The below article was written by two of our Texas-based attorneys, Ann L. Latimer and Daniel J. Baldwin, and was published on September 21st in Texas Lawyer.

Come Hell or High Water

By Ann L. Latimer and Daniel J. Baldwin
September 21, 2017  

On Friday, Aug. 25, 2017, Houston and surrounding communities were preparing for Hurricane Harvey as city officials warned the storm would be more of a rain event than wind event.

On Saturday morning, many property owners woke to find that they had survived the storm with little to no damage; however, their situation would change within the next 24 to 48 hours. Harvey dumped record breaking amounts of rainfall, more than 51 inches in some areas, and by some reports, over 9 trillion gallons of water overall, enough to fill the Great Salt Lake twice over. Where does all that water go? Harris County has the Addicks and Barker reservoirs that help prevent flooding in 22 main channels and bayous within Houston, and are monitored by the Harris County Flood Control District.

On Sunday, the United States Army Corps of Engineers, the HCFCD and local officials began controlled releases from the reservoirs to protect the integrity of the reservoirs from catastrophic damage that could occur from an uncontrolled release, and to preserve storage capacity for future rains. In an attempt to reduce flood levels, the USACE and the HCFCD raised the release rates from 2,000 cubic feet per second to 13,000 cfs, which caused extensive flooding in the channels and bayous. Neighborhoods that were not flooded by the initial storm were now inundated with several feet of water.

A similar event took place north of Houston at the Lake Conroe dam. Lake Conroe rose to a record level of 205.88 feet above mean sea level. The San Jacinto River Authority (conducted a record setting controlled release rate of 79,100 cfs, eclipsing the 1994 record of 33,360 cfs, to protect the integrity of the dam and prevent extensive damage to lakefront properties; however, the release caused extensive flooding along the San Jacinto River and Spring Creek areas.

Flooded out property owners are outraged with the USACE, SJRA, HCFCD, and local officials, and many are asking who is responsible for the damage and what causes of action do I have?

Federal Tort Claims Act and Texas Tort Claims Act

Historically, under the doctrine of sovereign immunity, you could not “sue the king”. The FTCA and TTCA, however, provide limited waivers of immunity when property is damaged, by the wrongful or negligent act of a government employee acting in the scope of their duties. Neither statute likely provides affected Harris County homeowners with relief.

The FTCA exempts claims based upon the performance of, or failure to perform, a discretionary function, which the USACE would argue encompasses the controlled releases. Likewise, the TTCA specifically excludes equipment used in connection with operation of floodgates or water release equipment.

Inverse Condemnation

The Federal and Texas constitutions protect private property rights and prohibit the taking of a person’s property for a public use without adequate compensation. In other words, when the government physically takes possession, even temporarily, of a property for some public purpose, it has a duty to compensate the property owner. A taking occurs when a government action directly and immediately interferes with the use and enjoyment of a piece of property.

Some affected homeowners have already filed lawsuits against the USACE, HCFCD and SJRA, among others, contending that the controlled releases amounted to an impermissible taking of their homes. Plaintiffs are seeking recovery for property loss, repair costs, diminution in value, lost income and any consequential damages. To recover on an inverse condemnation claim, these homeowners must establish that the governmental agencies made an intentional decision to perform the controlled releases for a public use, resulting in a taking of their property.

The success of these lawsuits and others that will follow likely depends upon the knowledge and intent of the government, i.e., whether the agencies intended to cause the flooding, as well as the length of time each property was flooded, the character of the land at issue and whether the water released initially flowed directly onto the homeowner’s property or a river, bayou or other man-made channel.

Conclusion

For homeowners that have experienced continuous flooding, a buyout program may be the best option. Harris County official Ed Emmett has reportedly requested $800 million from the federal government to buyout properties that cannot be repaired or where a buyout is more cost effective. The HCFCD recently launched its home buyout program, and residents are asked to submit a Notice of Voluntary Interest to the HCFCD. As of Wednesday, Sept. 13, 2017, approximately 1,850 property owners have taken advantage of such program, which is well above the norm of 12 a month. A buyout still has pitfalls, such as limited funding, delays in processing applications, receiving approval from federal, state and local officials and issuing final payments. The typical buyout process takes between two and two and a half years.

Additional lawsuits may be filed against federal, state and local agencies over the next few months and years, but we all need to remember that this was an extreme weather event, setting record amounts of rainfall. The concern was that if there had not been controlled releases, then the reservoirs and Lake Conroe dam could have failed, bringing even more devastation. This was a situation where you are “dammed” if you do and “dammed” if you don’t … pun intended.

Ann L. Latimer is Special Counsel in Jones Walker’s Real Estate Practice Group and practices from the firm’s Woodlands office. Daniel J. Baldwin is an associate in Jones Walker’s Business & Commercial Litigation Practice Group and practices in the firm’s Houston office.

Reprinted with permission from the September 21, 2017 edition of Texas Lawyer© 2017 ALM Media Properties, LLC. All rights reserved.

Further duplication without permission is prohibited. ALMReprints.com – 877-257-3382 – reprints@alm.com

Please find below a press release that was issued yesterday by The Harris County Office of Homeland Security & Emergency Management.

September 21, 2017 – (Houston, Texas) – The Harris County Office of Homeland Security & Emergency Management invites residents affected by Hurricane Harvey to a recovery fair this weekend.

  • WHAT: Hurricane Harvey Recovery Fair
  • WHEN: Saturday, September 23 and Sunday, September 24
    9 a.m. – 4 p.m.
  • WHERE: Houston Community College – Northeast
    Art Hub Gallery
    555 Community College Drive
    Houston, Texas 77013

The Harvey Recovery Fair will provide important recovery information about available disaster assistance from both governmental and non-profit organizations. Representatives from the Federal Emergency Management Agency (FEMA) and the Small Business Administration (SBA) will be available to answer questions and help residents apply for disaster assistance.

This recovery event is targeting residents living in northeast and east Houston, East Aldine, Jacinto City, Galena Park, Cloverleaf and the Channelview areas.

Harris County Commissioner Precinct Two will be providing free shuttle service to the event from the following locations:

Flukinger Community Center
16003 Lorenzo Street
Channelview, TX 77530

Northeast Community Center
10918 1/2 Bentley Street
Houston, TX 77093

Alvin D. Baggett Community Center
1302 Keene Street
Galena Park, TX 77547

Morning Trip: 9 a.m. pick-up and 12 p.m. return
Afternoon Trip: 12 p.m. pick-up and 4 p.m. return

Participating Organizations:

  • Harris County Office of Homeland Security & Emergency Management
  • Harris County Office of Commissioner Jack Morman
  • Harris County Community Services Department
  • Harris County Engineering Department
  • Harris County Flood Control District
  • Harris County Public Library
  • Harris County Public Health Services
  • City of Houston 311
  • City of Houston Housing and Community Development
  • City of Houston Department of Neighborhoods
  • City of Houston Permitting Center
  • Office of U.S. Representative Sheila Jackson Lee
  • Federal Emergency Management Agency (FEMA)
  • Small Business Administration (SBA)
  • American Red Cross
  • Texas Gulf Coast Voluntary Organizations Active in Disasters (VOAD)
  • United Way of Greater Houston
  • Houston Community College

###

Law360 recently featured Jones Walker lawyers in two articles discussing the legal implications that Texas businesses will face following the widespread damage caused by Hurricane Harvey. The publication turned to Houston-based partner Krystal Pfluger Scott and Baton Rouge-based partner Davis B. “Pepper” Allgood to share their knowledge.

Scott was quoted in a Law360 article, “5 Biggest Client Questions After Hurricane Harvey.” She discusses how Jones Walker is providing legal guidance to clients who have concerns about employee benefits, commercial leasing disputes, insurance claims, contractual obligations, and property damage. She explains that many of the firm’s clients in the greater Houston area are small and midsized businesses that face the dilemma of taking care of their workers while keeping their business operations sound. Scott notes that “The generosity is so consistent in our clients and how they are managing that question.”

Clients are also seeking advice about how Harvey will affect leases after extensive property damage and business closures. Scott advises that when these disputes arise, it is best to look at specific leasing situations separately as every agreement is different. And, on the transactional side of property damage, Scott said that Jones Walker lawyers are drafting construction contracts to protect clients against potential breaches by contractors. Lawyers are also advising clients on flood protection measures.

Scott remains optimistic, saying, “People love this city and they want to be in business here. It’s just a question of how we do that without suffering the same kind of loss again.”

Allgood, Baton Rouge-based Construction team partner, was quoted in a Law360 article, “Disaster Response Has Unique Hazards for Contractors.” Allgood discusses key legal and regulatory issues faced by contractors participating in the recovery from Hurricane Harvey.

Rebuilding efforts will require billions of dollars, which presents significant opportunities for contractors. The challenge in short-term emergency situations is a potential conflict between state and federal laws and requirements. Allgood advises contractors to seek legal counsel “…to make sure that the rules are going to be followed, particularly if there’s a lot of money involved.” He recommends this because many entities will need to turn to the federal government for assistance in paying contractors, which is not always guaranteed and can result in disputes. Allgood cautions against relying upon local governments, even amid time pressures of the rebuilding efforts.

In response to the impact of Hurricanes Harvey and Irma, certain counties in Texas and Florida have been declared as major disaster areas. [For a complete list of declared counties and information on hurricane related federal tax relief see IRS Provides Tax Filing and Payment Relief to Hurricane Victims.]  As a result, numerous states have enacted delayed filing and payment periods for individuals and businesses located in these major disaster areas.  In order to help track these developments, the Jones Walker team has compiled and summarized the provided relief of participating states.  Our team will continue to monitor for further federal and state tax related disaster relief announcements and update this post accordingly.

Alabama

  • Alabama Department of Revenue Press Releases: August 29, August 31, September 12, 2017
  • Alabama taxpayers residing in Texas or Florida counties designated as disaster areas by the federal government have until Jan. 31, 2018, to file tax returns due on or after Sept. 1 (Sept. 15 for Hurricane Irma victims), 2017, and before Jan. 31, 2018.
  • Penalty relief will be provided during the extension period.
  • Taxpayers seeking this tax relief should write “Texas Flood 2017” or “Irma Relief – 2017” in red ink on any state paper return/report which relies on this filing extension relief.
  • The relief applies to individual income tax, corporate income tax, pass-through entities, sales and use tax, withholding tax, and business excise tax.
  • IRP/IFTA requirements for vehicles are temporarily suspended for vehicles engaged in disaster relief efforts.

Arkansas

California

  • CDTFA News Release NR 9-17 (September 1, 2017)
  • Business owners and tax and fee payers affected by Hurricane Harvey may request extensions to file their returns, ask for relief from penalties and/or interest for some taxes and fees, and request copies of records lost due to storm damage.
  • Deadlines are extended for filings that were delayed by disruptions affecting the U.S. Postal Service and private mail and freight companies.
  • Businesses located in the Gulf Coast area that have been impacted by Hurricane Harvey, and who, as a result, cannot meet their filing and payment deadlines, may be eligible for relief.

Continue Reading State Tax Relief for Hurricane Victims

As a result of the devastation wrought by Hurricanes Harvey and Irma, the following counties have been declared as major disaster areas, all of which are entitled to federal tax filing and payment relief:

In Texas: Aransas, Austin, Bastrop, Bee, Brazoria, Calhoun, Chambers, Colorado, DeWitt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Hardin, Harris, Jackson, Jasper, Jefferson, Karnes, Kleberg, Lavaca, Lee, Liberty, Matagorda, Montgomery, Newton, Nueces, Orange, Polk, Refugio, Sabine, San Jacinto, San Patricio, Tyler, Victoria, Walker, Waller and Wharton Counties.

In Florida: Broward, Charlotte, Clay, Collier, Duval, Flagler, Hillsborough, Lee, Manatee, Miami-Dade, Monroe, Palm Beach, Pinellas, Putnam, Sarasota and St. Johns Counties.

Taxpayers whose principal residence or a business’ principal place of business was located in one of the counties declared as a major disaster area are entitled to certain federal tax relief for the 2016 tax year. This federal tax relief includes: (a) the suspension of certain deadlines to file tax returns; (b) the suspension of certain deadlines to pay taxes; and (c) the ability to claim casualty losses incurred as a result of Hurricanes Harvey and Irma.

Continue Reading IRS Provides Tax Filing and Payment Relief to Hurricane Victims

Maritime contracts for services generally include clauses for performance, demurrage, deviation, termination, and suspension. Performance may be affected by an Act of God or Force Majeure clause and event. A typical Force Majeure clause reads as follows:

Except for the duty to make payments hereunder when due, and the indemnification provisions under this Agreement, neither Company nor Contractor shall be responsible to the other for any delay, damage or failure caused by or occasioned by a Force Majeure Event as used in this Agreement. “Force Majeure Event” includes: acts of God, action of the elements, warlike action, insurrection, revolution or civil strife, piracy, civil war or hostile action, strikes, differences with workers, acts of public enemies, federal or state laws, rules and regulations of any governmental authorities having jurisdiction in the premises or of any other group, organization or informal association (whether or not formally recognized as a government); inability to procure material, equipment or necessary labor in the open market acute and unusual labor or material or equipment shortages, or any other causes (except financial) beyond the control of either Party. Delays due to the above causes, or any of them, shall not be deemed to be a breach of or failure to perform under this Agreement. Continue Reading Hurricanes and Act of God Defenses

Environmental issues may arise relating to shut-downs, start-ups, and upsets, as well as spills or releases from operating facilities in Texas relating to Harvey and the massive flooding that resulted. Many operating permits and authorizations require notification to TCEQ and/or EPA for force majeure events, such as floods and storms. Verbal notifications followed by written notifications are typically required. Operating entities should carefully review their permits and authorizations for applicable notification provisions and procedures. TCEQ also provides outreach and technical guidance to facilities reporting spills, including from sanitary sewers and other waste water facilities in flood-impacted areas.

As a response to Harvey, TCEQ has requested and Governor Gregg Abbott has signed on August 28, 2017, a disaster declaration temporarily suspending certain specified rules and regulations that could prevent, hinder or delay entities regulated by TCEQ in relation to Harvey’s disaster response operations. See: https://www.tceq.texas.gov/assets/public/response/hurricanes/Governor-response-to-suspension-of-rules.pdf and https://www.tceq.texas.gov/assets/public/response/hurricanes/suspension-of-tceq-rules-8.28.17.pdf.

EPA and TCEQ are notifying the public of potential hazards associated with flood waters, including bacteria and other disease agents. See: https://response.epa.gov/sites/12353/files/EPA%20Press%20Release%20EPA-TCEQ%20Statement%20on%20Water%20Quality%2008-31-2017%20.pdf.

Other useful information relating to environmental issues as well as guidance for response and cleanup following Harvey may be found on TCEQ’s Hurricane Response web page at: https://www.tceq.texas.gov/response/hurricanes.

We first published this article in the Louisiana Employment Law Letter the month after Hurricane Katrina. We republished it following last year’s catastrophic flooding in Louisiana and are publishing it again now in the wake of Hurricane Harvey, as we believe its advice is timeless and as cogent as ever in the aftermath of any natural disaster.

A crisis in the workplace, whether the result of a natural disaster, terrorism, workplace violence, or other conflicts, can bring your business to a screeching halt and devastate the lives of the employees who are essential to your business’ existence. It’s only natural for business owners and managers to think immediately of the economic loss such a disaster can cause, particularly because the loss of a business usually translates into the loss of a livelihood for owners, managers, and employees. Your plan for responding to and recovering from a crisis must take into account the effect it will have on your workers and the ways you can help them become productive again, even in the face of personal loss.

Follow these guidelines to help your employees cope with the catastrophe and return to productive employment:

  • Communicate with employees as soon as possible after a disaster. When disaster strikes, your employees may suffer the loss of their personal possessions, homes, friends, and family. Even a temporary inability to return to work can compound any sense of loss or emotional trauma your employees may experience. Locate and contact your employees immediately after a disaster, and tell them the company’s status and plans. If employees know what’s expected of them and what they can expect from the company, they can take the company’s plans for them into consideration when rebuilding their personal lives. For example, if a leave of absence, relocation, or layoff is inevitable, employees should be told as soon as possible so they can plan accordingly. Don’t leave them in the dark about their employment.
  • Keep the company’s leadership visible, and stay firmly in charge. Let employees know who is in charge of each aspect of your response or recovery efforts—and what those efforts are. You might lose loyal and valuable employees if they sense the company is disorganized or lacks leadership and a plan for the future. Don’t react rashly or without thinking through all your options—for example, calling for a facility closure or mass layoff may not be the most economical or practical response to a disaster. That isn’t to say that the company’s leaders and management can’t show emotion or compassion, or make mistakes. Your employees know you aren’t superhuman, and they’ll respect you for acknowledging and correcting your mistakes. But restoring order and direction will give them the confidence to stick with the company and work together while it responds to and recovers from the disaster.
  • Give managers and supervisors the tools they need to help employees cope with the effects of a workplace crisis. Don’t forget that your managers and supervisors are the people who deal directly with your employees. Educate them about the possible effects of a crisis or disaster on employees and how to spot indicators of emotional or behavioral conditions that need attention. You may need to hire a consultant to meet with your managers and supervisors, or you might take advantage of free booklets and services provided by the government or private relief organizations. At a minimum, your managers and supervisors should know to refer affected employees to an employee assistance program (EAP) or HR for the identification of other sources of professional assistance.
  • Cut employees some slack. That doesn’t mean you should replace order with chaos, but you should treat employees fairly and with compassion when it comes to getting things back on track. Your employees will likely need some time to get their personal lives in order, whether they need to grieve for loved ones, make housing or financial arrangements, or seek medical attention. Revisit your leave policies and benefits to determine whether the nature of the crisis warrants a revision or extended leave or benefits. Make sure you apply your policies uniformly, and avoid jumping to conclusions if an employee misses work, makes a mistake, or just doesn’t seem herself. Natural disasters and other crises can adversely affect your most unflappable superstar, so consider EAP referrals or other benefits if an employee appears to be slipping in his performance or behavior. You don’t have to lower your standards, but you should understand that it might take some time and assistance for employees to fully recover.
  • Help employees tend to their personal affairs so they can regain their productivity. Employees often have to spend a great deal of time during business hours getting their personal lives back in order after a disaster. For example, they may need to meet with or talk to benefits providers, claims representatives, bank officials, medical professionals, attorneys, and so on. Consider setting aside time during the day for employees to use the telephones for personal business matters, or consider inviting representatives and/or consultants from insurers, EAPs, legal aid organizations, and crisis management services to meet with employees at scheduled times. You might even set aside an office with a telephone and Internet access to allow employees to take care of private personal matters during breaks. The sooner your employees get their personal lives in order after a crisis, the sooner they can get back to business as usual.
  • Get involved in community relief efforts, and allow employees to participate. If the disaster or crisis is one that affected others outside your workplace, consider becoming involved in relief efforts and allowing employees to participate. Becoming productive again and helping others can be rewarding and therapeutic for employees and can help the economy. You might organize a blood drive, volunteer services after hours, or contribute to relief funds. Becoming part of a larger response and recovery effort will help employees put their personal losses into perspective.
  • Develop or update your disaster response and recovery plans. Finally, take the time to develop a disaster response and recovery plan if you don’t already have one, or update your plan with any lessons learned from your own experience.

For more information, please contact H. Mark AdamsJennifer L. AndersonVeronica Rivas-Molloy, and Stephanie M. Gilliam.

A federal disaster declaration has been issued in Louisiana for Orleans and Livingston Parishes following the tornadoes and severe storms that hit South Louisiana on February 7, 2017. The declaration was issued on February 11, 2017, by President Donald Trump upon the request of Louisiana Governor John Bel Edwards.

FEMA individual assistance will be available for residents and homeowners in Orleans and Livingston Parishes, including grants or low-cost loans for temporary housing, home repairs, and uninsured property losses, among other programs. To register with FEMA, visit DisasterAssistance.gov, call the FEMA Helpline at (800) 621-FEMA (3362), or download the FEMA mobile app.

Homeowners may be eligible for up to $200,000 to replace or repair their primary residence through the Home and Personal Property Loans program administered through the U.S. Small Business Administration (SBA). Homeowners and renters may be eligible for up to $40,000 to repair or replace damaged or destroyed personal property.

Businesses of any size and most private nonprofit organizations may be eligible for loans of up to $2 million to repair or replace real property, machinery, equipment fixtures, inventory, and leasehold improvements through the Business Physical Disaster Loans program administered through the SBA.

Small businesses, small agricultural cooperatives, and most private nonprofit organizations may be eligible for SBA Economic Injury Disaster Loans to help meet working capital needs caused by the disaster, regardless of property damage. The SBA’s economic injury program extends beyond Orleans and Livingston Parishes, to the contiguous Louisiana Parishes of Ascension, East Baton Rouge, Jefferson, Plaquemines, St. Bernard, St. Helena, St. John the Baptist, St. Tammany and Tangipahoa.

More details on the SBA programs, including loan details and interest rates, can be found at the SBA Fact Sheet for Louisiana Declaration #15045 & #15046.

FEMA has provided a summary of key federal aid programs that can be made available as needed under the disaster declaration.

A Disaster Recovery Center (DRC) is opening in Orleans Parish effective February 13, 2017, at East New Orleans Public Library, 5641 Read Blvd., New Orleans, LA 70127. Homeowners, renters, and businesses can visit the DRC to apply for or seek information regarding federal disaster assistance. Representatives will be on site from the Governor’s Office of Homeland Security and Emergency Preparedness, the Federal Emergency Management Agency, U.S. Small Business Administration, the City of New Orleans, and other volunteer groups and agencies.

FEMA can be reached by phone at (800) 621-FEMA (3362).

The SBA Customer Service Center can be reached by phone at (800) 659-2955.