Conflicting federal policies may cost residents more on flood insurance, and leave them at risk

Conflicting federal policies may force thousands of residents in flood-prone areas to pay more for flood insurance or be left unaware of danger posed by dams built upstream from their homes and worksites, according to an Associated Press review of federal records and data.

The problem stems from a complex set of flood policies and some national security precautions taken after the Sept. 11, 2001, terror attacks.

To get the best discount on flood insurance, the Federal Emergency Management Agency’s points-based rating system requires communities to chart all the homes, businesses and critical facilities endangered by a potential dam failure and warn people of their risk. But that’s difficult or even impossible in some communities, because other federal agencies restrict the release of such information for hundreds of dams that they own or regulate across the U.S., citing security risks.

The quandary has persisted for years, though federal officials have been warned of its implications.

Federal “dam information sharing procedures costs communities points, homeowners money, and potentially citizens lives,” a California emergency services official warned in a January 2020 presentation to FEMA's National Dam Safety Review Board at an invitation-only meeting attended by dozens of federal and state officials.

The meeting's minutes were provided to the AP this summer, nearly two-and-half years after the news organization submitted a Freedom of Information Act request to FEMA.

Since that meeting, the U.S. Army Corps of Engineers has begun publicly posting maps of areas that could be flooded if one of its hundreds of dams were to fail. But similar information remains restricted by other federal agencies, including by the Federal Energy Regulatory Commission, which regulates about 1,800 power-producing dams, and by the U.S. Bureau of Reclamation, whose 430 dams in the western U.S. include some of the nation's largest structures.

The Bureau of Reclamation said in response to questions from the AP that it is revising its policies and will start sharing more information about dam-failure inundation zones in 2025, though it said the process could take more than eight years to complete for all its dams.

Meanwhile, FEMA is accepting public comment through Sept. 9 on potential revisions to its Community Rating System, which awards discounts on flood insurance in communities that take steps to reduce risks. During a FEMA public hearing Wednesday, the floodplain administrator for Phoenix — the nation's fifth largest city — raised concerns that the conflicting federal policies regarding dam flood zones were unfair to communities trying to get better insurance discounts for their residents.

“I believe this is a punishment to us,” Phoenix floodplain administrator Nazar Nabaty told FEMA officials.

One community's frustrations

Another community that has been affected by the information-sharing gap is Sacramento, California, which ranks among the most at-risk regions in the U.S. for catastrophic flooding. California's capital sits at the confluence of two rivers and about 25 miles (40 kilometers) downstream from Folsom Dam, a large Bureau of Reclamation structure with a capacity that could cover the equivalent of the entire state of Rhode Island with a foot of water.

During a review about five years ago, Sacramento County achieved one of the best-ever scores in FEMA's rating system. But the county did not qualify for the top flood-insurance discount because the Bureau of Reclamation's restrictions regarding Folsom Dam made it impossible to meet FEMA's criteria for mapping and public outreach about a potential dam break, said George Booth, the county's former floodplain manager.

“We got wrapped around the axle,” said Booth, now executive director of the Floodplain Management Association, a professional organization that focuses on flood-risk reduction in California, Hawaii and Nevada.

The city of Sacramento, which receives a separate flood insurance rating, has faced similar struggles meeting FEMA's standards for flood insurance discounts because of limited information about Bureau of Reclamation dams, said Rosa Millino, the city's Community Rating System coordinator.

For an individual homeowner, the missed discounts could make about $100 difference in annual flood insurance premiums. When spread citywide, the extra cost could reach several million dollars. When costs are higher, fewer people tend to buy insurance. But there's more at stake than just insurance premiums.

“People need to be informed of the potential dangers of living in an area that’s protected by a dam," Millino said.

Flood risks and costs

As the climate changes, heavy rains from intense storms have put communities at increased risk of flooding and placed the nation's aging dams in greater jeopardy of failing. That's been evident as recent floodwaters damaged or breached dams in Georgia, Minnesota, New York, South Carolina, Texas and Wisconsin, forcing evacuations and costly repairs.

Floods have caused about $108 billion of damage in the U.S. since 2000, according to FEMA. Standard home and commercial property insurance does not cover flood damage.

But FEMA's National Flood Insurance Program is available in 22,692 communities that have adopted and enforced floodplain management regulations. As of the end of July, it provided $1.3 trillion of flood insurance coverage to about 4.7 million policyholders — down about 1 million policies since the program's peak participation in 2009.

Premium discounts ranging from 5% to 45% are available in jurisdictions that participate in FEMA's Community Rating System, a voluntary program begun in 1990 that grades flood mitigation and safety measures on a 1-to-10 scale. A Class 1 rating earns the largest discount.

Most communities don't seek the extra savings. Just 1,500 local governments take part in the Community Rating System, though they account for three-quarters of policies issued under the National Flood Insurance Program. Just two communities — Roseville, California, and Tulsa, Oklahoma — have achieved the top discount for their residents.

Roseville, which also is near Folsom Dam, used FEMA grant money to create its own inundation maps showing the affects of a potential dam failure. But the city still encountered difficulties trying to share that information with residents. While presenting the inundation data at a public meeting over a decade ago, consultant Rob Flaner said a Bureau of Reclamation official interrupted and told him to stop.

“It was ironic that one federal agency funded it," Flaner said. "It was like, `Ummm, maybe you guys need to talk to each other.'”

Roseville has since satisfied both federal agencies by creating inundation maps that show the overlapping flood potential of multiple dams without identifying the specific dam failure that could affect each home, business or important site, Flaner said. But Roseville is the exception, not the norm.

"There’s a lot of jurisdictions that can’t meet the requirements because they can’t get the maps, or a federal agency is saying, `No, do not do outreach downstream of our dam,'” said Flaner, who has worked with nearly 300 local governments over three decades, first as a Community Rating System specialist on behalf of FEMA and then as a hired consultant.

Security concerns

FEMA says it is important for communities to have access to dam-failure inundation maps in order to warn residents in harm's way, That's because dam failures can spread floodwaters beyond normal high-risk areas and affect multiple communities downstream.

But after the Sept. 11, 2001, terror attacks, some federal agencies cited national security grounds while refusing to release certain information about dams. They said dams could become targets if terrorists knew the potential to cause devastating flooding.

The Federal Energy Regulatory Commission continues to categorize dam inundation maps as critical infrastructure information that “could be useful to a person planning an attack” and requires those receiving such information to sign non-disclosure agreements, said FERC spokesperson Celeste Miller. But FERC can’t prevent a dam owner from independently sharing the information.

The Bureau of Reclamation also has required non-disclosure agreements when sharing dam inundation maps and emergency action plans with local officials. Under its upcoming policy change, the bureau will allow communities to publicly share information about dam inundation zones, including potential flood-wave travel times, flood depths and durations, said Sandy Day, the bureau's chief of public affairs.

The Army Corps of Engineers, which also had shielded certain information about its dams, began posting dam inundation maps online in late 2021 after determining that releasing the information “is more beneficial to the public than any risk of misuse,” Corps spokesperson Gene Pawlik said.

A complex system

Three years ago, FEMA sought public input about ways to revamp the Community Rating System to better incentivize communities to reduce flood risks. Several commenters highlighted difficulties in getting credit for dam initiatives, including the reluctance of federal agencies to share information regarding inundation zones from dam failures.

Nothing immediate came from the 2021 review. Though FEMA is again seeking public input on potential changes to the Community Rating System, it doesn't plan to make any changes until 2026.

The U.S. Government Accountability Office has suggested a substantial overhaul may be necessary. In a report last year, the GAO found that the premium discounts offered under FEMA’s rating system are not actuarially justified. Mapping projects, flood warning procedures and public information campaigns may have some value, the report said, but don’t reduce the flood risk of currently insured properties.

Some local officials contend FEMA’s Community Rating System is too costly and complex, especially for governments with small budgets and staffs. The rating system has about 100 items for which communities can earn points, often requiring extensive documentation. The dam safety section is among the most challenging — just four communities got any points for their local efforts during the most recent evaluation, according to FEMA data.

During its last review, Fort Collins, Colorado, earned more than 5,000 points in the Community Rating System — the most of any community, according to FEMA data. Yet the city failed to get a Class 1 ranking, because it didn’t meet criteria about potential dam failures or promoting flood insurance. The area has about 20 high-hazard dams that could result in loss of life if they failed.

“We do know where the dams are,” said Ken Sampley, the city’s water engineering director. “But we don’t have as detailed information and direct coordination with a lot of the dam owners as may be required.”

Thurston County, Washington, which is home to the state capital of Olympia, spends almost $200,000 a year to maintain its Class 2 rating in the flood insurance program, resulting in collective premium savings of slightly less than that for residents, said Mark Biever, who coordinated the county’s efforts from 2019-2023. But the county decided it wasn’t worth it to try for a Class 1 rating, in part because staff didn’t have the resources to compile all the information about dams, he said.

The rating process is frustrating and incredibly time-consuming, Biever said. Though it’s resulted in a 40% discount for about 600 flood-insurance policyholders, “nobody’s every called and said, `Hey thanks for all that extra effort,’” Biever added.

None of Thurston County’s cities and towns participate in the Community Rating System, meaning the county's flood-insurance discount is only available in unincorporated areas.

In Bucoda, a rural Thurston County town nestled along the twisting Skookumchuck River, the high cost of flood insurance means homeowners often skip it unless required to buy it by a mortgage holder, said James Fowler, the town’s fire chief and planning commission chair. Yet the town is just 10 miles (16 kilometers) downstream from a dam.

“If that dam that’s on that reservoir was to fail, it would be catastrophic flooding,” Fowler said. “In a couple hours, there would be 20 feet of water in the town.”