In all three lawsuits — one involving Key deer in Florida, another targeting fish and wildlife habitat in New Mexico and the third involving Chinook salmon in Puget Sound — environmental groups have argued that the NFIP allows development in floodplain areas and that FEMA is responsible for encouraging wholesale habitat and endangered species destruction.
In reality, the flood insurance program, established by Congress as part of the National Flood Insurance Act of 1968, is designed to minimize risks to human health and property within floodplains and requires participating communities to enact ordinances and regulations to manage growth and development. The NFIP also is designed to provide reasonably priced flood insurance that would otherwise be cost prohibitive or unavailable to most property owners that participate in the program.
In order for a community to participate in the NFIP, it is required to adopt a floodplain management ordinance that complies with, or exceeds, the minimum requirements set forth in the NFIP regulations. To ensure compliance with the NFIP, FEMA has the authority to suspend communities that either do not have compliant ordinances or have not maintained a floodplain management ordinance conforming with the NFIP regulations. Furthermore, Congress has encouraged NFIP participation by mandating that federally regulated lenders require mortgagees to have flood insurance on covered properties.
If the environmental groups prevail in their lawsuits and builders or property owners are unable to obtain or renew flood insurance, builders and owners will be unable to finance their property, extend financing or sell their property because mortgage lenders will be unwilling to provide loans for land that cannot adequately be insured.
Similarly, purchasers will not be able to secure loans in participating NFIP communities if they cannot purchase flood insurance due to a court ordered injunction. Creative financing options will need to be developed to fill the gap left by the unavailability of traditional mortgages.
Status of the NFIP Challenges
NAHB has intervened in the lawsuit in the Pacific Northwest and is closely following the challenge to the flood insurance program in Florida. The suit filed by environmental groups in New Mexico was settled before NAHB could participate.
Florida Key Deer: The longest running of the flood insurance lawsuits, initially filed in 1990, involves a challenge to the flood insurance program in South Florida where environmental groups alleged that FEMA’s practices negatively impacted Key deer habitat. Key deer are considered an “endangered species” and their habitat encompasses most of the Florida Keys. As part of their suit, environmentalists contended that FEMA did not “consult” with the U.S. Fish & Wildlife Service (FWS) to develop procedures to preserve Key deer habitat.
A federal district court agreed with the environmental groups and ordered FEMA to “consult” with FWS. As a result, the counties in the affected area now forward building permits to FWS for review before local building permits can be approved.
However, because the environmental groups are not satisfied with FWS reviews, they have brought another legal challenge requesting that the court enjoin FEMA from issuing flood insurance in Key deer habitat.
NAHB currently is monitoring the proceedings and is ready to support FEMA if the court sets hearing or briefing schedules in response to the environmentalists’ request for an injunction.
New Mexico Fish and Wildlife: In this matter, the environmental groups claimed that by granting flood insurance, FEMA has harmed the endangered Rio Grande silvery minnow, the bald eagle and the Colorado pike minnow. FEMA and the environmental groups negotiated a settlement that required FEMA to assess the effects of the flood insurance program on these endangered animals. The settlement also required FEMA to perform compliance assessments on communities participating in the flood insurance program. The case was settled before NAHB had an opportunity to intervene.
Puget Sound Chinook Salmon: In this case, filed in Seattle, environmentalists alleged that FEMA failed to consult with the National Marine Fisheries Service (NMFS) to carry out programs for the conservation of endangered and threatened Chinook salmon. Specifically, they claimed that: “The sweeping extent of floodplain loss is one of the most pervasive and unregulated forms of habitat degradation in the Pacific Northwest.” They seek an injunction preventing FEMA from issuing any further flood insurance until it consults with NMFS about ways to protect Chinook salmon habitat.
NAHB has intervened in this case in order to remain involved in any consultation process, and to be able to explain to the court the negative impacts that would occur if the court were to issue an injunction against issuance of flood insurance.
In addition, NAHB is concerned that the environmentalists will expand their litigation to other communities participating in FEMA’s flood insurance program, thereby slowing down or otherwise preventing development.
NAHB will continue to monitor these and other cases, to ensure that its members’ efforts to supply affordable housing are consistent with minimizing floodplain impacts and protecting endangered species.