In its Penn Central decision, 438 U.S. 104 (1978), the Supreme Court recognized the challenge of analyzing “takings” cases “when the interference with property rights arises from some public program adjusting the benefits and burdens of economic life to promote the public good.” Id. at 124. In the near future, the application of takings analysis in the context of the nation’s great river basins is likely to require unique application of this adjustment of benefits and burdens.
In Arkansas Game & Fish Comm’n v. United States (“Arkansas”), 133 S. Ct. 511 (2012), the plaintiff state agency (“AGFC”) owned a hardwood forest along the Black River, and managed it for recreation, hunting and timber harvest. The U.S. Army Corps of Engineers (“Corps”) operated an upstream dam and had an operations manual in place which established seasonably variable release rates. In response to informal requests from agricultural interests, the Corps varied the releases in order to extend the harvest season; the result was flooding of the state forest during its key growing season. The AGFC claimed that the changes in flow caused sustained flooding during the tree-growing season, leading ultimately to death and reduced growth in the forest trees. The U.S. Court of Claims found a takings, but was reversed by the Court of Appeals for the Federal Circuit. The case went to the U.S. Supreme Court, which held for the AGFC, finding a compensable temporary takings. In the Court’s words, “[a] temporary takings claim could be maintained as well when government action occurring outside the property gave rise to ‘a direct and immediate interference with the enjoyment and use of land.’” Id. at 519. For this, the Court cited United States v. Causby, where frequent overflights “deprived the property owner of the customary use” of his property. Id.
In Arkansas, the Court identified four relevant factors that bear on the inquiry: (1) the duration of the flooding; (2) “the degree to which the invasion is intended or is the foreseeable result of authorized government action, id. at 522; (3) the character of the land at issue and the owner’s reasonable investment-backed expectations regarding the lands use; and (4) the severity of the interference. Id.
Parenthetically, writing for the Court, Justice Ginsburg observed: “today’s modest decision augurs no deluge of takings liability.” Id. Time and events will tell whether this forecast is accurate!
A subsequent decision which relied on Arkansas arose in the aftermath of Hurricane Katrina. St. Bernard’s Parish vs. United States, 887 F.3d 1354 (Fed. Cir. 2018). Suit was brought by a local parish and numerous property owners on a theory that the construction, operation and failure to maintain the Mississippi River-Gulf Outlet (“MRGO”) project by the Corps resulted in temporary takings by causing increased flooding. MRGO was authorized in the 1950s and was controversial from the start, with an abundance of warnings of potential erosion and environmental damage, most of which was proved correct during the hurricane. (In fact, four years after Katrina, the government admitted failure and closed MRGO.) The trial court held the United States liable for property damage—potentially hundreds of millions of dollars—caused during Katrina, relying on the four factors in the Arkansas opinion.
The Federal Circuit reversed the trial court on several key points. First, it observed that the trial court’s finding of liability was largely and improperly based on the government’s failure to take action, “particularly on its failure to maintain MRGO or to modify it.” Id. at 1360. The Federal Circuit stated:
While the theory that the government failed to maintain or modify a government-constructed project may state a tort claim, it does not state a takings claim. A property loss compensable as a taking only results when the asserted invasion is the direct, natural, or probable result of authorized government action. Id.
On a second point, the Federal Circuit held that the plaintiffs failed to establish that the government’s actions related to MRGO caused the property injuries; and held that causation findings must account for the “risk-decreasing” impact of associated actions. Id. at 1364. The Federal Circuit held that it was required to consider “[t]he impact of the entirety of government actions that address the relevant risk,” including “the far reaching benefits which respondent’s land enjoys from the government’s entire program.” Id. After St. Bernard’s Parish, to quote Vermont Law Professor John Echeverria, “the relevant question is not whether the Army Corps’ operation of the flood control dam may have caused damage, but what level of flooding would have occurred if the flood control dam had never been built to begin with.” Reversal in St. Bernard Parish Case (Apr. 23, 2018), https://takingslitigation.com/author/jecheverria2014/ (hereafter, “Echeverria”). Now, plaintiffs must show “that they would not have suffered flooding in the absence of government action.” Id.
Takings Claims in the Context of River Basin Floodplains
Future takings cases based on Arkansas are likely to arise in or near the floodplains of large river basins that have undergone various levels of Congressionally-authorized development by either the Corps or the Bureau of Reclamation. The nation’s largest river basin—the Missouri—offers a relevant example. In its natural condition, the main river channel’s width ranges from 1,000 to 10,000 feet during normal flow periods and 25,000 to 35,000 feet during flood periods. Nat’l Research Council, The Missouri River Ecosystem: Exploring the Prospects for Recovery (hereafter, “NRC”) 57 (2002). The natural Missouri River was famous for large floods and meandering channels that moved freely across the floodplain while transporting great volumes of sediment. Id. at 54. In general, periodic flooding is a characteristic hydrologic feature of large river floodplain ecosystems, including the Missouri.
Demonstrating a Protectable Property Interest: The “No-Compensation” Rule
Essential to every takings claim is the legal definition of the property right being asserted. The Lucas decision emphasized that the relevant property rights are those acquired when the property owner obtains title, 505 U.S. 1003 (1993), and those rights are limited bythe “background principles of the State’s law of property and nuisance.” Id. at 1029. If there is no protectable property right, no compensation can be recovered.
In the context of large river basins, one “background principle” is the distinction between lands above the ordinary high water mark (“OHWM”) and those below. There is a clear right to compensation when the United States deprives the owner of the “fast lands”—those above the OHWM. See U.S. v. Rands, 389 U.S. 121 (1967); 33 U.S.C. Sec. 595a (requiring compensation to be paid for takings of real property “above the normal high water mark of navigable waters”).
The question that follows is whether a right to compensation can be raised when the government action occurs below the OHWM. Quoting the Court in Rands:
The proper exercise of the power is not an invasion of any private property rights in the stream or the lands underlying it, for the damage sustained does not result from taking property from riparian owners within the meaning of the Fifth Amendment but from the lawful exercise of a power to which the interests of riparian owners have always been subject. Id. at 123.
In an earlier decision, United States v. Chicago, Milwaukee, St. Paul & Pacific Railroad Co., 312 U.S. 592 (1941), the Court held that the power of the United States extends to the “entire bed of a stream, which includes the lands below the [OHWM],” and “any structure is placed in the bed of a stream at the risk that it may be so injured or destroyed, and the right to compensation does not depend on the absence of physical interference with navigation.” Id. at 596, 599. The “power” referred to is the so-called “navigation servitude,” which will serve as a Lucas limitation, which “must inhere in the title itself,” according to “background principles” of law. Chicago, Milwaukee affirmed that when the government exercises the navigation servitude, no invasion of a protectable property interest occurs, and therefore no compensation is due under the Fifth Amendment. Id. at 596-97.
Drawing Benefits into Account: The Entirety of the Government Program
Most large river basins in the United States have undergone extensive development. As St. Bernard’s Parish concluded, this presents the issue of whether the benefits to landowners must be considered in a takings claim for damages, See 33 U.S.C. Sec. 595 (requiring “special and direct benefits to the remainder arising from the improvement” to be accounted for in takings cases). According to St. Bernard’s Parish, the damage calculation must consider “the far reaching benefits which respondents land enjoys from the Government’s entire program.” 887 F.3d at 1364.
The Breadth of the Navigation Servitude
Large, federal river basin development projects are “multi-purpose,” meaning that in addition to improving navigation, they serve other authorized purposes such as flood control, hydropower generation, irrigation, water supply, recreation, economic development and fish and wildlife. See, e.g., Flood Control Act of 1944, 33 U.S.C. Sec. 701 et seq. (recognizing interests in “potential uses, for all purposes” of waters of the United States). In addition, federal water development projects typically require further tasks, such as road development, bank stabilization and implementation of wildlife and environmental protection laws such as the Endangered Species Act. In the case of Missouri River development, the legislative history makes clear that although flood control was the primary purpose, Congress contemplated a management system that tightly integrated navigation, hydroelectric power, irrigation “and other uses.” See John P. Guhin, The Law of the Missouri River, 30 S.D.L.Rev. 346, 364 (1985). The same history supports a conclusion that “other uses” was a phrase intended to include any beneficial use of water whether consumptive or not. Id. This leads then to the question of whether a development agency which pursues a mix of purposes unrelated to navigation but closely integrated into navigation management, remains entitled to the protection of the navigation servitude’s “no compensation” rule.
The Ideker Farms Litigation
Each of the key questions discussed above is potentially involved in a takings case that remains in litigation before the U.S. Court of Federal Claims, Ideker Farms, Inc. v. United States, No. 14-183L (Fed. Cl.), https://ecf.cofc.uscourts.gov/cgi-bin/show_public_doc?2014cv0183-426-0 (Mar. 13, 2018 trial opinion). The Ideker Farms litigation is proceeding in two phases, one of which is complete. Phase I focused on the issue of government liability, and held in favor of the Plaintiffs, a group of farmers, landowners, and business owners from six states who claimed a taking without just compensation based on flooding caused or exacerbated by the Corps’ management decisions on the Missouri River. Phase II will take up the defenses of the United States “and other legal and factual issues associated with proving entitlement to just compensation.” Id. at 2. The Plaintiffs are claiming that flow and storage adaptations made by the Corps in order to protect threatened and endangered species caused flooding and, consequently, their Arkansas takings claim.
The Missouri River is developed and managed for multiple purposes. There is an upper basin with six mainstem dams, feeding a lower basin bank stabilization and navigation channel. Before these structures were put in place, the river followed a “sinuous and meandering river channel that moved freely across the floodplain.” NRC at 56.
With development, the Corps, in addition to the dams, constructed a series of levees to help contain the river. As described in the Ideker Farms trial opinion:
The Corps also constructed a series of structures within the River that were designed to stabilize the River’s banks, limit erosion, and ensure that a deeper, self-scouring channel existed in the center of the River to move flood waters more quickly through the River and allow for navigation.
Ideker Farms at 5-6 (emphasis added). These dikes and revetments corralled the river in a channel, making large stretches of floodplain and low-lying ground available for human uses, principally agriculture. As a result of the Corps’ work, cultivated land increased dramatically and huge expanses of forest land were cleared to make way for the plow. See NRC at 81. Hundreds of thousands of acres adjacent to the river were protected from erosion, or made available for production, or created by accretion, presumably graduating to fee title under state law. See John R. Ferrell, Soundings: 100 Years of the Missouri River Navigation Project 111 (1995).
Against this background, and following a series of downstream floods, a large class of Missouri River landowners filed a takings claim—the Ideker Farms case. The Plaintiffs asserted that although the Corps manages the river for multiple purposes, and although runoff is affected by other factors such as precipitation and land drainage, their damages are attributable to the single-purpose of flow changes to benefit threatened and endangered species. For this interpretation, the trial court took its guidance from the appeals court decision on remand in Arkansas, which relied on a “single-purpose” analysis. Thus, so this thinking goes, a deviation in flows for a single purpose can support a takings claim.
In Phase I, the Ideker Farms court ruled that “but for” the flow deviations to support threatened and endangered species, the Plaintiffs would not have suffered a temporary takings. The trial court’s Phase I opinion did not address the character of title held by the Plaintiffs. The court did say, however, that the Plaintiffs’ properties are “within the river.” This suggests that in Phase II, the court will address issues associated with the no-compensation rule.
Nor does the Ideker opinion address the possibility that the lands involved have enjoyed substantial benefits from the overall government program. As the Federal Circuit noted in St. Bernard’s Parish, causation findings must take into account the “risk-decreasing” impact of associated actions. 887 F.3d at 1364. To again quote Professor Echeverria: “To carry their burden of proof on the issue of causation, . . . the plaintiffs were required to show that they would not have suffered flooding in the absence of government action.” Echeverria.
Large-scale navigation projects inevitably offer other services, hence the many “multiple-purpose” projects authorized by Congress. These other purposes are not likely to have been undertaken, however, had Congress not first desired navigation. In fact, in many cases, the multiple-purposes were added by Congress in order to augment economic benefits and justify the project. The question remains, as stated by Professor Joseph Sax some 50 years ago: “Whether [the] navigation servitude could be exercised in support of a project that is only nominally or marginally designed to promote navigation is a question which the Supreme Court has thus far declined to answer.” Joseph L. Sax, Water Law, Planning & Policy 94 (1968).