updated 9/24/2012 10:00:44 PM ET 2012-09-25T02:00:44

A federal appeals court has reversed itself and thrown out a judge's landmark ruling that the Army Corps of Engineers is liable for billions of dollars in damage that property owners blame on its maintenance of a New Orleans shipping channel.

The same three-judge panel from the 5th U.S. Circuit Court of Appeals that sided with plaintiffs earlier this year withdrew that decision Monday and ruled in the federal government's favor.

The panel's new opinion says the corps is completely insulated from liability by a provision of the Federal Tort Claims Act.

In 2009, U.S. District Judge Stanwood Duval Jr. rejected the federal government's argument that it is entitled to immunity from lawsuits blaming Katrina's flood damage on the corps' operation and maintenance of the Mississippi River-Gulf Outlet navigation channel.

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