State ex rel. AWMS Water Solutions, LLC v. Zehringer, 031819 OHCA11, 2016-T-0085

Docket Nº:2016-T-0085
Opinion Judge:PER CURIAM
Party Name:STATE OF OHIO ex rel. AWMS WATER SOLUTIONS, LLC, et al., Relators, v. JAMES ZEHRINGER, DIRECTOR OHIO DEPARTMENT OF NATURAL RESOURCES, et al., Respondents.
Attorney:Thomas J. Wilson, Comstock, Springer & Wilson Co., L.P.A., Matthew G. Vansuch, Brouse McDowell Co., LPA, and Kyle A. Shelton, Brouse McDowell Co., LPA, (For Relators). Dave Yost, Ohio Attorney General, W. Scott Myers and Brett A. Kravitz, Assistant Attorneys General, and Curtis J. Amrosy, Manches...
Judge Panel:THOMAS R. WRIGHT, PJ, CYNTHIA WESTCOTT RICE, J, TIMOTHY P CANNON, J, concur
Case Date:March 18, 2019
Court:Court of Appeals of Ohio
 
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2019-Ohio-923

STATE OF OHIO ex rel. AWMS WATER SOLUTIONS, LLC, et al., Relators,

v.

JAMES ZEHRINGER, DIRECTOR OHIO DEPARTMENT OF NATURAL RESOURCES, et al., Respondents.

No. 2016-T-0085

Court of Appeals of Ohio, Eleventh District, Trumbull

March 18, 2019

Original Action for Writ of Mandamus.

Thomas J. Wilson, Comstock, Springer & Wilson Co., L.P.A., Matthew G. Vansuch, Brouse McDowell Co., LPA, and Kyle A. Shelton, Brouse McDowell Co., LPA, (For Relators).

Dave Yost, Ohio Attorney General, W. Scott Myers and Brett A. Kravitz, Assistant Attorneys General, and Curtis J. Amrosy, Manchester Newman & Bennett, LPA, (For Respondents).

OPINION

PER CURIAM

{¶1} Respondents, James Zehringer, Director, Ohio Department of Natural Resources, et al., have moved this court for summary judgment on the petition for writ of mandamus filed by Relators, AWMS Water Solutions, LLC, et al. Relators seek the underlying writ to compel Respondents to commence appropriations proceedings based upon their allegation that Respondents' regulatory actions have eliminated the economic viability of certain real property and, as a result, Respondents have effectuated either a categorical-regulatory taking or a partial-regulatory taking, in violation of the United States and Ohio Constitutions. Respondents maintain there are no genuine issues of material fact to be litigated on Relators' allegations and therefore they are entitled to judgment as a matter of law. Relators have opposed the motion, asserting there are issues of material fact to be litigated on both of their takings claims and, as a result, their petition to compel appropriations on the subject real estate survives Respondents' motion.

Factual Background

{¶2} Relator, AWMS Water Solutions, LLC, is a company involved in disposing waste from oil and gas production sites and drilling sites. Relator, AWMS Holdings, LLC, is a holding company for a series of wholly-owned subsidiaries that own and operate brine disposal wells and facilities. Relator, AWMS Rt. 169, LLC, is a company that is a wholly-owned subsidiary of AWMS Holdings, LLC, and was formed to own and operate two salt-injection wells in Weathersfield Township, Trumbull County, Ohio. Respondents are James Zehringer, the Director of the Ohio Department of Natural Resources ("Director); the Ohio Department of Natural Resources ("ODNR"); Richard Simmers, Chief of the Division of Oil and Gas Resources Management ("Chief"); and the Division of Oil and Gas Resources Management ("Division").

{¶3} Relators secured a lease on property in an industrial area in Weathersfield Township, which it acquired for the purpose of constructing two salt-water injection wells. On December 23, 2011, Relators applied to the Division for a permit to construct the wells, designated AWMS #1 Well and AWMS #2 Well. Also in December 2011, two seismic events of varying magnitudes were detected in Youngstown, Ohio near the Northstar #1 injection well, operated by a third party not connected to this matter. The first, on December 24, 2011, a 2.7 magnitude earthquake was recorded within one mile of the well. The Division found that Northstar #1 Well likely induced the earthquake after reviewing the seismic data. One day after the Northstar #1 Well voluntarily ceased operations at the Division's request, a 4.0 magnitude event was recorded within one mile of the well. The Northstar #1 Well is located approximately seven miles from the AWMS #2 Well. After the second seismic event, the Division temporarily halted the issuance of permits through November 2012. During the pause in permit issuances, the Division drafted emergency rules to protect the public health and safety.

{¶4} Ultimately, on July 18, 2013, the Division issued a drilling permit to AWMS and, on March 24, 2014, an operational permit was issued. Full commercial operations of the wells commenced in May and June of 2014. During the time the wells were operating, AWMS #1 Well represented 5% of total injections between the two wells, while AWMS #2 Well represented 95% of total injections.

{¶5} On July 28, 2014, a seismic event, measuring a magnitude 1.7, occurred in Trumbull County in the vicinity of Relators' wells. On August 31, 2014, another seismic event occurred in the vicinity of the wells measuring 2.1. The earthquakes were connected in time and space with injections at AWMS #2 Well and experts agreed that the events were likely induced by Relators' operations. On September 3, 2014, the Division issued Chiefs Order No. 2014-372, amended by Chiefs Order No. 2014-374 ("Suspension Order), ordering relators to: (1) immediately suspend all operations at AWMS #2 Well, and (2) submit a written plan to the Division for evaluating certain "seismic concerns associated with the operation of the AWMS #2 salt water injection well." The Division also suspended operations at AWMS #1 Well, but subsequently terminated this suspension after Relators submitted additional information that AWMS Well #1 did not contribute to the earthquake activity.

{¶6} Relators submitted a plan to restart its operations at AWMS #2; the Division found, however, that the plan was deficient, that it was "generic and inadequate," and did not support terminating the Suspension Order. AWMS #2 Well has not operated since imposition of the Suspension Order.

{¶7} Relators appealed the Suspension Order to the Ohio Oil & Gas Commission ("Commission"). A hearing was held and, on August 12, 2015, the Commission found the Chiefs issuance of the Suspension Order was not unlawful or unreasonable and affirmed the Division's issuance of the Suspension Order. On September 8, 2015, Relators filed an appeal of the Commission's affirmance of the Suspension Order to the Franklin County Court of Common Pleas. After various procedural rulings relating to whether Relators properly filed their notice of appeal, the administrative appeal proceeded on June 30, 2016. And, on December 23, 2016, the Court of Common Pleas found that the Suspension Order was lawful, but reversed the judgment of the Court of Common Pleas, concluding the Order was unreasonable. The Division appealed this decision to the Tenth District Court of Appeals.

{¶8} Meanwhile, on August 26, 2016, Relators filed the instant petition for writ of mandamus alleging the continued enforcement of the Suspension Order had substantially interfered with Relators' property rights by depriving them of all or, at least partial, economically-viable use of the property. In light of the appeal to the Tenth Appellate District, this court stayed the underlying proceedings due to the possibility of rendering an inconsistent ruling contrary to the jurisdictional priority rule.

{¶9} On July 31, 2018, the Tenth District reversed the judgment of the court of common pleas, concluding, inter alia, the lower court based its decision on impermissible evidentiary inferences made between experts who testified before the division and because the trial court drew conclusions regarding the likelihood of seismic risk without reliable evidentiary support. See Am. Water Mgt Servs., LLC v. Div. of Oil & Gas Resources Mgt, 10th Dist. Franklin No. 17AP-145, 2018-Ohio-3028. The Tenth District therefore determined the Suspension Order was reasonable and reinstated the same. Relators filed a jurisdictional appeal with the Supreme Court of Ohio and, on November 21, 2018, in Am. Water Mgt. Servs., LLC v. Div. of Oil & Gas Resources Mgt, 2018-Ohio-3028, the Court declined jurisdiction. And, on December 26, 2018, the Court denied Relators' motion for reconsideration. See 2018-Ohio-3028. This court subsequently lifted the stay and we now consider Respondents' motion for summary judgment and Relators' memorandum in opposition.

Mandamus

{¶10} In order for a writ of mandamus to issue, Relators must establish a clear legal right to compel Respondents to...

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