Petition for Writ of Certiorari — Parish of St. Bernard v. United States

Supreme Court brief1986

Ask Donna

What actually matters in this document.

Text

‘

co 2 QP!) supreme Court, v.s.

NO.

Aye 29 1985

SOSERILE ASP ANIOL, JR

TLERK

jn the h

Supreme Court of the United States

OCTOBER TERM 1985

THE PARISH OF ST. BERNARD, ET AL,

Defendants-Petitioners,

VS.

UNITED STATES OF AMERICA,

Plaintiffs-Respondents.

PETITION OF THE PARISH OF JEFFERSON AND

JEFFERSON PARISH COUNCIL FOR A WRIT OF

CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE FIFTH CIRCUIT

(CONSOLIDATED CASES NOS. 83-3557,

83-3760 and 84-3082)

VOLUME 1

GERARD M. DILLON, Appeal Counsel

KEVIN O’BRYON

H. A. VONDENSTEIN, Parish Attorney

DILLON & CAMBRE

HAMMETT, LEAKE & HAMMETT

Attorneys for Defendants-Petitioners,

Parish of Jefferson and Jefferson

Parish Council

Suite 1920 - 1555 Poydras Street

New Orleans, Louisiana 70112-3797

Telephone No. (504) 586-1157

ae a ee ee

A B Letter Service, Inc., 327 Chartres Sit., New Orleans, La. (504) 581-5555

QUESTIONS PRESENTED FOR REVIEW

Is the Government! entitled under a subrogation

theory to recover from a community the amounts paid by

the Government for flood insurance claims and adjusters’

fees on account of flood damages to properties in the

community??

1 United States of America.

2 Defined in the National Flood Insurance Act (NFIA) as being

‘A State or political subdivision thereof which has zoning and building

code jurisdiction over a particular area having special flood hazards’. 42

U.S.C. §4003 (a) (1).

3 This case is one of several, pending in various parts of the coun-

try. wherein the Government is seeking recovery from states,

municipalities and counties for amounts paid by it under the National

Flood Insurance Prograia (NF IP) on account of flood damages and is the

first case to decide the said question which is now one of. national

importance.

are:

PARTIES TO THE PROCEEDING

The only parties, still remaining in the proceedings,

United States of America

Federal Emergency Management Agency

State of Louisiana

Parish of St. Bernard

Police Jury of the Parish of St. Bernard

Parish of Jefferson

Jefferson Parish Council

Pontchartrain Levee District

Jefferson Levee District

West Jefferson Levee District

Lake Borgne Basin Levee District

Burk & Associates

Fireman's Fund Insurance Company

reer

en ce eee

iii

TABLE OF CONTENTS

PAGE

Question Presented For Review ...........cccccccccceccesssesscesseseeee i

Parties to the Proceeding ................cccccccccccsssssscescessesscesseees ii

Table of Contents ............................. ES ee eT iii

GE iv

Opinions of Courts Below ................cccccccccccccssscssssscescesseeees l

Statement of Jurisdiction ..................c.ccccccccccsccsscssccsscscosseee 1

Statutes and Regulations Involved ..............cccccccscesceeeceeees 1

a. . sscnannnbsnnnsduanoensomsanins 2

Basis for Jurisdiction in District Court ...0........0..ccccccccseeee 5

a naa sacha annsababesamnadnniie 5

haa isk 5 sks acca cl cacbbinkcunenesibaounmanshandntsdanediiie 12

SE ie Po eee oe Ne REE 13

i aside ens coudmatonenniecniiinannabonl A-1

iin ced ns ctnhasinnadiknshsnaibins scbcansbdion A-32

TABLE OF AUTHORITIES

PAGE

City of Milwaukee v. Illinois and Michigan,

451 U.S. 304, 101 S.Ct. 1784, 68 L.Ed.2d 114 ............. 8

Crescent Wharf, Etc. v. Barracuda Tanker Corp.,

Ce I Fe FO wrvcteiaecssikcini th csernriinentinsnscsmeieverccesecoeees 7

Drewett v. Aetna Casualty & Surety Co.,

a, Fee ee SIREN prterenensgteniscintncnnteriqreccseniccenennennnsnnncsess 7

Insurance Co. of N.A. v. Gee,

I I IE ics can cahisnnmmantinannenansyapenaceessasnnssees 12

McCullough v. Seamans,

Te ig UIE BRI, LE cicncnccescasecorsoencssccccnondsnsnsnecescees 7

Mohasco Corp. v. Silver,

447 U.S. 807, 100 S.Ct. 2486, 65 L.Ed.2a 532 ........... 12

Olinkraft, Inc. v. Anco Insulation, Inc.,

ith, PAM, SPS GG BOE w.nccncscsccsnccccccesecccccececconcsnsccscees 11

Pacific Gas & Electric Co. v. U.S.

I I I TO a ec cerenssiinagbonnnesipennnaneniocnnins 12

Pennhurst State Sch. & Hospital v. Halderman,

452 U.S. 1, 101 S.Ct. 1531, 67 L.Ed.2d 694 ................. 9

Pennsylvania National Mutual Cas. Ins. Co. v. Barnett,

5B Cir., 445 F.2d 578 ............cccccsccsssssscesessensesssseasensessosensees 7

State Farm Fire & Casualty Co. v. Sentry Indemnity Co.,

Re, Peme, TR TR BIB oisencennsccsscecscsececcsecssvnscoscncsnsccenes 11

Till v. Unifirst Federal S. & L. Ass’n.,

i I er ME iitansiecccnenisictisnnnsiennissosinssanceesincnancnnntd 6,8

Table of Authorities (continued)

Touche Ross & Co. v. Redington,

445 U.S. 560, 99 S.Ct. 2479, 61 L.Ed.2d 82 ........00000.... 9

Town of Falmouth, Mass., Bd. of Selectmen v. Hunter,

SPs SRO hay, URE IIA: SOD nin ssisastiaeniginnesishntntion titirnneiaitinnni 10

Transamerica Mortgage Advisors, Inc. v. Lewis,

444 U.S. 11, 100 S.Ct. 242, 62 L.Ed.2d 146 ................ 10

United States v. Larionoff,

431 U.S. 864, 97 S.Ct. 2150, 53 L.Ed.2d-48 .......000... 12

United States v. St. Bernard Parish,

Fe i ee sciecddtaiicsirdastiolibiliniannaiin snncthccedninnssegnas nae 1

United States v. Standard Oil Co.,

Ee Es, GHW MIs II bcc. caccincesaccsarconedceenmnastbonanenias 7

STATUTES

FR Ee nvenneeonoomeriarecic teiesienr Enero < 4

5 RES WER PPS oReNer a rere | 5

ikl naccliadtasasunmnuibvedilahintisinapbeninnnsiloaes 1

Ae I ON isis nsnacccnnisnsnsbskdcariticbndincsenenpsnnaanbons 5

I i icascvciknsicsscineassncncucébecsascuvsacinasbatipebaiena’ 6

Oe IN iii ietenenitincenincciensinsshnwnciainidubchasees 10

aE ali lanickitcdescinitnsthcarscsecceinindcincesiedinens 2,7,8

iiss chnccvnincssescncevdncnckecvsseensincideanemes 2,7

GE Tee IE OEE GED oc ceeccvcncseccsncncesccescscisscecinsestonse 2,8

42 U.S.C. $410G6(a) and (b) ................cccccccccscssccsstssnscscceeess 2,6

OT iarrcticsbeteniesi chs sacessnccrvecrssecntece reasoned 2,8

44 C.F.R. §61.13 Appendix A ........ Soasaliensaink clicbdincieeiabdadadle 2,6

NO.

IN THE

SUPREME COURT OF THE UNITED STATES

THE PARISH OF ST. BERNARD ET AL,

Defendants-Petitioner,

VS.

UNITED STATES OF AMERICA,

Plaintiffs-Respondents.

OPINIONS OF COURTS BELOW

The opinion of the United States Court of Appeals

for the Fifth Circuit in United States v. St. Bernard Parish

is reported in 756 F.2d at page 1116. the “ORDER AND

REASONS" of the District Court is in the appendix hereto.

STATEMENT OF JURISDICTION

The opinion and decree of the Court of Appeal was

rendered on April 8, 1985 and was entered on the same

date. A petition for rehearing and a suggestion for rehear-

ing in banc were filed on April 22, 1985 and were denied by

orders of the Court, dated June 7, 1985 and entered on June

10, 1985. The Court has jurisdiction of this petition for cer-

tiorari under the provisions of 28 U.S.C. §2101/c).

STATUTES AND REGULATIONS INVOLVED

The following statutes and regulations, all of which

are set out verbatim in the appendix hereto, are involved in

this case:

42 U.S.C. §4012(c)

42 U.S.C. §4013(a)

42 U.S.C. §410 a)(b)

44 C.F.R. §61.13 and appendix thereto

42 U.S.C. §4053

42 U.S.C. §4072

44 C.F.R. 59.24

STATEMENT OF THE CASE

(i) Course of Proceedings and Disposition in Courts Below

The Government filed this action on behalf of the

Federal Emergency Management Agency (FEMA) and the

Federal Insurance Administration (FIA), the present and

former administrators of the National Flood Insurance

Program (NFIP), demanding recovery from defendants, in-

cluding Jefferson Parish and the Jefferson Parish Council

(hereinafter collectively ‘‘Parish’’), of damages in the

amount of $76,389,642.81 allegedly for flood insurance

claims and adjusters’ fees paid by plaintiff on account of

the May 3, 1978 and April 12-13, 1980 floods in the

metropolitan New Orleans area and prior floods.* Man-

datory injunctive relief was also sought ordering the Parish

to (a) enforce the base flood elevation requirements for the

new development mandated for communities participating

in the NFIP, (b) implement and enforce standards to insure

that proposed development in flood-prone areas is not ap-

proved unless the proposed plans call for adequate

4 Plaintiff's amended complaint, Article 129 (81-1810 NR 191). In

addition, damages in the sum of $17,238,478.14 are demanded for

similar payments on account of the floods of April 24-25, 1982 and

December 4-5, 1982 (83-2007 NR 1).

drainage to reduce exposure to flood hazards, are consis-

tent with the need to minimize flood damage within the

flood-prone area, and require that all public utilities and

facilities are located and contracted to minimize or

eliminate flood damage, (c) implement and enforce stan-

dards to insure that proposed construction in flood-prone

areas is not approved unless it is designed and adequately

anchored to prevent flotation, collapse or lateral movement

of the structure, is to be constructed with materials and

utility equipment resistant to flood damage, and is to be

constructed by methods and practices that minimize flood

damage, and (d) comply with and enforce all other re-

quirements of the National Flood Insurance Act (NFIA)

and the regulations promulgated thereunder. Parish filed

an alternative motion to strike or to dismiss the Govern-

ment’s demand for alternative relief? and, also, a motion

for summary judgment.® Although no specific ruling was

made by the District Court on the alternative motion to

strike or to dismiss, the District Court partially granted

and denied the motion for summary judgment.’ To the ex-

tent that the motion was granted Parish moved for entry

of judgment pursuant to FRCP 54 (b); and in accordance

with the direction of the Court judgment was entered in

favor of the Parish and against the Government dismissing

the Government’s contract claim, insofar as the complaint

seeks monetary damages but not insofar as the complaint

seeks specific performance, and the Government’s claim to

abate a ‘‘public nuisance”.8 The Government appealed

5 81-1810 NR 20.

6 81-1810 NR 131.

7 81-1810 NR 274.

881.1810 NR 191.

from this judgment. Parish filed in the Court of Appeals an

application under 28 U.S.C. §1292(b) for an appeal from the

interlocutory order partially denying the motion for sum-

mary judgment, which was initially denied but was granted

upon a motion for reconsideration thereof.? :

A panel of the Court of Appeals found ‘‘that subroga-

tion is available to the United States to the extent permit-

ted by Louisiana law’’ and ‘“‘that the United States may

pursue any available common law right of recovery against

the parish defendants so as to recover for any property the

parishes owned and insured under the NFIP”’, and dismiss-

ed the remaining claims of the Government. Parish timely

filed a petition for rehearing and a suggestion for rehearing

in banc, both of which were denied.

(ii) Statement of Facts

The Complaint alleges that on or about October 1,

1971 Parish entered the regular phase of the NFIP; that

subsequent thereto thousands of residents of Jefferson

Parish obtained flood insurance coverage through that pro-

gram, and that on May 3, 1978 and again on April 12-13,

1980 substantial flooding occurred which caused damages |

to homes and businesses, covered under the NFIP, |

throughout the Parish, as a resu!t whereof the Government :

was required to pay $76,389,642.81 in flood insurance

claims and adjusters’ fees. It is contended that these flood

damages and the resultant flood insurance claims are the

direct and proximate result of willful and negligent acts

and omissions of Parish and other defendants in the action.

Recovery is sought from Parish under several legal

9Miscellaneous Docket No. 83-9103 of the Court of Appeals.

carta naeinataieaeteacea lal

theories:

(a) By electing to enter the NFIP Parish con-

tracted to adopt and enforce land use and con-

trol measures consistent with the requirements

of the NFIP and failed to do so, thus breaching

a contract,

(b) Due to certain willful and negligent acts and

omissions Parish and other defendants are

liable in tort for the resulting flood damage,

and

have caused recurrer* flooding, consituting a

public nuisance under Federal Common Law,

which the Government seeks to abate. [This

theory has ven abandoned (Government’s

brief in Court of Appeals, p. 20, fn 19)].

BASIS FOR JURISDICTION IN DISTRICT COURT

The District Court has jurisdiction over the subject

matter of this matter pursuant to 28 U.S.C. §1345.

ARGUMENT

Purpose of the NFIP

Although as expressed in the decision of the Court of

Appeals the NATIONAL FLOOD INSURANCE ACT OF

1968 (42 U.S.C. §4001 et seq.) was enacted to provide

previously unavailable flood insurance protection to pro-

perty owners in flood prone areas, ‘‘the principal purpose in

enacting the Program was to reduce, by implementation of

adequate land use controls and flood insurance, the

massive burden on the federal fisc of the ever-increasing

———————oOorremeoaou—__"

federal flood disaster assistance.”’!9 Till v. Unifirst Federal

S. & L. Ass'n., 5 Cir., 653 F.2d 152, 159. After 1973 the con-

tinued participation of a community in a flood-prone area

in the Program cannot be categorized as voluntary, in-

asmuch as the failure of a community in such an area to

join or continue in the Program thereafter would have

resulted in its financial suicide due to the harsh remedies

imposed upon such a community by the 1973 amendment

to the Act, namely, the complete cessation of Federal finan-

cial assistance to such a community and the curtailment of

any loans to it or its citizens by Federally regulated or in-

sured banking or other financial institutions. 42 U.S.C.

§4106 (a) and (b).

The Parish of Jefferson joined the Program in

December, 1971. The form of Flood Insurance Policy con-

taining the subrogation clause, was not published in the

Federal Regulations until 1976. 44 C_F_R. $61.13, Appendix

A determination as to whether Congress in enacting

the NFIA intended to vest in the Administrator of the Pro-

gram the power to adopt a regulation authorizing the

remedy of subrogation against a participating community,

such as, the Parish of Jefferson, should be made only after

due consideration of the foregoing facts.

- 10 Pwo of the purposes of the Act, declared by Congress, were to

‘*(3) require States or local communities, as a condition of future Federal

financial assistance, to participate in the Flood Insurance Program and

to adopt adequate flood plain ordinances with effective enforcement pro-

visions consistent with Federal standards to reduce or avoid future flood

losses; and (4) require the purchase of flood insurance by property

owners who are being assisted by Federal programs or by Federally

supervised, regulated or insured agencies or institutions in the acquisi-

tion or improvement of land or facilities located or to be located in iden-

tified areas having special flood hazards.’ 42 U.S.C. §4002(b) (3/4).

The Prerequisites for the Recoupment Remedy

Absent statutory authorization or fraud on the part

of the party from whom recovery is sought, which is not

alleged in this case, the recoupment remedy under a

subrogation theory or otherwise is not available to the

Government. United States v. Standard Oil Co., 332 U.S.

301, 67 S.Ct. 1604; McCullough v. Seamans, D.C. Ca., 348

F.Supp. 511; Pennsylvania National Mutual Cas. Ins. Co. v.

Barnett, 5 Cir., 445 F.2d 573; Crescent Wharf, Etc. v. Bar-

racuda Tanker Corp., 9 Cir., 696 F.2d 703.

Absence of Statutory Authorization

The NFIA allows the Secretary (Administrator) to

‘‘provide by regulation for general terms and conditions of

insurability which shall be applicable to properties eligible

for flood insurance under Section 4012 of this Title’’,!! in-

cluding specified terms and conditions and, also, ‘‘any

other terms and conditions relating to insurance coverage

or exclusion which may be necessary to carry out the pur-

poses of this chapter.’’ 42 U.S.C. §4013(a). The reliance of

the Court of Appeals on Drewett v. Aetna Casualty & Sure-

ty Co., 5 Cir., 539 F.2d 496, in support of its conclusion that

the above quoted provisions of the statute authorize the

adoption of a subrogation remedy is totally misplaced.

Drewett simply involved a situation where a property

owner who applied for and obtained insurance while a flood

was in progress could not recover under the “‘loss-in-

progress” principle of insurance law. This related solely to

‘‘insurance coverage or exclusion"’, as distinguished from a

remedial right, such as, subrogation.

11 49 USC. 4012%c).

Congress specifically provided in the Act for certain

remedial rights in the form of judicial actions. 42 U.S.C. §§

4053 and 4072; Till v. Unifirst Federal S. & L. Ass’n., supra,

653 F.2d at page 160. Further, the NFIA “‘spoke directly

to (the) question” with respect to the other remedies

available thereunder, !2 namely, suspension from eligiblity

from participation in the N FIP,!3 cessation of Federal

financial assistance to them and curtailment of any loans

to their citizens by Federally regulated or insured banking

or other financial institutions. Having thus addressed the

problem, Congress proscribed the application of Federal

Common Law in order to permit the assertion of claims for

reimbursement under the doctrine of subrogation. As

stated by this Court in City of Milwaukee (451 U.S. at pp.

313-314, 101 S.Ct. at p. 1791):

‘‘We have always recognized that Federal

Common Law is ‘subject to the paramount

authority of Congress.’ (Citation omitted). It

is resorted to ‘in absence of an applicable Act

of Congress,’ and because the Court is com-

pelled to consider federal questions ‘which

cannot be ansered from Federal Statutes

alone’. (Citations omitted).”’

If Congress had intended the Government to have a

tort remedy under a subrogation theory or otherwise

against a community participating in the NFIP, “it knew

how to do so and (would have done) so expressly’”’ and

12 City of Milwaukee v. Illinois and Michigan, 451 U.S. 304, 315,

101 S.Ct. 1784, 1791, 68 L.Ed.2d 114; Till v. Unifirst S. & L. Ass'n.

supra.

13 The authority of the Secretary of Housing and Urban Develop-

ment to adopt and promulgate the regulation to this effect (44 C.F.R.

59.24) is clearly evident in 42 U.S.C. $4012(c).

unambiguously. Touche Ross & Co. v. Redington, 442 U.S.

560, 572, 99 S.Ct. 2479, 2487, 61 L.Ed.2d 82; Pennhurst

State Sch. & Hospital v. Halderman, 451 U.S. 1, 17, 101

S.Ct. 1531, 1540, 67 L.Ed. 694. In Pennhurst this Court

said:

Unlike legislation enacted under § 5,

however, legislation enacted pursuant to the

spending power is much in the nature of a

contract: in return for federal funds, the

States agree to comply with federally impos-

ed conditions. The legitimacy of Congress’

power to legislate under the spending power

thus rests on whether the State voluntarily

and knowingly accepts the terms of the ‘’con-

tract.’’ See Steward Machine Co. v. Davis,

301 U.S. 548, 585-598, 57 S.Ct. 883, 890-896,

81 L.Ed.2d 1279 (1937); Harris v. McRae,

448 U.S. 297, 100 S.Ct. 2671, 65 L.Ed.2d 784

(1980). There can, of course, be no knowing

acceptance if a State is unaware of the condi-

tions or is unable to acertain what is ex-

pected of it. Accordingly, if Congress intends

to impose a condition cn the grant of federal

moneys, it must do so unambiguously. Cf.

Employees v. Department of Public Health

and Welfare, 411 U.S. 279, 285, 93 S.Ct.

1614, 1618, 36 L.Ed.2d 251 (1973); Edelman

v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39

L.Ed.2d 662 (1974). By insisting that Con-

gress speak with a clear voice, we enable the

States to exercise their choice knowingly,

cognizant of the consequences of their

participation.

Surely, the NFIA does not clearly and unambiguously in-

form communities that by virtue of their participation in

the NFIP they are subjecting themselves to tort actions

via a subrogation theory.14

Having specifically limited the remedy against such

participa 1g communities, Congress preculded the

fashioning of a tort remedy against them by means of the

adoption of a regulation that would permit the assertion of

that type of remedy. This is consistent with the reasoning

of this Court in Transamerica Mortgage Advisors, Inc. v.

Lewis, 444 U.S. 11, 19-20, 100 S.Ct. 242, 247, 62 L.Ed.2d

146, wherein it said:

[4] We view quite differently, however,

the respondent’s claims for damages and

other monetary relief under § 206. Unlike §

215,, § 206 simply proscribes certain con-

duct, and does not in terms create or alter

any civil liabilities. If monetary liability to a

private plaintiff is to be found, it must be

read into the Act. Yet it is an elemental

canon of statutory construction that where a

statute expressly provides a_ particular

remedy or remedies, a court must be chary of

reading others into it. ‘‘When a statue limits

a thing to be done in a particular mode, it in-

cludes the negative of any other mode.”

It would have been unconscionable for Congress to

have enacted legislation whereunder premiums for flood in-

surance would have charged by the Government to people

of a “community” 15 and to provide in the same statute

14 The FIA, apparently recognized the limitations on its sanc-

tions and remedies under the NFIA, as evidenced by Town of Falmouth,

Mass., Bd. of Selectmen v. Hunter, D.C. Mass., 427 F.Supp. 26, wherein

the town sought an injunction to prohibit its suspension from the NF IP.

15 Although the NFIA /42 U.S.C. §4003(a/1)/ narrowly defines

that upon payment to those same people of the amounts of

damages, sustained by them as a result of unusual torren-

tial rains to which their communities might be subjected as

a result of God’s will, for the reimbursement by them to the

Government of the precise amounts paid to them by the

Government, plus more./® In essence, this is what the

Government is asking the Courts to decree to be by im-

plication the intent of Congress in enacting the N FIA.!7

Needless to say, the Parish has no funds to reimburse the

Government for the losses other than taxes collected from

the people of the ‘‘“community”’; and any reimbursement to

the Government would essentially by forthcoming from its

policyholders to which it sold insurance. This illustrates

the absence of any intent on the part of Congress to provide

a subrogation remedy to the Government for recoupment

of any losses under the NFIA. The failure of Congress to

specify a remedy of subrogation against participating com-

munities, strongly indicates its intention to proscribe such

a remedy. Therefore, the Secretary (Administrator) was

powerless to create by regulation a remedy which Congress

(footnote 15 continued)

community “as a State or political subdivision thereof’, the broader

definition of the word is set forth thusly in Webster's Third New Inter-

national Dictionary, Unabridged:

“a: STATE, COMMONWEALTH b: the people living in a par-

ticular place or region and usu. linked by common interests; broad-

ly: the region itself: any population cluster”

16 Adjusters’ fees and expenses.

17 This would be contrary to the established insurance doctrine

that an insurer, paying a loss, is not subrogated for recovery of the

amount thereof from its own insured. State Farm Fire & Casualty Co.

v. Sentry Indemnity Co., La. App., 316 So.2d 185, 188; Olinkraft, Inc.

v. Anco Insulation, Inc., La. App., 376 So.2d 1301, 1303.

did not intend to provide; and the Government cannot

assert such a remedy.against the defendants in this case.

United States v. Larionoff, 431 U.S. 864, 873, 97 S.Ct.

2150, 2156, 53 L.Ed.2d 48; Mohasco Corp. v. Silver, 447

U.S. 807, 825, 100 S.Ct. 2486, 2497, 65 L.Ed.2d 532; Jn-

surance Co. of North America vs. Gee, 2 Cir., 702 F.2d 411,

414; Pacific Gas & Elec. Co. v. U.S., 9 Cir., 664 F.2d 1133,

1136.

PRAYER

WHEREFORE, the premises considered, petitioners

pray that a writ of certiorari issue herein directing the

United States Court of Appeals for the Fifth Circuit to

send up to Your Honors the record of the case aforesaid, to

the end that the same may be examined by said Court and

that Your Honors may remand the case with instructions

or take the whole case and pronounce judgment thereon,

which said judgment your petitioners pray should be a

reversal of the judgment of the Court of Appeals, making

available to the Government a subrogation remedy, and

the entry of a judgment dismissing all «f the plaintiff's

demands against your defendants-petitioners.

GERARD M. DILLON, Appeal Counsel

KEVIN O’BRYON

H. A. VONDENSTEIN, Parish Attorney

DILLON & CAMBRE

HAMMETT, LEAKE & HAMMETT

Attorneys for Defendants-Petitioners,

Parish of Jefferson and Jefferson

Parish Council

Suite 1920 - 1555 Poydras Street

New Orleans, Louisiana 70112-3797

Telephone No. (504) 586-1157

i cteeehatalegianeeeh ieee pa ben

CERTIFICATE

I hereby certify that copies of the foregiong petition

were this day mailed to the attorney of record for piaintiff-

respondent, United States of America, and to all other

counsel of record in these consolidated cases.

New Orleans, Louisiana. August EB: _, 1985

GERARD M. DILLON

7 eee re

A-1

APPENDIX A

UNITED STATES of America,

Plaintiff-Appellant,

PARISH OF ST. BERNARD, Police Jury of the Parish of

St. Bernard, Lake Borgne Basin Levee District, Fosco

Enterprises, Inc., Travelers Insurance Co., Parish of Jeffer-

son and Jefferson Parish Council, Regent Development

Corp., Jefferson Levee District, Pontchatrain Levee

District, Joseph F. Varisco, Jr., and Terry Tedesco, Inc.,

Defendants-Appellees.

UNITED STATES of America,

Plaintiff-Appellee,

The PARISH OF JEFFERSON, et al.,

Defendants-Appellants.

Nos. 83-3557, 83-3760 and 84-3082.

United States Court of Appeals,

Fifth Circuit.

April 8, 1985.

United States brought suit against Louisiana public

and private defendants, alleging that the parish defendants

had caused massive flood damage by violating their con-

tractual and regulatory obligations to adopt and enforce

flood control measures consistent with the parishes’ par-

ticipation in the national flood insurance program. The

United States District Court for the Eastern District of

Louisiana, at New Orleans, Adrian G. Duplantier, J.,

granted defense motions for summary judgment on several

claims, and an interlocutory appeal was taken. The Court

A-2

of Appeals, Brown, Circuit Judge, held that: (1) national

flood insurance program did not form a contract between

participating communities and the United States; (2) no im-

plied right of action was available to the United States

under the national flood insurance program; (3) United

States was not entitled to an injunction to force the

parishes to bring into compliance all areas located in flood

plains that were in violation of the federal regulations, as

it would not be a proper use of judicial power to force

parishes to do what they could decide to avoid doing by

simply withdrawing from NFIP; (4) subrogation was,

however, available to the United States to the extent per-

mitted by Louisiana law; and (5) United States could pur-

sue any available common law right of recovery against the

parish defendants so as to recover for any property the

parishes owned and insured under the NFIP.

Affirmed in part, reversed in part, and remanded.

Jerre S. Williams, Circuit Judge, filed an opinion con-

curring in part and dissenting in part.

Appeal from the United States District Court for the

Eastern District of Louisiana.

Before BROWN, WILLIAMS, and GARWOOD, Cir-

cuit Judges.

JOHN R. BROWN, Circuit Judge:

I. Overview

In this exceptionally complicated consolidated ac-

tion we are presented with what is apparently a question

A-3

of first impression under the National Flood Insurance Pro-

gram (NFIP). The United States Government seeks

recovery of over $100 millien from various Louisiana public

and private defendants. The district judge granted the

defendants’ motions for summary judgement on several of

the government’s claims. After various procedural

maneuvers, both sides sought, and we granted, an in-

terlocutory appeal to resolve the correctness of the district

court’s summary disposition.

After briefing, an extended oral argument, and a

diligent search of the record, we affirm the district court’s

opinion dismissing the United States’ express contractual

claim. Since the government abandoned its public nuisance

claim on appeal, its dismissal is not before us. We further

hold that no implied right of action is available to the

United States under the NFIP. We also find that injunc-

tive relief would be ineffectual and accordingly dismiss the

government's claim on this ground. However, we do find

that subrogation is available to the United States to the ex-

tent permitted by Louisiana law. We further hold that the

United States may pursue any available common law right

of recovery against the parish defendants so as to recover

for any property the parishes owned and insured under the

NFIP.

II. Case History

The United States instituted two civil actions on

behalf of the Federal Emergency Management Agency

(FEMA) and the Federal Insurance Administration (FIA),

the present and former administrators of the NFIP: (i) No.

81-1808 against the Parish of St. Bernard, the Police Jury

of St. Bernard, the Lake Borgne Levy District, the State of

A-4

Louisiana, and various home builders, engineers, and

surveyors; and (ii) No. 81-1810 against Jefferson Parish,

the Jefferson Parish Council, Firemen’s Insurance Fund

Company, La Fourche Basin, Pontchatrain Levy District,

Jefferson and West Jefferson Levy District, Burk and

Associates, and other developers, builders, engineers, and

surveyors. The two actions were eventually consolidated.

After much jockeying for position, discovery was stayed

pending the resolution of the legal availability of the claims

filed by the United States.

In its actions the United States alleged that the

parish defendants caused massive flood damage by

violating their contractual and regulatory obligations to

adopt and enforce flood control measures consistent with

the parishes’ participation in the NFIP. The government

sought recovery in contract and implied contract. The

United States also contended that the defendants were

liable to the United States as subrogee under the policies

of the property owners who had been insured and paid in

full by the NFIP. The government further claimed that the

defendants’ actions (or inaction) constituted a public

nuisance under Louisiana law. However, as above mention-

ed, the government later abandoned any public nuisance

claim.

The government sought recovery of the money paid

to the insured property owners, an injunction for the

specific performance of all obligations required from the

parishes under the NFIP, and prospective injunctive relief

requiring the parish and levy district defendants to imple-

ment and enforce the flood control measures in order to

minimize future damage.

A-5

The parish defendants filed motions for summary

judgment. On June 29, 1983, the district court entered an

order granting the parishes’ motions insofar as the govern-

ment’s complaint sought recovery in contract. The district

court’s order denied the United States’ summary judgment

motion for specific performance as a remedy for breach of

the alleged contract between the parishes and the United

States. The district court alsc refused to grant the govern-

ment’s summary judgment motion on the availability of

subrogation. | Thus, over the objection of the United

States, the district court entered partial final judgments

dismissing the governement’s public nuisance ¢laim as to

all defendants and dismissing the portions of the United

States contractual claims insofar as they sought compensa-

tion from the parishes.

On July 28, 1983, in response to the defendant’s mo-

tions, the district court amended its order to reflect that

the partial denial of the parishes’ motions presented ques-

tions of law appropriate for interlocutory appeal under 28

U.S.C. § 1292(b). Meanwhile, the government filed two new

actions, No. 83-2077 and 83-2078, against Jefferson Parish

and the Levy District defendants, and St. Bernard Parish

and the Levy District defendants, to recover for flood in-

surance claims paid in 1982. In these suits the government

did not name any non-governmental entities as detendants.

These actions were subsequently consolidated with the

prior actions.

1 In another portion of its order which is not presently before us,

the district court rejected the c laim of Firemen’s Insurance Fund Com-

pany that the indemnity policy issued by it to Jefferson Parish did not

provide coverage for liability on the claims brought against the parish

by the United States and declined to dismiss Firemen’s from the case

or grant it summary judgment.

Son

A-6

On August 10, 1983, we denied the parish defen-

dants’ application for interlocutory appeal. The United

States then moved for reversal of the partial final summary

judgments which had been entered against it in appeals

No. 83-3557 and 83-3760.

On February 1. 1984, upon a motion for reconsidera-

tion, we reversed our prior ruling and granted the defen-

dants leave to pursue an interlocutory appeal. We

simultaneously deferred consideration of the government’s

motion for summary reversal and requested a full briefing

on the merits of the government’s appeals from the partial

dismissal of the public nuisance claims and the contractual

claims insofar as they concerned recovery of the United

States’ payments under the insurance policies. All appeals

were consolidated for briefing and argument.

III. The NFIP

The National Flood Insurance Act of 1968, was

enacted by Title XIII of the Housing and Urban Develop-

ment Act of 1968 Public Law 90-448, August 1, 1968, to

provide previously unavailable flood insurance protection

to property owners in flood prone areas.” 42 U.S.C. § 4001

et seq.

Dissatisfied with the lack of commitment being

made to the prgram by the municipalities to which in-

surance was available, Congress added additional incen-

tives for communities to participate in the NFIP. Con-

gress’ persuasive stick - used as an aid to the insufficient

2 Mudslide protection was added to the program by the Housing

and Urban Development Act of 1969, Public Law 91-152 (December 14,

1969). Flood related erosion protection was added to the program by the

1973).

A-7

pa ayy carrot - was the Flood Disaster Protection Act of

1973.

To qualify for the sale of federally subsidized flood

insurance, a community was required to adopt and submit

as part of its application, flood plain management regula-

tions. These regulations were designed to reduce or avoid

future flood damages.

However, the 1968 Act required a risk study to be

undertaken for each community before it could become

eligible for the sale of flood insurance. Since this require-

ment resulted in a delay in providing insurance protection,

Congress established an Emergency Flood Insurance Pro-

gram to permit the early sale of insurance in flood prone

communities. The emergency program did not affect the re-

quirement that a community adopt adequate flood plain

management regulations; it only permitted insurance to be

sold before a study was conducted to determine actual risk

premium rates for the particular community. The emergen-

cy program still required the charging of actual risk

premium rates for all new construction, substantial im-

3 See, Texas Landownders’ Rights Association v. Harris, 453

F.Supp. 1025, 1030 (D.D.C.1978). Congress was concerned because

many communities decided it was better to remain outside the program

and avoid paying any insurance premiums so long as they were able to

collect federal disaster relief. The 1973 Act required the purchase of

flood insurance on or after March 2, 1974, as a condition to receiving any

form of federal or federally related financial assistance for the acquisi-

tion or construction of insurable buildings and mobile homes within and

identified special flood, mudslide, or flood related erosion hazard area

located within any community participating in the program. The Flood

Disaster Protection Act also requires that on or after July 1, 1975, or

one year after a community has been formally notified by the Director

of the Flood Insurance Program of its identification as a commmunity

containing one or more special flood hazards, no such federal finar.cial

assistance shall be provided unless the ~oramunity in which the area is

located is then participating in the program.

A-8

provements, and high lir:?.s of coverage on existing struc-

tures when a flood insurance rate map became effective.

To qualify for flood insurance, a community was re-

quired to apply for the entire area within its jurisdiction.4

The program requires the community ta designate an agen-

cy or official with responsibility, authority, and means to

implement the specific requirements of the program and to

make an annual report concerning the community’s par-

ticipation in the program.. The regulations provide that a

community is subject to suspension from the NFIP for

failure to implement adequate flood plain management

regulations. During a suspension, no flood insurance may

be sold or renewed.

Thus, the Act contemplates the participation of both

the federal agency charged with the program’s oversight

and the local community government charged with im-

plementing the agency’s flood plain regulations. Under the

regulations, however, ultimate responsibility for communi-

ty compliance remains with the Agency since it has the

power to suspend any municipality for lack of compliance

with the NFIP.

IV. Resolution of the Issues

[1] Many of the general principles applicable to

the judicial interpretation of flood insurance policy provi-

sions have been established by prior decision. Federal law

4 Individual property owners may not purchase flood insurance

unless they live in a municipality which has entered the prgam. To

achieve Congress’ goal of preventing widespread flood damage through

prophylactic land use restrictions, an individual who voluntarily com-

plies with the regulations still cannot obtain the benefit of the program

without local government action.

A-9

governs disputes over coverage arising under the National

Flood Insurance Act of 1968. West v. Harris, 573 F.2d 873,

880-81 (5th Cir.1978), cert. denied, 440 U.S. 946, 99 S.Ct.

1424, 59 L.Ed.2d 635 (1979). When such disputes arise,

they are resolved under federal law ‘“‘by drawing upon stan-

dard insurance law principles.’’ Jd. at 881; Drewett v. Aet-

na Casualty & Surety Co., 539 F.2d 496, 498 (5th Cir.1976).

See Hanover Building Materials v. Guiffrida, 748 F.2d

1011 (5th Cir.1984). Given the importance and complexity

of this case, we discuss each disputed issue separately.

(a) No Express Contract Created

[2, 3] The United States urges that the many letters

exchanged between the communities and the agencies

charged with implementing the NFIP establish an express

contract. In brief, the government reasons that legislation

enacted pursuant to the spending power is in the nature of

a contract: in return for federal funds, the communities

agreee to comply with federally imposed conditions. Pen-

nhurst State Schools v. Halderman, 451 U.S. 1, 17, 101

S.Ct. 1531, 1539, 67 L.Ed.2d 694 (1981); United States v.

Marion County School District, 625 F.2d 607, 609 (5th

Cir.1980), cert. denied, 451 U.S. 910, 101 S.Ct. 1980, 68

L.Ed.2d 298 (1981). We believe that Pennhurst is

dispositive of the government’s contract claim. The clear

holding of Pennhurst is that a ‘“‘contract”’ can arise only

when the state knowingly and voluntarily accepts Con-

gress’ terms.

There can, of course, be no knowing accep-

tance if a state is unaware of the conditions

or is unable to ascertain what is expected of

it. Accordingly, if Congress intends to im-

pose a condition on the grant of federal

A-10

moneys, it must do so unambiguously (cita-

tions omitted). By insisting that Congress

speak with a clear voice, we enable the States

to exercise their choice knowingly, cognizant

of the consequences of their participation.

Pennhurst, 451 U.S., at 17, 101 S.Ct. at 1539. Congress fail-

ed to make clear in either the statute or regulations that

participation in the NFIP created a contract. As a result,

the parishes could have no knowing understanding that

they would be subjected to almost unlimited liability in ac-

tions for monetary damages under the statute by joining

the program. We sustain the district court’s decision that

the NFIP does not form a contract between participating

communities and the United States.

(b) No Implied Right of Action

The theory of impiied private action is, of course,

basically a matter of statutory construction. Transamerica

Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 15, 100

S.Ct. 242, 245, 62 L.Ed.2d 146 (1979); Belluso v. Turner

Communications Corp., 633 F.2d 393, 395 (5th Cir.1980).

For over half a century federal courts readily allowed plain-

tiffs to imply private causes of action. See, e.g., Superinten-

dent of Insurance v. Bankers Life and Casualty Co., 404

U.S. 6, 92 S.Ct. 165, 30 L.Ed.2d 128 (1971); Texas & P.R.R.

v. Rigsby, 241 U.S. 33, 36 S.Ct. 482, 60 L.Ed. 874 (1916).

The Supreme Court began to reverse this trend in Cort v.

Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975).°

° In more recent cases the Supreme Court has looked almost ex-

clusively to congressional intent - The Cort v. Ash criteria being treated

as indicia of that intent. Transamerican Mortgage Advisors, Inc. v.

Lewis, 444 U.S. 11, 100 S.Ct. 242, 62 L.Ed.2d 146 (1979); Touche Ross

& Co. v. Redington, 442 U.S. 560, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979).

A-il

In response to the United States argument that we

should imply a private right of action under the NFIP, we

need go no further than our opinion in Till v. Unifirst

Federal Savings & Loan Association, 653 F.2d 152, 154

(5th Cir.1981). In Till, we were asked to read the language

and history of the NFIP as affording a cause of action not

explicitly provided for by Congress. We analyzed the NFIP

under the factors of Cort v. Ash: (1) whether the plaintiff is

one of a class for whose special benefit the statute was

enacted; (2) whether there is an indication of legislative in-

tent to create or deny such remedy; (3) whether such a

remedy would be inconsistent with the underlying

legislative purpose; and (4) whether the cause of action is

one traditionally relegated to state law. Cort v. Ash, supra,

422 U.S. at 78, 95 S.Ct. at 2088. As we noted in Till,

though, in interpreting federal statutues, Cort and its pro-

geny have all focused upon the ‘‘ultimate issue’ of whether

is was Congress’’ intent - either explicit or implicit - to

create a private remedy or to deny one. Jill at 154.6

(footnote 5 continued)

Since deciding Cort v. Ash, the Supreme Court has become even more

reluctant to imply new private causes of action for damages. See Mid-

dlesex County Sewerage Authority v. National Sea Clammers Associa-

tion, 453 U.S. 1, 101 S.Ct. 2615, 69 L.Ed.2d 435 (1981); Northwest

Airlines, Inc. v. Transport Workers Union of America, 451 U.S. 77, 101

S.Ct. 1571, 67 L.Ed.2d 750 (1981); Texas Industries, Inc. v. Radcliff

Materials, Inc., 451 U.S. 630, 101 S.Ct. 2061, 68 L.Ed.2d 500 (1981);

California v. Sierra Club, 451 U.S. 287, 101 S.Ct. 1775, 68 L.Ed.2d 101

(1981).

6 As the court observed in Touche Ross & Co. v. Edward S.

Redington, 442 U.S. 560, 576, 99 S.Ct. 2479, 2489, 61 L.Ed.2d 82 (1979),

the central inquiry remains whether Congress intended to create, either

expressly or by implication, a private cause of action. Indeed, the first

three factors discussed in Cort - the language and focus of the statutue,

A-12

Cort v. Ash, supra, 422 U.S. at 78, 95 S.Ct. at 2088. See

California v. Sierra Club, 451 U.S. 287, 101 S.Ct. 1775,

1779, 68 L.Ed.2d 101 (1981); Rogers v. Frito Lay, Inc., 611

F.2d 1074, 1078 (5th Cir.1980), cert. denied, 449 U.S. 889,

101 S.Ct. 246, 66 L.Ed.2d 115 (1980).

[4, 5] Our quest for Congress’ intent must being with

the Supreme Court’s warning that in cases where the

statutes and legislative history are silent on the question of

private remedy, “implying a private right of action on the

basis of congressional silence is a hazardous enterprise, at

best.”” Touche Rosse & Co. v. Redington, supra, 422 U.S. at

571, 99 S.Ct. at 2486. Clearly, the principal purpose in enac-

ting the NFIP was to reduce through the implementation

of adequate land use controls and the availability of sub-

sidized flood insurance, the massiv and ever increasing bur-

deon of federal flood disaster assistance.’ Nowhere in an

(footnote 6 continued)

its legislative history, and its purpose, see 422 U.S. at 78, 95 S.Ct. 2080,

2087, 45 L.Ed.2d 26 - are ones traditionally relied upon in determining

legislative intent.

7 In 1968, House iieport No. 1585 discussed the purposes and

need for a flood insurance program. It stated as follows:

Heavy losses over the years from hurricanes in the coastal areas

and from storms in inland areas of the nation dramatize the lack

of insurance protection against flood damage. Insurance protec-

tion against the risk of destruction cause by tornadoes and other

natural catastrophies is generally available, but it is not available

against the risk of flocd ioss.

Communities along the sea coast or .n a river basin become

completely immobilized following a major flood. Usually they

must depend on the federal government and voluntary relief agen-

cies to provide various forms of assistance. Some state and local

governments have limited programs to assist flood stricken areas,

A-13

examination of the language of the NFIP and its legislative

history can we find evidence that Congress had any intent

to allow a private cause of action, either expressly or by

implication.

While the Supreme Court in Touche Ross refused to

imply a private cause of action partly because other sec-

tions of the same Act expressly provided for private

remedies, we find applicable what was obviously the main

thrust of the Court’s reasoning: ‘‘when Congress wished to

provide a private damages remedy, it knew how to do so

and did so expressly.’’ Touche Ross & Co. v. Redington,

supra, 442 US. at 572, 99 S.Ct. at 2487. Thus, as we found

in Till, where the statue by its terms grants no private

rights to any identifiable class and nrescribes no conduct

as unlawful, further inquiry is foreciused. We follow Till

and hold that no cause of action may be implied under the

NFIP.

6, 7] It is black letter law that an injunction wil! not

issue when it would be ineffectual. Under the NFIP a com-

(footnote 7 continued)

but disaster relief from all of these sources is inadequate to pro-

vide for the necessary restoration of heavily damaged areas. These

facts underline the need for a program which will make insurance

against flood damage available, encourage persons to become

aware of the risk of occupying the flood plains, and reduce the

mounting federal expenditure for disaster relief assistance.

H.Rep.No. 1585, 90th Cong.. 2d Sess., reprinted in [1968]

U.S.Code Cong. & Adm.News 2873, 2966-67.

For further evidence of the interest of Congress in reducing the burden

of federal funds through land use controls and insurance, see Senate

Report No. 93-583, 93rd Cong., Ist Sess., reprinted in [1973] U.S.Code

Cong. & Adm.News 3217, 3218-20, 3223.

A-14

munity may withdraw, or it may be suspended by the agen-

cy, if it is not in compliance with the regulations governing

flood plain construction and management. Nonetheless, the

gevernment seeks an injunction to force the parishes to

bring into compliance all areas located in flood plains that

are in violation of the regulations. The government also

seeks a prospective injunction to keep the communities

from engaging in future violations.

We can perceive no utility in such a course. Requir-

ing a community to do acts which it may voluntarily

choose to avoid is not a proper exercise of judicial power.

In no way is community participation in the NFIP re-

quired. Deciding to join or remain under the program is a

decision left solely by the statute to the local community.

This remians true even after Congress created additional

incentives to secure more widespread community participa-

tion. As a result, it is not a proper use of judicial power to

force the parishes to do what they may decide to avoid do-

ing by simply withdrawing from the program.

Similarly, requiring a community to undertake ex-

pensive reconstruction projects to bring itself into com-

pliance with the NFIP is fruitless when the agency already

possesses the power to suspend any community which is in

violation. We certainly agree with the government that a

community must be in compliance to remain in the pro-

gram. However, that is not equivalent to saying we must

force a community to comply by means of an injunction.

While we can speculate upon the reasons the United States

would like to have the court provide such injunctive relief,

suffice it to say that we decline to make it available because

the agency already had the power to suspend the parishes

until they comply with the flood plain regulaticns.

A-15

(d) Availability of Subrogation

We perceive two inquiries to be dispositive of the

United States’ claim as to the availability of subrogation.

Fizst, we must consider Congress’ intent in enacting the

NFIP. Second, we must examine the validity of the regula-

tions promulgated by the agency pursuant to Congress’

directions.

We first had occasion to consider Congress’ intent

several years ago in Drewett v. Aetna Casualty and Surety

Co., 539 F.2d 496, 497 (5th Cir.1976). The plaintiff in

Drewett argued that because the statue creating the NFIP

anticipated premiums which were lower than the actuarial

cost of insuring property in flood prone areas (the dif-

ference being subsidized by the federal government, see 42

U.S.C. §§ 4014 and 4015), it was inappropriate to apply

general insurance law principles, which were originally

developed to apply to profit seeking insurance companies.

We held Drewett’s contention to be without merit.

As we stated in the context of the NFIP as it was then

operated:

[T]he flood insurance program is ad-

ministered with cooperation between the

federal government and private insurance

companies; the private companies carry

some of the risk, although the federal govern-

ment stands ready to reinsure and reimburse

excessive losses. 42 U.S.C. § 4017, 4041-84.

The Program also requires ongoing actuaria!

studies to help set the premiums to be charg-

ed, 42 U.S.C. § 4014. The eventual goal of the

Program is to discourage building in flood

prone areas by raising, over time, the

A-16

premiums actually charged to equal the ac-

tuarial cost of flood insurance. See U.S. Code

Cong. & Adm. News (1968) at 2969, reprin-

ting House Report No. 1585, 90th Cong., 2d

Sess. (1968).

In short, although the Program offers

subsidized flood insurance, it is designed to

operate much like any private insurance com-

pany and eventually to eliminate the sub-

sidy. Because the Program's exposure to

claims and its premiums are required to be

estimated in accordance with standard in-

surance practices, and because private in-

surers carry part of the risk, it is clear that

Congress did not intend to abrogate stan-

dard insurance law principles which affect

such estimates and risks. Nothing in the

statue or regulations promulgated under it,

see 24 C.F.R. Part 1909-18, requires

otherwise.

Drewett at 498 (emphasis added).

We can perceive no reason the NFIP should be seen

as operating differently now that the federal government

has displaced private insurance companies. The actuarial

studies required for the assessment of risk premiums re-

mains the same. Indeed, the agency has long had the choice

of operating the program privately or publicly. The reeson

the NFIP is now operated entirely by the government is

because studies convencingly showed this would achieve

greater economy.

As to the second inquiry - the validity of the agency

regulations issued to implement the NFIP - it must be

noted that the insurance policy used by the government is

the same policy issued to property owners when private

companies were employed as agents for the government

A-17

under the NFIP. When the government assumed the

responsibilities formerly performed by the private com-

panies, the agency published the insurance policy in the

Code of Federal Regulations. It has been published there

ever since. Nonetheless, defendants in these cases contend

that the inclusion of the policy's subrogation clause is an

unwarranted assumption of power by the agency outside

the scope of congressional intent now that the United

States operates the program. This, of course, is a very hard

road for the defendants to travel since Congress delegated

to the agency the responsibility for writing the regulations

under which the NFIP would operate.

[8, 9] The standards by which federal regulations are to be

judged were well stated in New York Foreign Freight For-

warders and Brokers Association v. The Federal Maritime

Commission, 337 F.2d 289, 295 (2d Cir.1964), cert. denied,

390 U.S. 910, 914, 85 S.Ct. 893, 902, 13 L.Ed.2d 797. 800

(1965). The court observed that: (1) a regulation is presump-

tively valid, and one who attacks it has the burden of show-

ing its invalidity; and (2) a regulation or administrative

practice is ordinarily valid unless it is (a) unreasonable or

inappropriate or (b) plainly inconsistent with the statute.

Thus, our scope of review of the agency issued

regulations is limited. Such judicial restraint in the assess-

ment of administrative regulations is rooted in a realistic

view of the legislative process. Legislation cannot under-

take to deal with every situation. Accordingly, Congress

creates an administrative agency so that experts who are

familiar with the task Congress has identified can address

the problems in all their intricacies. The Supreme Court

carefully explained the necessary and proper function of

agency rulemaking in American Trucking Associations,

A-18

Inc. v. United States, 334 U.S. 298, 73 S.Ct. 307, 97 L.Ed.

337 (1953). In that case the Interstate Commerce Commis-

sion had issued rules prohibiting short-term or trip leasing

by motor carriers. The court held that promulgation of the

rules was within the Commission’s power - despite the

absence of specific reference to leasing practices in the

Motor Carrier Act.

All urge upon us the fact that nowhere in the

Act is there an express delegation of power

to control, regulate or effect leasing prac-

tices, ana it is further insisted that in each

separate provision of the Act granting

regulatory authority there is no direct im-

plication of such power. Our function,

however, does not stop with a section-by-

section search for the phrase ‘‘regulation of

leasing practices’ amoung the literal words

of the statuory provisions. As a matter of

principle, we might agree with appellant's

contention if we thought it a reasonable

canon of interpretation that the draftsmen of

acts delegating agency powers, as a practical

and realistic matter, can or do include

specific consideration of every evil sought to

be corrected. But no great acquaintance with

practical affairs is required to know that

such prescience, either in fact or in the minds

of Congress, does not exist. National Broad-

casting Company v. United States, 319 U.S.

190, 219-20, 63 S.Ct. 997, 1010-11, 87 L.Ed.

1344; Phelps Dodge Corp. v. National Labor

Relations Board, 313 U.S. 177, 193-94, 61

S.Ct. 845, 852, 85 L.Ed. 1271. Its very

absence, moreover, is precisely one of the

reasons why regulatory agencies such as the

Commission are created, for it is the fond

hope of their authors that they bring to their

OOOO ee

A-19

work the expert’s familiarity with industry

conditions which members of the delegating

legislatures cannot be expected to possess.

United States v. Pennsylvania Railroad Co.,

323 U.S. 612, 65 S.Ct. 471, 89 L.Ed. 499.

American Trucking, 344 U.S. at 309-10, 73 S.Ct. at 314-15.

Similar thoughts on the judicial restraint necessary when

assessing agency regulations were expressed more recently

by the Supreme Court in American Union Transport, Inc.

v. United States, 257 F.2d 607, 612 (D.D.C.), cert. denied,

358 U.S. 828, 79 S.Ct. 46, 3 L.Ed.2d 67 (1958). The Court

focused on ‘‘[t]he great complexity of our economy [which]

induced Congress to place...the regulation[s] in specialized

agencies with broad powers.’’ The Supreme Court em-

phasized that we must be ‘“‘slow to interfere with the con-

clusions of such agencies when [their regulations 8 recon-

ciliable with statutory directions.”’

[10] As to the task of reconciling regulations with

their statutory authorization, courts give great deference

to the interpretation given the statute by the officers or

agency charged with its administration. Udall v. Tallman,

380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616, 625

(1965). ‘To sustain the Commission’s application of this

statutory term, we need not find that its construction is the

only reasonable one, or even that it is the result we would

have reached had the question arisen in the first instance

in judicial proceedings.’’ Une.nployment Compensation

Commission v. Aragon, 329 U.S. 143, 153, 67 S.Ct. 245, 91

L.Ed. 136, 145 (1946). See also, Gray v. Powell, 314 U.S.

402, 62 S.Ct. 326, 86 L.Ed 301 (1941); Universal Battery

Co. v. United States, 281 U.S. 580, 583, 50 S.Ct. 422, 423,

74 L.Ed. 1051, 1054 (1930). ‘‘Particularly is this respect

due when the administrative practice at stake ‘involves a

A-20

contemporaneous construction of a statute by the men

charged with the responsibility of setting its machinery in

motion, of making the parts work efficiently and smoothly

while they are yet untried and new.””’ See Udall v. Tallman,

380 U.S., at 16, 85 S.Ct. at 801, citing Power Reactor Co.

v. International Union of Electrical, Etc., 367 U.S. 396,

408, 81 S.Ct. 1529, 1635, 6 LEd.2d 924, 932 (1961).

[11] Defendants in these cases rely upon the surely

correct proposition that the power of an agency when ad-

ministering a federal statute and prescribing regulations is

not the power to make law. Manhattan General Equipment

Co. v. Commissioner, 297 U.S. 129, 56 S.Ct. 397, 80 L.Ed.

528 (1936). We believe the defendant’s hornbook restate-

ment of the law to be as accurate as it is inapposite. The in-

quiry before us is nothing more than the reasonableness of

including subrogation as part of Congress’ scheme to

employ insurance principles as a cost saving mechanism in

lieu of direct disaster relief appropriations. We would be

disputing with the sophists if we doubted for a moment

that:

government is a practical affair intended for

practical men. Both officers, lawmakers and

citizens naturally adjust themselves to any

long continued action of the Executive

Department - on the presumption that

unauthorized acts would not have been

allowed to be so often repeated as to

crystallize into a regular practice. That

presumption is not reasoning in a circle but

the basis of a wise and quieting rule that in

determining the meaning of a statute or the

existence of a power, weight shall be given to

the usage itself - even when the validity of

the practice is the subject of investigation.

A-21

See Udall v. Tallman,380 U.S., at 17, 85 S.Ct. at 801-802,

citing United States v. Midwest Oil Co., 236 U.S. 459,

472-73, 35 S.Ct. 309, 312-13, 59 L.Ed. 673, 681 (1915). We

hold that the agency’s adoption of the insurance policy

formerly issued by private companies with its inclusion of

a subrogation clause was within the framework con-

templated by Congress and that the United States may

pursue subrogation.

(e) Parish Liability to Suit and the

Availability of a Common

Law Remedy®

[12, 13] It is settled law that the parishes are not pro-

tected from suit by the eleventh amendment. As the

Supreme Court observed in County of Lincoln v. Luning,

133 U.S. 766, 767, 10 S.Ct. 363, 363, 33 L.Ed. 766. (1889),

“the Eleventh Amendment limits...jurisdiction only as to

suits against a state.’’ It has been the clear rule since the

time of Chief Justice Marshall that ‘“‘the Eleventh Amend-

ment...is of necessity limited to those suits in which the

state is a party on the record.’”’ Osborn v. The Bank of the

United States, 22 U.S. (9 Wheat.) 738, 857, 6 L.Ed. 204

(1824).

[14, 15] Since the elventh amendment constitutes no

bar to a suit against the parishes, our next inquiry is

whether Louisiana law allows such a suit. The doctrine of

sovereign immunity has been abandoned in Louisiana.

However, this does not mean a parish raay be sued for any

8 We are aware, of course, that Louisiana is not a common law

state. Nonetheless, some term is needed to identify the causes of action

outside the NFIP and Louisiana insurance law. We use common law as

such a descriptive moniker here.

A-22

cause. Parish liability is limited by the step-child of the old

doctrine of sovereign immunity - the public duty doctrine.

This doctrine, adopted in Louisiana, was well stated in

Stewart v. Schmieder, 386 So.2d 1351, 1357 (La.1980).

The rule of official responsibility, then, ap-

pears to be this: that if the duty which the of-

ficial authority imposes upon an officer is a

duty to the public, a failure to perform it, or

an adequate or erroneous performance, must

be a public, not an individual injury, and

must be redressed, if at all, in some form of

public prosecution. On the other hand, if the

duty is a duty to the individual, then a

neglect to perform it, or to perform it proper-

ly, is an individual wrong, and may support

an individual action for damages. ‘The

failure of a public officer to perform a public

duty can constitute and indivdcual wrong on-

ly when some person can show that in th+

public duty was involved also a duty to

himself as an individual, and that he has suf-

fered a special and peculiar injury be reason

of its non-performance.”’

[16] The parishes’ adoption of flood control measures

and their responsibility for inspecting and maintaining

defenses against the possibility of rising flood waters does

no impel the automatic application of the bar of the public

duty doctrine. Louisiana case law permits the conclusion

that the parishes can be found liable after trial for the

breach of what may be perceived to be at first glance as a

public duty. Bacile v. Parish of Jefferson, 411 So.2d 1088

(La.App.1981); Jones v. City of Baton Rouge, 388 So.2d

737 (La.19%80); McCloud v. Parish of Jefferson, 383 So.2d

477 (La.App.1980); Broussard v. Parish of Jefferson, 375

So.2d 722 (La.App.1979); Lewis v. Fireman’s Fund Ins. Co.,

A-23

342 So.2d 244 (La.App.1977); Jackson v. Parish of East

Baton Rouge, 331 So.2d 64, 65 (La.App.1076); Contranchis

v. Parish of Jefferson, 299 So.2d 513 (La.App.1974); Toppi

v. Arbour, 119 So.2d 621 (La.App.1960).

[17] Of course, it is a fundamental principle of in-

surance law that an insurer may not sue its own insured on

the insurance policy. The law has recognized, however, that

there may be causes of action by an insurer outside the

policy, i.e. fraud. It is with understanding that we now con-

sider the United States’ claim as to the availability of com-

mon law remedies.

This circuit, along with others, has recognized that

the government has a common law right to recoupment.

Jacquet v. Westerfield, 569 F.2d 1339, 1345 (5th Cir.1978);

Woods v. United States, 724 F.2d 1444, 1448 (9th

Cir.1984); United States v. Mead, 426 F.2d 118, 124 (9th

Cir.1970); United States v. Silliman, 167 F.2d 607, 610 (3d

Cir.1948), cert. denied, 335 U.S. 825, 69 S.Ct. 48, 93 L.Ed.

379 (1948). However, an inextricable part of any decision as

to the availability of a common law remedy must focus

upon not only what remedies were intended by Congress in

passing the NFIP, but also upon what remedies were

foreclosed.

Thus, although in Jacquet v. Westerfield we held

that the power to disqualify food stamp recipients on ac-

count of fraud was “‘inherent in the effective administra-

tion of such a program,” at issue in Jacquet was a dis-

qualification regulation. It is with this background that we

said ‘“‘[njot only is recoupment an appropriate ad-

ministrative tool, but the government also has a common

law right to recoup value fraudulently obtained from it.’

A-24

Jacquet at 1346.

In Mount Sinai Hospital of Greater Miami, Inc. v.

Weinberger, 517 F.2d 329, 338 (5th Cir.1975), cert. denied,

425 U.S. 935, 96 S.Ct. 1665, 48 L.Ed.2d 176 (1976), we

made the observation that ‘“‘[t]he recoupment right does

not always fit consistently and logically into the statutory

system, but the alternative of no right to recoup produces

even more severe incongruities.”’ Thus, thought the general

principle is, as we observed in United States v. Bellard, 674

F.2d 330, 333 (5th Cir.1982), that the courts are reluctant

to find legislative enactments in derogation of the common

law, this general rule cannot be viewed as a talisman; it

must be tempered by the specifics of the program adopted

by Congress. Accordingly, the availability of common law

remedies is primarily a hunt for a species of congressional

intent.

In our search of Congress’ intent in enacting the

NFIP we cannot escape the conclusion that it would be in-

congrous for the same body which did not contemplate ex-

press or implied contractual remedies against the defen-

dants to have intended that the full panoply of common law

actions remain available against the same defendants. It is

not reasonable for us to conclude that Congress would have

thought that the parishes would have voluntarily entered

a program such as the NFIP - which involved many restric-

tion upon land use - if they thought they were going to be

subject to massive tort liabilities. It is unreasonable to

argue, as the United States seemingly does, that the NFIP,

a program designed to lessen the massive public outlay for

federal disaster assistance, could be foisted in its entire

cost onto the very people Congress was trying to protect

from the prohibitive cost of flooding.

Wks an, Pelli ae AO A Ls Atte 8 tomer

A-25

{18] Our decision that Congress did not intend to

allow recovery from the defendants under the whole of com-

mon law torts, however, is not tantamount to saying that

no action can lie against the parishes for the value of the

property the parishes owned and insured under the NF IP.

Moreover, since under standard insurance law principles

the United States as an insurer cannot sue the parishes as

its insureds under the NFIP policies, any action against

the parishes concerning parish property insured under the

NFIP is extremely limited. Although actions for fraud

have traditionally been recognized at common law as a

means of recovery from insureds by their insurers, we do

not say at this early stage of litigation - prior to any real

discovery having occured - that this will be the only non

subrogation action available by the United States against

the parishes. It is only with this understanding of the very

narrow nature of the causes of action available. to the

United States against the parishes for the value of the pro-

perty owned and insured under the NFIP that we give the

green light to the United States to pursue common law

remedies against the parishes. Suffice it to say since none

of the claims that may be articulated in subrogation ac-

tions against the parishes are available to the United

States as an insurer, any action by the United States

against the parishes for the value of the property which the

parishes insured under the NFIP must not be in violation

of the fundamental principle of insurance law that an in-

surer cannot sue its insured. To this limited extent express-

ed in our opinion, a common law remedy is available to the

United States against the parishes.

V. Conclusion

By way of summation, we affirm the district court's

A-26

summary disposition of the United States’ express con-

tract and public nuisance claims. We further hold that the

United States is not entitled to pusue an implied right of

action or injunctive relief under the NFIP. However,

subrogation, and any applicable causes of action at com-

mon law which do not violate fundamental insurance law

principles for recovery of the value of the property the

parishes owned and insured under the NFIP, remain

available.

AFFIRMED IN PART, REVERSED IN PART,

and REMANDED.

JERRE S. WILLIAMS, Circuit Judge, concurring in

part and dissenting in part:

I concur in all of my brother Brown’s opinion for the

Court in this case with the exception of IV(a) in which he

conlcudes that the conditional grant in aid program did not

create a contract between the federal government and the

local governmental entities. This conclusion is contrary to

a long line of established Supreme Court authority. The

1866 Supreme Court case of McGee v. Mathis, 71 U.S. (4

Wall.) 143, 155, 18 L.Ed 314 said: “It is not doubted that

the grant by the United States to the State upon condi-

tions, and the acceptance of the grant by the State con-

stituted a contract. All the elements of a contract met in

the transaction - competent parties, proper subject-matter,

sufficient consideration, and consent of minds. This con-

tract was binding upon the State.” In our own controlling

case on this issue, United States v. Marion County School

Dist., 625 F.2d 607 (5th Cir.1980), we quoted the McGee

case at 609 n. 4. The Marion County case involved contrac-

tual assurances by the school district of compliance with

A-27

the prohibitions against racial discrimination in the Civil

Rights Act in the operation of federally funded schools. At

p. 609, our ruling was specific:

As the Supreme Court has long recognized,

the United States may attach conditions to a

grant of federal assistance, the recipient of

the grant is obligated to perform the condi-

tions, and the United States has an inherent

right to sue for enforcement of the recipient's

obligation in court. E.g., Rex Trailer Co. v.

United States, 350 U.S. 148, 151, 76 S.ct.

219, 221, 100 L.Ed. 149 (1956); United States

v. San Francisco, 310 U.S. 16, 31, 60 S.Ct.

749, 757, 84 L.Ed. 1050 (1940); Cotton v.

United States, 52 U.S. (11 How.) 229, 231, 13

L.Ed. 675 (1850); Dugan v. United States, 16

U.S. (3 Wheat.) 172, 181, 4 L.Ed. 362 (1818).

The same principle is stated in Pennhurst State

School & Hospital v. Halderman, 451 U.S. 1, 17, 101 S.Ct.

1531, 1540, 67 L.Ed.2d 694 (1981), the case relied upon by

the majority opinion for the contrary result. In the

paragraph immediately preceding the paragraph quoted in

the majority opinion, the Supreme Court gives the follow-

ing recognition to the nature of a conditional grant as a

contract:

Unlike legislation enacted under § 5,

however, legislation enacted pursuant to the

spending power is much in the nature of a

contract: in return for federal funds, the

States agree to comply with federally impos-

ed conditions. The legitimacy of Congress’

power to legislate under the spending power

thus rests on whether the State voluntarily

and knowingly accepts the terms of the ‘“‘con-

tract.’’ See Steward Machine Co. v. Davis,

301 U.S. 548, 585-598, 57 S.Ct. 883, 890-896,

81 L.Ed.2d 1279 (1937); Harris v. McRae,

A-28

448 U.S. 297, 100 S.Ct. 2671, 65 L.Ed.2d 784

(1980).

The conditions the United States Government plac-

ed upon the grant in this case were clear and precise. Ob-

viously the government knew that it was undertaking large

financial obligations in supplying flood insurance to the

citizens of the Parishes. It insisted upon conditions which

would substantially cut down on that liability. The condi-

tions which the Parishes were alleged to have breached

were two in number. First, they failed to implement and en-

force the specific land use and control requirements which

they had obligated themselves to enforce. As a result, a

number of buildings were built below the flood level eleva-

tion requirements which the Parishes promised to meet. Se-

cond, even more specifically, the Parishes failed to carry

out unequivocal promises concerning the extablishment of

adequate drainage systems involving pumps, canals,

levies, and culverts. The United States further charges

that the Parishes failed to keep drainage pumps in proper

repair so that they would operate in situations involving

flood emergencies.

These failures had to do with specific promises which

the Parishes were required to make to be entitled to obtain

for themselves and their citizens the flood insurance protec-

tions under the National Flood Control Act and the Flood

Disaster Protection Act. I concede, of course, that the

Court in Pennhurst did state that Congress must intend to

impose clearly and unambiguously the conditions on the

grant. Of course, the clearness and certainty come from the

administrative requirements established under congres-

sional authorization rather than requirements in the

statute itself. Virtually all conditional grants by the

eo PEA iy het i = et

tenancies

A-29

federal government occur through an administrative pro-

cess that establishes the specific conditions and creates the

contract under the general grant of authority from the Cun-

gress. Congress does not write the contract, nor does it sign

it. The administrator writes the contract and signs it on

behalf of the government.

It cannot be said in this case, in the words of Pen-

nhurst, that a local governmental entity was ‘‘unaware of

the conditions or [was] unable to ascertain what [was] ex-

pected of it.’’ The conditions were clear and precise, and a

contract was created under this conditional flood insurance

program. A contract is the normal and usual outgrowth of

a conditional grant of federal largesse, and there is no

reason to treat this case as an exception.

Admittedly the more serious question is not whether

a contract was created, but whether the local government

bodies can be held liable for the consequential damages

arising from their failures to carry out the contract provi-

sions. These failures ultimately resulted in the federal

government having to pay large flood insurance claims

which, the federal government asserts, would not have

arisen if the Parishes had carried out their contract obliga-

tions. Of course, upon trial the federal government would

have to prove that the failure of the Parishes to carry out

these contract obligations caused the damages. But there

is absolutely nothing in the law of contracts, governmental

or otherwise, giving the Parishes any privileged position

with respect to liability for consequential damages for

breach of contract. If the government can establish the link

in causation, the Parishes are liable under the most elemen-

tary common-law principles. 5 Corbin, CONTRACTS §§

997, 998.

A-30

The fact that federal monies were not paid directly to

the Parishes but were paid through flood insurance claims

to the citizens of the Parish does not alter the nature of the

case. In Grove City College v. Bell, US. , 104

S.Ct. 1211, 1216, 79 L.Ed.2d 516 (1984), the Supreme Court

recognized that the College benefitted by a federal aid pro-

gram even though all funds were paid directly to the

students. The Court found that the College, therefore, was

subject to the conditions attached to the receipt by the

students of the federal financial assistance under the Civil

Rights Act. The Court specifically recognized that the

federal disbursements to the students benefitted the Col-

lege through relieving it of financial burdens which it would

otherwise have to bear in the absence of the federal

assistance. Precisely the same considerations are ap-

plicable where it was to the obvious benefit of the Parish to

obtain federal flood control insurance for its citizens. The

contract existed, and its legal consideration from the point

of view of the Parish was the interest of the Parish in ob-

taining for its citizens the subsidized federal flood control

program.

Finally, I stress that I am in full agreement with the

conclusion of the Court, in IV(c) of the opinion, that the

government is not entitled to specific performance to en-

force the contract in the future. The contract was without

duration. The sanction for continuing violation of the con-

tract by the Parishes was suspension from the program. 24

C.F.R. § 1909.24. The Parishes are not required by law to

continue in the program. They can drop out at any time.

See Guardians Ass'n v. Civil Service Comm. of the City of

New York, US. , 103 S.Ct. 3221, 3229, 77

L.Ed.2d 866 (1983). Thus there is no legal right to force

them through a specific performance decree to continue to

A-31

abide by the contract. This conclusion, however, does not

in any way affect the liability of the Parishes for damages

to the United States Government while the contract has

been in effect. The federal government is entitled to under-

take to prove its case with respect to those damages. The

district court erred in granting a partial summary judg-

ment against such federal claims. I must dissent because

this Court affirms the partial summary judgment which

was erroneously granted on this issue.

A-32

APPENDIX B

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Nos. 83-3557 & 83-3760

UNITED STATES OF AMERICA,

Plaintiff-Appellants,

versus

THE PARISH OF ST. BERNARD, ET AL.,

Defendants-Appellees.

* * * * * * ca * * * * * *

No. 84-3082

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

THE PARISH OF JEFFERSON, ET AL.,

Defendants-Appellants.

ON PETITION FOR REHEARING AND SUGGESTION

FOR REHEARING EN BANC

(Opinion 4/8/85, 5 Cir. 198__, F.2d )

(June 10, 1985)

Before BROWN, WILLIAMS and GARWOOD, Circuit

Judges.

PER CURIAM: of Defendants-Appellees Parish of Jeffer-

son, et al.

A-33

(Appendix B continued)

(.~) The Petition for Rehearing is DENIED and no member

of this panel nor Judge in regular active service on the

Court having requested that the Court be polled on rehear-

ing en banc, (Federal Rules of Appellate Procedure and

Local Rule 35) the Suggestion for Rehearing En Banc is

DENIED.

( ) The Petition for Rehearing is DENIED and the Court

having been polled at the request of one of the members of

the Court and a majority of the Circuit Judges who are in

regular active service not having voted in favor of it,

(Federal Rules of Appellate Precedure and Local Rule 35)

the Suggestion for Rehearing En Banc is also DENIED.

( ) A member of the Court in active service having re-

quested a poll on the reconsideration of this cause en banc,

and a majority of the judges in active service not having

voted in favor of it, rehearing en banc is DENIED.

ENTERED FOR THE COURT:

United States Circuit Judge

A-34

APPENDIX C

U.S.A. CIVIL ACTION

VS. NO. 81-1808

PARISH OF ST. BERNARD, SECTION “H”’

ET AL. ‘consolidated with

U.S.A. CIVIL ACTION NO.

VS. 81-1810

PARISH OF JEFFERSON, ET AL

ORDER AND REASONS

Plaintiff, United States of America, filed two similar

civil actions against various defendants. In Civil Action

81-1808 the defendants are the Parish of St. Bernard, the

Police Jury of the Parish of St. Bernard, the Lake Borgne

Basin Levee District, the State of Louisiania, and various

home builders and surveyors. In Civil Action 81-1810, the

defendants are the Parish of Jefferson and its insurer,

Fireman’s Fund Insurance Co., Jefferson Parish Council,

(Fireman’s Fund also insures the Council), the Lafourche

Basin, Pontchartrain, Jefferson and West Jefferson Levee

Districts, and various homebuilders, surveyors, and a

design engineer. Travelers Inusrance Co. is also joined as

a defendant in the Jefferson Parish suit, as insurer of one

of the builders, Regent Development Corp. The two suits

have been consolidated.

Jurisdiction over suits commenced by the United

States is conferred by 28 U.S.C. 1345.

The complaints allege that the two Louisiana

parishes and their respective governing bodies chose to

participate in the National Flood Insurance Program, pur-

A-35

suant to the National Flood Insurance Act of 1968, 42

U.S.C. §4001 et seg. Thousands of residents in each parish

thus became eligible for and purchased federally subsidized

flood insurance coverage. On May 3, 1978, and again on

April 12 and 13, 1980, and on other prior occasions covered

by the flood insurance program, substantial flooding oc-

cured which caused damages to insured property in both

parishes. The United States, -laiming that it paid more

than $17,000,000 in St. Bernard Parish and more than

$76,000,000 in Jefferson Parish in flood claims and ad-

justers’ fees, seeks a variety of relief, including damages,

specific performance, and injunctive relief.

. The United States seeks to recover from the various

defendants upon an array of legal theories:

(a) the parishes and their governing bodies, .by

electing to enter the National Flood In-

surance Program, contracted to adopt and

enforce land use and control measures con-

sistent with the requirements of the National

Flood Insurance Program and failed to do so,

thus breaching the contracts;

(b) by certain willful and negligent acts and

omissions, all defendants are liable in tort for

the resulting flood damage; and

recurrent flooding, constituting a public

nuisance under federal common law, which

plaintiff seeks to abate.

The National Flood Insurance Program was initiated

A-36

with the passage of the National Flood Insurance Act of

1968, which made available federally subsidized flood in-

surance to those communities willing to participate in the

program. Legislation in 1973 provided increased incentives

to participate in the flood insurance program, including

denial of federal financial assistance in flood-prone areas

which did not participate in the flood insurance program

and, in participating communities, denial of federally-

related financing of construction or acquisition of property

not covered by flood insurance. 42 U.S.C. §4106(a)(b).

The findings and declaration of purpose of the Na-

tional Flood Insurance Act reveal several areas of Congres-

sional concern: to relieve the personal hardships and

economic distress caused by flooding without increasing

the burden of disaster relief programs, to share the risk of

flood losses, to foster a unified national program for flood

plain management, to guide future development away from

fleod prone areas, and to encourage continuing studies of

flood hazards. 42 U.S.C. §4001, 4002.

The Act provides for jurisdiction in the United

States district courts of any action to contest the denial of

a claim for flood insurance benefits. 42 U.S.C. §4072. The

Act also provides that, as a condition for eligibility for

government-supported flood insurance, communities shall

adopt sound land use policies designed to minimize flood

damage. 42 U.S.C. §4072. The Act also provides that, as a

condition for eligibility for government-supported flood in-

surance, communities shall adopt sound land use policies

designed to minimize flood damage. 42 U.S.C. §4022, 4102.

Regulations provide in detail the land use measures to be

adopted. Failure to ‘adopt such measures may result in

suspension of the community from the flood insurance pro-

ia A ai A ANN SONA Ait an.

A-37

gram. 44 C.F.R. 59.24. The result of such suspension would

be inability of property owners in those parishes to obtain

flood insurance or to obtain financing from institutions

regulated by or controlled by the federal government.

Neither St. Bernard nor Jefferson Parish has been suspend-

ed from eligibility in the program.

The cases were referred to a magistrate (28 U.S.C.

636(b)) for consideration of various motions to dismiss or

for summary judgment. The magistrate filed a ‘Finding

and Recommendation’’, to which various objections were

filed, with supporting memoranda. The court heard oral

argument thereon, and for the oral reasons announced in

open court, supplemented by these written reasons, the

floowing order was entered:

The Motions to Dismiss or for Summary Judgment

filed on behalf of various defendants, seeking to dismiss the

contract claim were granted insofar as the complaint seeks

specific performance.

The motions of various defendants to dismiss or for

summary judgment insofar as the complaint seeks

recovery in tort were denied.

The motions of various defendants to dismiss or for

summary judgment insofar as the complaint seeks to abate

a ‘‘public nusiance’’were granted. !

1 Three other motions were decided but are not dealt with herein:

the oral reasons being complete: the motion to dismiss insofar as a third

party claim is sought to be asserted against the Corps of Engineers, the

motion of Fireman’s Fund Ins. Co. to dismiss or for summary judgment,

and the motion of defendant Krebs for summary judgment.

A-38

BREACH OF CONTRACT

The United States seeks damages and specific perfor-

mance under a breach of contract theory from Jefferson

Parish, St. Bernard Parish and their respective governing

bodies. It is undisputed that there is no written contract

between the parties by virtue of the parishes’ participation

in the NFIP and, if so, whether the government has a

remedy for its breach.

The United States relies upon a number of

documents in support of its contract claim in its opposition

to the motions for summary judgment. Under the National

Flood Insurance Act, the adoption of adequate land use

and control measures by local governments is a condition

precedent to entry into the flood insurance program, 42

U.S.C. 4022. The governing body of each defendant parish

passed a resolution indicating its intent to participate in

the NFIP. Thereafter, the parishes were told that various

land use and control measures were required by regulations

promulgated under the Act. The parish governing bedies in

turn adopted ordinances to comply with the regulations.

Passage of these resolutions and ordinances, together with

the government’s subsidization of the flood insurance pro-

gram, is sufficient evidence to conlcude that an implied

contract exists between the parties and that the parishes

were aware of and understood their obligations under the

contract.

Also at issue is what remedies are available for

breach of contract by the parishes. We emphasize that our

analysis is based on a cause of action sounding in contract

and not a cause of action arising under the National Flood

A-39

Insurance Act. For this reason a Cort v. Ash” analysis is

inapplicable. Moreover, we construe Cort v. Ash as ap-

plicable only to a determination of whether private parties

(not the United States) have an implied right of action

under a statute.

It has frequently been held that the United States

may employ common law remedies to enforce conditions at-

tached to the dispersal of federal benefits. See Penhurst

State School and Hospital v. Halderman, 451 U.S. 1 (1981),

United States v. San Francisco, 310 U.S. 16 (1940), and par-

ticularly the following from United States v. Marion Coun-

ty School District, 625 F.2d 607, 609 (5th Cir. 1980):

It is settled law that the United States

has authority to fix the terms and conditions

upon which its money allotments to state

and other governmental entities should be

disbursed. Lau v. Nichols, 414 U.S. 569, 94

S.Ct. 786, 789, 39 L.Ed.2d 1 (1974); King v.

Smith, 392 U.S. 309, 333, 88 S.Ct. 2128,

2141, 20 L.Ed2d 118 (1968); Ivanhoe Irriga-

tion District v. McCracken, 257 U.S. 275,

295, 78 S.Ct. 1174, 1185, 2 L.Ed.2d 1313

(1958); Oklahoma v. Civil Service Commis-

sion, 230 U.S. 127, 143, 67 S.Ct. 544, 553, 91

L.Ed. 794 (1947). As the Supreme Court has

long recognized, the United States may at-

tach conditions to a grant of federal

assistance, the recipient of the grant is

obligated to perform the conditions, and the

United States has an inherent right to sue

for enforcement of the recipient’s obligation

in court. E.g., Rex Trailer Co. v. United

States, 350 U.S. 148, 151, 76 S.Ct. 219, 221,

2 422 U.S. 66 (1975)

A-40

100 L.Ed 149 (1956); United States v. San

Francisco, 210 U.S. 16, 31, 60 S.Ct. 749, 757,

94 L.Ed. 1050 (1940); Cotton v. United

States, 52 U.S. (11 How.) 229, 231, 13 L.Ed.

375 (1850); Dugan v. United States, 16 U.S.

(8 Wheat.) 172, 181, 4 L.Ed. 362 (1818).

Congress can of course nullify the government’s

right to sue to enforce a contract under the federal common

law, but, ‘‘as the Supreme Court has repeatedly emphasiz-

ed, courts are entitled to conclude that Congress has done

so only if the evidence of Congress’ intent is extremely,

even unmistakably, clear. Id at 611.

However, if the United States imposes a conditicn

upon federal funds, it must do so unambiguously. Penhurst

State School and Hospital v. Halderman, supra. Here the

documents show that the conditions imposed on the

parishes were unambiguous, and the parishes did not com-

municate to the government a lack of understanding of

their obligations under the Act.

The United States seeks to enforce the conditions of

the NFIP through both specific performance and reim-

bursement of the funds expended to satisfy flood insurance

claims made under policies issued to residents of Jefferson

and St. Bernard Parish. These two remedies are distinct

and are discussed separately.

No case has been called to our attention wherein the

United States was granted the right of reimbursement as

a remedy for breach of contract. The defendant parishes

were not the direct recipients of federal funds; the govern-

ment seeks reimbursement from the parishes for funds paid

2h th ania OV

A-41

to individual residents of the parishes, as damages for

breach of contract. We conclude that it was not Congress’

intent to permit reimbursement from the parishes under

such circumstances. Neither Congress nor the parish

governing bodies foresaw that there would be such an ex-

treme remedy for either a negligent or intentional breach of

the contract. Certainly had they foreseen that they might

be liable for flood losses and expenses related thereto, the

parishes would never have decided to participate in the pro-

gram. The lack of foreseeability is supported by the

documents submitted by the United States, which evidence

no indication that the government would seek to enforce

compliance with the NFIP regulations by means of reim-

bursement of monies expended to satisfy flood insurance

claims. For these reasons, the government’s damage claims

for reimbursement for funds expended on flood insurance

claims based on breach of contract are dismissed. .

However, we conclude that the United States has

stated a cause of action for specific performance against

the parishes and their governing bodies. The government's

right to seek specific performance to enforce contractual

obligations has been consistently recognized. Unlike the in-

stant case, in which the citizens of the parishes received the

benefit of the NFIP, United States v. San Francisco, supra

and United States v. Marion County School District, both

involved specific performance against local agencies which

were the direct recipients of federal benefits of obligations

attached to their receipt. That distinction, however, is not

significant. We conclude that Congress did not intend that

the government should be powerless to compel the parishes

and their governing bodies to perform obligations clearly

undertaken by them as a condition precedent to the issuing

of flood insurance policies to the citizens of the parishes.

A-42

We do not at this time decide what form the remedy

of specific performance may take. Such relief, however, is

not precluded by the Tenth Amendment. The parish gover-

ning bodies voluntarily decided to participate in this pro-

gram, albeit that the United States used certain financial

incentives to make the program more attractive to local

communities. When local governing bodies voluntarily

commit themselves to participation in a federal program,

they cannot urge that the Tenth Amendment prohibits the

United States from compelling them to satisfy their obliga-

tions under the contract. See Texas Landowners Rights

Association v. Harris, 453 F.Supp. 1025 (D.D.C. 1978). We

conclude that the plaintiff has stated a cause of act’»n for

specific performance of the contracts between it and the

two parishes.

TORT CLAIM

The second claim urged by the government is premis-

ed on the theory that it has a right of subrogation, either

by operation of law or conventionally, to any claim which

an insured homeowner may have had against the various

defendants with respect to the flood damages sustained by

the homeowner. The insurance policies all contained the

following subrogation clause:

“In the event of any payment under this

policy, the Insurer shall be subrogated to all

the Insured’s rights of recovery therefor

against any party, and the Insurer may re-

quire from the Insured an assignment of all

rights of recovery against any party for loss

to the extent that payment therefor is made

by the Insurer.’ 44 CPR §61.13, App. (A)(1),

General Conditions, ‘‘T’’; App. A(2), General

Conditions, ‘‘U.”

A-43

It is well settled under Louisiana law that a

homeowner may assert a cause of action against any party,

public or private, allegedly responsible for damage due to

flooding. See, e.g., Eschete v. City of New Orleans, 258 La.

134, 245 So.2d 383 (La. 1971); North Forest Homeowners’

Assoc. v. Homecraft Corp., 407 So.2d 450 (La. App. ist Cir.

1981); McCloud v. Parish of Jefferson, 383 So.2d 477 (La.

App. 4th Cir. 1980). See also Stewart v. Schmeider, 386

So.2d 1351 (La. 1980); Mobley v. Rego, 412 So.2d 1143 (La.

App. 2d Cir. 1982). Additionally, there is no question that

a determination as to whether the United States is

subrogated to that right of the homeowner is an issue con-

trolled by federal law, because, as the Fifth Circuit held in

West v. Harris, 573 F.2d 878 (5th Cir. 1978), federal com-

mon law, in the absence of a Congressional statute, must

govern all rights and obligations under NFIP policies.

Subrogation is unquestionably one of those rights and

obligations.

With regard to the tort claim, the sole issues in

dispute are: (A) is there a federal common law right to

subrogation?; (B) if so, has that right been preempted by

the NFIP?; and (C) are any tort claims prescribed?

Defendants’ assertions notwithstanding, the right of

subrogation is well established in federal jurisprudence.

See Continental Casualty Co. v. Canadian Ins. Co., 605

F.2d 1340 (5th Cir. 1979), cert. denied, 445 U.S. 929 (1980);

United States v. Bender Welding & Machine Co., 558 F.2d

761 (5th Cir. 1977); Department of Revenue of the State of

New Mexico v. United States, 408 F.2d 574 (10th Cir.

1969). Defendants rely upon United States v. Standard Oil

Co., 332 U.S. 301 (1947), in which the Supreme Court held

that in the absence of legislation providing a right of

A-44

recovery, the government could not recover from a tort-

feasor the amounts expended for an injured soldier’s

hospitalization and for his compensation during disabiliy.

But in Bender, supra, at 765, the Fifth Circuit clearly ex-

plained that Standard Oil was not controlling precedent on

issues dealing with subrogation: “United States v. Stan-

dard Oil of California, 322 U.S. 301, 67 S.Ct. 1604, 81 L.Ed.

2067 (1947), was not a subrogation case, and reliance on the

denial of recovery to the Government in that case is

misplaced.”

Having determined that there is a generally recogniz-

ed common law right to subrogation, we also conclude that

the NFIP has not preempted the application of those

federal common law principles. The Supreme Court in City

of Milwaukee v. Illinois and Michigan, 451 U.S. 304 (1981),

stated that the key to this decision ‘“‘[is] whether the

legislative scheme ‘[speaks] directly to the question’...not

whether Congress [has] affirmatively proscribed the use of

federal common law.”’ In the NFIP, Congress has not affir-

matively proscribed the use of federal common law for

issues concerning subrogation; neither has it spoken direct-

ly to the question. In fact, far from preempting the prin-

ciples of subrogation, specific provisions of the NFIP ap-

pear to support its applicability. In particular, 42 U.S.C.

§4013 provides that the Secretary of Housing of Urban

Development? “‘shall...provide by regulation for general

terms and conditions of insurability which shall be ap-

plicable to properties eligible for flood insurance coverage.”

3 All duties imposed by this section on the Secretary of Housing

and Urban Development have been transferred to the Director of the

Federal Emergency Management Agency by § 202 of Reorganization

Plan No. 3 of 1978, set out in Appendix II of Title 5 of the United States

Code.

A-45

Following the mandate of this section, the Secretary placed

the subrogation clause quoted above in the ‘Standard

Flood Insurance Policy’’ forms, which clause is simply one

of those terms or conditions of insurability. See 44 C.F.R.

§61.13, App. A(1), General Conditions, ““T’’; App. A(2),

General Conditions, ‘‘U’’. Also, several sections of the

NFIP, including 42 U.S.C. §§ 4011, 4017, 4046 and 4051-6,

show that Congress contemplated that the Secretary would

encourage and arrange for the involvement of private in-

surers; it is undisputable that subrogation clauses are a

common part of insurance policies issues by private

insurers.

Defendants’ position that preemption has occurred is

based on Till v. Unifirst S. & L. Assn., 653 F.2d 152 (5th

Cir. 1981). The Till court held that the NFIP did not imply

a right of action for monetary damages on behalf of a pro-

perty owner-borrower against a federally insured savings

and loan association which allegedly failed to follow certain

guidelines under the Act. The court reasoned that, since

the ‘“‘Cort v. Ash test’’ for implied rights of action was

becoming increasingly stringent and since may ad-

ministrative remedies were set up to handle ‘‘wayward”’

savings and loans, administrative remedies should be

exclusive:

Once again we are asked to find from

the language and history of a federal statute,

an implied cause of action not explicitly pro-

vided for by Congress. The standards which

such a cause of action must meet before it

may be implied have become increasingly

more stringent.

A-46

In this case, the Federal Home Loan

Bank Board (FHLBB) has the authority to

issue cease and desist orders against ap-

pellees’ officers, to terminate unsafe or un-

sound practices, to impose administrative

remedies, including monetary penalties, and

to require affirmative action to prevent or

correct violations. Existence of this ad-

ministrative scheme of enforcement is strong

evidence that Congress intended the ad-

ministrative remedy to be exclusive.

Id. at 157 and 160.

The Till decision is notable only in that it is one of the

few cases discussing substantive rights under the NFIP; in

no way does it deal with the present issue. Till did not in-

volve subrogation. More importantly, the issue in Till was

whether a right of action should be implied from a statute

when that right did not otherwise exist. In the instant

situation, the Cort v. Ash analysis is not relevant, since the

question is not whether a right of subrogation can be im-

plied form the statute, but rather, whether the statute

preempts the well established common law principle of

subrogation. Retaining a right of action under the City of

Milwaukee test, used in this case is far less stringent than

establishing a right of action under Cort v. Ash, used in

Till.

Another issue related to the tort claim is the conten-

tion by several defendants that the government’s claim has

prescribed. We adopt the magistrate’s handling of that

issue:

[T]he United States asserts that if it

was assigned a claim before the state statute

of limitations expired, then the United

A-47

States was thereafter subject to the federal

statute of limitations for negligence actions,

which is three years. 28 U.S.C. §2415(b). The

United States claims that if it paid a claim

within one year of the date flooding occurred,

it then became subject to the three year

federal statute of limitations for negligence

actions and that this action was timely filed.

It is well settled that asignment to the

United States will not revive a claim which

has already been barred by a state statute.

Guaranty Trust Co. v. United States, 304

U.S. 126, 141-142; 58 S.Ct. 758, 793; 82

L.Ed.2d 1224 (1938). However, in the case of

an assignment before the state statute of

limitations has run, the case will not be bar-

red until the federal statute has run. United

States v. Summerlin, 310 U.S. 414, 60 S.Ct.

1019; 84 L.Ed. 1283 (1940); United States v.

Nashville Chattanooga, St. Louis Ry Co., 118

U.S. 120, 125; 6 S.Ct. 1006, 1008; 30 L.Ed. 81

(1886). Therefore, the Court must consider

whether the claims assigned to the United

States were barred by a state statute before

their assignment and, if not, whether the

federal statute had run before this action

was filed.

The applicable state limitations period

for flood damages is one year. Young v. In-

ternational Paper Company, 155 So. 231, 179

La. 803 (La. 1934). Assignment of the claims

for flood damage occurred at the time the

United States paid the claims of its insureds.

State Farm Fire and Casualty Co. v. Sentry

Indemnity, 346 So.2d 1331 (3rd Cir. La. App.

1977). Because the floods out of which the

claims of the United States arose occurred at

A-48

various times and flood damage claims were

paid at various times, it is impossible to

determine on the present record whether all

the United States claims are prescribed.

However, it can be determined that all

claim derived from flooding which occurred

more than four years prior to the filing of the

compalaint are prescribed, since the relevant

state statute of limitations, one year, as well

as the relevant federal limitations period,

three years, would have expired. This action

was filed May 1, 1981.

Therefore, any tort claim derived from flooding

which occurred prior to May 1, 1977, is prescribed. Certain

other claims may be prescribed, but this can be determined

only after further facts are developed, and not at this stage

of the case.

PUBLIC NUISANCE CL4'™

We dismiss the final claim upon which the govern-

ment seeks relief, based upon its allegation that all defen-

dants have caused recurrent flooding, constituting a public

nuisance under federal common law. We do so upon the fun-

damental ground that the United States lacks ‘‘standing”’

to abate the alleged nuisance, conceding arguendo that

under federal common law or state law the aggrieved pro-

perty owners or the state could abate the nuisance.

An inquiry concerning a plaintiff's standing to sue

centers around the question of ‘‘whether the litigant is en-

titled to have the court decide the merits of the dispute or

of particular issues.” Warth v. Seldin, 422 U.S. 490, 498

(1975). When the United States “‘stands’’ as the party-

A-49

plaintiff, a federal court will consider the merits of the ac-

tion if the government has a sufficient interest at stake.

See United States v. New Orleans Pac. Ry. Co., 248 U.S.

507 (1919); United States v. Waller, 243 U.S. 452 (1917).

The types of interest which have been held sufficient by the

Supreme Court were recently discussed by the First

Circuit:

We recognize that the United States

may sometimes sue without statutory

authority or a pecuniary interest, see SEC v.

United States Realty & Improvement Co.,

310 U.S. 434, 60 S.Ct. 1044, 84 L.Ed. 1293

(1940); United States v. New Orleans Pac.

Ry., 248 U.S. 507, 518, 39 S.Ct. 175, 63 L.Ed.

888 (1919); In re Debs, 158 U.S. 564, 586, 15

S.Ct. 900, 39 L.Ed. 1092 (1895). But in this

case there is no national issue of great mo-

ment or urgency, no fraud on the United

States, and no fiduciary duty owed to an in-

dividual such as would justify suit simply

under the aegis of constitutional grant and

congressional exercise of power.

Ruotolo v. Ruotolo, 572 F.2d 336, 339 (1st Cir. 1978). See

also Comment, “Protecting the Public Interest:

Nonstatutory Suits by the United States’, 89 Yale L.J.

118 (1978).

Although the precise issue of the United States’

standing to bring suit to abate a public nuisance causing

intra-state flooding has not been litigated, several courts

have discussed a somewhat analogous situation in the con-

text of a nuisance action for pollution control. See United

States ex rel. Scott v. United States Steel Corp., 356

F.Supp. 556 (N.S. Ill. 1973); United States v. Ira S. Bushey

& Sons, Inc., 346 F.Supp. 145 (D. Vt. 1972); United States

v. Lindsay, 357 F.Supp. 784 (E.D.N.Y. 1973). A thorough

A-50

discussion of the issue is contained in the United States

Steel decision:

Apparently the United States

Supreme Court has never explicitly held that

the government of the United States has

standing to abate a common law nuisance on

behalf of its residents. However, in New

York v. State of New Jersey, et al., 256 U.S.

296, 41 S.Ct. 492, 65 L.Ed. 937 (1921) the

Supreme Court stated that the Federal

government had the undoubted right to in-

tervene to protect the navigable waters from

pollution (256 U.S. at p. 308, 41 S.Ct. 492).

See also Wyandotte Transportation Co. v.

United States, 389 U.S. 191, 88 S.Ct. 379, 19

L.Ed.2d 407 (1967). The Federal government

clearly has a proprietary interest in the

navigable waters of Lake Michigan which is

bounded by four states. It also has an in-

terest in establishing a “uniform rule of deci-

sion”’ by enforcing a Federal common law.

Cf. State of Illinois v. City of Milwaukee, et

al., 406 U.S. at p. 105 n. 6, 92 S.Ct. 1385.

Hence, since the Federal government could

intervene in this litigation, we find and con-

clude that it has a sufficient independent in-

terest to file it. Acc, United States of

America v. Ira S. Bushey & Sons, Inc., et al.,

346 F.Supp. 145 (D.Vt.1972); United States

of America v. Reserve Mining Co., et al.

(D.Minn. Nov. 30, 1972).

356 F.Supp. at 558.

Unquestionably, that court’s decision hinged on the fact

that the pollution involved a navigable body of water

bounded by several states. Other public nuisance ‘‘pollu-

tion’’ cases, while not specifically mentioning standing,

A-51

have also stressed this interstate connexity requirement in

finding that the United States could not assert a cause of

action of public nuisance when only intrastate effects were

alleged in the pleadings.4 See, e.g., Reserve Min. Co. v.

EPA, 514 F.2d 492 (8th Cir. 1975). As the Eighth Circuit

stated in Reserve Min. Co.:

We reject the federal common law of

nuisance as a basis for relief. As forumulated

in Illinois v. City of Milwaukee, 406 U.S. 91,

92 S.Ct. 1385, 31 L.Ed.2d 712 (1972), and

Texas v. Pankey, 441 F.2d 236 (10th Cir.

1971), federal nuisance law contemplates, at

a minimum, interstate pollution of air or

water. The United States, while invoking

this doctrine, alleges only that Reserve’s

discharge ‘‘significantly endangers the

health of all those persons living in the vicini-

ty of the defendant’s taconite ore processing

operations.”’

Id. at 520-1.

We conclude that in the present case, the United

States does not have standing to assert a public nuisance

claim, since no national interest is at stake. The flooding at

issue occurred totally within the borders of Louisiana. Not-

withstanding that the flooding could indirectly affect tax-

payers throughout the United States, because the govern-

ment must pay NF iP insureds, no direct interstate interest

is implicated.

The government relies for ‘“‘standing’’ on United

4 Several courts have held that the pollution need not be literally

interstate if pollution has occurred is navigable waterways. See, e.g.,

United States v. Solvents Recovery Serv.. Etc., 496 F.Supp. 1127 (D.

Conn. 1980); United States v. Ira S. Bushey, supra.

A-52

States v. Ray, 423 F.2d 16 (5th Cir. 1970), in which the

United States brought an action to enjoin private construc-

tion atop coral reefs on the outer continental shelf. The

private developers were plainning to creat independent

‘nations’ on the reefs, claiming that the reefs were subject

to colonization by them since they had discovered the reefs.

Not surprisingly, the Fifth Circuit determined that the

United States had the ‘‘exclusive right for purposes of ex-

ploration and exploitation of the reefs’ since the reefs

belonged to the public as a whole, id. at 22; and the govern-

ment had an “important interest to protect in preventing

the establishment of a new sovereign nation within four

and one-half miles of the Florida Coast,” id. at 23.f

The facts in Ray, quite unlike those in the instant

case, present one of the strongest situations imaginable for

standing by the United States. In Ray, because the object

of the threatened harm was a “‘public thing’’ beyond state

territorial waters and controlled by the United States

government for the good of all citizens, the United States

was the proper party to prevent exploitation of the reefs by

private developers. This case, by contrast, involves a pure-

ly local matter, an action for which could be brought

against the alleged tortfeasors by any threatened private

citizen and/or state or local governmental entity; the con-

tinual flooding endangers ‘cds under specific, private

ownership.

Although we conclude that the government lacks

standing, we nevertheless discuss the related and intert-

wined issue of whether under federal common law there ex-

ists a right to abate the type of public nuisance alleged in

the complaint.

A-53

The United States Supreme Court has recently

outlined three situations in which federal common law

exists:

Rather, absent some congressional

authorization to forumulate substantive

rules of decision, federal common law exists

only in such narrow areas as those concerned

with the rights and obligations of the United

States, interstate and international disputes

implicating the conflicting rights of States

or our relations with foreign nations, and ad-

miralty cases. In these instances, our federal

system doesn not permit the controversy to

be resolved under state law, either because

the authority and duties of the United States

as sovereign are intimately involved or

because the interstate or international

nature of the controversy makes it inap-

propriate for state law to control.

Texas Industries, Inc. v. Radcliff Materials, 451 U.S. 630,

641 (1981).

Obviously, there is no contention here that this is an ad-

miralty case, but the government does attempt to justify

the application of federal common law under both the “‘in-

terstate’’ and the “rights and obligations of the United

States” areas.

It is difficult to follow the argument that the instant

case involves an ‘‘interstate’’ dispute ‘‘implicating the con-

flicting rights of the States.”’ Jd. All of the alleged wrongful

acts, and the consequences resulting therefrom, occurred

within the borders of Louisiana. The government asserts

that the economic effects of the flooding are interstate in

nature, because taxpayers throughout the country may be

A-54

required to subsidize losses in the NFIP. According to the

government's analysis, federal common law would apply to

any circumstance in which the United States has a

substantial monetary interest.

Such an expansive interpretation of federal common

law clearly conflicts directly with the Supreme Court’s

teaching that the instances of federal common law must be

“few and restricted.’’ Wheeldin v. Wheeler, 373 U.S. 647,

651 (1963). Examples of the types of ‘‘interstate disputes”

appropriate for federal common law are interstate pollu-

tion, Illinois v. Milwaukee, 406 U.S. 91 (1972), and in-

terstate water or boundary disputes, Hinderlider uv.

LaPlata River & Cherry Ditch Co., 304 U.S. 92 (1938). Cer-

tainly, this case is not in the same category.

The government also contends that federal common

law is justified on the basis of the ‘‘narrow [area]...concern-

ed with the rights and obligations of the United States.”’

Texas Industries, Inc. v. Radcliff Materials, supra. Two of

the leading cases establishing such common law are Clear-

field Trust Co. v. United States, 318 U.S. 363 (1943) (rights

and duties of United States on commercial paper it issues

pursuant to federal law), and United States v. Little Lake

Misere Land Co., 412 U.S. 580 (1973) (because land acquisi-

tion was one arising from and bearing heavily upon federal

regulatory program, federal law would govern). Both of

these cases involved the rights and obligations of the

United States in proprietary transactions in which unifor-

mity was a necessity. While this category of federal com-

mon law is not limited to proprietary transactions to which

the United States government is a party, there must at

least be a strong federal interest coupled with the need for

uniformity. See, e.g. Textile Workers Union v. Lincoln

A-55

Mills of Ala., 353 U.S. 448 (1957).

The government points to two cases which, relying

on the Clearfield analysis, have determined that federal

common law governs disputes concerning coverage of

NFIP policies. See West v. Harris, 573 F.2d 873 (5th Cir.

1978); Beverly v. Macy, 702 F.2d 931 (11th Cir. 1983). The

West court held:

poe tee

In sum, federal law controls disputes over

the coverage of insurance policies issued pur-

suant to the National Flood Insurance Act of

i 1968 regardless of whether the district court

exercises jurisdiction under 42 U.S.C.A. §

4053 or under 28 U.S.C.A. § 1332. Congress

has undertaken to establish a comprehensive

flood insurance program under the control of

; the Department of HUD to achieve policies

national in scope, and the interest in unifor-

mity of decisions compels the application of

federal law. As a result, a prevailing plaintiff

is not entitled to recover the penalty and at-

torney’s fees provided by Louisiana.

Nothing in the decisional law of this circuit

or in the provisions of the insurance policy

| points to a contrary conclusion.

| 573 F.2d at 881-2.

tee ete

~ $B cP NAEO AR 2 ve

The instant situation does not fit into the ‘‘narrow”’

Clearfield area. There is simply no strong federal interest in

isolated flooding. The government is correct that interstate

ramifications are not a prerequisite for application of Clear-

field common law, but such a factor is a consideration go-

ing to the degree of interest. As the Clearfield Court itself

noted:

The issuance of commericial paper by

A-56

the United States is on a vast scale and tran-

sactions in that paper from issuance to pay-

ment will commonly occur in several states.

The application of state law, even without

the conflict of laws rules of the forum, would

subject the rights and duties of the United

States to exceptional uncertainty. It would

lead to great diversity in results by making

identical transactions subject to the vagaries

of the laws of the several states. The

desirability of a uniform rule is plain.

318 U.S. at 367.

In Clearfield, the Court realized that thousands of transac-

tions would occur daily, often involving more than one

state in the same transaction.

More importantly, the federal common law of

nuisance which the government attempts to assert in this

case is not closely related to the purported statutory in-

terest, as was the situation in Clearfield and its progeny. In

those cases, uniformity was required because they involved

issues ‘“‘bearing heavily upon a federal...program.’’ United

States v. Little Lake Misere Land Co., supra, at 592. For

example, in West v. Harris, supra, the Fifth Circuit deter-

mined that Congress, through the NFIP, had established a

“comprehensive flood insurance program...to achieve

policies national in scope’’; thus, all issues concerning

rights and obligations pursuant to an NFIP policy should

be determined by a uniform body of law. We decline to app-

ly that to the present case, involving only local flooding.

Finally, the Clearfield cases are distinguishable in

that, in those cases, if the federal common law sought to be

asserted was not accepted as the applicable law, then the

A-57

United States had no other method by which to insure that

its interests were protected. In this case, the United States

is able to force compliance with the NFIP by injunctive

relief and, in the event flooding has occurred due to the

negligence of contractors or municipalities, by a suit in tort

A finding in this case that the federal common law of

nuisance not be applied is compatible with the principle

that federal common law is to be invoked “‘restrictively’’.

City of Milwaukee v. Illinois and Michigan, supra, at 313.

This result also draws support from those cases

discussing federal common law with regard to pollution. As

stated previously, several courts have determined that the

nuisance action for pollution could only be asserted if in-

terstate effects were alleged. See, e.g., Reserve Min. Co. v.

Epa, supra; Committee for Jones Falls Sewage System v.

Train, 539 F.2d 1006 (4th Cir. 1976).

July 8, 1983

UNITED STATES DISTRICT JUDGE

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.