North Carolina Court Rules Permit Delay Supports Temporary Regulatory Taking Claim

Appeals court reverses dismissal of inverse condemnation claim, affirms rejection of due process challenges

Published on Feb. 10, 2026

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The North Carolina Court of Appeals has ruled that a property owner adequately alleged a temporary regulatory taking claim based on a state environmental agency's prolonged refusal to process a stormwater permit application. The court reversed the dismissal of the inverse condemnation claim, while affirming the rejection of the property owner's due process challenges.

Why it matters

This ruling highlights the potential for property owners to seek compensation from the government when regulatory delays deprive them of the economically viable use of their land, even if the delays do not result in a permanent taking. The decision also underscores the importance of the administrative process in addressing such disputes before they reach the courts.

The details

The dispute arose after the plaintiff, LDI Shallotte 179 Holdings LLC, purchased land in Brunswick County, North Carolina that had previously been subject to a stormwater permit issued in 2001 for a residential subdivision. When the plaintiff sought to develop the property into a new subdivision and applied for a stormwater permit through the state's Express Review Program, the defendant state environmental agency declined to process the application, asserting that the original permittee remained responsible and that unresolved compliance violations had to be addressed first.

  • In 2001, a stormwater permit was issued for a residential subdivision on the property.
  • After the original developer abandoned part of the project, the plaintiff purchased the land and applied for a new stormwater permit through the state's Express Review Program in 2024.
  • The state environmental agency declined to process the plaintiff's permit application, citing the original permittee's responsibility and unresolved compliance violations.
  • The plaintiff challenged the agency's approach in a contested case before the Office of Administrative Hearings, which ruled in the plaintiff's favor in 2025.
  • The plaintiff then sued in superior court, asserting inverse condemnation, unconstitutional taking, and due process claims in 2026.

The players

LDI Shallotte 179 Holdings LLC

The plaintiff, a property owner that purchased land in Brunswick County, North Carolina and sought to develop it into a new subdivision.

North Carolina Department of Environmental Quality, Division of Energy Mineral, and Land Resources

The defendant, a state environmental agency that declined to process the plaintiff's stormwater permit application, citing the original permittee's responsibility and unresolved compliance violations.

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What they’re saying

“The defendant lacked authority to impose prior violations on the plaintiff and improperly withheld review of the permit application.”

— Administrative Law Judge (nclawyersweekly.com)

What’s next

The case will now return to the trial court for further proceedings on the plaintiff's temporary regulatory taking claim.

The takeaway

This ruling underscores the potential for property owners to seek compensation from the government when regulatory delays deprive them of the economically viable use of their land, even if the delays do not result in a permanent taking. It also highlights the importance of the administrative process in addressing such disputes before they reach the courts.