## Facts

- A regional public water authority was formed to develop a long-term public water supply and pursued a project to impound and divert water from the Deep River for Randleman Lake and inter-basin transfers.
- The Environmental Management Commission issued a certificate authorizing the authority to acquire land by eminent domain and divert up to 30.5 million gallons per day from the Deep River basin.
- Plaintiffs were downstream riparian owners who operated hydroelectric facilities that depended on adequate river flow to generate electricity for resale.
- Plaintiffs alleged the authority’s impoundment and diversion reduced and would continue to reduce the natural flow reaching their facilities, impairing their riparian rights and hydroelectric operations.
- Plaintiffs sued for inverse condemnation, seeking a determination that the diversion effected a taking of their riparian rights without just compensation.
- The trial court, in proceedings under N.C. Gen. Stat. § 40A-47, determined a taking occurred and that plaintiffs were entitled to compensation; the authority appealed.

## Issues

1. Whether the authority’s diversion and inter-basin transfer of water that diminished downstream flow to hydroelectric plants constituted a compensable taking of plaintiffs’ common-law riparian rights.
2. Whether downstream riparian rights include a protectable interest in the river’s natural flow sufficient to support hydroelectric generation.
3. Whether statutory authorization and an administrative certificate approving the diversion barred or negated inverse condemnation liability.

## Decision

- The Court of Appeals affirmed the trial court’s order determining that a taking occurred.
- The court held the authority’s diversion materially diminished the river’s natural flow available at plaintiffs’ properties and thereby took an aspect of plaintiffs’ riparian property rights.
- The court rejected the argument that statutory authority and the administrative certificate insulated the authority from takings liability; such approvals did not substitute for just compensation.
- The decision established only the existence of a taking for inverse condemnation purposes; compensation remained to be determined in later proceedings.

## Legal Principles

- Common-law riparian rights are property interests protected against uncompensated governmental takings, including rights associated with the beneficial use of a watercourse’s natural flow.
- A public project may serve a valid public purpose and still require just compensation when it appropriates or substantially impairs private property rights.
- Administrative or statutory authorization to divert water does not, by itself, eliminate the constitutional and statutory requirement to compensate affected property owners when a taking occurs.
- Under N.C. Gen. Stat. § 40A-47, a court may resolve liability questions in inverse condemnation, including whether a taking occurred, separate from the amount of compensation.

## Conclusion

The court affirmed that a public water authority’s authorized diversion reducing downstream flow could constitute a taking of downstream owners’ riparian rights supporting hydroelectric generation, permitting inverse condemnation and requiring a subsequent determination of just compensation.


L & S Water Power, Inc. v. Piedmont Triad Reg'l Water Auth., 211 N.C. App. 148, 712 S.E.2d 146 (2011)