Federal Court Upholds Government Liability in Harvey Reservoir Flooding Case

The U.S. Court of Appeals for the Federal Circuit has issued a unanimous ruling affirming the federal government's liability for upstream flooding caused by the Addicks and Barker reservoirs during Hurricane Harvey, marking a significant victory for property owners affected by the event.

In the decision, the three-judge panel held that the U.S. Army Corps of Engineers knew or should have known since the reservoir's construction that severe storm events would cause the dams to overflow, resulting in flooding of private property.

The court further concluded that the flooding constituted a permanent taking under the Fifth Amendment, finding that hurricane-level storms "would inevitably recur without identifiable end."

The ruling confirms that property owners whose land lies within the government's flowage easement are entitled to compensation for the ongoing burden placed on their property rights.

"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," said Daniel Charest of Burns Charest LLP, who has represented the property owners for over eight years.

While the court affirmed liability, it also imposed limits on recoverable damages. The Federal Circuit ruled that property owners may not recover consequential damages such as lost rental income, business profits, or relocation expenses, determining that those losses are indirect and not compensable in takings cases.

Portions of earlier damage awards related to displacement costs were struck down, with the court reasoning that the flowage easement itself already compensates for temporary occupation of property by floodwaters.

"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," Charest commented. "So it must compensate upstream property owners for this taking."

While liability is now firmly established, Charest said the government's remaining options are limited, including seeking a rehearing or petitioning the Supreme Court.

The case will now return to the Court of Federal Claims to address the remaining damages issues before proceedings resume for other upstream claims.