Supreme Court flooding case could ripple across the energy sector

By Niina H. Farah | 10/02/2023 07:10 AM EDT

An ongoing legal debate has implications for lawsuits against utilities, including ones potentially at fault for sparking wildfires.

The U.S. Supreme Court.

The Supreme Court. Francis Chung/E&E News

Texas property owners flooded by Hurricane Harvey and Tropical Storm Imelda are headed to the Supreme Court to make their pitch for why they should be allowed to sue for compensation from the state.

Court watchers are closely following the case for how it could also affect the energy sector.

Richard Devillier and other property owners sued the Lone Star State after their land flooded for days following the storms, allegedly as the result of a state-led highway elevation and expansion project. The revamped roadway was meant to create an evacuation route during emergencies, but the plaintiffs said it also prevented floodwaters from receding into the Gulf of Mexico.


The Supreme Court agreed Friday to hear their case, Richard Devillier v. Texas, which centers on the process for how the challengers could get help from the judicial system. According to the petition’s backers, the high court’s ruling could have implications for cases where the use of land for a public good damages private property. These so-called inverse condemnation challenges can include suits against utilities operating outside their easements, or those allegedly at fault for sparking wildfires.

The Supreme Court decision to hear the Devillier case comes after a concerted effort in recent years to convince the court to address procedural maneuvers that have made it challenging for property owners to bring their claims to court, said Robert Thomas, director of property rights litigation at the Pacific Legal Foundation. The nonprofit is among the groups that has asked the court to address takings cases and has lent its support for the property owners in Devillier in a “friend of the court” brief.

“There’s a lot of gamesmanship going on trying to avoid getting to the actual core question — is compensation owed for the take?” Thomas told E&E News. “You will see local governments, and often the federal government, interposing these procedural defenses to move the chess pieces around.”

This case is an example of how court procedure is being used to stymie damage claims from property owners, he added.

Texas, meanwhile, has fought the property owners’ claims for compensation, saying it was immune from the lawsuit, and in the case of Harvey, the challenge came too long after the 2017 storm that wreaked havoc on the state.

“The petition does not warrant this Court’s attention,” the state attorney general’s office said in a brief to the high court.

Robert McNamara, an attorney for the property owners, said his clients are heading to court to challenge a 5th U.S. Circuit Court of Appeals ruling that found property owners could only sue for damages if Congress passed a law allowing it.

The 5th Circuit decision “transforms” the rights to repayment laid out in the takings clause of the 5th Amendment of the Constitution, which holds that if the government takes private property to build something for the public good, it has to pay “just compensation,” said McNamara, deputy litigation director at the Institute for Justice, a nonprofit law firm.

“But that doesn’t mean you don’t get to sue for just compensation unless the legislature has given you the right to sue,” he said.

The 5th Circuit “has turned the federal courts from the place where citizens can go for redress of their federal rights to the place the government gets to go to extinguish your federal constitutional rights, which is just exactly backwards,” McNamara said.

The type of takings case before the high court is the flip side of challenges where the government has authorized condemnation, like in most cases when utilities are building new projects.

In inverse condemnations, the government does not exercise eminent domain but does something else — in this case, elevating a highway — and in the process of taking that action “that results in something that, from the [property] owner’s perspective, kind of looks like eminent domain,” said Thomas.

The outcome of this case could be relevant in the circumstances where a utility has exceeded its easement or a property owner has sued a utility to pay for using land that it hasn’t previously paid for, McNamara said.

“If the Fifth Circuit ruling stands, state-owned utilities just wouldn’t have to pay as a matter of law,” McNamara said in an email.

Thomas said that the case could also be relevant for another type of inverse condemnation case that has gained some traction in California courts — where utilities are sued for damages from wildfires associated with their power lines. In some courts, judges have found utilities liable for wildfires if they are providing public power, while others have said property owners can only bring a takings challenge when the utility has eminent domain power.

The ruling could also potentially impact how eminent domain lawsuits, like those filed against pipeline or transmission line construction, move forward, as those types of cases are also mired in similar procedural disputes, Thomas said.

He pointed specifically to the issue of a “quick take,” where companies can begin to build a project on condemned land before paying the property owners. Virginia residents in the path of the Mountain Valley pipeline had sought to challenge that process, but the Supreme Court rejected their petition in 2019 and has not resolved the legal question.

‘Significant ramifications’

The property owners in Devillier argued that during the storms in 2017 and 2019, a concrete barrier between the east and westbound lanes of Interstate 10 in East Texas served as a dam blocking floodwaters from moving into the southern lanes. This resulted in flooding on their property north of the highway.

In Devillier’s case, his family’s ranch was so badly flooded that livestock were left in neck-deep water for four days, according to McNamara.

Devillier and other property owners had first brought their challenge under the takings clauses in the United States and Texas constitutions to state court, before Texas successfully shifted the case to the U.S. District Court for the Southern District of Texas, where it was consolidated with other cases into a single lawsuit including 77 property owners.

In response, Texas said that it was necessary that Congress authorize a lawsuit. These types of statutes authorizing litigation against the government exist in other takings litigation and civil rights law, said Thomas, though he contested the state’s claim that a similar requirement exists in this circumstance.

The district court dismissed the landowners’ case in 2021, and the 5th Circuit upheld the lower court ruling in a short decision last year.

The Texas attorney general’s office did not respond to a request for comment on the court’s decision to grant the case. In its brief to the Supreme Court, Texas claimed the case had arrived before the justices too soon.

The high court only allowed takings claims to come to federal courts first four years ago in its ruling in Knick v. Township of Scott, the state’s top attorney said. In that case, the Supreme Court justices ruled in a 5-4 decision to undo long-standing precedent requiring that takings claims be raised first in state court before being raised in federal court.

So “there has been very little time for lower courts to consider the relevant issue of whether the Constitution creates a cause of action that may be pursued in federal court,” John Scott (R), Texas’ provisional attorney general at the time, said in a brief to the high court this summer.

Attorneys for the Cato Institute, which also backed the landowners in a “friend of the court” brief to the Supreme Court, said the 5th Circuit ruling effectively undid the Supreme Court’s 2019 finding that the requirement to first bring a takings case to state court before raising a federal challenge created a “Catch-22.”

That’s because, if the challengers lost their case in state court, they were barred from bringing their suit to federal court.

The decision “demonstrates at best a massive oversight of this Court’s precedents and at worst an egregious resistance of them,” attorneys for the Cato Institute said.

“These significant ramifications of the Fifth Circuit’s ruling render the question presented extremely important,” they said.

This story also appears in Climatewire.