1975, June, Pg. 1081. Flood Protection-A New Approach.

• Author: Peter M. Williams

4 Colo.Law. 1081

Colorado Lawyer

1975.

1975, June, Pg. 1081.

Flood Protection-A New Approach

1081Vol. 4, No. 6, Pg. 1081Flood Protection---A New ApproachPeter M. Williams... The Flood Disaster Protection Act of 1973 signaled the beginning of a new approach in America for regulating the use of land that is subject to flooding and the methods to pay for flood-caused damage.

The new law (Public Law 93-234) will require an estimated 12,000 communities to enact and enforce ordinances that will restrict construction of new buildings in flood hazard areas.

The law also paves the way for drastic reduction in grants and loans made under the long-standing, piecemeal, and inadequate federal disaster relief program. Insurance that must now be purchased by property owners located in flood hazard areas (a market estimated at 5 million policies) should bring an end to massive outlays of federal funds for disaster relief.

The insurance will be underwritten by the Federal Insurance Administration (a division of HUD). Property owners will be able to purchase insurance in amounts up to $70,000 for one- to four-family residential buildings---with $20,000 additional for contents---and $200,000 for multifamily residential and commercial buildings---with $200,000 additional contents coverage.

In no previous federal law has the Congress expressed such a forceful desire to regulate the use of private land. Indeed, legislation expressly called "land use" regulation evoked great controversy in Congress throughout 1973 and remains unpassed at this writing. Yet the flood insurance law moved through Congress with scarcely a ripple and passed with all its powers intact.

George K. Bernstein, Federal Insurance Administrator, writing on the principal purpose of the law, said:The Bill provides highly subsidized flood insurance for residents who build their homes and businesses in floodprone areas without sufficient knowledge of the hazards involved and in return obtains the cooperation of local authorities in controlling flood plain development as a means of reducing or avoiding future losses. But the Act also has the important secondary purpose of attempting to reduce our annually increasing Federal expenditures for disaster relief by encouraging potential disaster victims to contribute to their own protection. An additional benefit of flood insurance, of course, is that it is capable of providing a full-loss indemnification to flood victims, without the need for loan repayments that the disaster relief program often requires.

Former HUD Secretary James T. Lynn echoed these comments when he transmitted the proposed legislation to Congress

1082on March 26, 1973. Lynn said the legislation would "require each community to adopt effective land use measures before individuals in that community can purchase flood insurance. The program wisely combines federally subsidized insurance protection for existing flood plain residents with enforceable local safeguards against needlessly increasing future losses."

OMB Offers Strong SupportThe dollar-conscious, cost/benefit-oriented Office of Management and Budget also strongly supported the bill. The agency recognized the political problem of a natural disaster---something must be done for the victims when flooding occurs. However, the general taxpayer supplies the money for disaster relief aid. OMB officials saw great merit in using privately purchased insurance to pay the losses of those who actually suffer damage.

Congress recognized that federal participation in a subsidized insurance program might encourage the continued unwise development of flood-hazard areas, resulting in even greater expenditures of tax dollars for disaster relief to flood victims. Therefore, Congress authorized subsidized insurance only if future development is directed toward minimizing losses.

Local governments will have to insure that known flood hazards be taken into account when making decisions concerning the location, design, and construction of new structures. The control will generally be established by amending the community's building permit systems and subdivision regulations.

Amending the Act of 1968The new legislation consists primarily of amendments to the National Flood Insurance Act of 1968. In this earlier law, Congress attempted to deal with the problem of disaster relief aid and flood plain land use, but since communities were not actually required to enter the program the law accomplished little.

Also, since the purchase of insurance was voluntary, only 170,000 policies were sold in the first five years after the legislation was passed---including only two in Wilkes Barre, Pennsylvania, prior to the time Hurricane Agnes demolished the city. Thus people living in flood-prone areas showed conclusively they were unwilling to pay their share of the cost of floods on a voluntary basis.

The formal steps required to enroll a community in the flood insurance program are described in Table 1. The procedure begins with FIA notifying the community that it has been tentatively identified as containing one or more special flood hazard areas. In Step 2, the table notes that the community "adopts initial land use measures and applies to FIA for enrollment in the program."

Community Action MandatoryThe action of the community appears to be mandatory from this statement and, except for a limited appeals provision, it is. The community does have the right to submit technical data in an attempt to convince the Secretary that the community either is not...