The U.S. Court of Federal Claims recently addressed a dispute arising out of the halted construction of the southern border wall.
The factual setting is straightforward, but the outcome underscores a critical point for property owners. Even where government-owned materials occupy private land for an extended period, a viable physical taking claim depends not just on the physical impact, but also on who is contractually responsible for that occupation.
Background: A Project Halt Leaves Materials Behind
Strong Structural Steel, Ltd. v. United States arises from contracts awarded in 2019 by U.S. Customs and Border Protection, through the U.S. Army Corps of Engineers, to a joint venture known as Southern Border Constructors (the prime contractor) to build segments of the border wall along the border between Mexico and Texas.
The prime contractor subcontracted with Strong Structural Steel, Ltd., a steel fabricator based in Pharr, Texas. Under a series of purchase orders, Strong Structural manufactured more than 14,000 steel bollard panels—large, heavy components intended for use in the fence construction along the border. As production progressed, these panels were stored at Strong Structural’ s facility, where they occupied substantial space and limited the company’s operational flexibility.
But with the change in administrations, in January 2021 the newly elected President issued a presidential directive halting all border wall construction, and the Army Corps issued suspension-of-work orders to the contractor. Those orders required the prime contractor to halt performance and to avoid incurring additional costs except where necessary. The contractor, in turn, issued a stop-work order to Strong Structural, which immediately stopped manufacturing the steel bollard panels, leaving Strong Structural with panels housed in its facilities.
Months later, in October 2021, the Government terminated the prime contract but left the already-fabricated panels in Strong Structural’ s facility. Altogether, the steel bollards remained in Strong Structural’ s facility for about seventeen months, limiting its ability to use the property for other productive purposes and effectively tying up a substantial portion of its yard.
In January 2021 the newly elected President issued a presidential directive halting all border wall construction. The Government terminated the prime contract but left the already-fabricated panels in Strong Structural’ s facilit for about seventeen months, limiting its ability to use the property for other productive purposes and effectively tying up a substantial portion of its yard.
The Claim: A Temporary Physical Taking
Strong Structural filed a taking claim directly against the United States in the Court of Federal Claims, seeking more than $11 million in damages.
The company advanced a temporary physical takings theory, arguing that the government had effectively commandeered its property as a storage site for the steel bollard panels. Because the Government had inspected and paid for the panels, Strong Structural contended that the continued presence of those panels on its land—without compensation—amounted to a taking.
The Government responded that the dispute was, at bottom, contractual. Because Strong Structural was a subcontractor with no direct contractual relationship, or “privity,” with the United States, so any remedy must lie against the prime contractor, not the Government.
The court allowed the case to proceed past the jurisdictional stage, recognizing that Strong Structural had alleged interference with a traditional property interest. But that threshold determination did not resolve the core issue. The dispositive question remained whether the alleged facts actually stated a viable takings claim.
The Core Issue: Who Caused the Alleged Occupation?
The Court of Federal Claims agreed with the Government’s argument, dismissing the taking claim under Rule 12(b)(6). The Court’s reasoning turned on a fundamental point: the Constitution requires that the Government itself be responsible for the alleged invasion of property rights. In this case, the CFC concluded that the connection between the Government’s conduct and the occupation of Strong Structural’s property was too indirect.
The Army Corps’ suspension-of-work orders were directed solely at the prime contractor. The government did not issue any directive to Strong Structural, nor did it instruct that the panels be stored at the subcontractor’s facility. Instead, the prime contractor received the suspension order and then determined how to respond, including how to handle the already-fabricated materials.
That distinction proved decisive. The court emphasized that the prime contractor retained discretion in managing the consequences of the project shutdown. Critically, it was prime contractor that chose to leave the panels at Strong Structural’s facility rather than relocate them or absorb the costs associated with doing so. As a result, the continued presence of the panels on Strong Structural’s property reflected the prime contractor’s business decisions—not a direct command from the government.
The court also rejected any suggestion that the prime contractor’s actions could be attributed to the Government. There was no plausible allegation that the prime contractor was acting as the Government’s agent in deciding where to store the materials, nor was there any indication that the Government compelled the prime contractor to keep the panels on-site. Without either direct Government action or a sufficiently close agency relationship, the causal chain required for a takings claim did not exist.
The court also rejected any suggestion that the prime contractor’s actions could be attributed to the Government. Without either direct Government action or a sufficiently close agency relationship, the causal chain required for a takings claim did not exist.
Strong Structural argued that, as a practical matter, it had little choice but to store the panels. Moving them would have required incurring costs that might not be reimbursed under the terms of the suspension orders. The court acknowledged this dilemma but ultimately found it insufficient to establish liability against the Government.
The CFC dismissed the case for failure to state a claim, concluding that the alleged interference with property was not attributable directly to the Government, but instead flowed from the decisions of a prime contractor operating under a federal contract structure. For property owners and practitioners who regularly litigate takings claims, the decision highlights a recurring and often decisive issue: how the contractual relationships between the government, prime contractors, and subcontractors can shape—and in some cases defeat—an otherwise compelling taking claim.
Key Takeaways for Takings’ Practitioners
This decision underscores several important lessons about how takings claims can succeed—or fail—in the context of government projects.
- First, contract structure can define the outcome. Where the government operates through a prime contractor, and the prime contractor in turn manages subcontractors, responsibility for on-the-ground impacts may rest with the intermediary rather than the government itself. Even significant interference with property rights may not be compensable if it stems from the contractor’s independent decisions.
- Second, direct causation remains essential. A viable takings claim requires a clear and direct causal connection between government action and the alleged invasion of property. When that connection derives from actions taken by an independent third party, courts are likely to view the claim as too indirect to establish takings liability.
- Finally, not every physical burden amounts to a taking. The extended presence of government-owned materials on private land resulting from federal decision making, at least intuitively, might seem to support a physical takings claim. But as this decision illustrates, the source of that compulsory occupation matters just as much as its duration or impact. Without government compulsion or direction, even a prolonged physical intrusion may fall outside the scope of the Fifth Amendment.
Conclusion
The Strong Structural Steel decision highlights a recurring tension in takings law: the gap between real-world burdens on property owners and the narrower category of actions that qualify as constitutional takings. Although the Court of Federal Claims allowed the claim to move forward initially, it ultimately dismissed the case because the alleged occupation of the property could not be traced directly to the government. Instead, it resulted from the decisions of a prime contractor operating within the framework of a federal contract.
For property owners and counsel evaluating potential takings claims arising out of government projects, the lesson is clear. Understanding the contractual chain of command is not just helpful—it is often determinative. Where the government acts through intermediaries, establishing a compensable taking will require not only showing that government-owned property ended up on private land, but also that the government itself put it there or required it to stay.
