[author: Matthew B. Seltzer]

Under a new U.S. Supreme Court decision, businesses of all kinds may be entitled to compensation for temporary flooding of their land caused by government flood control projects.

In 2011, the Federal Circuit Court of Appeals ruled that only flooding of land by the government that is "permanent or inevitably recurring" could lead to compensation for a taking.

But on December 4, 2012, the U.S. Supreme Court unanimously reversed the Federal Circuit and ruled that temporary, recurrent floodings can in fact be considered an unconstitutional taking of private property by the government. The Supreme Court emphasized, however, that the facts must be assessed to determine if temporary flooding in any particular case amounts to a taking.

The Supreme Court sent the Arkansas Game and Fish Commission v. United States case back to the Federal Circuit to determine if a taking occurred and if up to $5.7 million in compensation should be awarded. The Supreme Court emphasized that the "particular circumstances" of each flooding case must be assessed. On remand, the Federal Circuit will review factors relating to "causation, foreseeability, substantiality, and the amount of damages."

The Arkansas Game and Fish Commission claims that it is entitled to the payment because of flooding caused by the U.S. Army Corps of Engineers.

The Corps operates the Clearwater Dam on the Black River in Arkansas. From 1993 through 2000, the Corps altered the management of the dam to extend the period each year when high water would be released. This resulted in widespread damage to trees and forest habitat in the Game and Fish Commission's Black River Wildlife Management Area located downstream of the dam.

The Federal Circuit relied upon early twentieth-century Supreme Court cases to find that there could be no takings compensation for temporary flooding. In reversing the Federal Circuit, the Supreme Court said that its almost 100-year-old decisions did not directly address temporary flooding and were decided before its modern precedents, which recognize that a taking need not be permanent to be compensable.

Although the case is a suit by one government entity against another government entity, the case is also significant for businesses and other private landowners:

• The holding that there is no categorical exemption from taking liability for temporary government-induced flooding applies to private as well as public land.
• The Corps operates hundreds of dams and many miles of levees, opening the Corps to potential claims by landowners in other cases.
• The decision also would allow private landowners to sue state and local agencies for takings caused by temporary government flooding of private land.
• The case demonstrates the clear commitment of the Supreme Court to support the right of landowners to receive compensation for temporary physical and regulatory takings of all kinds, not just flooding. However, the facts of each case must be assessed to determine if a taking occurred.