Beveridge & Diamond
 

Court Faults NEPA Review, Holds Corps Liable for Katrina Damage

Beveridge & Diamond, P.C., November 25, 2009

Last week a federal judge found the Army Corps of Engineers responsible for catastrophic flooding experienced in parts of New Orleans after Hurricane Katrina.  U.S. District Court Judge Stanwood Duval Jr. held that the Corps’ negligent maintenance of a major shipping channel -- the Mississippi River Gulf Outlet (“MRGO”) -- led to intensified storm surges, to the deterioration of wetlands protection, and ultimately, to the levee breaches that swamped the city.  The decision, the first to hold the federal government liable for Katrina-related flooding, rests on the conclusion that the Corps could not invoke sovereign immunity under the Federal Tort Claims Act because in the course of operating MRGO, it did not satisfy specific environmental review standards under the National Environmental Policy Act (“NEPA”).  This novel ruling that NEPA bears on defenses available to the federal government in a suit for monetary damages will likely engender close scrutiny on appeal.

According to Judge Duval, the Corps violated NEPA in three ways.  First, the Corps’ initial review of the project, set forth in a 1976 environmental impact statement (“EIS”), “was fatally flawed” because, among other problems, it failed to provide a description of the cumulative impacts of MRGO’s operations on the environment.  Second, despite awareness of substantial changes to environmental impacts caused by MRGO’s maintenance and operation, the Corps failed to supplement the 1976 EIS.  Third, the Corps improperly segmented its reporting on MRGO’s environmental impacts, thus “guaranteeing that the public and other agencies would remain uninformed as to the drastic effects [that MRGO] was causing” on the environment.

Although finding the Corps liable for faulty operation and maintenance of the MRGO appears defensible on the extensive trial record, it is uncertain whether the Court picked the correct vehicle in NEPA through which to do so.  Courts analyzing NEPA have not addressed its interplay, if any, with the tort-law concept of negligence.  NEPA’s “procedural” mandates differ from tort law in many respects.  The requirement to act under NEPA is not the same as a duty owed under tort law; the arbitrary and capricious standard of review for NEPA-related actions is vastly different from a negligence standard of review; and federal statutory schemes such as NEPA offer deference to agency decision-making, a notion with no counterpart under a common law tort scheme.  Judge Duval’s opinion does not attempt to reconcile these inconsistencies, but rather, raises substantial questions without answers for agencies seeking to comply with NEPA, project proponents, and third-party contractors that regularly prepare NEPA documents.

Another troubling aspect of the opinion is the failure to address those few opinions that actually discuss NEPA and tort-related issues, such as causation.  For example, the Supreme Court has opined that, to make an agency responsible for a particular effect under NEPA, “a reasonably close causal relationship” akin to proximate cause under tort law must be shown.  DOT v. Public Citizen, 541 U.S. 752, 767 (2004) (citing Metropolitan Edison Co. v. People Against Nuclear Energy, 460 U.S. 766, 774 (1983)).  Here, the Court found that an allegedly inadequate EIS prepared in 1976 has a sufficiently close causal relationship to hold the Corps responsible for hurricane-related damage nearly 30 years later.  If that relationship suffices for causation purposes, numerous “line drawing” questions arise.  For example, can a plaintiff claim that their lung cancer was caused by a highway built near their home 30 years ago and seek to hold the federal government liable on the basis that the original EIS concluded that air impacts would not be significant or that the EIS did not adequately address the highway’s potential health impact?  What if that EIS had been challenged years ago and held to be adequate?  What if it were never challenged?  Will an agency’s NEPA predictions now be held to a higher level of scrutiny?

A link to the opinion can be found here

If you would like further information or to discuss the implications of this noteworthy decision in  more detail, please contact Ben Wilson at (202) 789-6023 (bwilson@bdlaw.com), Fred Wagner at (202) 789-6041 (fwagner@bdlaw.com), or Bill Sinclair at (410) 230-1354 (wsinclair@bdlaw.com).