On the same day the N.C. Supreme Court supported a developer’s need for a driveway permit over NCDOT’s whimsical requirement that the developer first build a $3 million bridge to carry traffic from 60 homes, the High Court issued yet another opinion supporting private property rights in an inverse condemnation case brought in Guilford County.

             The second case, discussed below, involved governmental impoundment of water for Randleman Reservoir to the detriment of downstream hydroelectric companies whose property was diminished by loss of certain riparian rights to water flow in the Deep River. 

             The science here is easy to explain: a hydroelectric power plant, by definition, requires water to generate electricity.  Take away the water and you cripple the plant’s ability to generate electricity. 

             Technically, the Supreme Court did not write an opinion.  Rather, it granted discretionary review to Piedmont Triad Regional Water Authority (PTRWA) after PTRWA lost in the Court of Appeals.  After reading briefs and hearing arguments, the Court merely stated “Discretionary review improvidently granted,” leaving the COA opinion to stand.  Here is the link to the now-binding COA opinion in L&S Water Power, et. al. v. PTRWA.

             Sidebar: My first argument before the N.C. Supreme Court was defending a COA victory in Ball v. Randolph County. I wasn’t asked a single question by a single justice and left feeling empty.  The Court’s decision was that review was “improvidently granted.”  But a win is a win.  You need the wins to balance the times when fortune smiles at opposing parties instead. If you’re in the game long enough, wins and losses will be many. End sidebar.

 The Facts

             Randleman Reservoir was planned and built to serve the long-term water needs of Greensboro, High Point, Jamestown, Archdale and Randleman.  It is a good project and sorely needed.

             Each time PTRWA took somebody’s farm or home so their land could be flooded, it had to pay them just compensation, a specific requirement of the Fifth Amendment of the U.S. Constitution.

             When PTRWA filled up Randleman Reservoir it diverted 30.5 million gallons a day from the Deep River Basin.  Of course, it had to get the Environmental Management Commission’s permission to do it.  Plaintiffs claimed that the loss of 30.5 million gallons per day had a detrimental effect on their power plants.  They sued PTRWA in an inverse condemnation action claiming that their riparian rights were taken away by governmental action and that they deserved compensation.

             PTRWA claimed two things of note: (1) that because it had been granted regulatory permission to divert water away from the Deep River it had no duty to compensate the plant owners; and (2) the plant owners had no property interests in the water.

 The Law

             “Riparian rights are vested property rights that arise out of ownership of land bounded or traversed by navigable water.”  For example, a beef cattle farmer (like my dad) has riparian rights to serve his cattle from the creeks and one river that naturally flow across his farm.

             In most states water can be diverted from its natural course.  However, if the diversion is unreasonable and causes substantial damage to downstream owners, then the downstream owners must be compensated.

 The Opinion

             The Court of Appeals   held that being granted regulatory permission to exercise eminent domain does not relieve a government of its “constitutional mandate to compensate those whose property is taken.”

             “The EMC certificate [to divert water to another basin] only authorizes the defendant the right to exercise eminent domain by diverting waters and does not concern plaintiffs’ right to compensation.”

             Perhaps more importantly, the reasonable use rule, the Court said, applied only to private owners who divert water.  “Where the interference with surface waters is effected by [a governmental] entity, the principle of reasonable use . . . is superseded by the constitutional mandate that ‘[w]hen private property is taken for public use, just compensation must be paid.’”

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Tom Terrell

Terrell_TomMr. Terrell is widely regarded as one of North Carolina’s leading land use attorneys, representing both private and governmental entities in matters related to real estate development. His practice “footprint” covers the state from the mountain counties to the coast and occasionally includes…

Terrell_TomMr. Terrell is widely regarded as one of North Carolina’s leading land use attorneys, representing both private and governmental entities in matters related to real estate development. His practice “footprint” covers the state from the mountain counties to the coast and occasionally includes parts of Virginia and South Carolina. His many clients are involved in commercial and residential real estate, solid waste hauling and disposal, telecommunications, quarries/asphalt and miscellaneous litigation related to permit denials, vested rights and rezonings.

He has published numerous articles and speaks regularly to legal, governmental and business groups on a variety of issues related to land use and zoning.

Mr. Terrell has served as a leader in numerous civic and legal endeavors, including Chairman of the Board of Trustees of the N.C. State Health Plan, Chairman of the Board of Trustees of Winston-Salem State University, and service on the Board of Directors of the UNC-CH General Alumni Association, Board of Directors of the High Point Chamber of Commerce, Board of Visitors of Guilford College and Board of Center Associates of the Center for Creative Leadership, and as a founding member of the N.C. Bar Association Zoning, Planning and Land Use Section.

More information can be found at https://www.foxrothschild.com/thomas-e-terrell-jr/.

Mr. Terrell can be contacted at mailto:tterrell@foxrothschild.com.