Weaponizing flood insurance puts landowners at big risk

By In the news
In: Uncategorized
Wednesday December 4, 2024


Environmental Lawsuits Threaten Flood Insurance & Development Across Oregon
By Oregon Property Owners Association,

Landowners beware— if your property is in the floodplain, you may face serious roadblocks to develop it, including losing your flood insurance, thanks to ongoing litigation by environmental groups against the United States Federal Emergency Management Agency (FEMA).

Thanks to a recent lawsuit, by December 1, 2024, every local government enrolled in the National Flood Insurance Program (NFIP) will have to choose one of three compliance measures to remain enrolled in the program. If the local government does not, current and future insurance policies may be threatened.

This is a big problem for Oregon. A majority of counties in Oregon, and the cities within those counties, have land in the mapped floodplain. And not just a little land – it’s a lot, including land that has already been developed and land that is supposed to be used for needed development, like housing. As such, many communities, both urban and rural, are currently enrolled in the NFIP.

This is a red alert for property owners. As explained below, each of the compliance measures may have serious effects on your property rights and your ability to develop your land. They are also going to be extremely difficult (if not impossible) for some counties to lawfully comply with.

We won’t mince words. By filing these lawsuits and weaponizing the federal flood insurance program, these environmental activist organizations are playing chicken with the livelihoods, property rights, and insurance policies of thousands of Oregonians. This is a major threat to our urban and rural communities, particularly our coastal communities, who may never recover from this bureaucratic nightmare.

We are going to do our best to simplify the issue, but know that this is a complex and evolving issue that may differ depending on the location of your property. As such, this is longer than normal post that is going to require a Part II. All links are posted at the bottom of the article.

Environmental Groups Commandeer The NFIP.

The NFIP is a voluntary federal program administered by FEMA. Under the NFIP, areas that have a 1% chance in any given year of being covered by flood waters are mapped as Special Flood Hazard Areas, and require floodplain management according to NFIP standards.

Under the program, communities can opt into the program, which allows property owners in their jurisdictions to purchase insurance protection against losses from flooding through the federal government. To be eligible for the program, the local government must adopt floodplain management ordinances that are designed to reduce the risk of potential losses from flooding. These floodplain ordinances are specifically focused on protecting people and structures from flooding.

In 2009, a coalition of environmental activist groups (Audubon Society of Portland (now called the Bird Alliance of Oregon), National Wildlife Federation, Northwest Environmental Defense Center, and Association of Northwest Steelheaders) sued FEMA under the premise that FEMA’s implementation of the NFIP violated the Endangered Species Act (ESA).

Specifically, the groups alleged that FEMA violated Section 7 of the ESA by not consulting with the National Marine Fisheries Service (NMFS) on the impacts of the NFIP in Oregon on anadromous fish species listed as threatened and endangered under the ESA. Section 7 of the ESA requires that any action federal agencies authorize, fund, or carry out must be unlikely to jeopardize the continued existence of any endangered or threatened species. According to these groups, by encouraging and allowing development to occur in the floodplain, the NFIP jeopardized the wellbeing of the listed species.

In layman’s terms, the environmental groups claimed that by providing flood insurance under the program, the NFIP encourages people to develop in the floodplain, which jeopardizes the survival of listed species. As such, consultation under the ESA is required. Never mind that the program doesn’t encourage development in the floodplain (it discourages it), is really about limiting insurance losses if people are going to build there, and was never intended to be environmental legislation.

The 2016 Biological Opinion & “No Net Loss” Standard

Regardless, facing similar lawsuits in other states, FEMA settled the Oregon lawsuit and agreed to cooperate with NMFS in preparing a biological opinion (BiOp) evaluating how FEMA’s implementation of the NFIP in Oregon may impact those species and their habitats. Years later in 2016, NMFS completed the BiOp and concluded that the NFIP program jeopardized the livelihood of sixteen anadromous fish species and the Southern Resident Killer Whale. The Reasonable and Prudent Alternative (RPA) included within the BiOp proposed alternative approaches to implementing the NFIP that would avoid continued jeopardy for the listed species.

Based on the BiOp and recommendations made in the RPA, and pursuant to Section 7(a)(2) of the ESA, FEMA had to make several significant changes to the program. One was a requirement that FEMA implement a “no net loss of floodplain function” standard on all development within the mapped action area. For reference, a “no net loss” standard means that any adverse impacts to the floodplain must either be avoided or offset through adherence to certain requirements, so that there is no net change in the function of the floodplain.

In short, if jurisdictions wanted to remain enrolled in the NFIP, they would have to adopt new floodplain ordinances that are highly protected of the listed species and achieve the “no net loss” standard. However, FEMA was in the driver’s seat on when and how these changes would come into effect.

FEMA Delays. Oregon Environmental Groups Sue Again. FEMA Panics.

After years of inaction and extensions by Congress, FEMA finally released a draft implementation plan in 2021. In late 2023, FEMA began reviewing the plan under the National Environmental Policy Act (NEPA).

NEPA requires federal agencies to assess the environmental effects of their proposed actions prior to making decisions. The NEPA review process is long and complicated, but it allows for the public to weigh in and requires officials to make informed decisions that balance social, economic, and environmental factors. The NEPA process was set to be finished by 2025.

Unhappy with delays and uninterested in finishing the NEPA process, a different group of environmental organizations (Northwest Environmental Defense Center, the Center for Biological Diversity, The Conservation Angler, and Willamette Riverkeeper) sued FEMA again. In this 2023 lawsuit, they again argued that that by encouraging development in the floodplain, the NFIP was causing degradation of key floodplain functions that the ESA listed species rely upon. However, this lawsuit mostly took aim at FEMA’s delays and inaction after the 2016 BiOp and RPA.

In response and without warning to jurisdictions, FEMA abruptly announced that by December 1, 2024, all NFIP participating communities in Oregon must select and begin implementing one of three Pre-Implementation Compliance Measures (PICMs) to achieve “no net loss of floodplain function” when allowing development in their jurisdictions.

If jurisdictions do not adopt one of the PICMs to achieve “no net loss” of floodplains function, they lose access to the NFIP, potentially throwing the state of flood insurance and floodplain development into chaos.

No Good Option: Understanding The PICMs

While we don’t know exactly the consequences for each PICM, we can tell you that none of them are good options, and each will have consequences for property owners and local governments. Additionally, choosing any PICM will put a local government at risk of violating several state land use laws.

In order for jurisdictions (and property owners) to remain enrolled in the NFIP, jurisdictions must adopt one of the following options:

  1. Prohibit all new development in Special Flood Hazard Area
  2. Adopt a model ordinance developed by DLCD that incorporates the “no net loss” standard into local floodplain ordinances
  3. Require permit applicants to develop a Floodplain Habitat Assessment documenting that their proposed development will achieve the “no net loss” standard

Given the deadline for implementation is around the corner, County Commissions and City Councils will likely be adopting their chosen PICM at public hearings this month, if they haven’t already. We strongly encourage you to go to your city or county’s planning page to see if there is an upcoming hearing on this issue.

The Unspoken Fourth Option: Tell FEMA To Kick Rocks & Lose NFIP Eligibility

FEMA does not have the authority to prohibit development or enforce development standards on private land. However, it does have the authority to say that a local government must comply with one of the PICMs to remain in the NFIP. Remember, the NFIP is technically a voluntary program and therefore local governments have a choice to meet the eligibility criteria.

If enough local elected officials tell FEMA they won’t comply, the worst-case scenario is that the jurisdiction loses eligibility to participate in the NFIP. According to FEMA’s website (see links below), a community that is suspended from the NFIP faces the possible sanctions:

  • No property owner or renter will be able to purchase a flood insurance policy.
  • Existing flood insurance policies will not be renewed.
  • No federal grants or loans for development may be made in identified flood hazard areas under programs administered by federal agencies
  • No federal disaster assistance may be provided to repair insurable buildings located in identified flood hazard areas for damage caused by a flood.
  • No federal mortgage insurance or loan guarantees may be provided in identified flood hazard areas.
  • Federally insured or regulated lending institutions, such as banks and credit unions, must notify applicants seeking loans for insurable buildings in flood hazard areas that there is a flood hazard and that the property is not eligible for federal disaster relief.

This is also obviously a bad option that most jurisdictions won’t even entertain.

Stay Informed & Take Action For Your Property

Because of these lawsuits, local governments are caught somewhere between a rock and a hard place – they can either choose a PICM that will have terrible consequences for their community and put them at risk of being sued under state land use law, or they can risk getting suspended from the NFIP, which threatens flood insurance and lending opportunities for most of their residents. Thanks, environmental groups for your zealous advocacy!

The best way to get this problem solved is a legislative solution. Unfortunately, Congress rarely does anything, regardless of who’s in charge or the issue at hand. It will be especially difficult to get Congress to care about a west-coast centric issue, but advocates will (and should) try to run up that hill.

In the meantime, litigation is the next best option. Unfortunately, this means that local governments will be on the short end of that stick. There is no way around it. Again, thank you environmental groups for throwing our state into sheer chaos with little to no regard for the consequences!

For property owners, there is little that can be done until we know which option local governments are choosing. In the meantime, here are ways you can get informed and take action to start pushing back on FEMA’s decision to implement the PICMs:

  1. Stay Informed. Contact your local planning department and local officials to determine which PICM they will be choosing.
    • If your community is holding a listening session on the PICMs, please attend. The better informed your are, the better choices you can make for your property.
    • Be on the lookout for landowner notices and Measure 56 notices – local governments must notify you of any rezoning or change in regulations that may limit or prohibit previously allowed uses.
  2. Take Action. Based on which PICM your community is taking, take action for your property if you determine that you need to. This could include submitting applications for permits as soon as possible.
  3. Write to your local, state, and federal elected officials. Tell them that FEMA needs to at least finish the NEPA process before implementation, and ultimately, we need to amend or clarify the ESA. How is our government supposed to remotely function if every single program, dollar spent, or action taken by a federal agency is subject to environmental litigation and ESA consultation?

The OPOA Legal Center is preparing to defend landowners and property rights as this issue unfolds. If you are a landowner who has property in the floodplain, and you receive any denials, fail to receive Measure 56 notices, or face issues from your local government related to this issue, please contact us.

Contact Us – You can send an email to [email protected].

You can find more information on this issue at these links:

The opinions expressed in this post are those of the author and do not represent the opinions or positions of any party represented by the OPOA Legal Center on any particular matter.

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