Federal Circuit Holds U.S. Army Corps of Engineers Not Liable for Hurricane Katrina Flood Damage

by Liskow & Lewis

The United States Court of Appeals for the Federal Circuit recently issued a significant opinion in a case in which a takings claim was asserted to redress Hurricane Katrina-related flood damage.  On April 20, 2018, it reversed a decision of the United States Court of Federal Claims (“Claims Court”), which had held the U.S. Army Corps of Engineers liable under the Tucker Act for flood damage to the Plaintiffs’ properties.

In 1968, the Corps completed construction of the Mississippi River Gulf Outlet (“MRGO”) in New Orleans.  The purpose of this navigation channel was to increase commerce between the port of New Orleans and the Gulf of Mexico.  Around the same time, Congress authorized funding for flood control through the Lake Pontchartrain and Vicinity Hurricane Protection Project (“LPV”).  This project was instituted to reduce the risk of flooding in New Orleans, and it resulted in the construction of levees and floodwalls along the banks of MRGO.

In 2005, Hurricane Katrina hit New Orleans and catastrophically flooded St. Bernard Parish and the Ninth Ward in New Orleans, among other places.  Property owners in these areas, as well as the St. Bernard Parish Government, sued the federal government in Claims Court, claiming that, under the Tucker Act, both action and inaction by the Corps constituted a “taking” by causing flood damage to their properties.  Specifically, Plaintiffs asserted that the construction, operation, and improper maintenance of MRGO caused a variety of adverse impacts (e.g., increased salinity in the water and erosion of MRGO’s banks) that increased storm surge along the channel.  After a bench trial in late 2011, the Claims Court held that a temporary taking had occurred.  It found that the substantially-increased, storm surge-induced flooding of Plaintiffs’ properties that occurred during Hurricane Katrina and in later storms was a direct result of the Corps’ cumulative acts, omissions, and policies over time. After a second bench trial, the court awarded approximately $5.5 million dollars in replacement costs and lost rental value as just compensation.  It certified a liability class and two subclasses for compensation.  The federal government appealed both the liability and the compensation rulings, and Plaintiffs cross appealed the issue of compensation.

On appeal, the Federal Circuit first framed the case as one for inverse condemnation based on a taking of a flowage easement.  It identified the pivotal legal issue as whether the increased flooding from the MRGO constituted a taking, and it explained the proof Plaintiffs needed to prevail on such an issue: that government action caused the injury to Plaintiffs’ properties and that the invasion was the direct, natural, or probable result of an authorized activity.  Plaintiffs were also required to prove that the invasion was either intentional or foreseeable.

Turning next to Plaintiffs’ claims, the court noted that Plaintiffs’ theory of liability was based largely on government inaction—namely, the Corps’ alleged failure to maintain or modify MRGO (e.g., by failing to armor banks or repair erosion).  The court flatly held that, on a takings claim, the government cannot be liable for failure to act—only for affirmative acts, or “authorized activity.”  Plaintiffs’ sole remedy, if any, for the Corps’ omissions, lies in tort.

The court then turned to the two affirmative acts identified by Plaintiffs as causing their damages—the construction of MRGO and its continued operation.  To the extent that Plaintiffs’ case was premised on these acts, the court held, Plaintiffs failed to prove that the acts caused their injury.  Addressing the causation analysis applicable in a takings case, the court explained that Plaintiffs were required to prove that they would not have suffered the injury in the ordinary course of events, absent government action.  Thus, they should have—but did not—present evidence comparing flood damage that actually occurred with damage that would have occurred had there been no government action.

Moreover, according to the Federal Circuit, Plaintiffs’ causation analysis was flawed from the outset.  Their proof rested entirely on the premise that it was sufficient to establish that their injury would not have occurred absent the construction and operation of MRGO, without accounting for the impact of the LPV flood control project.  The court held that this failure to account for the LPV project and the possibility that it mitigated the impact of MRGO was fatal to Plaintiffs’ claim.  As the court put it, Plaintiffs asked the wrong question: the relevant inquiry is not whether isolated government acts caused the injury, but rather whether the totality of the government action caused the injury.

The court addressed Plaintiffs’ responsive argument that, in determining causation, it is unnecessary to consider the entirety of government action if the beneficial government action is not part of the same project as the detrimental action.  It rejected this argument out of hand, finding that the LPV project was unquestionably directed to decreasing the very flood risk that Plaintiffs alleged was increased by MRGO.  The court put it simply: when the government action mitigates the type of adverse impact that is alleged to be a taking, it must be considered in the causation analysis, regardless of whether it is formally related to the government project that allegedly contributed to the harm.  Plaintiffs’ failure to consider the impact of the risk-reducing LPV project resulted in a failure of proof on the key issue of causation.  The Claims Court’s judgment was thus reversed without consideration of the other issues on appeal.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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