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Tuesday, May 28, 2024 | Back issues
Courthouse News Service Courthouse News Service

Entergy Sues Uncle Sam for $69 Million

NEW ORLEANS (CN) - Entergy says the Army Corps of Engineers' negligence in building levees cost it $69 million in the aftermath of Hurricane Katrina and forced it into bankruptcy.

Entergy and its subsidiaries say their substantial assets in the New Orleans area were flooded by Hurricane Katrina's massive storm surge that was funneled through the Mississippi River Gulf Outlet (MRGO) and other Corps of Engineers-maintained waterways. It says its assets were damaged, lost or destroyed.

The utility company says the disaster facilitated by the Corps of Engineers' shoddy planning and maintenance forced a hike in utility rates for Entergy to continue to deliver services to customers in Orleans, St. Bernard and Plaquemines Parishes.

Hartford Steam Boiler Inspection and Insurance Co., Entergy's insurer, has paid $69.5 million for a portion of the losses of assets owned by the Entergy Companies.

After Hurricane Katrina, the greater New Orleans area suffered massive flooding caused not by the natural forces of the storm, but by the faulty design, construction and maintenance of waterways, levees and floodwalls for which the Army Corps of Engineers was responsible, according to the federal complaint.

In the fall of 2009, U.S. District Stanwood R. Duval Jr. found that the MRGO was flawed in two fundamental aspects. First, the Corps failed to take into account the waterway's inherent, known capacity to funnel rapidly accelerated, hurricane-driven storm surges, increasing the force and height of a storm surge in populated areas.

Second, the Corps failed to take into account the destruction of wetlands it knew would be caused by construction of the MRGO, and the consequent salt water intrusion into wetlands, thereby erasing a natural buffer against storm surge and exacerbating the funnel effect of the MRGO's faulty design.

On Aug. 29, 2005, a tidal surge from Hurricane Katrina rushed from the Gulf of Mexico through the MRGO and collided where it meets the Gulf Intracoastal Waterway with another storm surge from Lake Borgne, flooding New Orleans East, portions of Gentilly, the Ninth Ward, Plaquemines and St. Bernard Parishes.

East of New Orleans, as Lake Borgne crested with the storm surge, the manmade structures funneled and poured salt water into the marshes and wetlands of South Louisiana. In addition to the homes and businesses that were inundated with the waters, many elements of the area's critical utility infrastructure were damaged and destroyed: the natural gas pipelines that served New Orleans were infiltrated and filled with salt water; electric transmission and distribution facilities in Gentilly, New Orleans East, the Ninth Ward, St. Bernard and Plaquemines Parishes were flooded and in some cases washed away; and numerous other utility assets were decimated. As a result, Entergy says, residents of these areas were left without utility services for a long time, and have faced higher utility rates due to the unprecedented need for repairs and restoration as well as the diminished population of ratepayers among whom the utilities' operating costs must be shared.

Entergy seeks economic and compensatory damages under to the Federal Torts Claims Act to recover for damages to its fixed assets, past and future business opportunity, and operating income s.

The energy company is represented by Wendy Robinson with Gordon, Arata & McCollam.

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