Late yesterday the United States Court of Appeals for the Federal Circuit issued a decision that delivers a significant victory for property owners affected by upstream flooding from the Addicks and Barker reservoirs during Hurricane Harvey. The three-judge panel unanimously affirmed the government’s liability, finding that the Corps of Engineers knew or should have known since the dams’ construction that severe storms would cause the reservoirs to overflow and flood private properties. Importantly, the court held that this flooding was not just a one-time event but constitutes a permanent taking, as hurricane-level storms “would inevitably recur without identifiable end.”
“This ruling reinforces that every property owner whose land is subject to the government’s flowage easement deserves compensation for that permanent burden on their property rights,” says Daniel Charest of Burns Charest LLP, who has represented property owners in the litigation for more than eight years.
While the government failed to escape liability, it was able to secure some limitations on the scope of damages in addition to offsets for FEMA relief received. The Federal Circuit agreed that property owners cannot recover “consequential damages” such as lost rental income, business profits, or temporary relocation costs—holding that these are indirect losses not compensable in takings cases. The Court struck down portions of the test property awards relating to displacement costs incurred while flooded test property was inaccessible. The Court reasoned that the flowage easement already compensates owners for the government’s temporary occupation of their property with flood water, and any additional displacement costs are merely consequential.
These rulings establish important boundaries: while the government must pay for the permanent flowage easement and destroyed personal property, it won’t be liable for all the economic ripple effects of its flooding.
“This decision confirms that the government made a very calculated decision decades ago to use private property as flood storage to protect downtown Houston and downstream properties,” says Mr. Charest. “So it must compensate upstream property owners for this taking.”
According to Mr. Charest, with liability now conclusively established by the Federal Circuit, the government has limited options remaining—it could seek rehearing and it could petition the Supreme Court, but either option may be difficult given the unanimous decision of the panel.
Once the case is returned to the Court of Federal Claims, it is anticipated that the court will need to work through the remanded damages issues before lifting the litigation stay on the remaining Upstream claims.
News of the ruling and comments from Mr. Charest were featured on Channel 13 and Houston NPR.