Water Overtops New Orleans Levee

Sept. 1, 2008— -- Floodwaters overtopped New Orleans' industrial canal, raising concerns that the city's fragile levee system would not be able to withstand the torrential rains the city faces as Hurricane Gustav makes landfall.

The brunt of the storm seems to have passed to the West of New Orleans, but the fragile levees still in a state of disrepair since Huricane Katriana devastated the city three years ago are being closely watched for signs of failure.

The walls of the canal, located in the city's Upper Ninth Ward, are 12.2 feet. The water level is just over 11 feet, according to Major Tim Kurgan of the Army Corps of Engineers. The water has yet to breech the levee, but it is splashing over.

"We are very concerned about this overtopping," Kurgan told ABC affiliate WGNO.

For the latest on Hurricane Gustav, watch a special edition of "20/20" at 10 p.m. ET

No one is confident – not the mayor, not the Army Corps of Engineers, not the Department of Homeland Security – that the levees will absolutely hold. Just one-third of the levees have been repaired in the last three years and an additional 350 miles of embankments still need to be fixed.

Eighteen pump stations along the levees have been repaired, but 12 more have not been improved.

The city and the federal government prepared for the worst.

"There is a real likelihood of getting some overtopping. Additionally, rain is a big factor here," DHS chief Michael Chertoff said when asked about whether water is likely to pour over the tops of the levees.

New Orleans Mayor Ray Nagin warned that levees to the west of the city and along the Harbor Canal were at particular risk.

"The west bank levees have not been armored to the level of the east bank levees," Nagin said. "The heights are much lower than the east bank levees. In the Harbor Canal, that work is under construction. There are significant gaps in the Harbor Canal construction. So I'm very concerned about storm surge on that side of the river. I think it's going to potentially lead to severe flooding."

At best the levees are estimated to be able to withstand water levels rising at the rate of an inch an hour. Gustav, however, promises to deliver much more. Before Gustav was downgraded to a Category 2, it was feared that In some places storm surge could reach 18 feet.

Congress authorized $12.8 billion to rebuild the levees, but only $3 billion has been spent. The U.S. Army Corps of Engineers, in charge of the construction, has blamed red tape, saying studies, approvals and environmental committees have all slowed down the work. Additionally, they say repairs of the entire network were not planned for completion until 2011.

For now they're doing what they can, closing floodgates across the region, readying pumps and hoping for the best.