ARTICLE
14 April 2023

A Lesson On Water Runoff And Inverse Condemnation Liability

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Nossaman LLP

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For more than 80 years, Nossaman LLP has delivered the highest quality legal expertise and policy advice to our clients nationwide. We focus on distinct areas of law and policy, as well as in specific industries, ranging from transportation, healthcare and energy to real estate development, water and government.
With all the recent storms in California, private property is bound to suffer impacts from storm water runoff, landslides, erosion and subsidence.
United States Energy and Natural Resources
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With all the recent storms in California, private property is bound to suffer impacts from storm water runoff, landslides, erosion and subsidence. Understanding whether the government bears responsibility for such damage is a complex and fact-specific analysis. However, a recent court of appeal decision, Shenson v. County of Contra Costa (2023 Cal. App. LEXIS 244), provides an excellent history on liability in these circumstances, and explains when natural watercourses, drainage improvements, and a public agency's approval of development can trigger inverse condemnation liability.

Background

Shenson involved a situation in which in the 1970s, the county approved maps for residential subdivisions, and required the developers to (i) make drainage improvements to collect and convey water from the subdivisions to an adjacent creek and (ii) dedicate drainage easements to the county. However, the county never accepted the offers of dedication for the drainage improvements, which remained in the ownership of the subdivision association. The county, nevertheless, continued to collect drainage fees from the homeowners for a future proposed flood protection project.

Two homeowners sued the county for inverse condemnation and parallel tort causes of action after the drainage improvements failed and resulted in serious erosion and subsidence damage. The owners claimed that the county assumed ownership and responsibility of the drainage improvements by requiring the subdivision developers to construct them and to offer to dedicate easements to the county to enable it to maintain them. The owners also argued that the county's collection of drainage fees from homeowners rendered it responsible for the drainage improvements constructed by the subdivision developers. The County asserted that it did not accept the offers to dedicate the easements and did not otherwise assume responsibility for maintaining the drainage improvements, and that it could not be liable for merely collecting fees for future improvements that, thus far, have not been constructed because of the unavailability of matching federal funds.

The trial court found no liability, concluding that, as a matter of law, a public entity must either own or exercise actual control over a waterway or drainage improvements to render them public works for which the public entity is responsible, and in this case, there was no such ownership or control. The owners appealed.

The Appeal

On appeal, the court provided some background principles of inverse condemnation liability as it pertains to subdivisions and drainage:

A public entity may be liable as a property owner when alterations or improvements to its own upstream property result in the discharge of an increased volume of or velocity of surface water in a natural watercourse causing damage to the property of a downstream owner. However, as with any upstream property owner, whether public or private, a government entity is only liable if, considering all of the circumstances, its conduct was unreasonable and the lower property owner acted reasonably.

  • A government entity may be liable in inverse condemnationwhere the increased volume or velocity of surface waters and resulting damage are caused by discharge of increased surface waters from public works or improvements on publicly owned land or if it has incorporated the watercourse or public improvements into a public drainage system.

The theory underlying inverse condemnation liability in these contexts is that a downstream owner may not be compelled to accept a disproportionate share of the burden of improvements undertaken for the benefit of the public at large. However, similar to a tort, the reasonableness of the government's conduct matters: the public entity will only be liable if it fails to use reasonably available, less injurious alternatives, and the downstream owner fails to take reasonable measures to protect its property.

With these principles in mind, the court went on to explain why there could be no inverse condemnation liability in this circumstance.

Requiring Construction of the Drainage System and an Offer of Dedication Did Not Convert Private Improvements into Public Works.

First, the court held that while the county imposed on the developer a condition requiring it to construct the drainage improvements, and required the developer to offer to dedicate easements for drainage purposes to the county, it was the subdivision developer that designed and built the improvements. Moreover, the county never accepted the offer of dedication, never maintained or repaired the drainage improvements, and therefore they did not constitute a public work. Approval of a subdivision map does not represent a sufficient level of government involvement to constitute a public use or improvement subjecting the public entity to inverse condemnation liability.

That the Drainage Improvements Serve Some Off-Subdivision Needs Does Not Convert Them into Public Works.

Second, the court held that requiring artificial drainage facilities and conveying water across properties over which it might not have flowed when the area was undeveloped does not convert those improvements into public works. The court explained that if government-required improvements on one subdivision are deemed "public works" if they serve drainage needs of properties outside that subdivision, then local governments would be reluctant to ensure proper improvements are made as part of the development process, as doing so would impose responsibility and the associated costs on them for maintaining and repairing all such improvements.

There Was No Implied Acceptance of the Drainage Easements by the County.

Third, the court held that requiring improvements and easements does not convert the improvements into public works, and because the county did not construct the improvements and performed no maintenance or repair work on the improvements, there could be no implied acceptance.

The Creek was not Part of the Public Drainage System.

Finally, the court explained that utilizing an existing watercourse for drainage of surface water runoff, and requiring others to do so, does not transform the watercourse into a public drainage system; there must be some affirmative action by the public entity to assume ownership or responsibility of the watercourse. Here, the county did not have any ownership interest in the creek and did not perform any maintenance on the creek. The drainage fees being collected by the government were placed in a fund intended to cover a future flood protection project. Simply implementing and collecting drainage fees to fund a proposed project that was never built does not convert the creek into a public drainage system.

Take-Aways

In order for a public agency to face inverse condemnation liability, one of the key findings is that the damage must be from a public improvement. Simply approving a subdivision map, requiring the construction of drainage improvements, and even requiring an offer of dedication (if not accepted), will not convert such improvements into a public work for liability purposes. These situations are very fact-specific, but demonstrating acceptance, dominion or control over the improvements in question is a necessary element to recover. Given the amount of rainfall and flooding we've experienced in 2023, I expect these issues to be fleshed out further in the courts over the coming years.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
14 April 2023

A Lesson On Water Runoff And Inverse Condemnation Liability

United States Energy and Natural Resources

Contributor

For more than 80 years, Nossaman LLP has delivered the highest quality legal expertise and policy advice to our clients nationwide. We focus on distinct areas of law and policy, as well as in specific industries, ranging from transportation, healthcare and energy to real estate development, water and government.
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