On April 20, the U.S. Court of Appeals for the Federal Circuit decided the case of St. Bernard Parish Government, et al., v. U.S., reversing a decision by the U.S. Court of Federal Claims. The Court of Claims had found that a Constitutional compensable “taking” had occurred with respect to the owners of real property located in St. Bernard Parish and the Lower Ninth Ward of the City of New Orleans, whose properties had been damaged as a result of the damage wrought by Hurricane Katrina and other recent hurricanes.

“In summary, we conclude that the allegations of government inaction do not state a takings claim, and that plaintiffs have not established that the construction or operation of MRGO caused their injury.”

This could be a very important ruling affecting many thousands of Texas and Southeastern United States claims that are being filed in the Court of Claims in the wake of Hurricane Harvey.

The plaintiffs’ theory was that the U.S. Government incurred liability for these takings because of its inaction, specifically, its failure to properly maintain or modify a shipping canal, the Mississippi River Gulf Outlet, known as “MRGO,” which resulted in the canal carrying significantly more water at higher velocities.

On appeal, the Court of Appeals held that the U.S. Government cannot be liable on this takings theory because MRGO was not proven to have been the cause of the flooding, and that the Court of Claims erred when it failed to apply the correct legal standard, “which required that the causation analysis account for government flood control projects that reduced the risk of flooding.”

The Court of Appeals recounted the long history of flooding in New Orleans, and the Congressional actions taken in the 1950s that set in motion plans to build MRGO, and the construction and implementation of a “Barrier Plan” that protects the city from hurricanes through a system of floodgates, levees and flood walls. However, it concluded that the plaintiffs made no effort to show that the combination of MRGO and the levees caused more flooding than would have occurred without any government action.

Indeed, the plaintiffs argued that the Court of Appeals should limit its consideration of MRGO in isolation. These are “inverse condemnation” cases, meaning that a landowner may recover just compensation under the Fifth Amendment for a physical taking of his property when specific condemnation proceedings have not be initiated. In this case, the takings claim was based on the taking of a flowage easement by the operation of MRGO, which is compensable.

The Court of Appeals notes that while a claim for property damages that is based on an illegal failure to maintain or modify a government-constructed project may state a tort claim, it does not necessarily state a takings claim. Indeed, another batch of Hurricane Katrina tort claims were dismissed because of the discretionary function exception to the Federal Tort Claims Act. Here, the plaintiffs had the burden of proof to show what would have occurred if the Government had taken no action. In the end, their failure to present evidence comparing the flood damage that actually occurred to the flood damage that would have occurred if the Government had taken no action at all required that the Court of Appeals reverse the Court of Claims.

The plaintiffs failed to address the other Government actions, such as the levee systems, which acted to mitigate the damages wrought by MRGO.