State ex rel. R.T.G., Inc. v. State

• Decision Date: 18 December 2002
• Docket Number: No. 2001-0976.,No. 2001-0748.,2001-0748.,2001-0976.
• Parties: The STATE ex rel. R.T.G., INC. et al., Appellees and Cross-Appellants, v. The STATE of Ohio et al., Appellants and Cross-Appellees. The State ex rel. R.T.G., Inc., Appellants, v. The State of Ohio et al., Appellees.
• Court: Ohio Supreme Court

Page 998

780 N.E.2d 998

98 Ohio St.3d 1

2002 Ohio 6716

The STATE ex rel. R.T.G., INC. et al., Appellees and Cross-Appellants, v. The STATE of Ohio et al., Appellants and Cross-Appellees.

The State ex rel. R.T.G., Inc., Appellants, v. The State of Ohio et al., Appellees.

No. 2001-0748.

No. 2001-0976.

Supreme Court of Ohio.

Submitted March 27, 2002.

Decided December 18, 2002.

COPYRIGHT MATERIAL OMITTED

Porter, Wright, Morris & Arthur, L.L.P., Mark S. Stemm and J. Kenneth Thien, Columbus, for R.T.G., Inc. et al.

Betty D. Montgomery, Attorney General, Mark G. Bonaventura and John P. Bartley, Assistant Attorneys General, for the state of Ohio et al.

R.S. Radford, Sacramento, CA, for amicus curiae Pacific Legal Foundation in support of R.T.G., Inc. et al.

Thomas P. Michael, Dublin, for amicus curiae Ohio Coal Association in support of R.T.G., Inc. et al.

Schottenstein, Zox & Dunn Co., L.P.A., and Kristopher M. Huelsman, Columbus, for amicus curiae Ohio Environmental Council in support of the state of Ohio.

Timothy J. Dowling, for amici curiae Pleasant City and Community Rights Counsel in support of the state of Ohio.

LUNDBERG STRATTON, J.

I. Introduction

{¶ 1} This is a regulatory-takings case. Regulatory-takings issues are complex and difficult and have defied attempts to provide a simple solution. Even the United States Supreme Court "quite simply, has been unable to develop any `set formula' for determining when `justice and fairness' require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons." Penn Cent. Transp. Co. v. New York City (1978), 438 U.S. 104, 124, 98 S.Ct. 2646, 57 L.Ed.2d 631.

{¶ 2} R.T.G., Inc. ("RTG") is a coal-mining company that began surface-mining land located in eastern Ohio in the 1980s. This property consisted of tracts of land that RTG owned in fee and tracts of land in which RTG owned or leased coal rights only. Ultimately, the state of Ohio determined that RTG's surface mining of this property could adversely affect the aquifer that supplied water wells for the village of Pleasant City. Therefore, pursuant to R.C. 1513.073, the state designated 833 acres of property in Guernsey County as unsuitable for mining ("UFM"), including a substantial portion of RTG's property.

{¶ 3} RTG filed a complaint seeking a writ of mandamus to compel the state to appropriate the coal that the state's UFM designation prevented RTG from mining. The appellate court held that imposition of the UFM regulation resulted in a taking of the coal that lies under the tracts of land that are located within the UFM-designated area and in which RTG owned coal rights only. However, the court held that the UFM designation did not result in a taking of the coal that lies under the tracts of land that RTG owned in fee. We reverse the judgment of the court of appeals in part and hold that the UFM regulation resulted in a taking of RTG's coal that lies under the tracts of land in which RTG owned only coal rights and that are located within the UFM-designated area, as well as the coal rights that lie under the tracts of land that RTG owned in fee and that are located in the UFM-designated area.

{¶ 4} In a separate entry, the court of appeals denied RTG's motion for attorney fees and costs. We also reverse this judgment and hold that RTG is due reasonable attorney fees and costs.

II. RTG's Efforts to Mine Its Property

{¶ 5} James Rossiter is the president, CEO, and controlling shareholder of RTG. RTG is a coal-mining company. In 1982, RTG began investigating the viability of surface-mining coal in Valley Township, Guernsey County, just to the northwest of the village. RTG conducted extensive test drilling, which indicated the presence of high quality coal in this area. Consequently, RTG began acquiring property in this area for the purpose of mining coal. In all, RTG acquired approximately 500 acres of property through purchases in fee or purchases or leases of coal rights in sections 5, 7, and 8 of Valley Township. Approximately 200 acres of this property consisted of several tracts of property that RTG owned in fee (surface and coal rights). Approximately 300 acres consisted of several tracts of property in which RTG leased or owned coal rights only.¹ Rossiter testified that RTG spent over $250,000 to acquire these property rights, to test-drill, and to prepare the mine permit applications.

{¶ 6} In 1984, RTG filed an application to mine 21.8 acres of the property that it had acquired. Because the area subject to the permit application was within three-quarters of a mile of a well field that provided water to the village, the Ohio Department of Natural Resources, Division of Reclamation ("DOR"), required RTG to install monitoring wells between the area to be mined and the village's water wells to determine whether that mining would interfere with the village's water supply. A pump test indicated that the monitoring wells were in a different aquifer from the village's wells. Accordingly, on May 20, 1986, the state issued permit D-578, which allowed RTG to begin mining the 21.8 acres.

{¶ 7} After receiving the D-578 permit, Rossiter testified, RTG paid $100,000 to prepare the land for mining, including building a sediment pond, establishing drainage controls, removing and segregating topsoil, and building roads and ramps into the excavation.

{¶ 8} On June 5, 1987, pursuant to permit D-578-1, the permit area was revised to include an additional 77.2 acres adjacent to the original permit area. The DOR found that "[g]round water supplies monitored up to the date of this written finding have not displayed any significant changes in the quality and quality [sic] to the Village of Pleasant City's well field."

{¶ 9} On September 10, 1987, the aquifer that served the village's water supply was designated a sole-source aquifer by the United States Environmental Protection Agency.

{¶ 10} On September 21, 1988, pursuant to R.C. 1513.073, the village filed a petition with the DOR that sought to designate 833 acres in Valley Township that lie below 820 feet in elevation as UFM because mining in this area would adversely affect the aquifer that supplies the village's wells.

{¶ 11} On October 6, 1989, the chief of the DOR designated approximately 275 of the requested 833 acres as UFM. The chief determined that mining in this area could reduce the long-term productivity of the village's water wells. The UFM designation affected property that RTG sought to mine. RTG and the village appealed from the chief's decision to the Ohio Reclamation Board of Review ("board").

{¶ 12} Before the appeal was decided, the area subject to the permit was increased by 8.4 acres. The board found that "[b]ased on the monitoring data collected by the Division of Water it is not anticipated that the quantity of water to the Village of Pleasant City's well field will be jeopardized by the proposed mining operation, application # D-0578-2."

{¶ 13} Ultimately, however, on June 16, 1994, the board issued an order that designated as UFM the entire 833 acres, which consisted of all lands in Sections 7 and 8 of Valley Township that lie below 820 feet. The UFM designation prevented RTG from mining much of its property.

III. RTG's Mandamus Proceedings

{¶ 14} On September 21, 1994, RTG filed a complaint in the Franklin County Court of Common Pleas seeking a writ of mandamus to compel the state to appropriate the coal located within the UFM-designated area. RTG alleged that the UFM designation was a taking of its coal rights by regulation.

{¶ 15} On April 22, 1996, the trial court dismissed RTG's complaint. On appeal, the Tenth District Court of Appeals reversed the trial court's judgment and remanded the matter for a hearing and a determination whether a taking had occurred. State ex rel. R.T.G., Inc. v. Ohio Dept. of Natural Resources (Mar. 31, 1997), Franklin App. No. 96APE05-662, 1997 WL 142363. The state filed a discretionary appeal with this court, which was not allowed. State ex rel. R.T.G., Inc. v. Ohio Dept. of Natural Resources (1997), 79 Ohio St.3d 1482, 683 N.E.2d 787. On remand to the trial court, RTG dismissed its complaint.

{¶ 16} On August 6, 1998, RTG filed a complaint in the Tenth District Court of Appeals seeking a writ of mandamus to compel the state to initiate appropriation proceedings. State ex rel. R.T.G., Inc. v. Ohio Dept. of Natural Resources (2001), 141 Ohio App.3d 784, 2001-Ohio-4267, 753 N.E.2d 869.

{¶ 17} The case was referred to a magistrate. In March 2000, RTG amended its complaint to add James and Phyllis Rossiter and the Myron Fishel Scholarship Trust as additional relators.²

{¶ 18} On April 13, 2000, the state filed a motion for judgment on the pleadings against the Rossiters and the trust, alleging that their claims were barred by the statute of limitations. The magistrate denied the state's motion, finding that a 21-year statute of limitations applied.

{¶ 19} For purposes of applying the takings analysis, the magistrate divided RTG's land into two parcels. The first parcel consisted of the tracts of land that RTG owned in fee located within the UFM-designated area. The second parcel consisted of the tracts of land in which RTG owned or leased only coal rights located within the UFM-designated area.

{¶ 20} As to the property owned in fee, the magistrate applied the Penn Cent. takings test (applied when the regulation deprives the property of less than 100 percent of its economic value). The magistrate determined that the UFM designation did not result in a taking because, even though the designation prevented RTG from mining any coal, the surface estate still had value.

{¶ 21} As to the coal rights, the magistrate applied the takings test of Lucas v. South Carolina Coastal Council (1992), 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (applied when the regulation deprives the property of 100 percent of its...