Earlier this month, the Federal Circuit issued its opinion in Ideker Farms, Inc. v. United States, a takings case we have been following because it attracted an amicus brief. In this case, the Federal Circuit reviewed a conclusion of the Court of Federal Claims that the government’s action was the cause-in-fact of flooding damage and that, as a result, a taking-by-flooding occurred. In an opinon authored by Chief Judge Moore and joined by Judges Prost and Taranto, the Federal Circuit affirmed in part, vacated in part, and remanded the case. This is our opinion summary.
Chief Judge Moore began by discussing the government’s flood management practices:
The Flood Control Act (FCA) of 1944 authorized the construction of a series of dams to create a reservoir storage system designed to contain excess water and reduce flooding. . . . The FCA required the Corps to operate the Mainstem System to promote . . . primarily navigation and flood control. . . . In 1945, Congress established the Bank Stabilization and Navigation Project (BSNP) . . . [under which] the Corps altered the River’s water flow . . . by constructing a “self-scouring” navigation channel and building dikes, levees, and revetments. . . .
. . . [T]he Corps manages the Mainstem System while accounting for the effects of BSNP structures according to operations outlined in its 1979 Master Manual, which it used from 1979 until 2004. The 1979 Master Manual prioritized flood control first and recreation and wildlife last. . . .
The Mainstem System and BSNP accomplished their intended effect: what was previously economically unproductive floodplain became stable for development. . . .
[There were also] significant environmental side effects. . . . [such as] altered downstream sediment deposits [and] . . . eliminated . . . habitats. . . .
[Due to resulting] lawsuits, . . . the Corps [was ordered] to revise its 1979 Master Manual, which resulted in the 2004 Master Manual. . . .
The 2004 Master Manual brought many changes to the Mainstem System and BSNP (2004 Changes). The BSNP changes (River Changes) were intended to ‘restor[e] the Missouri River. . . .’ The Corps referred to this as the Missouri River Recovery Program (MRRP). . . . The MRRP created more shallow water habitats through modifications to the channel and dikes and reopened chutes that the Corps previously closed. . . . The Corps also made changes to the Mainstem System management (System Changes). Unlike the 1979 Master Manual that prioritized flood control over wildlife, the 2004 Master Manual eliminated prioritization. . . .
Chief Judge Moore then discussed the procedural background of the case:
. . . Plaintiffs are approximately 372 individuals and entities who own and operate farms adjacent to the River in six states. . . . Plaintiffs filed suit . . . alleging the 2004 Changes caused frequent and severe flooding on Plaintiffs’ farms between 2007 and 2014 that amounted to permanent, physical takings under the Fifth Amendment.
The trial court split Plaintiffs’ action into two phases. In Phase I, the trial court selected 44 bellwether Plaintiffs to be the subject of its decision whether the 2004 Changes caused the flooding, whether the flooding was the foreseeable or predictable result of the 2004 Changes, and whether the flooding was severe enough to be a taking. . . . The trial court found that 28 of the 44 bellwether Plaintiffs established at least causation and foreseeability or causation, foreseeability, and adequate severity for some years of flooding between 2007 and 2014. . . . It also found the 2004 Changes did not cause flooding in 2011 for any Plaintiff. . . .
The trial court then proceeded to Phase II, where it tried damages and the Government’s defenses. To assess these issues, the court selected the properties of three representative Plaintiffs out of those who prevailed in Phase I: the Adkins property, the Ideker Farms property, and the Buffalo Hollow Farms property. . . . Based on the trial court’s finding that the parties agreed it was appropriate to apply the Arkansas Game & Fish II factors, it applied those factors to this case. . . . The factors, which apply to temporary, intermittent flooding, are severity, duration, intent or foreseeability, character of the land, and the owner’s reasonable, investment-backed expectations. . . . Applying those factors, the trial court determined the flooding was a taking of a permanent flowage easement . . . The trial court collectively awarded the three representative Plaintiffs . . . for property value diminution, . . . repairing a levee, and prejudgment interest. . . . The court ruled, however, that Plaintiffs were not entitled to compensation for crops destroyed during the stabilization period because they were consequential damages. . . .
The Government appeals, and Plaintiffs cross-appeal, rulings from both trial phases. Specifically, the Government argues the Court of Federal Claims erroneously determined the accrual date for Plaintiffs’ taking claims, which resulted in the trial court’s improper exercise of jurisdiction after the statute of limitations on Plaintiffs’ claims had run. . . . It also argues the trial court erred in its application of the Arkansas Game & Fish II factors, the legal standard for causation, and the availability of a relative benefits defense. . . . Plaintiffs cross-appeal, arguing the trial court erred in denying compensation for lost crops and finding the 2004 Changes did not cause the 2011 flooding. . . .
After providing this background, Judge Moore analyzed the government’s argument that the “Court of Federal Claims lacked jurisdiction over Plaintiffs’ claims.” She rejected this argument, noting that the court agreed “with Plaintiffs that the Court of Federal Claims had jurisdiction over this case” and that the Court of Federal Claims correctly determined the accrual date for Plaintiffs’ taking claims.
The opinion next discussed aspects of takings law related to flooding. After noting that the “Fifth Amendment’s Takings Clause guarantees that private property shall not be taken ‘for public use, without just compensation,’” Chief Judge Moore highlighted how “the Supreme Court clarified that temporary flooding can be a taking and established a multi-factor test for determining if temporary government induced flooding is a taking rather than a mere trespass.” She explained, however, the “trial court accepted based on the parties’ stipulation that the flooding in this case is permanent, not temporary, in nature.” As for permanent flooding, she noted how the Federal Circuit “reinforce[s] the principle that the permanent appropriation of a flowage easement is ‘clear enough’ to be on the side of a per se taking and not a trespass.”
Chief Judge Moore next analyzed the issue of causation. She discussed how the “causation inquiry in this case requires us to assess the proper temporal baseline for measuring whether the 2004 Changes caused the flooding on Plaintiffs’ properties.” She explained that this “causation analysis depends on which ‘but for’ world the effects of the 2004 Changes are measured against: the one predating the Mainstem System and BSNP under the 1944 FCA or the world with the Mainstem System and BSNP as it existed between 1967 and 2004.” She concluded the “trial court properly evaluated the relevant government actions” and that there was “no error in the trial court’s ruling on this issue.”
Chief Judge Moore next discussed how the “the parties dispute the applicability to this case and the scope of the so-called ‘relative benefits’ doctrine, which states: ‘if governmental activities inflict slight damage upon land in one respect and actually confer great benefits when measured in the whole, to compensate the landowner further would be to grant him a special bounty.’” On this issue, the Federal Circuit ultimately concluded that the “Court of Federal Claims . . . properly applied . . . the relative benefits framework.”
The opinion then shifted to the plaintiffs’ cross-appeal. Chief Judge Moore highlighted the plaintiffs’ two main arguments. She noted that, “[f]irst, they argue the Court of Federal Claims improperly rejected Plaintiffs’ claims for crop damages.” She further noted that, “[s]econd, they argue the trial court clearly erred in finding the Government’s actions did not cause the flooding of their lands in 2011, which coincided with periods of extreme runoff and flooding.” With regard to the first argument, the court found it to be “erroneous to exclude crop damages occurring between 2007 and 2014 from the damages calculation.” Addressing the second argument, the “trial court also failed to consider, despite the record rainfall, whether the Corps’ actions increased the severity or duration of the 2011 flooding compared to what was attributable to record rainfall.”
As a result of its analysis, the Federal Circuit affirmed “the Court of Federal Claims’ judgment with respect to Plaintiffs’ takings claims” and vacated “the trial court’s denial of crop damages and its finding that the Government did not causally contribute to the 2011 flooding.” As a result, it remanded “for further consideration consistent with this opinion.”