Court Opinion

ID: 4638745
Source: CourtListenerOpinion
Date Created: 2020-12-02 14:12:05.62961+00
Date Added: 2024-06-11T07:59:09.382621
License: Public Domain

[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

   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.”

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                                January Term, 2020

       {¶ 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

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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.

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                                January Term, 2020

        {¶ 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

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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

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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

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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

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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-Ohio-
5209, 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

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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

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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

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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, fact-
specific 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

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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

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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’ common-
pleas-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,

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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 Tahoe-
Sierra 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

                                          15
                                January Term, 2020

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

                                          16
                                 January Term, 2020

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 net-
present-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.

                                          17
                                 January Term, 2020

        {¶ 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.

                                         18
                                January Term, 2020

       {¶ 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,

                                          19
                               January Term, 2020

       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-of-
property-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-

                                         20
                                   January Term, 2020

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 total-
takings 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

                                            21
                               January Term, 2020

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-net-
income 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

                                        22
                                January Term, 2020

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 net-
income 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.

                                         23
                                January Term, 2020

       {¶ 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 partial-
takings 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

                                         24
                                January Term, 2020

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

                                          25
                                January Term, 2020

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-

                                           26
                                January Term, 2020

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-the-
governmental-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

                                         27
                                 January Term, 2020

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

                                          28
                                January Term, 2020

#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

                                          29
                                January Term, 2020

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.

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                                January Term, 2020

       {¶ 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

                                          31
                                January Term, 2020

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

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                                January Term, 2020

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.

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                                 January Term, 2020

                                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 total-
takings 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.

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                                 January Term, 2020

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.

                                          35
                                January Term, 2020

       {¶ 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.

                                         36
                                January Term, 2020

       {¶ 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

                                         37
                                January Term, 2020

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

                                         38
                                 January Term, 2020

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.

                                          39
                                January Term, 2020

       {¶ 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 saltwater-
injection 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.

                                         40
                                 January Term, 2020

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

                                            41
                                  January Term, 2020

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

                                           42
                                January Term, 2020

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 income-
producing 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

                                         43
                                January Term, 2020

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

                                         44
                                January Term, 2020

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 corporate-
strategy 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-backed-
expectations 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

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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 investment-
backed 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.

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       {¶ 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

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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.
                                _________________

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