Managing Flood Risk: Technical Uncertainty in the National Flood Insurance Program

Congress established the National Flood Insurance Program ( NFIP )2 to prevent flood damage and to provide relief after such damage has occurred. The NFIP is administered by the Federal Emergency Management Agency ( FEMA or Agency ) 3 and has become a major influence on state and local land use regulation and a critical factor in private land use decisions across the nation. This innovative program seeks to control the risk of flood damage by inducing local government to take land use control and other police power measures. It offers, as the inducement for such measures, the availability of federal flood insurance at low cost to property owners within the jurisdiction of the local government. Community compliance with NFIP requirements establishes the eligibility of property owners for the benefits of federal insurance coverage, and thus advances the congressional objective of flood risk reduction. This program involves the federal government significantly-but indirectly-in local land use and private development. Although the program is highly structured, it is based on incomplete and changing data as to flood risk potential, and involves the use of analytic methods for predicting flood risk that produce good estimates at best. Further, its success depends upon the vigor of local efforts to control development in flood-prone areas, which will vary considerably with local values, legal authority and private development pressure. Finally, extra-community developments constitute an inevitable dynamic condition which lies beyond the control of FEMA and its member communities, and may dramatically change the potential flood risk. An upstream development, for example, may change the flood potential of a river for a number of downstream communities struggling to comply with NFIP requirements. Nevertheless, Congress chose to provide the benefit4 of subsidized flood insurance, and has affirmed this decision consistently. To deal with these and other implementation problems, it vested the Agency (originally the Department of Housing and Urban Development) with considerable discretion for designing the NFIP and its insurance eligibility requirements. This article addresses two problems that have emerged under the NFIP. Both problems are attributable in large part to the technical uncertainties and changing circumstances which beset the program. First, the article gauges the bases for rejecting existing flood hazard reports in favor of restudy. When should a FEMA flood insurance study ( FIS ) of a community\u27s flood risk, insurance availability, floodplain mapping and community compliance requirements be corrected, amended or superseded by a restudy? What procedures should be employed in making that decision? This is a problem of growing importance to FEMA, because the FIS is central to FEMA determinations and the availability of insurance, and the rising demand for restudies claims an increasing share of the Agency\u27s budget. Indeed, restudies may soon be capturing virtually all study funds to be committed for the NFIP.6 Second, the article sets up parameters for the Agency\u27s response to new technical or methodological developments which promise greater accuracy in floodplain mapping and predictions of risk. Under what circumstances should FEMA adopt new engineering assumptions and methodologies for its studies and restudies, and what criteria should the agency employ to make these generically applicable decisions? 7 Although stated as abstract propositions, both issues concern real property, property owners, development potential and the spectre of loss of life and property. Intense, local controversies are arising across the nation over the validity of older FISs still used to justify restrictions on the development of specific properties. FIS determinations and local compliance measures face challenges and litigation. In the midst of this upheaval, FEMA is actively seeking an efficacious and cost-effective strategy for its program. This article identifies the legal framework and technical considerations governing the issues stated and weighs possible solutions. The findings, while of direct relevance to FEMA, local communities and affected private interests, also should contribute to an improved understanding of federal programs which seek to manage risk through the provision of benefits