St. Bernard Parish Government v. United States

          Appeals from the United States Court of Federal Claims in No. 1:05-cv-01119-SGB, Chief Judge Susan G. Braden.

          Charles J. Cooper, Cooper & Kirk, PLLC, Washington, DC, argued for plaintiffs-cross-appellants. Also represented by Brian W. Barnes, Vincent J. Colatriano, Michael W. Kirk, William C. Marra; Carlos A. Zelaya, II, Mumphrey Law Firm, LLC, Chal-mette, LA.

          Brian Halligan Fletcher, Office of the Solicitor General, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by John C. Cruden, Brian C. Toth, Environment and Natural Resources Division, United States Department of Justice, Washington, DC.

          Mark F. Hearne, II, Arent Fox, LLP, Clayton, MO, for amici curiae National Federation of Independent Business Small Business Legal Center, Reason Foundation, Southeastern Legal Foundation, Property Rights Foundation of America, Inc., National Association of Reversionary Property Owners, James W. Ely, Jr. Also represented by Stephen Sharp Davis, Meghan Sue Largent.

          Before Newman, Lourie, and Dyk, Circuit Judges.

          Dyk, Circuit Judge.

         Saint Bernard Parish Government and various other owners of real property in St. Bernard Parish or in the Lower Ninth Ward of the City of New Orleans (collectively "plaintiffs") brought suit in the Court of Federal Claims ("Claims Court") under the Tucker Act, 28 U.S.C. § 1491(a)(1), alleging a taking. They claimed that the government was liable for flood damage to their properties caused by Hurricane Katrina and other hurricanes. Plaintiffs' theory was that the government incurred liability because of government inaction, including the failure to properly maintain or to modify the Mississippi River-Gulf Outlet ("MRGO") channel, and government action (the construction and operation of the MRGO channel). The Claims Court found a taking occurred and awarded compensation. The government appeals, and plaintiffs cross-appeal alleging that the Claims Court's compensation award was inadequate.

         We conclude that the government cannot be liable on a takings theory for inaction and that the government action in constructing and operating MRGO was not shown to have been the cause of the flooding. This is so because both the plaintiffs and the Claims Court 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. There was accordingly a failure of proof on a key legal issue. We reverse.

         Background

         New Orleans has a long history of flooding. The geographic location of the city makes it "particularly vulnerable to hurricanes." J.A. 25035. The city was hit by major storms in 1909 and 1915, and much of the city flooded due to the Fort Lauderdale Hurricane in 1947. In 1955, Congress authorized the Army Corps of Engineers ("Corps") to study the need for additional hurricane protection in the Lake Ponchartrain area. This resulted in a comprehensive report known as the "Barrier Plan, " which recommended a system of floodgates, levees, and floodwalls to protect the area from hurricanes.

         In 1956, Congress authorized the Corps to construct the MRGO navigation channel in New Orleans. The purpose of the channel was to increase commerce by providing a direct connection between the port of New Orleans and the Gulf of Mexico. Construction was completed in 1968.

         Plaintiffs allege that over the course of the next several decades, the construction, operation, and improper maintenance of the MRGO channel caused various adverse impacts that increased storm surge along the channel as follows. The construction, operation, and failure to maintain MRGO increased salinity in the water by providing a direct route for salt water to flow into the area from the Gulf of Mexico. The saltwater changed the character of the marshes and destroyed wetlands in the area that previously acted as a natural buffer against flooding. Moreover, the "failure of the Army Corps to maintain the banks" caused erosion along the banks, which allowed more water to pass through the channel at higher velocities. MRGO also created the potential for a funnel effect, which increased flooding during storms by compressing storm surge into the channel and causing it to rise faster and higher.

         In 1965, while MRGO was still under construction, Congress authorized funding to implement the Barrier Plan through the Lake Pontchartrain and Vicinity Hurricane Protection Project ("LPV project") to control flooding resulting from hurricanes. See Flood Control Act of 1965, Pub. L. No. 89-298, 79 Stat. 1073, 1077 (1965). At an estimated cost of approximately $56 million ($447 million in today's money), the LPV project included construction of levees and floodwalls in the St. Bernard basin along the banks of MRGO utilizing dredged material from the MRGO channel. The levee system was designed to, and did, reduce the risk of flooding in New Orleans, including specifically along the banks of MRGO. Construction began around the same time that construction of MRGO was concluding.

         Plaintiffs own properties located in the St. Bernard Parish and Lower Ninth Ward areas. These properties were catastrophically flooded during Hurricane Katrina in 2005. Hurricane Katrina was "one of the most devastating hurricanes that has ever hit the United States, generating the largest storm surge elevations in the history of the United States." In re Katrina Canal Breaches Consol. Litig., 647 F.Supp.2d 644, 678 (E.D. La. 2009), aff'd in part, rev'd in part, 696 F.3d 436 (5th Cir. 2012). Storm surge is a "wind generated process, " so "a storm of such intensity creates an immense storm surge." Id. at 679. During Hurricane Katrina, as a result of the storm surge, levees from the LPV project around St. Bernard Parish and the Lower Ninth Ward breached, contributing to flooding in the area. Increased storm surge also contributed to subsequent damage from other hurricanes.

         Plaintiffs brought an action in the Claims Court under the Tucker Act, alleging that construction and operation of MRGO and failure to properly maintain or modify it constituted a taking by causing flooding damage to their properties. Plaintiffs made no effort to show that the combination of MRGO and the LPV levees caused more flooding than would have occurred without any government action, arguing that the court should limit its consideration to MRGO in isolation.

         After a bench trial in December 2011, the Claims Court held that a temporary taking occurred. The Claims Court found, as plaintiffs alleged, that a causal link existed between increased storm surge and MRGO. The construction of, continued operation of, and failure to maintain or modify MRGO caused erosion, increased salinity, wetlands loss, and a funnel effect, which in turn caused increased storm surge. The Claims Court found that "the substantially increased storm surge-induced flooding of Plaintiffs' properties that occurred during Hurricane Katrina and subsequent hurricanes and severe storms was the direct result of the Army Corps' cumulative actions, omissions, and policies regarding the MR-GO that occurred over an extended period of time."^[1] St. Bernard Par. Gov't v. United States, 121 Fed.Cl. 687, 741 (2015); see also id. at 745 ("The evidence in this case established that the substantial increase in storm surge and flooding was the 'direct, natural or probabl[e] result' of the construction, expansions, operation, and failure to maintain the MR-GO."). The plaintiffs presented no evidence, and the Claims Court made no findings, as to whether the combination of these MRGO-related effects and the LPV levees caused flooding on plaintiffs' properties greater than would have occurred had the government engaged in no action at all.

         The Claims Court also determined that these environmental effects were foreseeable at least by 2004. The Claims Court found that "it was foreseeable to the Army Corps that the construction, expansions, operation, and failure to maintain the MR-GO would increase salinity, increase habitat/land loss, increase erosion, and increase storm surge that could be exacerbated by a 'funnel effect' and likely cause flooding of Plaintiffs' properties in a hurricane or severe storm." Id. at 723.

         After a separate trial on compensation in November 2013, the Claims Court awarded compensation of $5.46 million based primarily on the replacement cost of improvements to the properties and lost rental value during the temporary taking period. The Claims Court also sua sponte awarded lost real-estate taxes to the New Orleans city government, a non-party. The Claims Court then certified a class under Court of Federal Claims Rule 23(a) for purposes of liability and two subclasses for purposes of just compensation.

         The government appeals both the finding of liability and the compensation award. Plaintiffs cross-appeal the amount of the compensation award. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).

         Discussion

         Whether a taking under the Fifth Amendment has occurred is a question of law with factual underpinnings. Ridge Line, Inc. v. United States, 346 F.3d 1346, 1352 (Fed. Cir. 2003). We review the trial court's legal ...