Floodgates Open to Takings Claims? Supreme Court Finds That Even Temporary Flooding From Government-Owned Dams May Constitute a "Taking"

December 10, 2012

As reported in our posting of November 2, the U.S. Supreme Court this term is considering two cases of particular significance for dam operators. The first, Arkansas Fish & Game Commission v. United States, was decided last week. The court rejected the proposition that no Fifth Amendment taking can occur from temporary flooding caused by a government-owned dam. This result will give little comfort to dam operators since takings claims will now be decided on a fact-intensive balancing test rather than on the basis of a per se rule that takings can arise only from permanent or predictable periodic flooding.

The case arose from seasonal flooding at the Donaldson Black River Wildlife Management Area ("WMA") in northwest Arkansas caused the U.S. Army Corps of Engineers' Clearwater Dam, located 115 miles upstream in Missouri. In the 1990s, the Corps began to deviate from its accepted operating plan for the Clearwater reservoir in order to reduce damage to crops upstream from the dam. Arkansas sued the Corps, asserting that deviations from operating rules increased flooding in the WMA, damaging hardwoods and reducing the value of the habitat in the WMA. The claim succeeded in the lower court, but the U.S. Court of Appeals for the Federal Circuit, in a split en banc decision, reversed, holding that the flooding was only temporary and therefore could not support a takings claim. This holding was primarily based on Supreme Court takings precedents from 1924 and 1917 involving dams.

The Supreme Court vacated the Federal Circuit's ruling, concluding that takings claims, including those arising from dam operations, should be decided using the balancing test the Court has relied on since the Penn Central case in 1978. The Court rejected the Federal Circuit's conclusion that its earlier cases required permanent, or at least recurrent and predictable, flooding before a takings claim can be established based on operations of a government dam. By employing a fact-intensive balancing test rather than a bright-line rule, the Court's decision is likely to make it harder for government dam operators to obtain summary judgment dismissing takings claims since trial courts will be hesitant to reject such claims until the factual record is established. Further, as the facts of Arkansas Fish & Game demonstrate, dam operations often involve difficult trade-offs and reducing damage to one set of affected interests may now give rise to a compensable takings claim by other interests who are damaged as a result to changes in rule curves and other operating procedures following by government dam operators.

The news is better from this term's other case of particular importance for dam operators. That case, Los Angeles County Flood Control, was argued on December 4. While it remains unclear how the Court will resolve the case, little doubt remains that the Ninth Circuit's opinion will not survive. The Ninth Circuit held that the Flood Control District had "discharged" pollutants within the meaning of the Clean Water Act from its concrete flood control channels used to contain several rivers in the county. This holding threatened to upend long-standing precedent holding that dams and conduits are not "point sources" under the Clean Water Act. It also threatened to limit the Supreme Court's holding in South Florida Water Management District v. Miccosukee Tribe, which held unanimously that no addition of a pollutant occurs triggering the requirement for a NPDES permit where the conveyance merely transfers water from one part of a water body to another without adding any pollutants.

None of the parties, including the plaintiffs (represented by Natural Resources Defense Council), argued for upholding the Ninth Circuit on its terms. Instead, plaintiffs argued that the Ninth Circuit's decision should be upheld, but on different grounds. The Flood Control District, of course, argued that the Ninth Circuit's opinion should be reversed and the case dismissed. The Solicitor General, which appeared as an intervenor on behalf of the U.S. government, argued for a third approach, which would require a remand for additional fact-finding. The argument was dominating by a discussion of which of these approaches to follow. A fourth approach, urged by a group of environmental law professors appearing as amicus curiae, was to dismiss the writ of certiorari as improvidently granted. This approach appears to have gained little traction with the Court. The decision is expected sometime before the end of the current term in June, 2013.

If you have any questions about the Supreme Court cases discussed in this post, the regulation of dams, or other matters related to the utility industry, natural resources, water, or environmental law, please contact a member of GTH's Energy, Telecommunications and Utilities practice group or Environment & Natural Resources practice group.