh District’s judgment granting summary judgment to the 

state and remand to that court for further proceedings on AWMS’s total-takings 

claim. 
January Term, 2020 

18 

{¶ 47} In reaching this decision, we reject the state’s argument that AWMS 

did not suffer a total taking because AWMS used and could continue to use its site 

after the division suspended operations at well #2. The state emphasizes that 

AWMS could use the site to (1) conduct saltwater-injection operations at well #1, 

(2) store, recycle, and treat wastewater, and (3) sell byproducts of the wastewater. 

According to the state, nothing prevents AWMS from continuing those uses. Our 

concern here, however, is not whether AWMS’s property is capable of being used, 

but whether it is capable of being used in an “economically beneficial or 

productive” manner. Lucas, 505 U.S. at 1015, 1017, 112 S.Ct. 2886, 120 L.Ed.2d 

798. As Dr. Wade opined, the uses to which the state refers yield monthly net 

losses. For the purposes of summary judgment, his opinion is enough to establish 

a genuine issue of material fact sufficient to withstand the state’s claim that AWMS 

did not suffer a total taking. 

{¶ 48} We also reject the court of appeals’ conclusion that AWMS did not 

suffer a total taking because AWMS could have sublet its property to a third party. 

2019-Ohio-923, 132 N.E.3d 1151, at ¶ 16. The Federal Circuit addressed a similar 

argument in Lost Tree Village Corp. v. United States, 787 F.3d 1111 

(Fed.Cir.2015). In that case, the government argued that an owner’s ability to sell 

an affected parcel of land constituted an economically beneficial use under Lucas. 

In rejecting that argument, the court explained that “[t]ypical economic uses enable 

a landowner to derive benefits from land ownership rather than requiring a 

landowner to sell the affected parcel.” Id. at 1117. By analogy, AWMS’s 

subletting the property, which would transfer away its right to directly use the 

property, also does not rise to the level of an economically beneficial use under 

Lucas. Moreover, any sublessee of the property would encounter the same problem 

as AWMS because it would inherit AWMS’s leasehold rights, which, as noted 

above, extend no further than saltwater-injection-well operations. 
January Term, 2020 

19 

{¶ 49} It is doubtful that AWMS’s subletting the property would even be a 

viable option here. “[A] proposed ‘use’ requires a showing of reasonable 

probability that, at the time of the taking, the land was both physically adaptable for 

such use and that there was a need or demand for such use in the reasonably near 

future.” Bd. of Cty. Supervisors of Prince William Cty. v. United States, 276 F.3d 

1359, 1365 (Fed.Cir.2002). The court of appeals observed that third parties had 

expressed interest in using AWMS’s property but that no agreement had been 

finalized. 2019-Ohio-923, 132 N.E.3d 1151, at ¶ 16. In support, it relied on the 

deposition testimony of Kilper, AWMS’s vice president, who explained that two 

potential buyers had contacted him and expressed interest in possibly buying out 

AWMS’s interest in the property. The record does not disclose the details of those 

conversations, but Kilper explained that at some point in the negotiations the 

potential buyers stopped returning AWMS’s telephone calls. The evidence, 

therefore, does not show a legitimate demand for AWMS’s interest in the property. 

{¶ 50} The court of appeals also relied on the report of Andrew Adgate, 

ODNR’s underground-injection-control manager, id. at ¶ 17. In his report, Adgate 

suggested alternative ways in which AWMS could use the property. But because 

we conclude that Dr. Wade’s opinions in his report are enough to create a genuine 

issue of material fact regarding whether AWMS suffered a total taking, we need 

not consider the substance of Adgate’s report. 

2. The state’s nuisance defense 

{¶ 51} Under Lucas, even if a governmental regulation completely deprives 

an owner of all economically beneficial use of its property, just compensation is 

not required if the government can show that background principles of property and 

nuisance law proscribe the owner’s use of the property. Lucas, 505 U.S. at 1029, 

1017, 112 S.Ct. 2886, 120 L.Ed.2d 798. To take an example from Lucas, 
January Term, 2020 

20 

the corporate owner of a nuclear generating plant [would not be

entitled to just compensation] when it is directed to remove all 

improvements from its land upon discovery that the plant sits astride 

an earthquake fault. Such regulatory action may well have the effect 

of eliminating the land’s only economically productive use, but it 

does not proscribe a productive use that was previously permissible 

under relevant property and nuisance principles. 

Id. at 1029-1030. Courts have interpreted Lucas’s background-principles-ofproperty-and-nuisance-law passage as creating a defense that the government can 

raise in a regulatory-takings action. See, e.g., Rith Energy, Inc. v. United States, 

247 F.3d 1355, 1361 (Fed.Cir.2001); Palm Beach Isles Assocs. v. United States, 

231 F.3d 1354, 1357 (Fed.Cir.2000). We must consider whether, as AWMS argues, 

the state waived its nuisance defense. 

{¶ 52} “Unlike lack of subject matter jurisdiction, other affirmative 

defenses can be waived.” State ex rel. Jones v. Suster, 84 Ohio St.3d 70, 77, 701 

N.E.2d 1002 (1998). “[I]t is well settled that ‘[a] party who fails to raise an 

argument in the court below waives his or her right to raise it here.’ ” (Second 

bracket sic.) Niskanen v. Giant Eagle, Inc., 122 Ohio St.3d 486, 2009-Ohio-3626, 

912 N.E.2d 595, ¶ 34, quoting State ex rel. Zollner v. Indus. Comm., 66 Ohio St.3d 

276, 278, 611 N.E.2d 830 (1993). 

{¶ 53} AWMS argues that the state waived its nuisance defense because the 

state did not raise it in the court of appeals. The state’s second amended answer to 

AWMS’s complaint clearly sets forth the defense, but whether the state did so in 

its summary-judgment motion presents a closer question. 

{¶ 54} In its motion for summary judgment, the state briefly analogized the 

facts of this case to the hypothetical used by the court in Lucas in which the 

government could raise a nuisance defense in a situation in which a nuclear-power-
January Term, 2020 

21 

generation plant sits astride an earthquake fault. In making that analogy, the state 

claimed that AWMS’s facility was located near “a previously unknown earthquake 

fault.” 

{¶ 55} At first blush, it would appear that the state did not waive its nuisance 

defense. The problem, however, is that Lucas requires a government-defendant to 

ground its nuisance defense in principles of its state’s property and nuisance law. 

Lucas, 505 U.S. at 1029-1030, 1017, 112 S.Ct. 2886, 120 L.Ed.2d 798. Here, the 

state did not ground its nuisance defense in principles of Ohio property and 

nuisance law. We have held that waiver will apply when a litigant supplies no 

argument “regarding whether the relevant case law, applied to the facts of th[e] 

case, justifies a decision in [the litigant’s] favor.” Util. Serv. Partners, Inc. v. Pub. 

Util. Comm., 124 Ohio St.3d 284, 2009-Ohio-6764, 921 N.E.2d 1038, ¶ 53. We 

find that principle dispositive here and hold that the state waived its nuisance 

defense for purposes of this appeal. 

{¶ 56} In summary, we conclude that there is a genuine issue of material 

fact concerning whether the state’s suspension of operations at well #2 deprived 

AWMS of all economically beneficial use of its leasehold. We further conclude 

that the state waived its nuisance defense. We therefore reverse the Eleventh 

District’s judgment granting summary judgment to the state on AWMS’s totaltakings claim. On remand, the court of appeals must weigh the parties’ evidence 

relating to AWMS’s total-takings claim. 

D. Whether the division effected a partial taking 

{¶ 57} A regulation that prohibits less than all economically beneficial use 

of land falls outside of Lucas’ categorical rule and into Penn Cent.’s three-factor 

analysis. Palazzolo, 533 U.S. 606, 617, 121 S.Ct. 2448, 150 L.Ed.2d 592. Under 

the framework of the Penn Cent. analysis, a court should consider “(1) the 

economic impact of the regulation on the claimant, (2) the extent to which the 

regulation has interfered with distinct investment-backed expectations, and (3) the 
January Term, 2020 

22 

character of the governmental action,” Shelly Materials, 115 Ohio St.3d 337, 2007-

Ohio-5022, 875 N.E.2d 59, at ¶ 19. “[T]he Penn Central inquiry turns in large part, 

albeit not exclusively, upon the magnitude of a regulation’s economic impact and 

the degree to which it interferes with legitimate property interests.” Lingle, 544 

U.S. at 540, 125 S.Ct. 2074, 161 L.Ed.2d 876. “These essentially ad hoc, factual 

inquiries,” Penn Cent., 438 U.S. at 123, 98 S.Ct. 2646, 57 L.Ed.2d 631, account for 

the “particular circumstances of the case,” 767 Third Ave. Assocs. v. United States, 

48 F.3d 1575, 1580 (Fed.Cir.1995). 

1. Economic impact 

{¶ 58} Although the court of appeals did not consider the economic impact 

upon AWMS resulting from the state’s suspension of its operations at well #2, an 

established method of performing the economic-impact analysis involves 

“compar[ing] the value that has been taken from the property with the value that 

remains in the property.” Keystone Bituminous Coal Assn. v. DeBenedictis, 480 

U.S. 470, 497, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987). This method is sometimes 

referred to as the “with and without” method. Eagle, “Economic Impact” in 

Regulatory Takings Law, 19 Hastings W.-Nw.J.Envtl.L. & Pol’y 407, 417-418, 420 

(2013) (“The usual approach to determine the impact of the regulation subtracts the 

value of a parcel with the regulation in place from the value of the parcel without 

the regulation”). 

{¶ 59} Although there does not appear to be an exclusive method of 

comparing the value of property before and after a regulation, at least two 

approaches have been expressly endorsed. The first is the market-value approach, 

which compares the “market value of the property with and without the restrictions 

on the date that the restriction began.” Cienega Gardens v. United States, 503 F.3d 

1266, 1282 (Fed.Cir.2007) (“Cienega Gardens II”). The second is the lost-netincome approach, which “compare[s] the lost net income due to the restriction 

(discounted to present value at the date the restriction was imposed) with the total 
January Term, 2020 

23 

net income without the restriction over the entire useful life of the property (again 

discounted to present value).” (Parenthesis sic.) Id. 

{¶ 60} AWMS’s expert witness, Dr. Wade, calculated the economic impact

of the state’s regulation on AWMS under the with-and-without method using the 

lost-net-income approach. In Dr. Wade’s first calculation, he computed “the actual 

outcome caused by the shutdown of well #2.” In his second calculation, he 

computed “the expected outcome, which motivated [AWMS]’s investment in the 

leased property.” In each scenario, Dr. Wade used a discounted-cash-flow model 

to arrive at the net present value of AWMS’s property interest as of September 2014 

(when the suspension of operations at well #2 occurred) by looking backwards from 

June 2017 (the last date for which Dr. Wade had figures included on AWMS’s netincome statement from which to perform an analysis). 

{¶ 61} Regarding the first calculation, Dr. Wade computed a net loss of 

$6,119,275, and regarding the second calculation, he computed an expected net 

income of $14,475,770. Dr. Wade then computed the difference between those two 

numbers and determined that the economic impact upon AWMS was a loss of 

$20,595,045. Finally, Dr. Wade compared the present value of AWMS’s 

investment ($6,076,043 as of September 2014) with the actual outcome (a net loss 

of $6,119,275 as of September 2014) and concluded that AWMS’s “continued 

ownership of the facilities through June 2017 incurred a loss of 101.5% of 

investment.” In his words, “the actual outcome does not recoup investment; no 

return on investment exists.” 

{¶ 62} The state’s expert witnesses agree that the lost-net-income approach 

is a valid method for computing economic impact. And they too performed a 

discounted-cash-flow analysis. But they concluded that the economic impact of the 

state’s suspension of operations at well #2 upon AWMS ranged from a low of 

$116,334 to a high of $359,374. 
January Term, 2020 

24 

{¶ 63} Again, the court of appeals did not consider the economic impact 

upon AWMS resulting from the state’s suspension of its operations at well #2. 

Given the significant numerical disparities in the results of the economic-impact 

analyses between AWMS’s and the state’s expert witnesses, we conclude that a 

genuine issue of material fact precluded the granting of summary judgment on the 

economic-impact factor under Penn Cent. We therefore reverse the Eleventh 

District’s judgment granting summary judgment to the state on AWMS’s partialtakings claim, remand to the court of appeals, and order it to weigh the parties’ 

evidence concerning the economic-impact upon AWMS of the state’s suspension 

of operations at well #2. 

2. Reasonable investment-backed expectations 

{¶ 64} “The reasonable, investment-backed expectation analysis is 

designed to account for property owners’ expectation that the regulatory regime in 

existence at the time of their acquisition will remain in place, and that new, more 

restrictive legislation or regulations will not be adopted.” Love Terminal Partners, 

L.P. v. United States, 889 F.3d 1331, 1345 (Fed.Cir.2018). The Federal Circuit has 

developed three factors to guide a court when conducting that inquiry: “(1) whether 

the plaintiff operated in a ‘highly regulated industry;’ (2) whether the plaintiff was 

aware of the problem that spawned the regulation at the time it purchased the 

allegedly taken property; and (3) whether the plaintiff could have ‘reasonably 

anticipated’ the possibility of such regulation in light of the ‘regulatory 

environment’ at the time of purchase.” Apollo Fuels, Inc. v. United States, 381 F.3d 

1338, 1349 (Fed.Cir.2004), quoting Commonwealth Edison Co. v. United States, 

271 F.3d 1327, 1348 (Fed.Cir.2001). 

{¶ 65} Starting with the first factor—whether AWMS operated in a highly 

regulated industry—AWMS correctly notes that an entrant into a highly regulated 

field does not abandon all reasonable investment-backed expectations. See 

Cienega Gardens I, 331 F.3d at 1350. It is also true, however, that “reasonable
January Term, 2020 

25 

investment-backed expectations are greatly reduced in a highly regulated field.” 

Branch v. United States, 69 F.3d 1571, 1581 (Fed.Cir.1995). And here, AWMS 

does not deny that it had entered a highly regulated industry—that of oil and gas. 

{¶ 66} Turning to the second factor—whether AWMS had been aware of 

the potential seismicity problem—AWMS admits to having known that induced 

seismicity could be an issue with its injection wells. However, we disagree with 

some of the state’s arguments concerning the problem-awareness factor because 

they focus on circumstances that arose after AWMS had acquired its leasehold on 

December 19, 2011. First, the state points to the seismic events that took place in 

Youngstown on December 24 and December 31, 2011, which prompted former 

Governor Kasich to impose a moratorium on certain injection activities. Second, 

the state emphasizes the September 2013 confidential offering memorandum that 

AWMS prepared for prospective investors in which AWMS acknowledged that 

governmental regulation of injection wells might increase, that its wells might 

induce a seismic event, and that such an event could cause a suspension of its 

injection operations. True, that evidence tends to show AWMS’s awareness that 

its operations might be suspended if its wells were to be determined to have induced 

seismic events. But it is the interestholder’s expectations at the time it acquired its 

interest that is determinative, not its expectations following an event occurring at 

some later point in time. See Apollo Fuels, 381 F.3d at 1349. 

{¶ 67} At the time AWMS acquired its leasehold interest, AWMS could not 

have anticipated that the state would waver between a case-by-case approach and a 

statewide approach to addressing induced seismicity while rebuffing AWMS’s 

attempts to meet the state’s inchoate regulatory expectations. The parties do not 

dispute that at the time AWMS obtained its leasehold in December 2011, the 

division had not established its approach to managing induced seismicity. When 

the division first issued its suspension orders in September 2014, it put the onus on 

AWMS to “submit a written plan to the Division for evaluating the seismic 
January Term, 2020 

26 

concerns associated with the operation of” well #2. Although AWMS had not 

received direction from the division about what to include in the plan, AWMS 

nevertheless submitted a plan that included several proposals to establish certain 

controls over injections at well #2. The division rejected the plan as “generic and 

inadequate.” 

{¶ 68} During its appeal of the suspension order, AWMS met twice with 

the division in an attempt to understand the division’s regulatory position. At the 

first meeting in October 2014, the division stated that its statewide policy would 

not be ready for at least four to six more months and declined to address the 

circumstances of its suspension of AWMS’s operations. At the second meeting in 

February 2015, the division presented AWMS a single sheet of paper containing 14 

criteria that the division was considering for evaluating induced seismicity in its 

statewide policy. But the division also told AWMS that it would not implement a 

statewide policy for at least another eight months. A few days after the February 

2015 meeting, AWMS sought clarification on some of the division’s proposed 

criteria. Once again, the division failed to offer any direction or clarification. 

AWMS nevertheless submitted a plan to the division in early March 2015 

addressing the division’s proposed criteria. The record does not indicate that the 

division responded. 

{¶ 69} AWMS got its answer in August 2015 when the commission issued 

its decision affirming the division’s suspension of operations of well #2. AWMS 

could not have reasonably anticipated when it acquired its leasehold interest that 

the state’s inconsistent regulatory approach or its lack of responsiveness to 

AWMS’s attempts at remediation would leave AWMS in limbo for years with an 

indefinite suspension of its operations. 

{¶ 70} AWMS has demonstrated a material issue of fact that the division’s 

suspension of operations at #2 interfered with AMWS’s reasonable investment-
January Term, 2020 

27 

backed expectations. We therefore reverse the Eleventh District’s granting of 

summary judgment on this factor under Penn Cent. 

3. Character of the governmental action 

{¶ 71} The court of appeals began its analysis of the character-of-thegovernmental-action factor under Penn Cent. as follows: 

In evaluating the character of the Suspension Order, we 

emphasize that the issue of the reasonableness of the Suspension 

Order has been fully litigated and the Tenth District’s opinion has 

preclusive effect on that point. * * * The character of the order has 

been deemed reasonable as a matter of law and that judgment was

issued in an action between the same parties. Collateral estoppel 

therefore bars [AWMS] from challenging the reasonableness of the 

underlying order. 

2019-Ohio-923, 132 N.E.3d 1151, at ¶ 22. The court of appeals did not, however, 

cite any takings-related authority to support its application of the doctrine of 

collateral estoppel as a means of deciding the character-of-the-governmental-action 

inquiry. And neither party’s brief defends the court of appeals’ invocation of that 

doctrine. The parties’ silence is justified because the character of a governmental 

action is not determined by its lawfulness or propriety. See Norman v. United 

States, 63 Fed.Cl. 231, 285 (2004) (“the lawfulness or appropriateness of the 

governmental action is not akin to the character of the governmental action”). 

Applying this principle, we will analyze the character-of-the-governmental-action 

factor on its merits rather than recognize the court of appeals’ procedural bar. 

{¶ 72} Without attempting to provide an exhaustive list of the factors that 

courts have used to guide their character-of-the-governmental-action inquiries, we 

will focus on three factors emphasized by the parties. The first factor involves 
January Term, 2020 

28 

whether the interestholder has been impermissibly “singled out” by the government 

for unfavorable treatment, Sherman v. Chester, 752 F.3d 554, 565-565 (2d 

Cir.2014), or instead been permissibly included within a governmental program 

aimed at “adjusting the benefits and burdens of economic life to promote the 

common good,” Penn Cent., 438 U.S. at 124, 98 S.Ct. 2646, 57 L.Ed.2d 631. The 

second factor involves whether the regulation bears a “harm-preventing purpose.” 

Rose Acre Farms, Inc. v. United States, 559 F.3d 1260, 1281 (Fed.Cir.2009). And 

the third factor involves the extent to which regulatory delay accompanied the 

government’s decisionmaking process. State ex rel. Duncan v. Middlefield, 120 

Ohio St.3d 313, 2008-Ohio-6200, 898 N.E.2d 952, ¶ 19-20. 

{¶ 73} Turning to the first factor—whether the state impermissibly singled 

out AWMS for unfair treatment—AWMS claims that the division unfairly did so 

by suspending its operations at well #2 while not suspending operations at a 

seismicity-inducing well in Washington County (the “Long Run well”). The state’s 

expert witnesses agreed that the Long Run well contributed to seismicity in its 

surrounding area. And the division’s personnel do not dispute that the division 

contacted the operator of the Long Run well and asked it to reduce—rather than 

suspend—the well’s injection volumes in an effort to mitigate seismicity risks. 

{¶ 74} The state argues, however, that there has been no unfair singling out 

of well #2 because the characteristics of well #2 and the Long Run well differ. First, 

the state asserts that the wells differ from a geological standpoint. The state stresses 

the proximity of the bottom of well #2 to a region known as the Precambrian 

basement, which consists of “igneous and metamorphic rocks that exist below the 

oldest sedimentary rock cover.” Ground Water Protection Council & Interstate Oil 

& Gas Compact Commission at 124. According to Simmers, the division’s chief, 

well injections near that region should be avoided. In Washington County, the 

separation between the bottom of the Long Run well’s injection zone and the 

Precambrian basement is just under a mile, which is a significant separation. Well 
January Term, 2020 

29 

#2, however, is drilled much deeper and bottoms out in an area located directly 

above the Precambrian basement. 

{¶ 75} AWMS agrees that the Long Run well and well #2 differ 

geologically. But it maintains that the significance of the differences have been 

overblown. The problem with AWMS’s argument in that regard, however, is that 

AWMS’s brief cites nothing from the record to support that view. See State ex rel. 

Coulverson v. Ohio Adult Parole Auth., 62 Ohio St.3d 12, 14, 577 N.E.2d 352 

(1991) (holding that conclusory allegations are not sufficient to withstand summary 

judgment). 

{¶ 76} The state’s second basis for distinguishing the Long Run well from 

well #2 rests on the respective wells’ relative proximities to population centers. In 

support, the state points to a report prepared by one of its expert witnesses 

concluding that “the seismic risk in Trumbull and Washington Counties are at 

opposite ends of the spectrum” due to the differences in the “distribution and 

density of [the] population and structures” in those areas. AWMS responds that it 

is not the proximity of injection wells to population centers that should matter but 

rather the proximity of seismic events to population centers. Yet, AWMS fails to 

identify anything in the record that affirmatively negates the state’s emphasis on 

the wells’ proximity to population centers. And even if it had done so, there are 

still enough differences between well #2 and the Long Run well to persuade us that 

the state did not unfairly single out well #2. 

{¶ 77} Under the second character-of-the-governmental-action factor—

whether governmental regulation bears a harm-preventing purpose—the character 

of a regulation will “weigh[] strongly against finding a taking” when the purpose 

of that regulation is to prevent harm to public health and safety. Rose Acre Farms, 

559 F.3d at 1281. “[I]n the context of the protection of public health and safety, 

‘the private interest has traditionally been most confined and governments are given 

the greatest leeway to act without the need to compensate those affected by their 
January Term, 2020 

30 

actions.’ ” Dimare Fresh, Inc. v. United States, 808 F.3d 1301, 1311 

(Fed.Cir.2015), quoting Rose Acre Farms at 1281-1282. In Rose Acre Farms, the 

federal circuit addressed a governmental action undertaken to limit the spread of 

salmonella bacteria in the chicken-egg market. Id. at 1261. In rejecting the 

plaintiff’s takings claim, the court gave considerable weight to the government’s 

harm-preventing purpose, explaining that human consumption of the “infected eggs 

could have caused serious illness and possibly even death.” Id. at 1283. 

{¶ 78} In this case, the state presents a similar harm-prevention 

justification, arguing that the purpose behind the division’s suspension of 

operations at well #2 was to protect the public against the threat of earthquakes. A 

December 2017 report prepared by Simmers bears out this assertion. Simmers 

explained in his report that the “protect[ion] [of] public health and safety” was the 

purpose of the state’s suspension of operations at well #2. He further noted a strong 

correlation between the operations at well #2 and the seismic events that took place 

in the vicinity of well #2 on July 28, 2014, and August 31, 2014. And he concluded 

that the restarting of operations at well #2 would pose a continued threat of harm to 

public health and safety because the division has, since issuing the suspension 

order, obtained evidence that well #2 sits near a geological fault. 

{¶ 79} AWMS does not challenge Simmers’s statement that the purpose of

the suspension was to protect the public from harm—in fact, AWMS recognizes 

that preventing harm to the public is a laudable goal. Nor does AWMS challenge 

Simmers’s determination that its operations at well #2 correlated with the seismic 

events from 2014—two of AWMS’s expert witnesses concur in that determination. 

But AWMS does say in its merit brief that no one has determined that AWMS’s 

operations posed an “imminent threat” to public safety. However, AWMS 

identifies no authority that requires a governmental actor to establish that there is 

an imminent threat of harm before the government implements a regulatory action 

to protect public health and safety. 
January Term, 2020 

31 

{¶ 80} The third and final character-of-the-governmental-action factor

involves the extent to which delay accompanied the state’s decisionmaking process. 

Although “[a] requirement that a person obtain a permit before engaging in a certain 

use of his or her property does not itself ‘take’ the property in any sense,” United 

States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 127, 106 S.Ct. 455, 88 

L.Ed.2d 419 (1985), “a taking may occur by reason of ‘extraordinary delay in 

governmental decisionmaking,’ ” Wyatt, 271 F.3d at 1097, quoting Tabb Lakes, 

Ltd. v. United States, 10 F.3d 796, 803 (Fed.Cir.1993). In deciding whether a delay

is extraordinary, a court must weigh “all relevant factors,” Duncan, 120 Ohio St.3d 

313, 2008-Ohio-6200, 898 N.E.2d 952, at ¶ 20, including the length of the delay, 

Bass Ents. Prod. Co., 381 F.3d at 366. Bad faith on the part of the government will 

influence the inquiry, as will any delay that the interestholder’s conduct caused. 

Duncan at ¶ 20. The “nature of the permitting process” and the “reasons for any 

delay” may also inform the analysis. Wyatt at 1098. 

{¶ 81} The party alleging a governmental taking must tie its claim of 

extraordinary delay to the government’s decisionmaking process, namely, the 

process by which the government reviews an interestholder’s formal request to use 

its property in a particular way. Duncan at ¶ 19-20. In Duncan, a case cited by 

AWMS in its merit brief, a landowner tied his claim of extraordinary delay to the 

government’s conduct in reviewing his zoning-permit applications. Duncan at 

¶ 21 (addressing delays of six and nine months). In Byrd v. Hartsville, a case 

Duncan cites with approval, see Duncan at ¶ 19, a landowner similarly claimed to 

have suffered from extraordinary delay during the government’s review of his 

zoning petition, 365 S.C. 650, 660-662, 620 S.E.2d 76 (2005) (addressing delays 

of two and eleven months). Although the plaintiffs in Duncan and Byrd did not 

succeed on their extraordinary-delay claims, the salient point for the purpose of our 

analysis is that the plaintiffs in those cases tied their claims to the manner in which 
January Term, 2020 

32 

the government conducted itself in reviewing their formal requests to use their 

property in a particular way. 

{¶ 82} Here, although it is a bit unclear, AWMS appears to allege 

extraordinary delay stemming from the division’s decision to delay, and then 

abandon, the implementation of its once-promised statewide policy on induced 

seismicity. But AWMS cites no authority supporting its argument that a claim of 

extraordinary delay will lie against the government for unduly delaying the 

implementation of a policy, as opposed to deciding an interestholder’s pending 

request to use its property in a certain way. And AWMS makes no claim that it is 

awaiting the division’s approval of its plans to restart well #2. 

{¶ 83} AWMS next alleges that the division has engaged in extraordinary 

delay based on the length of time that operations at well #2 have been suspended. 

But that argument is misplaced because it targets the consequences of the division’s 

decisionmaking process, not the decisionmaking process itself. 

{¶ 84} AWMS also alleges that the division has acted in bad faith. In

support of that contention, AWMS points to an affidavit provided by Kilper, its 

vice president, in which he stated that he was told by a member of the division that 

“press and politics” (rather than science) was the real reason that the Long Run well 

had been permitted to operate and well #2 had not. But as explained above, there 

is no genuine dispute that well #2 and the Long Run well differ in significant ways. 

Given these differences, AWMS’s allegations of bad faith are not “significantly 

probative.” Buckeye Union Ins. Co. v. Consol. Stores Corp., 68 Ohio App.3d 19, 

22, 587 N.E.2d 391 (10th Dist.1990) (if evidence is “merely colorable” or not 

“significantly probative,” summary judgment may be entered). 

{¶ 85} If the crux of AWMS’s argument is that the division took too long 

to conduct its review of AWMS’s restart plan—again, AWMS’s argument 

regarding the division’s delay is a bit unclear—then the temporal scope of such 

reviews must be considered. AWMS is not clear on how it imputes value to a 
January Term, 2020 

33 

particular length of time. Approximately seven months—from September 2014 to 

March 2015—elapsed between the dates on which it submitted its first and second 

restart plans. And approximately 17 months—from March 2015 to August 2016—

elapsed between the dates on which it submitted its second restart plan and filed its 

mandamus petition. Because the record does not show that the division ever 

formally rejected AWMS’s second restart plan, see also AWMS I, 2018-Ohio-3028, 

118 N.E.3d 385, at ¶ 8, in the absence of further guidance, we construe the filing of 

AWMS’s mandamus petition as setting the date upon which AWMS regarded the 

division as having effected a constructive denial of its plans. Even if we were to 

assume that the state acted in bad faith, AWMS cites no authority supporting its 

argument that delays of the lengths that occurred in this case are extraordinary 

under the circumstances. Further, delays of 45 months and longer have been 

deemed unextraordinary when, as here, complex regulatory schemes are involved. 

See, e.g., Bass Ents. Prod. Co., 381 F.3d at 1363, 1366-1368 (45-month delay); 

Wyatt, 271 F.3d at 1098-1100 (76-month delay). 

{¶ 86} In summary, we conclude that AWMS has not demonstrated that 

there is a genuine issue of material fact regarding whether the character of the 

division’s suspension order was to protect the public’s health and safety.

4. Balancing the factors 

{¶ 87} In a typical partial-takings case, a reviewing court must balance the 

Penn Cent. factors to determine whether a partial taking has occurred. Reoforce, 

Inc. v. United States, 853 F.3d 1249, 1271 (Fed.Cir.2017). But genuine issues of 

material fact preclude us from performing that balancing exercise. We reverse the 

Eleventh District’s judgment granting summary judgment to the state on AWMS’s 

partial-takings claim. On remand, the court of appeals must weigh the parties’ 

economic-impact evidence and determine in whose favor that factor falls. After 

doing so, the court of appeals must balance all three Penn Cent. factors to determine 

whether AWMS suffered a partial taking. 
January Term, 2020 

34 

IV. CONCLUSION 

{¶ 88} For the foregoing reasons, we hold that there is a genuine issue of 

material fact concerning whether the state’s suspension of AWMS’s operations at 

well #2 constituted a total taking by depriving AWMS of all economically 

beneficial use of its leasehold. We further conclude that the state waived its 

nuisance defense to AWMS’s total-takings claim. We reverse the Eleventh 

District’s judgment granting summary judgment to the state on AWMS’s totaltakings claim. On remand, the court of appeals must weigh the parties’ evidence 

relating to AWMS’s total-takings claim. 

{¶ 89} We also reverse the Eleventh District’s judgment granting summary 

judgment to the state on AWMS’s partial-takings claim. On remand, the court of 

appeals must weigh the parties’ evidence in accordance with this opinion and 

balance all three Penn Cent. factors to determine whether AWMS suffered a partial 

taking. 

Judgment reversed 

and cause remanded. 

O’CONNOR, C.J., and FRENCH and DEWINE, JJ., concur. 

KENNEDY, J., concurs in judgment only, with an opinion. 

STEWART, J., concurs in judgment only. 

DONNELLY, J., dissents, with an opinion. 

_________________ 

KENNEDY, J., concurring in judgment only. 

{¶ 90} Because I agree with the majority that there are genuine issues of 

material fact precluding the entry of summary judgment in favor of appellees, the 

Ohio Department of Natural Resources (“ODNR”); ODNR’s director, Mary Mertz; 

ODNR’s Division of Oil and Gas Resources Management (“the division”); and the 

division’s chief, Richard Simmers (collectively, “the state”), I concur in the court’s 

judgment to reverse the decision of the Eleventh District Court of Appeals. 
January Term, 2020 

35 

Appellants, AWMS Water Solutions, L.L.C.; AWMS Holdings, L.L.C.; and 

AWMS, Rt. 169, L.L.C. (collectively, “AWMS”), presented evidence that the 

state’s order closing AWMS’s saltwater-injection well effected a total or partial 

taking of its property sufficient to survive the state’s motion for summary judgment. 

Total-takings analysis 

{¶ 91} The threshold issue in a takings analysis is to define the property 

allegedly taken, and state law determines which individual rights constitute 

property, see State ex rel. New Wen, Inc. v. Marchbanks, 159 Ohio St.3d 15, 2020-

Ohio-63, 146 N.E.3d 545, ¶ 24. “An interest in real property is defined by the metes 

and bounds that describe its geographic dimensions and the term of years that 

describes the temporal aspect of the owner’s interest.” Tahoe-Sierra Preservation 

Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302, 331-332, 122 S.Ct. 

1465, 152 L.Ed.2d 517 (2002). We have recognized, for example, that “[a] mineral 

estate may be considered the relevant parcel for a compensable regulatory taking if 

the mineral estate was purchased separately from the other interests in the real 

property.” State ex rel. Shelly Materials, Inc. v. Clark Cty. Bd. of Commrs., 115 

Ohio St.3d 337, 2007-Ohio-5022, 875 N.E.2d 59, ¶ 34. 

{¶ 92} The property interest at stake in this case is a narrow one: a leasehold 

right to operate Class II saltwater-injection wells on 5.2 acres of industrial property 

in Weathersfield Township, Trumbull County, Ohio. AWMS has invested millions 

of dollars to develop the facilities necessary to operate those wells, but it may use 

the property only for operations consistent with the limited property interest it 

owns. That is, AWMS cannot use the property to operate a fast-food restaurant or 

a car dealership or anything else exceeding the scope of the lease. Therefore, in 

determining whether the state’s order suspending AWMS’s operations at well #2 

constitutes a total or partial taking, the property allegedly taken is AWMS’s limited 

property right allowing it to operate saltwater-injection wells under its leasehold 

and the ancillary activities associated with that right. 
January Term, 2020 

36 

{¶ 93} In the United States Supreme Court’s seminal decision in 

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322 (1922), 

the claimant had sold the surface rights to particular parcels of property, but 

expressly reserved the right to remove the coal underneath those parcels. After the 

sale, Pennsylvania enacted a statute forbidding the mining of coal that causes the 

subsidence of any structure used as a human inhabitation unless, among other 

exceptions, the owner of the coal also owned the surface land. Id. at 412-413. The 

Supreme Court determined that the statute had made it “commercially 

impracticable” to mine the coal and had “very nearly the same effect for 

constitutional purposes as appropriating or destroying” the reservation of the 

mineral interest. Id. at 414. The court therefore held that the statute effected a

governmental taking of property. Id. at 415-416. 

{¶ 94} Similarly, AWMS’s evidence established a triable issue regarding 

whether the state’s suspension order caused a total taking of AWMS’s property by 

depriving its leasehold of “all economically beneficial or productive use,” Lucas v. 

South Carolina Coastal Council, 505 U.S. 1003, 1015, 112 S.Ct. 2886, 120 L.Ed.2d 

798 (1992). AWMS presented the report of its expert, Dr. William W. Wade, who 

explained that AWMS had lost 99.4 percent of its investment by September 2015 

and 101.5 percent of its investment by June 2017. He therefore opined that it was 

not economically viable for AWMS to conduct saltwater-injection operations at 

well #1 if the suspension order remained in place for well #2. That evidence, if 

believed, is sufficient to establish that the suspension order was a total 

governmental taking of AWMS’s property because it completely deprived AWMS 

of all economically beneficial use of its leasehold interest, a limited property right 

allowing AWMS to operate saltwater-injection wells and to conduct the ancillary 

activities associated with the wells. See Lucas at 1015; Mahan at 414. A property 

right has no economic value if it can only be exercised at an economic loss. 
January Term, 2020 

37 

{¶ 95} Because Dr. Wade’s opinion created a genuine issue of material fact 

regarding whether AWMS had suffered a total taking of its property interest, it is 

unnecessary to consider other factual issues regarding whether AWMS’s leasehold 

retained some economic value because AWMS could continue other kinds of 

operations on the premises or because it could sell or sublet its interest. Those 

remain triable issues that should be considered by the court of appeals on remand; 

this court should not resolve factual disputes in the first instance when considering 

issues on appeal. 

Partial-takings analysis 

{¶ 96} Regarding AWMS’s partial-takings claim, I agree with the majority 

that there are genuine issues of material fact that precluded the entry of summary 

judgment in favor of the state. In determining whether a partial taking has occurred, 

we apply the analysis from Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 

98 S.Ct. 2646, 57 L.Ed.2d 631 (1978). We have noted that the analysis involves an 

an ad hoc, factual inquiry that requires the examination of the

following three factors to determine whether a regulatory taking 

occurred in cases in which there is no physical invasion and the 

regulation deprives the property of less than 100 percent of its 

economically viable use: (1) the economic impact of the regulation 

on the claimant, (2) the extent to which the regulation has interfered 

with distinct investment-backed expectations, and (3) the character 

of the governmental action. 

Shelly Materials, 115 Ohio St.3d 337, 2007-Ohio-5022, 875 N.E.2d 59, at ¶ 19. 

{¶ 97} Regarding the first prong of the Penn Cent. test—the economic 

impact of the regulation—AWMS presented Dr. Wade’s expert opinion that the 

economic impact of the suspension order on AWMS was a loss of $20,595,045 and 
January Term, 2020 

38 

the elimination of any return on investment. The state’s experts calculated the 

economic impact as ranging between $116,334 and $359,374. Accordingly, there 

is a significant factual dispute regarding the scope of the economic impact that 

AWMS suffered. Without resolving this factual dispute, the court of appeals had 

no basis to determine what weight, if any, to give the economic impact of the 

regulation on AWMS’s property. Simply assuming that this factor weighed in 

AWMS’s favor, as the court of appeals did here, is no substitute. There is a 

difference between assuming that this factor weighed in AWMS’s favor and finding 

that the suspension order has cost AWMS tens of millions of dollars. 

{¶ 98} The majority therefore correctly determines that there are genuine 

issues of material fact regarding the economic impact of the regulation that 

precluded the court of appeals from granting summary judgment to the state. 

{¶ 99} The second prong of the Penn Cent. test requires us to evaluate the 

reasonableness of the property owner’s distinct investment-backed expectations. In 

investing millions of dollars to construct saltwater-injection wells, AWMS had a 

reasonable expectation that it would be able to conduct its operations if it complied 

with the statutes enacted by the General Assembly and the rules promulgated by 

the division. It was also more than reasonable for AWMS to expect that it would 

be able to continue saltwater-injection operations as long as it obeyed the terms of 

its permits. That is, AWMS had the right to expect that the state would adhere to 

the principle that “the government itself is subject to rules of law, and cannot 

disregard the law, or remake it to suit itself without heeding those procedures 

specified by law.” Cooper v. Gwinn, 171 W.Va. 245, 250, 298 S.E.2d 781 (1981). 

{¶ 100} The state might be correct when it calls AWMS’s investment “a 

calculated investment risk.” However, that calculation was based on AWMS’s 

expectations that the division would adhere to Ohio’s statutes and rules and 

AWMS’s permit conditions as written, which would allow AWMS’s continued 

operation of its well if the terms of its permits were not violated. AWMS could 
January Term, 2020 

39 

reasonably rely on R.C. 1509.04(A) and (C), which allow saltwater-injection 

operations to be suspended when there is a violation of a statute, administrative 

rule, or condition of the permit, but only if (1) the operator has violated an order 

finding a material and substantial violation or (2) continued operation “presents an 

imminent danger to the health or safety of the public or that results in or is likely to 

result in immediate substantial damage to the natural resources of this state.” And 

AWMS could rely on the fact that neither the Revised Code nor the division’s 

administrative rules include specific provisions regulating induced seismicity. And 

to the extent that Ohio law permits the division to include conditions regarding 

induced seismicity in a permit, AWMS could rely on the fact that its permits did 

not contain express language empowering the division to suspend its operations due 

to a seismic event of a specific magnitude. 

{¶ 101} The division and AWMS were both aware of the concerns that 

saltwater-injection operations could induce seismicity prior to the division’s issuing 

AWMS its permits, but the division nonetheless issued the permits for AWMS to 

construct two wells, without reserving its authority to suspend AWMS’s operations 

if the wells caused a particular amount of seismic activity. The Supreme Court of 

the United States has recognized that that such approval “can lead to the fruition of 

a number of expectancies embodied in the concept of ‘property’—expectancies 

that, if sufficiently important, the Government must condemn and pay for before it 

takes over the management of the landowner’s property.” Kaiser Aetna v. United 

States, 444 U.S. 164, 179, 100 S.Ct. 383, 62 L.Ed.2d 332 (1979). And there have 

been no relevant changes to Ohio’s regulatory scheme that should preclude 

AWMS’s continued reliance on the division’s approval. 

{¶ 102} Based on these facts, a factfinder could conclude that the state’s 

suspension order interferes with AWMS’s distinct investment-based expectations 

and that those expectations were reasonable. 
January Term, 2020 

40 

{¶ 103} In reviewing this second prong of the Penn Cent. test, the majority 

focuses on “the state’s inconsistent regulatory approach” and “its lack of 

responsiveness to AWMS’s attempts at remediation.” Majority opinion at ¶ 69. 

But that evidence should not be considered solely under the second prong of the 

Penn Cent. test, because it is also relevant in determining the character of the 

governmental regulation, which is the third prong of the Penn Cent. test. The third 

prong recognizes that there can be a range of governmental action that can affect 

property rights, from the physical invasion of property, to a regulation that “merely 

affects property interests through ‘some public program adjusting the benefits and 

burdens of economic life to promote the common good,’ ” Lingle v. Chevron 

U.S.A. Inc., 544 U.S. 528, 539, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005), quoting 

Penn Cent., 438 U.S. at 124, 98 S.Ct. 2646, 57 L.Ed.2d 631. The focus should 

appropriately be on “the degree to which [the regulation] interferes with legitimate 

property interests,” id. at 540, and draw on the understanding that the right to use 

property “is subject to the reasonable exercise of state authority, including the 

enforcement of valid zoning and land-use restrictions,” Palazzolo v. Rhode Island, 

533 U.S. 606, 627, 121 S.Ct. 2448, 150 L.Ed.2d 592 (2001). Our task here is to 

determine where on the continuum of governmental action the state’s suspension 

order on AWMS fell. 

{¶ 104} Contrary to the majority’s reasoning, there are genuine issues of 

material fact that must be resolved before the third prong of Penn Cent. test may be 

balanced against the first two factors. AWMS presented evidence establishing that 

the division’s suspension order had neither been intended to promote public safety 

nor supported by science, but that it was imposed because of “press and politics.” 

AWMS supports that claim by pointing to situations involving other saltwaterinjection wells that had been permitted to continue their operations notwithstanding 

concerns about their inducing seismicity, including one that had been permitted to 

inject saltwater at reduced volumes rather than have its operations suspended. 
January Term, 2020 

41 

AWMS points to the division’s delay in reviewing its plan for restarting its 

operations, a plan that sought to mitigate potential seismic activity through 

operational adjustments that had been successfully used with other wells. That is, 

“the state’s inconsistent regulatory approach” and “its lack of responsiveness to 

AWMS’s attempts at remediation” that have left “AWMS in limbo for years with 

an indefinite suspension of its operations,” majority opinion at ¶ 69, support 

AWMS’s assertion that the suspension order is “not * * * a broadly applied 

regulation to prevent or limit an existing threat to public safety or welfare[,]” but 

rather requires one injection-well operator to solely bear the burden of “a problem 

that is shared by its peers.” 

{¶ 105} This evidence establishes a factual dispute regarding the character 

of the state’s regulation of AWMS’s operations and whether the state’s purpose is 

to protect the environment and public safety or whether this “particular exercise of 

the State’s regulatory power is so unreasonable or onerous as to compel 

compensation,” Palazzolo at 627. 

{¶ 106} For these reasons, I agree with the majority that there are genuine 

issues of material fact precluding the entry of summary judgment on AWMS’s 

total-takings and partial-takings claims. 

_________________ 

DONNELLY, J., dissenting.

{¶ 107} I would hold that appellants, AWMS Water Solutions, L.L.C.; 

AWMS Holdings, L.L.C.; and AWMS, Rt. 169, L.L.C. (collectively, “AWMS”), 

suffered neither a total nor a partial regulatory taking, and thus I would affirm the 

judgment of the Eleventh District Court of Appeals. Accordingly, I respectfully 

dissent. 

Total-takings analysis 

{¶ 108} I start my regulatory-takings analysis where the majority does, by 

considering AWMS’s total-takings claim against the backdrop of the United States 
January Term, 2020 

42 

Supreme Court’s decision in Lucas v. South Carolina Coastal Council, 505 U.S. 

1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992). In that case, the property owner 

bought beachfront property for the purpose of developing it into single-family 

residences. Id. at 1006-1007. Later, the South Carolina legislature enacted 

legislation forbidding the owner from erecting any permanent habitable structures 

on the property, rendering the property “valueless.” Id. at 1007. The Supreme 

Court of South Carolina determined that the legislation had not effected a 

governmental taking of the owner’s property because the legislation’s purpose was 

to preserve beaches as a public resource. Id. at 1009-1010. 

{¶ 109} The United States Supreme Court reversed, determining that the 

legislation’s purpose had no place in a takings analysis. The Supreme Court held 

that “when the owner of real property has been called upon to sacrifice all 

economically beneficial uses in the name of the common good, that is, to leave his 

property economically idle, he has suffered a taking,” id. at 1019, unless the state 

can show that the owner’s “proscribed use interests were not part of his title to begin 

with,” id. at 1027. The court explained that when a regulation deprives land of any 

“economically beneficial or productive options for its use—typically, as here, by 

requiring land to be left substantially in its natural state,” the regulation carries with 

it a “heightened risk that private property is being pressed into some form of public 

service under the guise of mitigating serious public harm.” Id. at 1018. 

{¶ 110} The facts presented in this case are a far cry from those involved in 

Lucas. Appellees, the Ohio Department of Natural Resources (“ODNR”); ODNR’s 

director, Mary Mertz; ODNR’s Division of Oil and Gas Resources Management 

(“the division”); and the division’s chief, Richard Simmers (collectively, “the 

state”), did not force AWMS to render its property economically idle by leaving it 

to its natural state. AWMS continued to use well #1 after the division suspended 

operations at well #2. In fact, before AWMS voluntarily decided to shut down its 

operations at well #1, it had generated hundreds of thousands of dollars in revenue 
January Term, 2020 

43 

from its use. And as the court of appeals noted, even after well #2’s suspension, 

AWMS “still processed, stored, recycled, treated, and disposed of brine” on the 

property. 2019-Ohio-923, 132 N.E.3d 1151, ¶ 15. 

{¶ 111} Given that the property was, and still could be, used for incomeproducing purposes, I am puzzled by the majority’s decision to remand the cause 

to the court of appeals for further weighing of the evidence. The majority points to 

the parties’ competing economic-impact evidence, explaining that there is a 

genuine issue of material fact about whether the division’s suspension of operations 

at well #2 left AWMS’ leasehold valueless. True, the parties’ experts offered 

sharply divergent opinions on how far AWMS undershot its original revenue goals 

and why. The majority correctly notes that the “complete elimination of a 

property’s value” is the “determinative factor” under the analysis espoused in a 

Lucas. Majority opinion at ¶ 43, quoting Lingle v. Chevron, U.S.A., Inc., 544 U.S. 

528, 539, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005). But from a regulatory-takings 

perspective, I fail to see how a property could ever be characterized as valueless 

when the property is capable of being put to the economically beneficial uses 

discussed above. As Lucas itself makes clear, a property’s usage informs its value. 

See Lucas, 505 U.S. at 1019, 1027, 112 S.Ct. 2886, 120 L.Ed.2d 798. 

{¶ 112} Indeed, we interpreted the reasoning in Lucas in precisely that way 

in State ex rel. Shelly Materials, Inc. v. Clark Cty. Bd. of Commrs., 115 Ohio St.3d 

337, 2007-Ohio-5022, 875 N.E.2d 59. In that case, a local zoning board had denied 

a company’s request for a permit to mine sand and gravel deposits located below 

the surface of the company’s property. Id. at ¶ 4. The company eventually 

responded by filing a total-takings claim. Id. at ¶ 14. In one part of our decision, 

we framed the takings question as turning on whether the government had deprived 

the owner of all economically beneficial use of the property. Id. at ¶ 18. In another 

part of our decision, we framed the question as whether the company had suffered 

a “ ‘complete elimination of [the property’s] value.’ ” Id. at ¶ 22, quoting Lingle at 
January Term, 2020 

44 

539. We ultimately rejected the company’s argument that the government’s denial 

of the permit destroyed “all economic value associated with its property,” 

determining instead that “there are other potential uses available for th[e] land.” 

(Emphasis added.) Shelly Materials at ¶ 39. We noted that the property could be 

used for agriculture purposes or developed into residential lots. Id. at ¶ 3. 

{¶ 113} Other authorities support this understanding of Lucas. According 

to a leading treatise on regulatory takings, “[t]he tenor of Lucas * * * continually 

reinforces the idea that ‘property’ consists of rights to use resources.” (Emphasis 

sic.) 1 Eagle, Regulatory Takings, Section 7-3(b)(5) (2018). While recognizing 

that the concept of value does appear in Lucas, the treatise explains that Lucas’s 

discussion of value “is coupled with economically beneficial use.” Id. This 

coupling arises from the fact that “[a] large component of property, and of its value, 

is the right to receive streams of income in the future.” Id. at Section 7-3(b)(6). 

{¶ 114} The same treatise further observes that the United States Court of 

Appeals for the Federal Circuit “has repeatedly found that a categorical taking is 

measured by complete deprivation of use, not value.” Id. at Section 7-3(b)(5). The 

United States Courts of Appeals for the Ninth and Fourth Circuits have applied 

Lucas’s rule in a similar way. See, e.g., Del Monte Dunes at Monterey, Ltd. v. 

Monterey, 95 F.3d 1422, 1433 (9th Cir.1996) (“our focus is primarily on use, not 

value”), aff’d on other grounds, 526 U.S. 687, 119 S.Ct. 1624, 143 L.Ed.2d 882 

(1999); Front Royal and Warren Cty. Indus. Park Corp. v. Front Royal, 135 F.3d 

275, 286 (4th Cir.1998) (rejecting the claimant’s total-takings claim under Lucas

because the claimant had not been denied “the right to use its property”). 

{¶ 115} Today’s decision creates friction with those authorities and does 

little to bring certainty to Ohio litigants, other than ensuring that their litigation 

costs will rise. The majority’s holding will now make it necessary for litigants to 

pay an expert to prepare an economic-impact statement to prosecute (or defend 

against) a total-takings claim brought under Lucas. Nor is the majority’s decision 
January Term, 2020 

45 

today likely to simplify matters for Ohio courts considering a total-takings claim. 

Rather than requiring courts to consider, as Lucas instructs, whether an owner has 

been forced to render his or her property economically idle by leaving it to its 

natural state (a simple enough inquiry), the courts will now be expected to sift 

through dense economic analyses and determine which litigant’s expert produced 

the more probative report. Nothing in Lucas requires that we leave these important 

questions of constitutional dimension in the hands of economists and corporatestrategy analysts. 

{¶ 116} The upshot of the majority’s decision today is that Ohio taxpayers 

might now be forced to bear the financial fallout of an inherently risky business 

venture. Justice Holmes warned of such dangers long ago, observing that 

“[g]overnment hardly could go on if to some extent values incident to property 

could not be diminished without paying for every such change in the general law.” 

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413, 43 S.Ct. 158, 67 L.Ed. 322 

(1922). I fear that the majority’s decision today has lost sight of that principle. 

Partial-takings analysis 

{¶ 117} I turn now to the majority’s analysis of AWMS’s partial-takings

claim and the factors to be applied to that claim derived from Penn Cent. Transp. 

Co. v. New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978). 

Although I agree with the majority’s analysis of the factor in Penn Cent. examining 

the character of the governmental action and its conclusion that there is a genuine 

issue of material fact concerning the economic-impact factor, I would resolve the 

Penn Cent. inquiry solely on the basis of the reasonable-investment-backedexpectations factor. 

{¶ 118} I agree with a good portion of the majority’s analysis of the facts of 

this case under Penn Cent.’s reasonable-investment-backed-expectations factor. 

As the majority correctly points out, the government’s regulation of induced 

seismicity is an issue of enormous complexity. But, as the Federal Circuit noted in 
January Term, 2020 

46 

Good v. United States, we have a “growing consciousness of and sensitivity toward 

environmental issues,” with the result here being that AWMS “must * * * have 

been aware that standards could change to [its] detriment, and that regulatory 

approval could become harder to get.” 189 F.3d 1355, 1363 (Fed.Cir.1999). Given 

the added threat to public health and safety or damage to the environment arising 

from human-induced earthquakes, the majority properly finds that the balance of 

the investment-backed-expectations factor tips in the state’s favor. 

{¶ 119} Unlike the majority, however, I would go a step further and 

conclude that the balance tips decisively in the state’s favor, thus obviating the need 

to address the other Penn Cent. factors. That is precisely the approach that the 

Federal Circuit applied in Good when it held that “the government is entitled to 

summary judgment on a regulatory takings claim where the plaintiffs lacked 

reasonable, investment-backed expectations, even where the challenged 

government action ‘substantially reduc[ed] the value of plaintiff’s property.’ ” 

(Brackets sic.) Good at 1363, quoting Avenal v. United States, 100 F.3d 933, 937 

(Fed.Cir.1996). The Ninth Circuit Court of Appeals has applied a similar approach. 

See Guggenheim v. Goleta, 638 F.3d 1111, 1120 (9th Cir.2010) (according 

dispositive status to its conclusion on the inquiry into reasonable investmentbacked expectations). 

{¶ 120} The majority declines to accord controlling significance to the

investment-backed-expectations factor. I find it problematic that while the majority 

has applied a large swath of the Federal Circuit’s takings jurisprudence in this case, 

it has chosen not to apply it, as the Federal Circuit did in Good, to conclusively 

resolve the Penn Cent. analysis on the basis of the expectations factor. I do not find 

the majority’s piecemeal approach to be particularly helpful. In order to better 

ensure predictability and uniformity in our takings jurisprudence, the majority 

should follow the approach taken by the Federal Circuit in Good. 
January Term, 2020 

47 

{¶ 121} More importantly, I find it problematic that the majority focuses on 

AWMS’s expectations at the time it obtained its leasehold—rather than at the time 

of its investment. An analysis of a claimant’s reasonable investment-backed 

expectations should necessarily involve consideration of the claimant’s 

expectations formed at the time of its investment. When an interest in real property 

is relevant in a takings case, the economic investment and the price of acquiring the 

property interest are normally one and the same. See, e.g., Love Terminal Partners, 

L.P. v. United States, 889 F.3d 1331, 1337, 1346 (Fed.Cir.2018) (claimant’s 

investment was $6.5 million spent to acquire the property interest). Not so here. 

{¶ 122} When AWMS obtained its leasehold in December 2011, its only 

“investment” was its promise to pay the lessor a 5 percent royalty on any revenue 

eventually derived from each well from brine disposal. AWMS’s actual investment 

occurred, as AWMS itself states, when it spent millions of dollars “constructing a 

state-of-the-art disposal [f]acility on the leasehold.” The actual investment did not 

start to take place until September 2013, long after the series of earthquakes that 

occurred in Youngstown, Ohio in December 2011, long after the division took the 

“Northstar #1” well out of operation for causing the earthquakes, and long after the 

statewide moratorium had been imposed on certain well-injection activities so that 

the division could study induced seismicity. At the time that AWMS’s actual 

investment occurred, AWMS explicitly acknowledged in its “confidential offering 

memorandum” that it knew that the government’s regulation of injection wells 

could increase in scope and complexity due to growing industry awareness, that 

AWMS’s wells could cause a seismic event similar to the events that had occurred 

in Youngstown, and that a seismic event caused by AWMS’s wells could lead to 

the suspension of its injection operations. 

{¶ 123} All three factors in the reasonable-expectations analysis weigh

heavily in the state’s favor: AWMS operates in a highly regulated industry, it was 

aware that induced earthquakes had caused state regulation of an injection well in 
January Term, 2020 

48 

its property’s vicinity by the time of its investment, and it expressly anticipated the 

possibility of such regulation of its own wells at the time of its investment. See 

Apollo Fuels, Inc. v. United States, 381 F.3d 1338, 1349 (Fed.Cir.2004). Contrary 

to the majority’s conclusion, AWMS was absolutely forewarned that the division 

would regulate injection-well-induced earthquakes in the way that the division did. 

{¶ 124} Accordingly, after the division ordered AWMS to temporarily 

suspend its operations at well #2 due to the likelihood that AWMS’s operations had 

caused multiple earthquakes, the court of appeals correctly held that the suspension 

did not cause AWMS to suffer a total or partial regulatory taking. I therefore dissent 

and would affirm the judgment of the Eleventh District Court of Appeals. 

_________________ 

Brouse McDowell, L.P.A., Matthew G. Vansuch, and Kyle A. Shelton, for 

appellants. 

Dave Yost, Attorney General, Samuel C. Peterson, Deputy Solicitor 

General, and Brett A. Kravitz and W. Scott Myers, Assistant Attorneys General, 

for appellees. 

_________________