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GREENSBORO — The Piedmont Triad Regional Water Authority wants to disqualify the judge who ruled against it in a legal battle with owners of seven hydroelectric plants on the Deep River, citing an alleged conflict of interest involving the husband of U.S. Sen. Kay Hagan.

The authority argues that Superior Court Judge Calvin E. Murphy should not have ruled in the case, because Hagan’s husband — Greensboro attorney Charles T. “Chip” Hagan — is part-owner of one of the plants.

Sen. Hagan named Murphy as one of three candidates for a vacant federal judgeship shortly before his Oct. 23 ruling favoring the plant operators, including Chip Hagan.

The senator later withdrew Murphy’s name, saying she had chosen him without knowing of his role in the case.

But the water authority, in a court filing, said the situation raises enough questions to warrant overturning his ruling and disqualifying Murphy from further participation.

“The recommending of a trial judge for a lifetime judicial appointment by a United States senator, nine days before the court ruled favorably for the senator’s husband’s limited liability company, is a proceeding in which the judge’s impartiality may reasonably be questioned,” Robert A. Brinson, the water authority’s lawyer, wrote in the court pleading.

Greensboro lawyer J. Scott Hale of Chip Hagan’s law firm said he was aware of the water authority’s action but declined to comment. Hale represents Chip Hagan and the other owners and is their spokesman.

Chip Hagan is a “managing member” of Hydrodyne, which owns a plant on the Deep at High Falls in Moore County.

The water authority wants Murphy to revoke his ruling, order “a new hearing to avoid any appearance of impropriety or reasonable question of impartiality” and disqualify himself from further involvement.

Efforts to reach Murphy of Mecklenburg County were unsuccessful Wednesday.

The lawsuit at issue involves seven small hydropower plants that have been re-activated near old, mostly abandoned mills that line the Deep. Five of the plants operate; two haven’t worked in years.

Murphy’s ruling said the working plants were due compensation from the authority, but a jury would have to decide how much. Nothing “at this time” would be paid to the non-working plants, he said.

The plant owners claim the water authority’s Randleman Reservoir will divert water from the river, which they could otherwise use to generate electricity and earn money. They claim it hurt their operations when the reservoir was filled several years ago and will damage them more when the authority begins distributing water.

Rescinding her Oct. 14 recommendation of Murphy, Sen. Hagan said on Nov. 4 she hadn’t known he “was hearing a case in which my husband had an interest.”

“I respect Judge Murphy’s record of service, and I do not believe he did anything wrong,” she said. “However, to avoid any appearance of favoritism from my office, I am asking the White House to withdraw Judge Murphy’s name from consideration for U.S. District Court Judge for North Carolina’s western district.”

A senator can recommend several candidates to President Barack Obama, who ultimately chooses a nominee for confirmation by the full Senate.

Brinson cited several ways Murphy could have known of Chip Hagan’s role in the case and his relationship to the senator, including Chip Hagan’s presence in the courtroom during a July 28 hearing allegedly with a U.S. Senate notebook.

He sat “behind plaintiff’s counsel carrying and displaying a briefcase or portfolio bearing a visible logo of the United States Senate,” water authority director John Kime said in an accompanying affidavit, adding it “could readily be seen from anywhere in the courtroom.”

Several weeks ago, Hale acknowledged Chip Hagan was at such a hearing but said he sat unobtrusively in the audience.

In another example of ways Murphy could glean Chip Hagan’s connection to the case, Brinson noted that Sen. Hagan’s husband submitted an affidavit in the case identifying himself as “a manager and authorized representative of Hydrodyne” who could verify its High Falls plant “suffered a reduction in the amount of electricity it was able to produce during the time it took to fill” the reservoir and would suffer more after the authority begins distributing water.

Brinson also contrasted Murphy’s behavior in the case with that of local Judge Catherine C. Eagles, Guilford County’s senior resident Superior Court judge, who disqualified herself from the same case in July because “she was under consideration to be recommended for nomination for U.S. District Court Judge for North Carolina’s Middle District Court by Sen. Hagan,” the same position for which Murphy was considered in the western district.

Brinson did not accuse Murphy of any overt act biased against the water authority, noting that was not necessary. The test is whether a judge’s personal situation poses “such a risk of actual bias or prejudgment” given normal human weaknesses and psychological tendencies, Brinson said.

The lawsuit turns on the well-established rights of riverfront land owners to use the water that flows past their property. Several earlier studies said the reservoir would hurt the Deep River plants, never specifying how much but advising the water authority to negotiate with the plant owners.

The plant operators have submitted an expert’s study that suggests they will lose about $5.4 million in electric production over the next 50 years because of the authority’s diversion of drinking water.

The water authority counters that the alleged damages are either overblown or without any merit, partly because the plants have a history of sporadic operation that limited their earnings well before the Randleman Reservoir.

Contact Taft Wireback at 373-7100 or taft.wireback@news-record.com