You don't have 3 large reservoirs due to rainfall.
I would bet there was streams that ran through his property that he damned up and the neighbors lost their source of water or their supply was vastly diminished.
as the article said this law was in place since 1925 and this was the first time it was enforced.
The rate of flow in the stream is the rate of flow in the stream. A dam would only temporarily disrupt it, then the flow would resume.
Ok... Guy builds a damn.. This stops the water flow for a while..
At some point the water is going to overflow the damn and continue to run...
We need “the rest of the story”