Flood insurance crimps Western waterways

Federal program fosters development, damages rivers and wetlands

  • In recent years, the Rio Grande has moved as much as 20 feet closer to new homes like this one, in the Bosque Encantado subdivision in Albuquerque, New Mexico. The subdivision is backed by federal flood insurance.

    Jess Alford

Six years ago, John Horning canoed the Rio Grande near Albuquerque, N.M. Horning, now the executive director of the nonprofit Forest Guardians, drifted past a former dairy farm that had become a high-end housing development called Bosque Encantado ("Enchanted Forest"). Some of its houses were built just 100 feet from the bank, on a river that periodically rises and is prone to changing course.

How, wondered Horning, could those expensive houses have been built there — and what effects might they have on the river?

The answer to the first question is simple. In order to get financing, the homeowners received flood insurance through the National Flood Insurance Program, a division of the Federal Emergency Management Agency (FEMA).

But when it comes to the houses’ effects on the river, it gets more complicated. Homeowners could demand that levees be built to control the shifting river, for example, or they could press federal water managers to further restrict water releases from upstream dams. Neither action has yet occurred but either one would have impacts on the endangered Rio Grande silvery minnow, the bald eagle, and other species, as well as riverside willow and cottonwood forests (HCN, 11/19/01: Bringing back the Bosque).

That single housing development, Horning concluded, could bottleneck the whole river.

The Forest Guardians’ concerns soon expanded to take in other flood-insured properties along the Rio Grande, as well as along the San Juan and other rivers in the state. In 2001, the organization sued FEMA, saying it had broken federal law by failing to assess the environmental impacts of its flood insurance program. Two years later, Northwestern environmentalists filed a similar suit, arguing the insurance program hurt salmon recovery by fostering floodplain development around Washington’s Puget Sound.

The consequences of these lawsuits are still being hashed out. But the hurricanes that have recently hammered the Gulf Coast have put FEMA’s floodplain insurance program — and its environmental side effects — in the spotlight.

Unintended consequences

Congress created the National Flood Insurance Program (NFIP) in 1968, in response to the increasing cost of federal disaster relief. The idea was to use the insurance program both to pay for repairs and to encourage communities and property owners to minimize flood damage. Loans to "buy, build, or improve" structures in flood-prone areas are contingent on government-backed insurance, which is provided only where local governments have developed "floodplain management ordinances" to reduce future flood damage.

The total number of flood insurance policies written through NFIP has more than tripled — from 1.4 million to 4.7 million — since consistent counting began in 1978. The program has strong participation even in arid states: Colorado has 15,284 policies in force; Arizona 28,602; New Mexico 12,449. Except in catastrophic years — such as 2005 — the insurance premiums pay for all necessary repairs after a flood.

But even though FEMA is bound by the National Environmental Policy Act, which requires environmental studies of "major federal actions," it has not carried out any environmental assessments since at least the early 1970s, according to David Conrad, a senior resources specialist for the National Wildlife Federation.

FEMA spokesman Eugene "Butch" Kinerney says, "We definitely have to abide by federal law." But he could not cite a single example of an environmental assessment addressing flood insurance. A large-scale study of the National Flood Insurance Program, released in September, says that a sub-study is under way on the program’s environmental impacts.

Meanwhile, the courts seem to be siding with conservationists on the issue. Last November in Seattle, Federal District Judge Thomas Zilly agreed with the National Wildlife Federation and the Public Employees for Environmental Responsibility, finding that the flood-insurance program harmed Puget Sound’s imperiled salmon. He ordered FEMA to review the environmental impact of its insurance policies. FEMA and NOAA Fisheries are expected to release reports in late 2006.

In the New Mexico case, a judge dismissed the Forest Guardians lawsuit in 2002, but conditionally. While FEMA admitted no wrongdoing, the agency agreed to submit a biological assessment of the flood program to the U.S. Fish and Wildlife Service. It also agreed to review whether flood insurance should be allowed in certain areas. The Fish and Wildlife Service has not yet responded to FEMA’s biological assessment, however, and Horning says that Forest Guardians may have to force the issue in court.

Too late to pull back?

The FEMA skirmishes in the West gained national significance this fall, in the wake of a brutal hurricane season. Although many Gulf Coast residents are pushing for quick and ample federal assistance, both political leaders and scientists question how far that aid should extend. Idaho Sen. Larry Craig, R, for example, said, "I’m not humorous when I suggest we should turn (parts of Louisiana) back to what it was, a wetland."

At a congressional hearing in November, Rob Young, associate professor of geosciences at Western Carolina University, suggested creating a commission to consider withdrawing federal insurance protection from some flood-prone areas. Such a commission, he says, could be modeled after the Defense Department’s Base Realignment and Closure Commission, which examines military bases for possible shuttering (HCN, 8/22/05: Leavin' on a Jet Plane).

Another, albeit more expensive, option is to buy homes and buildings located in floodplains. FEMA spokesman Kinerney says the agency has an aggressive program for buyouts and pre-disaster mitigation. That program was budgeted at $255 million last fiscal year, but Kinerey says it is down to $50 million this fiscal year.

"By and large, this is an agency that often has not come to terms with its environmental obligations," says Jan Hasselman, the Earthjustice attorney who argued the Puget Sound case, "and those days may be coming to an end."

The author lives in Carlton, Oregon, and writes on Northwest public affairs at www.ridenbaugh.com.

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