The center of Hurricane Isaac made a second landfall over Port Fourchon, LA., early Wednesday while a levee was overtopped southeast of New Orleans.
Emergency management officials in Plaquemines Parish reported "overtopping of a levee from Braithwaite to White Ditch," according to The National Weather Service. "This will result in significant deep flooding in this area."
As of 4 a.m., Isaac is still packing winds of 80 mph and is 60 miles southeast of New Orleans. Isaac is moving at just 7 mph and has already dropped more than four inches of rain on New Orleans on the seventh anniversary of Hurricane Katrina. The hurricane had moved back into the Gulf of Mexico after making its initial landfall Tuesday evening.
The 200-mile wide hurricane is expected to gradually weaken and move inland, dumping seven to 14 inches of rain across Louisiana, with some places receiving up to 20 inches, according to forecasters.
The greatest concern is an expected storm surge of between six and 12 feet off the Louisiana and Mississippi coasts, four to eight feet along the Alabama coast and three to six feet on the Florida Panhandle, according to the Hurricane Center located in Miami, Fla.
A storm surge of 11 feet was reported at Shell Beach, LA., late Tuesday while a surge of 6.7 feet was reported in Waveland, Miss., according to the Hurricane Center.
Ed Rappaport, deputy director of the National Hurricane Center, said Tuesday night, wind gusts could reach about 100 mph at times, which could damage high-rise buildings in New Orleans.
Thursday night into Saturday, Isaac will move into the Mississippi Valley and eventually into Illinois and Indiana with possibly six inches of rain in the drought stricken Midwest.
Isolated tornadoes are possible along the central Gulf Coast region and part of the lower Mississippi River Valley through Wednesday, according to the National Oceanic and Atmospheric Administration.
Entergy New Orleans has listed more than 400,000 homes and businesses without power as of 4 a.m., according to their website. The Red Cross reported 18,000 people in 70 shelters across five states Wednesday morning.
When Isaac came ashore at 7:45 p.m. ET Tuesday, it dumped heavy rain with that spread 60 miles from Isaac's center. The highest wind gust reported in New Orleans was 71 mph at Lakefront Airport.
New Orleans Mayor Mitch Landreau told residents Tuesday night, "We are officially in the fight and the city of New Orleans is on the front line."
While traffic was nearly invisible Tuesday night, a few French Quarter bars remained open and filled with locals in New Orleans. At Lafitte's Blacksmith Shop -- the 150 year old dive at the end of Bourbon Street -- Chris LaRue recommended the four staples of hurricane preparedness, "Water, canned food, candles and booze."
"We're going to have some water to clean up," said LaRue. "But this kind of wind is nothing."
In Gulfport, Miss., Highway 90 was closed from Bay St. Louis Bridge to Biloxi Bay Bridge. There's a mandatory curfew in effect, especially at the beaches.
In advance of the storm, Louisiana set up shelters and stockpiled more than a million packaged meals, 1.4 million bottles of water and 17,000 tarps.
Since the levees failed in Katrina seven years ago, more than $14 billion has been spent on the 133 miles of floodwalls, spillways, gates and pumps surrounding New Orleans.
ABC News' Max Golembo and The Associated Press contributed to this report.