Best Practices for Wastewater Utilities in Light of Virginia Inverse Condemnation Decision

September 12, 2017

The Virginia Supreme Court recently expanded the potential liability of Virginia localities and public authorities for backups and overflows from sewage collection and treatment systems. The court allowed insurers who paid claims for property damage to a Harris Teeter grocery store arising from the backup of a county sewer line, to pursue those claims against Arlington County. The decision provides a path for damaged-property owners to avoid the public entity’s defense of sovereign immunity from tort liability.

The case, AGCS Marine Insurance Company v. Arlington County, 800 S.E.2d 159 (Va. June 15, 2017), arose from a sewer line backup that flooded a Harris Teeter grocery store. Virginia law of sovereign immunity protects public agencies from liability for negligent operation or design of sewer systems that cause backups or overflows. In this case, the insurers alleged that the county purposefully took or failed to take certain actions that, when combined, intentionally caused the sewer line at Harris Teeter to back up so that the entire system could continue to operate. Allegedly, “the County purposefully diverted sewage and/or storm water from another County treatment facility or pump station that it had closed yet never increased the capacity of the plant or followed the recommendations of engineers for other changes even though in doing so it knew that a sewage back-flow onto the property of others would occur.” The court held that this allegation, if proved, could be a taking of private property requiring just compensation.

Wastewater utilities routinely make decisions during extreme wet weather events to protect critical infrastructure by limiting flow into pump stations or treatment plants. If a plaintiff can characterize such decisions as choosing to divert flow onto private property, they can recover compensation for the public utility’s “temporary taking” of property. With the increasing intensity of storm events, such operational choices are likely to become more frequent.

In light of this ruling, best practices for wastewater utilities include 1) documenting design decisions to rebut any inference that the system is designed to relieve on private property, and 2) operating the system to prevent backups on private property, even at the cost of overflows on public property.

For more information, contact Jonathan Rak at [email protected] or +1 703 713 5411.