Inverse Condemnation Exposure For California Water Suppliers May Be Expanding

For decades, California water suppliers operated under a shield from inverse condemnation claims associated with delivery of water to their customers. Courts had rejected homeowners’ claims associated with pipe corrosion or pinhole leaks, reasoning that all customers bore the same burden — so no one was “singled out” — and that homeowners had “invited” the water by choosing to use the service.1

However, over the last few years, a narrow crack in that shield from inverse condemnation claims may be widening. In several unpublished decisions, courts have allowed property owners to assert claims for damages where they suffered “disproportionate” damage compared to others. These decisions have the potential to further expand inverse condemnation liability for water suppliers.

Shehyn v. Ventura County Public Works Agency: Individual Owner “Singled Out”

In Shehyn v. Ventura County Public Works Agency (2025)2, a property owner at the end of a branch line in the district’s water system alleged that the amount of sediment in his water was “vastly and grossly disproportionately greater than other properties” served by the district, and that the excess sediment damaged his irrigation pipes and orchard. Because the owner was seeking compensation for bearing a disproportionate amount of the externalized costs of a public improvement resulting from an inherent risk presented by the deliberate design, construction, or maintenance of the public improvement, the Court held that the owner presented a claim for inverse condemnation, and the “invited” water theory was not a brightline bar to liability.

Micheli v. City of Fresno: Thousands Can Be “Singled Out”

The narrow crack in the inverse condemnation shield from Shehyn may have expanded after another decision (unpublished), Micheli v. City of Fresno (2026), expanded the definition of “singled out.” In Micheli, the City of Fresno constructed a facility to treat and deliver surface water to thousands of northeast-area residents, who alleged the new water corroded their galvanized iron plumbing. The trial court dismissed their inverse condemnation claim under Williams – that the homes were not “singled out” and that the plaintiffs had invited the water into their homes. The Court of Appeal reversed, dismantling both pillars of the Williams defense.

On the “singled out” requirement, the court held that northeast-area residents were singled out because only their neighborhoods received the new supply — extending the doctrine to thousands of customers, so long as they can be distinguished from other ratepayers. On the “invited water” defense, the court reasoned that residents “did not consent to water that was improperly treated” and they lacked realistic alternatives to their municipal supply.

Importantly, the court distinguished between deliberate infrastructure decisions and negligent operations, noting that failing to comply with corrosion control standards would potentially fall in the category of negligence rather than takings. But where an agency affirmatively changes its water source or treatment methodology and that decision causes property damage, Micheli opens the door to inverse condemnation liability.

What This Means for California Water Suppliers

While these decisions were not final adjudications on the merits (and Micheli remains unpublished), California water suppliers should be cognizant of several potential ramifications flowing from recent inverse condemnation case law. The “invited water” defense may no longer be reliable given Micheli’s recognition that customers lack meaningful alternatives to water supply. The “singled out” requirement is broader than assumed — delivering changed water to a defined service area, even one with thousands of connections, may be sufficient.

These recent decisions, while not necessarily precedent setting, have implications for California water suppliers that may be substantial. Proactive risk assessment, robust compliance programs and thoughtful infrastructure planning are more important than ever to minimize potential inverse condemnation liability for water suppliers.

This article appeared in California Water Views 2026

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