Who Owns the Water? Part 3, (Diffuse) Surface Water, aka Stormwater

(Above: Change in extreme precipitation events in southeastern U.S., from National Climate Assessment 2014).

Whatever your take on projections of sea level rise and global temperature increases (I’m extremely worried: these things are happening and we are responding much like the 2014 UNC Tarheel football defensive unit responded to threats, which is to say, hardly at all), and whatever your beliefs about the likelihood of future droughts in the southeast (I don’t think the data support any confident predictions one way or the other), it’s hard to ignore the trend to increased extreme precipitation events (see banner image above). The graph shows percent changes in the annual amount of precipitation falling in very heavy events, defined as the heaviest 1% of all daily events from 1901 to 2012. The far right bar is for 2001-2012. In recent decades there have been increases nationally, with the largest increases in the Northeast, Great Plains, Midwest, and Southeast. Changes are compared to the 1901-1960 average. (Figure source: NOAA NCDC / CICS-NC).

This trend makes the law and policy of stormwater management more important than ever before in this country, region and state.

It’s not necessarily helpful to analyze water law problems in ownership terms, as I’ve discussed already in Part 1 (groundwater) and Part 2 (channelized surface water) of this series.  But many people, Americans at least, can’t help themselves from trying to see problems through the lens of property law. Judges and legislators in N.C. have also long been afflicted with this property law primacy. So I’ve learned, pardon the phrase, to go with the flow on this question of “Who Owns the Water?” Water, like wild animals, makes for its own interesting perspective on property law. It can teach us that our commonly-held notions of what it means to “own” something are not always accurate or adequate.

So in this post I will  wrap up my discussion of “Who Owns the Water” by plunging into another murky part of the pool: who owns the stormwater? In other words, when it rains, who owns the water that falls before it makes its way into the channels we call “intermittent” and “perennial” streams, or else before it infiltrates into the soil to become groundwater?

When people ask “who owns the water?” they are almost invariably thinking in terms of water scarcity and wondering “who gets to make beneficial use of that water?” There is an aspect of stormwater law that concerns itself with this side of the question, but it’s not an aspect that the law in North Carolina (or other eastern U.S. states) cares much about, simply because the rainfall is historically so plentiful here. In some western states, however, faced as they are with chronic water shortages, there has been litigation over the question of who has the right to use a catchment system (like a rain barrel) to capture the rain. After all, when the water is scarce and “fully appropriated,” meaning someone has a legally defensible property right to whatever is in a stream, it’s of more than academic interest to ask whether someone else is entitled to prevent rain from entering that stream. I’m not aware of any such legal debates in N.C. history, however. So if your interest is in whether you can capture stormwater in a cistern or a rain barrel, I’m confident the answer is, in N.C., “yes, as long as it’s on your (real estate) property” and “subject to regulation to avoid creating a nuisance or a risk to other persons from shoddy design or construction.”

The more interesting and problematic side of stormwater is: who’s responsible when runoff from your property injures me or my property, either chronically with bad drainage or occasionally with floods? This is the aspect of property ownership that most people forget. Owning something means more than just having the right to make beneficial use of that thing. It also means responsibility for the damage that thing causes to other people. Stormwater presents this problem very directly, and has ever since the early days of urbanization, when hard roofs and compacted streets (“impervious surfaces”) worked their magic: keeping the residents in the house dry and improving mobility, while at the same time increasing and sometimes diverting the flow of stormwater onto other people’s real estate.

The basic, modern legal answer to this question in North Carolina is “reasonable use.” Private property owners are subject to an obligation to make “reasonable use” of their lands when it comes to stormwater, meaning they can take whatever steps a court might deem reasonable to divert that water from its natural path.  Pendergrast v. Aiken, 293 N.C. 201 (1977) (involving culverts under Allen Avenue in South Asheville).  The N.C. Supreme Court in Pendergrast  reviewed the history of stormwater liability in North Carolina, noting that the early civil law rule of keeping water in its own channel had been overcome by numerous case-by-case exceptions, and adopted what commentators had come to call the “reasonable use” approach.    Although the Pendergrast court hoped this rule would make liability for drainage problems clearer and more predictable, it also acknowledged that the “reasonable use” rule comes down to case-specific facts.  The court created a private nuisance action for flooding, instructing future courts to weigh the gravity of the plaintiff’s injury against the utility of  the defendant’s conduct. This sort of case-specific, utilitarian-based weighing of harms versus benefits is central to judicial “reasonable use” tests. After Pendergrast, this sort of weighing is supposed to determine all stormwater disputes between private parties, as well as all water extraction disputes between riparians.

The Pendergrast court explicitly rejected the long history of courts treating stormwater cases differently than cases involving water in defined channels. Since “reasonable use” is also the standard for a riparian’s right to extract water from a stream, the hope was that North Carolina water law would settle down from its decades of confusing precedents into something more understandable for both judges and citizens. If only that were the case! Instead, the waters and the law concerning them have just gotten murkier.

One of the main recent stumbling blocks to this Pendergrast-era (1970s) hope for a unified state water law has been the refusal of courts to treat public sector actors, even in their mode as stormwater or water supply public enterprises, the same way as private sector actors. I discussed in a previous entry in this series the Piedmont Triad Water Authority case, holding a State-permitted water supply reservoir operator liable for damages to downstream hydroelectric producers, treating the dam owners as having a property right in a certain flow regime (shades of the old natural flow doctrine). An interesting aspect of that court’s decision was its reliance on a line of stormwater cases that began after Pendergrast  and that deny entities with eminent domain authority the ability to plead “reasonable use” in defending claims for stormwater damage.  See Board of Transportation v. Terminal Warehouse Corp., 300 N.C. 700 (1980) (disallowing a Pendergrast “reasonable use” defense for flooding problems caused by the relocation of U.S. highway 74). The Terminal Warehouse court justified its special, stricter treatment of public entities by reference to a 1940 case (Dunlap v. Light Co., 212 N.C. 814 (1940))  not involving stormwater, but rather involving damages from water releases at a dam owned by an electric utility.

Terminal Warehouse was an actual condemnation case. From a policy point of view, it may well make sense to have special rules for stormwater liability in condemnation cases, particularly where the public/condemnor/defendant has the power to design projects that either cause or avoid drainage problems for adjoining property owners. A well-established approach in tort law, supported by economic analysis, places the burden of liability (or the responsibilities of “ownership”) on the party that can most efficiently avoid the problem. But Terminal Warehouse has been relied on in recent years to support a view that any defendant that has eminent domain power is more or less strictly liable for stormwater problems in any drainages that it has ever attempted to manage or improve. This has become a deterrent to local governments getting involved in solving stormwater problems on private property. Solving those problems might improve everyone’s lives and property values.  But solving those problems today also risks committing the public entity to eternal public management of the drainage with strict liability for problems that arise.

The General Assembly attempted to absolve local governments from this dilemma in 2005, with the passage of G.S. 160A-193.1. :

(b)        The actions of a city to clear obstructions from a stream shall not create or increase the responsibility of the city for the clearing or maintenance of the stream, or for flooding of the stream. In addition, actions by a city to clear obstructions from a stream shall not create in the city any ownership in the stream, obligation to control the stream, or affect any otherwise existing private property right, responsibility, or entitlement regarding the stream. These provisions shall not relieve a city for negligence that might be found under otherwise applicable law.

Counties got parallel relief in G.S. 153A-140.1.

In 2014, Mecklenburg County went to the legislature and got a special statute allowing it to deal with stormwater problems on private property under certain procedural restrictions. See G.S. 153A-274.1.  I think this authority already existed and that this statute will just complicate decisions by other counties, who are not covered by the terms of the statute.

It’s too early to tell whether these new statutes will change the legal outcomes in stormwater disputes where a public entity is arguably involved. They do help give comfort to cities and counties that feel a need to help with drainage problems on private property (although Mecklenburg’s special legislation creates a new level of worry for other every other county). But I doubt the statutes will change the long-term trend to holding public entities strictly liable for drainage issues under their control, since the courts still deny those entities access to a Pendergrast “reasonable use” defense.

In a dispute over damages from stormwater, there is almost always some (often more than one) entity whose geographic jurisdiction extends over the waters in question and that has eminent domain power.  Thus the first question in resolving most of these disputes today is whether that public sector (or utility) entity has done anything to exert its authority to manage the drainage in question. It doesn’t necessarily take a formal act of adoption of a channel into a public system; it can be enough just to have done some remedial work in the past. See, e.g., Hooper v. Wilmington, 42 N.C. App. 548 (1979) (City on the hook for problems with culvert on private property, designed and built by a third party, because of prior work “snagging” the stream above and below the property).  If there is enough evidence of public entity control over the stormwater in question, the Pendergrast “reasonable use” analysis no longer applies, and the odds are high that the public entity will be held liable for the problems.

This is somewhat like the problem in cases involving improper hazardous waste disposal: as a result of the strict liability scheme under the Superfund statute, CERCLA, no matter who originally caused the problem, or how reasonable their actions were in comparison to the economic benefit gained, anyone who goes in and moves the waste around, even in a well-planned attempt to reduce the risks and solve the problem, can end up on the hook for all of the cleanup costs. With stormwater, this means we currently have a legal system strongly tilted to socialize the costs of stormwater damage. However, it also means that well-advised public entities may be more cautious than they should be (in an economic, public policy sense) about getting involved with drainage problems on private property.

“You may ask yourself ‘Well, how did I get here?…’
Water dissolving and water removing….
Same as it ever was….”
~Talking Heads, Once in a Lifetime

The new and unpredictable factor in this old legal problem (and these stormwater liability cases go way back into the 19th century) is the rise of stormwater regulations designed to address water quality problems, rather than just to get the water off someone’s property. To be sure, stormwater itself blurs the lines between water quality and water quantity, since the increased flows that development usually brings also increase erosion, causing turbidity in water, and also carrying all sorts of pollutants into streams and lakes. Probably the most pernicious water quality issue in contemporary North Carolina (as elsewhere) is nutrient over-enrichment, a significant part of which is caused by stormwater carrying nitrogen and phosphorus off our yards and fields and streets and into our drinking water.

To meet the difficult demands of stormwater control for water quality purposes, we have, in the last twenty years, begun to build local stormwater enterprises that typically charge fees and that focus most or all their efforts on stormwater control. The next chapter in the ongoing saga of “who owns the stormwater” will likely be how these fee-driven stormwater enterprises change the liability/ownership rules outlined above. My prediction is for continued push towards the socialization of stormwater costs–making the public “own it.” This might seem contrary to the flow of politics and law towards “small government” and “privatization.” But I think it will be water’s way of continuing to teach us that what we think we see on the surface is not necessarily what is happening at depth. Because the stormwater problems are only going to get harder–as are the rains, if present trends continue–and the market will not solve these problems. They are classic “externalities,” to use the economists’ term, and they bind us together today just as they did when the State of North Carolina first came into being.