The National Flood Insurance Program: Time to Weigh Some Alternatives?

FEMA has been threatening a programmatic EIS on the NFIP for 5 years. A recent announcement suggests it might still make good on the threat.

When the Federal Emergency Management Agency (FEMA) announced in 2012 that it was beginning a scoping process on a “programmatic” environmental impact statement (EIS) for the national flood insurance program, heads didn’t exactly bob up and down in nervous excitement.  Indeed, that announcement seemed to coincide with a congressional probe and threats on Capitol Hill that a major legislative overhaul was imminent.  You see, NFIP has been a massively imbalanced program which essentially provides socialized risk for privatized benefits, mostly along the Gulf coast and mostly to wealthy communities. {This report from the Institute for Policy Integrity sheds light on that dynamic.} But the agency recently noticed its intentions to press on—at least until it’s told not to.  This post explains why things may get tricky.


“Scoping” is a preliminary step in the preparation of an environmental impact statement in which the lead agency decides how broadly to search for information and its potential alternatives, all while considering and honing the “purpose and need” of the policy proposal(s) under consideration.  Scoping a “programmatic” EIS on something like NFIP is, as bureaucratic exercises go, something like walking your dog on an active runway.  You can probably do it and survive, but there are good reasons not to.  It’s almost like drawing attention to the fact that you’re about reveal some really uncomfortable information and waiting to see who stops you.

The ‘National’ Flood Insurance Program: Climate Change’s Ground Zero

If climate change had a target, an enemy, something that it was going to zero in on first, the NFIP would be it.  One of the principal threats in the near- and medium term Americans face from climate change is increased intensity and increased frequency of floods, especially in areas facing rising sea levels.  And one of the socioeconomic realities that that trend will keep emphasizing at regular intervals is this: we don’t have enough social or political capital to bail everyone out as needs will arise.

NFIP began in the wake of Hurricane Betsy in 1968, after devastating losses in and around New Orleans.  It was intended as a kind of disaster relief substitute, premised on the idea that those priced out of the insurance market would be offered government-subsidized flood insurance, financed by premiums that would spread the risk and thereby dissipate the threat that any given hurricane, no matter how big, might represent.  Fifty years on, it’s become clear who actually avails themselves of this ‘hand up’: those with enough money to buy shore houses along the Gulf Coast.  It’s also become clear, hurricane after hurricane, that NFIP doesn’t and perhaps can’t adequately spread hurricane flood risks anymore.  {This Wikipedia entry is actually quite clear and to the point.}

What’s less clear but may be coming into focus—and almost certainly will become clearer if the PEIS is prepared—is that NFIP actually draws more people and more investment into disaster-prone areas than would be there without it. It draws them there and socializes the costs of cleanup—which is why the NFIP is now deeply in debt.  As of 2014, as a result of Katrina, Rita and Sandy, the program was $24 billion in the hole.  And that puts a giant climate change bullseye on NFIP.

NEPA may be just the tool for a programmatic reset, though, especially now that the Trump Administration has declared its hostilities toward climate change action, withdrawing the “social cost of carbon” tools that several agencies had been using and taking various other steps.  (Some will say that was a terrible move and some will say it wasn’t.  The point is: the Administration’s systematically reversing Obama-era actions.).

Whether ditching tools like the social cost of carbon is a good or bad idea, it leaves a yawning gap in what agencies are to do with climate change mitigation concerns in their NEPA documents. Just as worrisome is climate change adaptation—how to harden ourselves and build necessary redundancies for when the next flood, drought, or wildfire strikes.  Adaptation strategies were squarely addressed in the CEQ memorandum to agency heads of August 2016 (the one the Trump Administration just nixed).  Now that nexus—adaptation in NEPA—is being left ignored.  With the Trump Administration’s rescission of that memo, a yawning gap on adaptation means that programs like NFIP, even if they are given a full-spectrum reexamination, can just keep on going, zombie-like, notwithstanding their now twisted existence.

Real alternatives for NFIP will be tricky: Congress has several times made matters worse and legislated changes to the program that have only served to bind FEMA’s hands.  Without agency discretion, an “alternative” isn’t really much of an alternative under NEPA.  FEMA, in other words, has its work cut out for it.  But if FEMA does prepare a PEIS on NFIP, don’t be surprised to see hard questions engulf this particular government bailout program—which is itself now deeply under water—and force the issues one way or another.

{Image: submerged subdivision, c.2006 FEMA}

I teach environmental, natural resources, and administrative law at Penn State Law. Before teaching I was an enforcement lawyer at U.S. EPA. Along the way I've done work for environmental nonprofits and written a fair bit about NEPA.
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