U.S. Sen. Kay Hagan has withdrawn support for a possible lifetime federal appointment for a state judge who ruled in favor of a company that includes her husband.

Three weeks ago, Hagan, D-N.C., recommended Judge Calvin Murphy to fill a vacant seat on the U.S. District Court for Western North Carolina. Nine days later, Murphy signed a ruling favoring the owners of five small hydroelectric plants on the Deep River, one of them belonging to Hydrodyne Industries. The company lists Hagan's husband as a managing member, the News & Record of Greensboro reported Thursday.

The first-term Democratic senator said she didn't know Murphy had ruled in a case in which her husband, Greensboro lawyer Charles T. "Chip" Hagan III, had a stake until the newspaper asked her to comment.

"I respect Judge Murphy's record of service, and I do not believe he did anything wrong," Hagan said in a statement Wednesday. "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."

Murphy is a part-time Superior Court judge who fills in when sitting judges are not available. He ruled against the Piedmont Triad Regional Water Authority in a lawsuit by Hydrodyne and other small power plants along the Deep River's 80-mile course from Guilford to Chatham County. The dam owners sued to recover electricity production revenue they contend they lost when the authority diverted millions of gallons for drinking water.

The water authority's executive director, John Kime, said the agency did not get a fair shake in Murphy's courtroom. Murphy and other judges who handled different parts of the case seemed to have their eye on the federal court vacancy, Kime said.

"It was clear to me that we weren't getting an unbiased opinion, based on politics," he said.

Murphy and Chip Hagan did not return calls to The Associated Press seeking comment Thursday.

It's not clear whether Murphy knew of Chip Hagan's connection to the case, said J. Scott Hale, an attorney at Chip Hagan's law firm who represented the plant owners. Kay Hagan has no connection to Hydrodyne and her husband has a "minority" interest in it, Hale said.

Chip Hagan is named in some lawsuit documents as "manager and authorized representative" of Hydrodyne, which owns and operates a hydroelectric plant in Moore County.

Power plant owners claimed the regional authority steered water away from their generating turbines as it filled Randleman Reservoir, built to supply water for Greensboro and surrounding cities.

The water authority claimed it tried as early as 1991 to get dam owners to help define how the reservoir would affect the plants, but the owners did not cooperate.

Murphy ruled Oct. 23 that the reservoir harmed the plants and that the owners are due compensation in an amount that a future jury will have to decide.