211 N.C. App. 148
N.C. Ct. App.2011Background
- Defendant Piedmont Triad Regional Water Authority sought to develop a public water supply by constructing the Randleman Dam and impounding water in Randleman Lake.
- Plaintiffs are downstream riparian owners operating hydroelectric plants on the Deep River whose flow and electricity production could be affected.
- EMC issued a certificate in 1992 authorizing diversion of up to 30.5 million gallons per day from the Deep River to other basins.
- Defendant sought and obtained approvals (EMC certificate and 404 permit) during which it exercised eminent domain for the project.
- Trial court found that the Randleman project reduced the natural flow of the Deep River and that plaintiffs suffered a taking of riparian rights, entitling them to compensation.
- The court determined compensation could be valued by the loss of electricity capable of being produced due to reduced stream flow.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether riparian rights were taken despite impoundment statutes and EMC certificate | L&S contends common law riparian rights apply and are not superseded by impoundment statutes or EMC certificate. | Lack of taking because EMC certificate/impoundment statutes create superior rights and limit compensation duties. | Riparian rights were taken; impoundment statutes do not negate compensation. |
| Whether exhaustion of administrative remedies was required | Inverse condemnation remedy exists independent of EMC/404 permits; no administrative remedy exhausted. | Administrative channels should be exhausted before proceeding in court. | No administrative remedies exhaustion required; inverse condemnation proper. |
| Proper method to determine just compensation for the taking | Loss of electricity capacity from hydro plants, tied to reduced stream flow, is a valid measure of value. | Should rely on traditional valuation methods; not limited to electricity loss. | Capitalize income approach (loss of electricity) is permissible and appropriate. |
| Whether 7Q10 flow rate governs the absent-impoundment baseline | Evidence supports a higher pre-impoundment flow (163 cfs) than 7Q10 for baselining. | 7Q10 is the default absent-impoundment rate unless more accurate calculation is introduced. | Trial court's finding of 163 cfs supported; 7Q10 not controlling here. |
Key Cases Cited
- Dunlap v. Light Co., 212 N.C.814 (1938) (distinguishes permanent disturbance of natural flow from mere temporary interference)
- Pendergrast v. Aiken, 293 N.C.201 (1977) (riparian rights and reasonable use; private interference subject to substantial damage standard)
- Bruton v. Light Co., 217 N.C.1 (1940) (riparian rights and reasonable use framed; downstream rights considerations)
- Board of Transportation v. Warehouse Corp., 300 N.C.700 (1980) (rejected application of Pendergrast's reasonable use in condemnation proceedings)
- Eller v. Board of Education, 242 N.C.584 (1955) (constitutional mandate to pay just compensation when private property taken by government)
- M.M. Fowler, Inc., 361 N.C.1 (2006) (capitalization of income is an acceptable method in condemnation cases)
- City of Statesville v. Cloaninger, 106 N.C.App.10 (1992) (approved capitalization of income approach in condemnation context)