Final

DISASTERS AND

DEMOCRACY The Politics of Extreme Natural Events

RUTHERFORD H . PLATT

WITH CONTRIBUTIONS BY

Miriam Gradie Anderson, Alexandra D. Dawson,

Jessica Spelke Jansujwicz, Ute J. Dymon,

K. Beth O'Donnell, Claire B. Rubin, and David Scherf

� "'t-() k-<"" 1...

ISLAND PRESS Washington, D.C. ♦ Covelo, California

,,

8 INTRODUCTION

NOTES l. Roger A. Piclke, Jr. (1997). "'Normalized Hurricane Damages in che United Smres:

1925-1995."' (Drnfr nrtic!e rnbmirred to Weathtrtwd Formming). Pielke uses a combina­ tion of inllacion, wenlch, and housing densiry changes ro normalize damage corn.ls.

2. Peccr J. Mai• (1985). Recr,-i11g from Catamophes: Ftderal Duaru,· Rdief Policy and Palitics. Westport, Con□.: Greenwood Press, 20.

3. Sciemiflc A111,rican (l888) ... Moving rhe Brighton Be-.ich Horel'" (April I 4): 1-2; Ruchcrford H. Piute and others ( 1992). Coastal f..-os1on: l-las R,urcat So,mdetl? Program on Enviro1lmeoc and Behavior Monogniph No. 53. Boulder· lnsrirute of Behavioral Science, University of Colorado, lC.

4. National Research Council (1987). Re1po11di11g to Change! in Sea Level. Washingcon, D.C.: Nacional Academy Press, 82-83.

5. Marcin Reuss O 991 ). U.S. Army Corps of Engineers Office of Hiscory, Personal Communicacion.

6. William Bronson (1959/1989). The Earth Shook, The Sky Burned. San Francisco: Chronicle Books, 100-104.

7. William G. Hoyt and Walter B. Langbein (1955). Floods. Princeton: Princeton Uni­ versiry Press, 263.

8. Pete Daniel (1977). Deep'n As It Come: The 1927 Mississippi River Flood. New York: Oxford University Press, 10.

9. Hoye and Langbein, note 7, 262-263. 10. David Alexander (1993). Natural Disasters. New York: Chapman and Hall, 342. I 1. Ibid. l2. Adam Smid, ( 1776/ 193 7). Th, \'(lw/th of Ndtions, New York: Modern lib rary, •123. 13. David G. McCullough ( l968). Thejob,mmc11 Flood. New York: Simon and &hus-

teL McCullough reporrs char Johnstown received an immense oucpou□ng of donared money, food, and building materi-nls from around the Un ired Sruces aud abroad.

I 4. Dr011SOn, note 6, 1 I 5. Richnnl H<l&radcr ( 195 5 }. Tb, rigt of R,fq,·111. New York: Knopf. 16. Sqmour Toll (l969). Zontd 1l-mtrfrd11. New York: Grossman Publishers, 26. 17. Wynn Craig Wade (1979). Tumur. Eud of th� Dr.t1m. New York: Penguin. 18. 198 u.s 45 (1905). 19. Ernst Freund (1904). The Police Power: Public Policy and Comtit111ional Laue

Chicago: Callaghan. 20. \Ylelch v. Swasey 214 U.S. 91 (1909). 21. Hadachek v. Sebastian 239 U.S. 304 (1915). 22. 272 U.S. 365 (1926). 23. Rutherford H. Platt (1996). Ltmd Use and Society: Geography, Law, and Public

Policy. Washington, D.C.: Island Press, Ch. 7. 24. 272 U.S., 386-387. 25. Gilbert F. White (I 960/J 986). "Strategic Aspects of Urban Floodplain Occu­

pance," in Geog,·aphy, Rdamw, and Euvironment Vol. 2 (eds. Roberc W. Karcs and Ian Bur­ ton). Chicago: Universiry of Chicago Press, 84-96.

26, Hoye and Langbein, nore 7, 95.

PART I

FEDERALIZING DISASTERS:

FROM COMPASSION TO ENTITLEMENT

The Federal Disaster Relief Ace of 1950 marked the beginning of a half-century of federal laws, programs, and policies intended to soften the financial and social impacts of natural disasters on che American people and their communities. Chapter 1 traces the evolution of such federal initiatives in terms of purpose (e.g., individual relief, community reconstruction, hazard mitigation) and means (e.g., disaster assistance grants, subsidized disaster loans, federal insurance pro­ grams, technical assistance). The chapter concludes with the problem-widely raised by disaster policy critiques since the mid- l 990s-of "moral hazard," namely, to what extent does the likelihood of generous federal assistance serve co diminish the natural caution that individuals, communities, and businesses might otherwise exercise in adjusting to natural hazards in their investment and locational decisions? At what point does compassion lead co "codependency" whereby potemial disaster victims and their federal procecrors become locked into a repetitive cycle· of loss, compensation, reconstruction, and new losses )

The spatial incidence of disasters, and of disaster assistance, is by no means uniform. Some places-notably coastal California, che Gulf Coast, and parts of che Mississippi River Valley-seem co be more disasrer-prone and therefore teceive greater allocations of federal assistance than "safer" places. Federal disas­ ter programs are so diverse in form and function that mapping their collective spatial impact would be a daunting task indeed. However, Chapter 2 examines

ru

l O PART I. F�:DERALIZING DISASTERS: FROM COMPASSION TO ENTITLEMENT

the geographical distribution of a key prerequisite to many kinds of federal assis­ tance, namely presidential disaster declarations under the Srafford Act. Dollars expended pursuant rn such declarations between 1988 and 1995 were clearly skewed to places experiencing real catastrophes such as Hurricanes Hugo and Andrew, the Midwest Flood of 1993, and the California earthquakes in 1989 and 1994. Those five disasters accounted for three-quarters of Stafford Act outlays during the study period. But like the tail of a comet, over 200 other declarations accounted for the other one-quarter of such oudays, many of them of relatively minute cost and extent. While of lesser impacc on the national treasury, such "low end" declarations have become, to some observers, new sources of federal spending at the local level, long referred to in other contexts as "pork barrel spending." (During fiscal years 1996-1998, President Clinton issued 189 major disaster declarations, averaging more than one per week.) At the county scale, anomalies between jurisdictions of comparable hazard vulnerability raise further questions about the politics of presidential disaster declarations.

Despite the proliferation of federal disaster declarations, and the presumptive lessening of state, local, and individual responsibility ("moral hazard") ensuing therefrom, proposals rn limit the scope and availability of federal disaster assis­ tance have been flatly rejected by Congress. Instead, federal policymakers have long endorsed the concept of "hazard mitigation," namely, reducing vulnerabil­ ity to natural hazards through safer design of structures and communities. Chap­ ter 3 returns to the historical thread of Chapter 1 to �race the rise and fall of var­ ious approaches to hazard mitigation since the 1960s. In view of the extent to which other federal policies (e.g., tax laws, community development programs, and, in fact, disaster assistance itself) promote development in hazardous areas, this might be viewed as driving with the brakes on. Furthermore, hazard miti­ gation itself involves the same dilemma as disaster assistance: What should the federal role be? In other words, how much should communities and individuals be expected (read "required'") to do for t hemselves as a condition of federal assis­ tance? That leads into Chapters 4 and 5 in Part II, which, respectively, examine the property rights movement and the takings issue as obstacles to hazard miti­ gation through land use restrictions in areas of known risk.

CHAPTER 1

Shouldering the Burden: Federal Assumption of Disaster Costs

INTRODUCTION

Depression and war spawned a much larger, more paternalistic federal govern­ ment. By the late 1940s, the American people had become accustomed to Social Security, federal housing programs, veterans benefits, farm subsidies, public higher education, federal aid to hig hways, and other federally supported social programs. The Federal Housing Administration (FHA) and the Veterans Administration (VA) offered subsidized mortgage insurance and low-interest loans to help veterans and their young families buy new homes, thus stimulat­ ing the spread of tract subdivisions onto rural land (later termed "urban sprawl"). In 1949, Congress launched the federal urban renewal program to acquire, clear, and redevelop "blighted" neighborhoods in cities. In 1956, Con­ gress authorized construction of the 42,500-mile Interstate Highway System with 90 percent federal funding, which further encouraged growth on the fringes of older cities. The Federal Tax Code offered further incentives to home ownership and land development. Laissez-faire was in ratters, but government was intervening in the private economy primarily to promote, not hinder, new investment and urbanization.

In the absence of restraint, some of this new development impinged on stream valleys, unstable hillsides, accessible forestlands, and coastal shorelines, not to mention prime farmland and critical natural habitat. Inevitably, a by-product of this process was the exposure of rising numbers of homes, workplaces, and lives to the risk of natural hazards. As losses mounted, or at least occurred at the doorsteps of the politically influential, Congress began, hesitantly at first, to devise a new set of programs and policies that collectively would transfer much of the financial costs of disasters from individuals and communities to the nation as a whole (in other words, to the federal taxpayer). In the process, an implicit new social compact was gradually forged between government and citizenry in which the former assumed a large share of disaster losses arising from the bad luck or bad judgment of the latter.

11

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U

1 2 P,\ RT J . FEDERALIZING DISASTERS: FROM COMPASSION T O ENTITLEMENT

FEDERAL DISASTER ASSISTANCE

The nation's fuse general disascer assistance la,v-the Disaster Relief Ace o_f 1 950 (PL 8 1 -875 )-wus a mere pi nprick in relarjon co chis backdrop of federal aetivism and g ra ndiose corucruccion programs. Three momhs after the oucbreak of che Korean War and wich the foul winds of McCarthyism beginning ro waft through the nadon's capital, it was adopred q_uiedy with little scudy or debate". ks initial au chorizat.ion was $5 mil l ion, paltry even c hen . B u e despice the con­ servative cli mate of the momen t , it harked back ro New Deal social legislarion as a logical extension of social securi ry, hous i n g , �ucarion, VA medical care, and orhcr social benefir programs. f n i cially, ics benefics were limi ted ro local public costs; lacer chis would be expanded to include private enterprise and iod iv.iduals as well. The 1 950 law marked a t h reshold in national policy concerning disas­ ters, from an era of disin.reresc co one of l i m i ted federal involvement (Table 1 - 1 ). Jr was the modesc forerunner of a lo.ng series of aces char would cwnulacively com m H che United Scares co prov.id.ing cens of billions of doll ars in assistance co individuals and com m u n i ries scricken by aaeural and ocher di sasters.

This obscure law was i ntroduced by Rep. Harold Hagen ofM.innesoca, whose i mmediate concern was co reliC\•e the financi11I burdens of repairing rhe farm-ro­ markee roads and bridges in recently flooded a reas along rhe Red River in M i n ­ nesota a n d North Dakora ( r h e same region where prolonged rioads would arc.race nari.onal accemion and $ 2 billion in federal assistance in 1 997) . .lcs sponsor pre­ sented a Jong IJsc of pasr special aces oF Congress, a l ong wi th other examples of Federal response co d i sasters through che Army Corps of Engi neers, che Farm Credit Adminisrmcion, and the Bureau of Public Roads. Bue unlike those ad hoc measures, rhe new legisiarion would prove co be the fi rst permanent and general d isaster law passed by Congress, and irs concepcs would become the model of all succeedi ng federal d .isaseer laws, albeir vasrly eirpanded in scope and cose. 1 l t s sketchy legislative hisrory states thae the law; " w i l l cover d i saster occll.[{.i ng anywhere in the entire cou n cry i ns tead of a particular sraee or local ity. -(Ir will} provide for an orderly and con t i n u i ng merhod of rendering assisca□ce co the stares and local governments in alleviating suffering and damage resulcing from a major peace t i me d.isas1er . . . . "1 The means provided ro accomplish that m is­ sion were, however, pars i monious as compared wirh the dismcer cornucopia of the 1 990s. The several hurricanes that suuck the Easr Coasc during the mid- 1 950s lnrroduced cbe public co the new concept of fede{a} d isaster assistance, albeir in limi ted form ( Fignre l - 1 ).

The peacetime missio□ of the fledgling program was to be overshadowed for decades by the Cold War. le was i n i tiall}' assigned co che Housing and Rome Finance Agency, which admi nistered Lhe federal urban renewal program. Bue from 1 9 5 3 LUml 1 974, rhe program was housed wirhin a series of civil defense agencies where i t languished in relative obscurity in rhe- midst of preparations for nuclear war (Table 1-2). ln 1 974, it r<!rurned m rhe arena of com m un i ry plan-

TABLE 1 - l Disasters and Congress: A Selective Chronology

�ar/y Peri�d-Negligible or Ad Hoc Fedem! A.sJistance

1 889 Johnsrown, Pennsylvania, dam break: 2209 deaths 1 900 Galveston, Texas, hurricane: over 6000 deaths 1 906 San Francisco Earthquake and Fire 1 926 South Florida Hurricane 1 927 Lower Mississippi River Flood 1 928 Lower Mississippi Flood Cancro! Act of 1 92 8

S c . Francis Dam (Calif.) break: over 400 deachs 1 9 3 3 1 9 3 6 1 938 1944

Long Beach Earthquake (Cal ifornia) Floods: Ohio and Lower Mississ ippi River Basins New England Hurricane South Florida Hurricane

Transitional Period-Limited Federal Di.raster Assistance

1 95 0 Disaster Relief Ace o f 1 9 5 0 (Pl. 8 1 -8 7 5 ) 1 9 5 3 Tennessee Valley Auchoricy Local flood Regulacion Program

established

1 95 4 - 1 9 5 5 1 9 5 6 1 964

1 965

1 968 1 969

1970 1 97 1 1 97 2

1 97 3 1 974

1 97 7

1 979

1 980 1 98 2

Small Busi ness Admin isrration Disaster Loan Program New England Hurricanes Naciooal Flood Insurance Program Ace (79 Star. 1 978) Alaskan Earthquake Alaskan Earthquake Assistance Ace (PL 88-4 5 I ) Hurricane Betsy: Gulf o f Mexico Soucheast Hurricane Disaster Relief Act (PL 89-339) National Flood Insurance Act (PL 90-448, Title XIII) Hurricane Cam i l le: Gulf of Mexico and inland areas Disaster Relief Ace (PL 9 1 -79) D isaster Relief Act (PL 9 1 -606) San Fernando Earthquake (California) Tropical Storm Agnes (Middle Aclantic scares) Rapid Ci cy flash flood (South Dakota) Federal Dam Safecy Ace (PL 92-367) Flood Disaster Protection Act (PL 93-2 34) Disaster Relief Act (PL 93-288) Water Resources Development Act (PL 9 3 -2 5 1 ) Earthquake Hazards Reduction Ace (PL 9 5 - 1 24) Executive Order 1 1 988: nonstructural floodplain management FEMA established Hurricane Frederic (Gnlf of Mexico coast) Hurricane David (Gulf of Mexico coast) Coastal Barrier Resources Act (PL 97-348)

Recent Period-Abundant Federal Disaster Assistance

1 988 Robert T. Srafford Disascer Relief and Emergency Assist. Act (PL 1 00-707)

1 98 9 Hurricane Hugo (Caribbean a n d Southeasc Aclancic scaces) Loma Prieca Earthquake (California)

1 9 9 1 Oakland. California, wildfires (contin11e1)

'&,

TABLE 1-1 Continued

1992

1993

1994

1995-1997 1996 1997

Hurricane Andrew (Florida and Louisiana) Hurricane Iniki (Hawaii) Midwest Floods Hazard Mitigation and Relocation Assistance Ace (PL 103-181) Northridge Earthquake (California) National Flood Insurance Reform Act (PL 103-325) California Floods Hurricanes Fran and Bertha (Norrh Carolina) Ohio River Floods Red River Floods (Minnesota, North Dakota)

FIGURE 1-1 Destruction at Winsted, Connecticut, due to flooding of the Mad River in Hurricane Diane, 1955. (Photo: Connecticut River Valley Flood Control Commission)

CHAPTER 1. SHOULDERING THE BURDEN

TABLE 1-2 Federal Disaster Agencies 1951 to Present

App__rox. Dates Responsible Agemy

Housing and Home Finance Agency (HHFA) Federal Civil Defense Administration (FCDA) Office of Civil and Defense Mobilization (OCDM) Office of Emergency Planning (OEP)

15

1951-1952 1953-1958 1958-1962 1962-1974 1974-1979 Federal Disaster Assistance Administration (FDAA) of U.S. Dept. of

Housing and Urban Development (HUD) 1979-Present Federal Emergency Management Agency (FEMA)

S011rce: Adapted from Frank P. Bourgin (no date), "Legislative History of Federal Disaster Relief,

1950-1974." Washington, D.C.: FEMA (mimeo).

ning under the newly created Federal Disaster Assistance Administration of the U.S. Department of Housing and Urban Development. From there, in 1979, it was transferred to the new Federal Emergency Management Agency, an amalgam of civilian and military preparedness programs established by President Jimmy Carter. In the 1980s, under the Reagan Administration, FEMA pursued a chimera called "integrated emergency management" that was intended to pro­ tect the American people from anything between a local flood and all-out nuclear war. Since 1993, under the Clinton Administration, FEMA has finally shed its Cold War baggage and has evolved into a genuinely domestic program with a strong emphasis on natural hazard mitigation. (See Chapter 3.)

After 1950, and more emphatically after the Federal Disaster Relief Act of 1970, the federal government assumed a permanent role as the primary source of funds and expertise to deal with major and some not-so-major disasters. The present dominance of federal assistance in disaster recovery was not intended or foreseen in the original 1950 law. As originally established by Congress, the fed­ eral disaster assistance program was to be:

1. Limited as to the scope of federal assistance to be supplied 2. Contingent upon a presidential disaster declaration finding that federal

assistance is require1 to supplement srate and local capabilities 3. Limited as to amounts of federal funding to be allocated to disaster relief

As discussed in following sections, the first of these limitations-scope of assis­ tance-was gradually modified by amendments to the act toward a much broader range of benefits. The second-that presidential declarations should assure that federal assistance is supplementary-still receives lip service in the cur­ rent version of the disaster assistance law (the 1988 Stafford Act), but has been found to be empty rhetoric by various policy reviews. Third, the cost of disaster assistance has risen from the initial appropriation of $5 million in 1950 to lev-

16 P.·\RT I. FEDERALIZING DISASTERS: FROM COMPASSION TO ENTITLEMENT

els as high as $10 billion in l994. Each ofchese limitations is considered in chefollowing sections.

Scope of Assistance At first, federal assistance was narrowly limited to emergency assistance andrepairs ro local public infrastrucrure. The l950 act authorized only (1) the "uti­lization or loan" to stares and local governments of federal equipment, supplies,facilities, personnel, and other resources; (2) discribution of food and medicinethrough the American Red Cross; (3) donation of surplus federal property roscares and local _governments; and (4) "performing on public or private landsprotective and ocher work essential for the preservation of life and property,clearing debris and wreckage, making emergency repairs to and temporary replace­mentJ of puJ;/ic f,Hifhie.s r,/ local governments damaged or destroyed in such majordisaster .. _ .. ; (emphasis added).

The rapid expansion in che scope o( allowable benefits through 1974 has beendocumented by Mileri4 and rhrough 1980 by May. 5 In 14 acts between 1950 and1980, the U.S. Congress vastly enlarged the disaster assistance func:ions of rhefederal government. Some of these laws responded ro a specific disaster (e .g., the1964 Alaskan Earthquake Assistance Ace) while others amended or replaced thegenei;ic 1950 acr (e.g., the 1974 Federal Disaster Relief Act). (See Table 1-1 fora partial list.) Among the benefits added ro che basic federal disaster programduring this period were temporary housing, granrs_ for repair of damaged stareproperty, unemployment compensation to disaster victims, legal, and mentalhealth services, individual and family grants, food coupons, and payments ro communities to offset lost tax revenue. A watershed in the federal roJe was crossed around 1969 with the authoriza­tion of benefits to individuals. Prior rn char time, federal assistance was directedprimarily to public unics of government.

It was not until the impact of Hurricane Camille on the GulfCoasc and Virginia and West Virginia that the Congress decidedthat a more formalized program of assistance to individualsshould be instituted. Part of this was accomplished on October I,1969, with the passage of PL 91-79. [Additional aces passed in1970 and 1974} continued and expanded this instirurionali:t�tionof disaster assistance for individuals.6

Today, the scope of both individual assistance (IA) and public assistance (PA)is very broad. IA includes temporary housing, individual and family grants,unemployment compensation, food coupons, crisis counseling, and legal ser­vices: PA covers debris removal, repair, restoration, or replacement of publicfacilities of many types (including beaches and trees in certain cases), commu-

Cll:\PTER I. SI!OULDERING THE BURDEN 17

nity disaster loans to cover shortfalls in local tax revenue due to a disaster (sub­ ject tO cancellation),7 and emergency response costs of srates and local govern­ ments. All of the foregoing are subject ro a 25 percent nonfederal cost share, unless it is reduced or waived by the president. (Related programs such as the National Flood Insurance Program and the Small Business Administration Dis­ aster Loan Program are considered later in this chapter.)

IA and PA programs differ significantly with respect to eligibility. W hile both are contingent upon a presidential declaration and limited to counties thereby listed, most individual assistance is further limited by financial need cri­ teria. Individual and family grants (IFGs), which are currently capped at about $14,000 per household, require that the recipients be too poor to qualify for a low-interest disaster loan from the Small Business Administration or other fed­ eral assistance. Temporary housing assistance requires that the applicant's pri­ mary residence has become unlivable and any insurance benefits available to the applicant are deducted from the federal grant.

By contrast, public assistance has no means test . Communities within declared counties are eligible for federal reimbursement of approved disasrec­ related costs to restore or replace damaged public facilities, regardlm of the eco­ nomic status of the community 01· its residents. Thus, financially hard-pressed indi­ viduals who do not meet the means criterion, as well as poor victims of nondeclared disasters, are ineligible for federal individual assiscance. Bur afflu­ ent communities covered by declarations may receive between 75 percent and 100 percent of their recovery costs from the federal government, even if they carry or could afford to carry disaster insurance. As argued in the Conclusion, chis inequity between IA and PA deserves reconsideration.

Presidential Declarations: The "Supplemental" Myth Throughout the hisrory of the federal disaster relief program, it has been sread­ fasrly maintained in statute, regulation, and agency dogma that federal assis­ tance is supplementary to state, local, and private resources. T he legislative history to the l950 Act clearly stated that limitation.

The purpose of the bill is to provide for an orderly and continu­ ing method of rendering assistance to the state and local govern­ ments in alleviating suffering and damage resulting from a major peacetime disaster and in restoring public facilities and in JUpple­ menting whatever aid the state or local governments can rende,· them­

selves8 (emphasis added).

Federal disaster assistance laws and regulations have never explicated how to assess what "aid the state or local governments can render themselves ... The key ace ion that unleashes federal benefits ro stricken areas is a disaster declaration by

18 PART I. fEOERJ\LIZING DISASTERS: FROM COMPASSION TO ENTITLEMENT

the president of the United Scares, pursuant to a request from the governor of an affected state. C riteria for the issuance of a disaster declaration have been notoriously vague. The 1988 Stafford Ace, still in effect in 1998, restates the language of the 1974 ace, which in rum was based on the 1950 law requiring " ... a finding char the disaster is of such severity and magnitude chat effective response is beyond the capabilities of the state and the affected local gov­ ernments and that federal assistance is necessary." 9 FEMA's regulations only slighcly embellish the sracucory language in providing chat a declaration is appropriate if:

l. The sic'uation is of s uch severity and magnitude that effective response is beyond the capabilities of the state and affected local governments; and

2. Federal assistance under the (Stafford) Ace is necessary to supplement the efforts and available resources of the state, local governments, disaster relief organizations, and compensation by insurance for disaster-related losses 10 (emphasis added).

Since the formation of the Federal Emergency Management Agency (FEMA) in 1979, requests from governors are channeled through FEMA regional direc­ tors and are processed by FEMA headquarters in Washington, D.C., which trans­ mits chem to the White House for action. Ultimacely, the decision as co whether or not co issue a declaration is a political choice by the president, often influ­ enced by congressional and media attention.11

The types of disasters to which che presidential declaration process applies were defined in rhe 1950 act to include "flood, drought, fire, hurricane, earth­ quake, storm, or ocher catastrophe .... " This list has been broadened by legisla­ tive amendments co the following, as of 1998:

"Major disaster" means any natural catastrophe (including any hurricane, tornado, storm, high water, wind driven wacer, tidal wave, rsunami, earthquake, volcanic eruption, landsLde, mud­ slide, soowsmrm, or dra1'ght), or, regardless of cause, any fire, flood, or explosion, in any pare of the Un.ired Scates, which in d ie derer­ miMtioo of the President causes damage of J,;ffide11t w-edty and magnimde to 111arram major disaster aui..ta,zre unJ�r chis Acr 10 s11p­ plmm1t the efforts am! aw1.ilt.1ble n!SOW'Cl!J of slate.s, l0<al gf11,'frnmmlI, and disaster relief organizations in alle11iaring the damage, loss, h,:mhb,p. or s1ef.fering c;wsed lhm·bJ ...

12 (emphasis indicaces lan­

guage retained from the 1950 ace).

Beginning with the 1974 Federal D isaster Relief Ace, a second category of presidential declaration was authorized for "emergencies."

CHAPTER 1. SHOULDERING THE BURDEN

"Emergency" means any occasion or instance for which, in rhe determination of the president, federal assistance is needed co supplement state and local efforts and capabilities co save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe in any part of the United Scates.13

19

However, the legal or functional distinction between an "emergency" and a "major disaster" has never been clearly specified and most declarations have been designated as "major disasters." Between January 1, 1953, and August 19, 1994, a total of 1258 major disaster declarations and 114 emergency declarations were issued (plus l 08 fire suppression declarations).14 Overall, about two-thirds of requests for declarations submitted co the president were granted.15

Following a rash of 90 major disaster and emergency declarations in fiscal years 1979 to 1981 (Figure 1-2), the General Accounting Office (GAO) reviewed rhe disaster declaration process in detail. Based on a review of 31 requests from governors, GAO found a "lack of consistency in the quality and method of assessments and lack of knowledge as co FEMA's methods of evalua­ tion ... (that) creates doubt as co whether the federal government is only pro­ viding supplementary assistance and whether each request is judged in a fair and equitable manner.'' l6 GAO recommended that:

FEMA reevaluate and improve its assessment criteria; publish the policies, procedures, and g uidelines which FEMA uses co evalu­ ate requests in the Federal Register; develop comprehensive, uni­ form forms for state and federal officials to use; require governors to provide the information necessary for the evaluations, and make it clear chat future requests which fully comply with Fed­ eral laws and regulations will help avoid delays in processing the requests.17

The Federal Emergency Management Agency accordingly prepared draft reg­ ulations that would reduce federal expendicures for disaster relief, by lowering the expected number of disasters to be declared as well as the level of federal cost-sharing_ ts The proposal would have limited che number of future presiden­ tial declarations by establishing a "state deductible" based on a per capita mini­ mum dollar amou nt adjusted by the ratio of the state/local price index co the national index. Of 11 1 declarations issued in prior years, 61 would have been ineligible for any public assiscance.19 FEMA also proposed to decrease the fed­ eral share of disaster costs from 75 percent co 50 percent and co exclude aid co special districts. Hearings in 1986 before the House Suhcomrnittee on Investi­ gations and Oversight generated adamant opposition from some members of

'V

20 PART l. FEDER,\LIZING DtS,ISTERS: FROM CO,\lPASSION TO ENTITLE,\IENT

FIGURE 1-2 The Pearl River at flood stage in Jackson, Mississippi, April 1979. Flooded buildings in foreground were constructed in reliance on a new flood control levee (beyond the highway in distance) that failed. (Photo by R.H. Platt)

Congress and local governments and the proposal was dropped from further con­ sideration. In 1988, the Stafford Act prohibired the use of an "'arithmetic for­ mula or sliding scale"' to deny disasrer assistance to any "geographic area." 20 In other words, Congress likes to keep the process imprecise, even if benefits occa­ sionally go co the undeserving. The absence of objective criteria preserves wide political discretion to the presidenc, a circumstance that has been questioned by some policy analyses such as Richard T. Sylves.21

Meanwhile the coses of disasters have been rising dramatically. Between 1970 and 1981, 376 major disasrers and 84 emergencies were declared, leading to direct federal disaster a$Sistauce. cosrs of $3.8 billion (unadjusted for inflation) for chat period. 22 By ccmrrasc., between 1989 and 1994, 291 declarations cost the U.S. Treasury over $34 billion (unadjusted for inflarion).2'

In 1992, the Congressional Research Service (CRS) characterized disaster assistance pursuanc to a presidential declaration as an "encitlemenr."

Once the presidenr declares a major disaster, the discretionary nature of the program changes. In essence, it becomes an entide-

CH,\PTER 1. SHOULDERING TIIE BURDEN

menc program. As long as viccims (public or individual) meet eli­ gibility requirements, they are entitled co disaster relief assis­ tance. While this ensures chat relief is provided to all victims [regardless of economic need) it may be a potentially expensive

u7 [ arrangement .... -

21

Noting a rising total of declarations per annum, CRS asked whether stare and local capacity to handle disasters was in face diminishing due, presumably, to limits on tax revenue and reliance on federal assistance. It suggested char "Con­ gress may wish to review che crireria used by the president to declare disas­ ters. "�5 le also noced che open-ended narnre of disaster declarations, which often continue co operate in the designated areas for many years after the disaster. CRS noted that as of September 1991, 184 disaster declarations were "open" and still disbursing funds. As of December 1997, California had 23 disaster declarations still open, daring back co che early \ 980s.26

Following further catastrophes-the Midwest Flood in 1993 and the North­ ridge Earthquake in 1994-both che House and Senate formed bipartisan task forces co review federal disaster policies. The declaration process, although not an issue for cruly catastrophic events, was thought co be overused in lesser disas­ ters, according to the Senate Task Force. le cited a 1994 audit by the FEMA Inspeccor General27 stating that "'FEMA has no method for evaluating the capa­ bilities of the stare and local governments ro effectively respond ro the disas­ ter. "28

The Senate Task Force called for a more objective process than chat being used for determining whether or not a presidential declaration should be issued. Ir also criticized the high probability of obtaining federal assistance for even rela­ tively local disasters: "If the anticipated availability of federal aid induces (more) individuals to locate social or economic activities in hazard-prone areas, then the total annual economic coses are higher with an aid program rhan without one. "29

The Task Force also cited a 1993 study by the National Academy of Public Administration (NAPA) which asserted that "Scace and local governments muse be able co successfully manage small and medium sized disasters on their own. ..... _lo T he Senate Task Force offered several proposals to reduce federal disaster costs: (1) establish more explicit and/or stringent criteria for providing federal disaster assistance, (2) emphasize hazard mitigation through incentives; and (3) rely more on insurance. 31 (This report is cl iscussed further in Chapter 3 .)

Contributing to the distortion of objective consideration of stare requests for disaster relief is what NAPA terms the "CNN Syndrome."

One of the most dramatic contextual changes for emergency man­ agement is the greater inrrusiveness and influence of news media. Disaster and emergencies provide dramatic news and the appetites of news media, particularly television, are insatiable.

tu.

"

22 PART !. FEDERALIZING DISASTERS: FROM COMPASSION TO ENTITLEMENT

This means that emergency management agencies wi11 have to perform under intense media scrutiny. It also means chat few emergencies and disaster will remain local-most wi11 now be "nationalized" and politicized as a result of media coverage .... The media pressures reluccant local and srate leaders to "ask for federal help," presidents to dispatch such help, and representa­ tives and senators to demand it on behalf of consricuents.32

In 1993, FEMA disaster assistance programs were also reviewed by the National Perfor1;1ance Review (NPR), chaired by Vice President Al Gore. This report echoed others cited earlier in urging chat "FEMA's basic role should be to serve as the federal government's coordinator of assistance.for scare and local gov­ ernments overwhelmed by disaster, and as a catalyse for deve.lopmenc of compre­ hensive state and local emergency management systems thac emphasize loss con­ trol and prevention."33

Concerning the proliferation of disaster declarations, NPR urged that: "Clear criteria need to be developed for disaster declarations to help conserve federal resources. Federal disaster relief processes should be designed to increase state and local incentives for mitigation (i.e., the use of zoning, building codes, a r,d ocher damage reduction measures)." 34

Catastrophes such as Hurricane Andrew, the Northridge Earthquake, and the Midwest Flood account for a large proportion of federal cUsascer outlays (see Chapter 2). Yet, the overall number of presidential declarations per year has been creeping upward. The average annual coral of decla.racions for 1984-1988 was 26 while che average for 1989-1993 was 42,3� and for 1993-1997, che average was 45 declarations per year (Table 1-3). President Clinton issued 189 declarac.ions during fiscal years 1996-1998, an average of more than one a week.

The percentage of requesrs accepted by the White House has generally been rising as well. From rhe 1950s until 1988, declarations per year averaged about two-thirds of chose requested. Since 1988, chis proportion has increased co chree­ quarters , with the Bush and Clinron administrations being the most generous in granting declaracions.36 For fiscal year 1996 (which ended a month before the national election), 72 declarations were issued by Presidenc Climon, comprising an all-time record of 85 percent of those requested (see Table 1-3). The previous record of 83 percent was attained by President Bush in I 992, also a presidenaal election year. According to University of Delaware political scientist Richard Sylves,37 the federal government has never applied formal, published tcricer1a to the declara rion process. Thus even though very large disasters seem co have increased in frequency and cost, it appears that federal largesse is also broaden­ ing co include a variety of smaller disasters tha t previously might have been con­ sidered as within sta re and local capabilities.

CHAPTl.':R ] . SHOULDERING THI:� BURDEN

TABLE l-3 Presidential Major Disaste r Declarations

Requested and Granted, Fiscal Year s 1984-1997

Fiscal Year No. Requested No. Declared % Declared

1984 48 35 72

1985 32 19 59

1986 38 3 0 79

1987 32 24 75

1988 25 1 7 68

1989 43 29 67

1990 43 3 5 81

75 1991 52 3

9

1992 56 46

1993 51 3 9

1994 51 36

1995 45 2 9

1996 85 72

1997 66 4 9

1998 n.a. 6 2

Averages: 1984-1988 1988-1992 1993-1997

35 4-1 60

25 33 45

82 76 71 64 85 74 n.a.

71 75 75

Sources: General Accounting O ffice, 1995 Dis::i.scer Assistanc

e: Information

on Expendicures and Prop osals co Improve Effecciveness

and Reduce Furure

Costs. (GAOIT-RCED-95-140 ), Washingcon, D.C.: GAO, p

. 3; Alan Rhine­

smith, Office of Management and Budgec. Daca provided t

o NarionaI

Research Council Committee on Assessing the Costs of Na

tural Disasters,

December 15, 1997.

n.a. = not available.

23

Expanding Federal Costs

Fueled by che potent combination of compassion and politics, congression

al dis­

aster outlays rose from the initial $ 5 million in 1950 to $52 million

in fiscal

1953 and have continued to soar after each new catastrophe ever since. The

1995

Senate Task Force esti_mated that to tal federal disaster-related expenses,

defined

broadly, between 1977 and 1993 amounted to over $119 billion (in

constant

1993 dollars).3 8 Although not on a pa r with th

e defense budget around

$250-300 billion per year, chis sc ale of federal spending on disaster

s could

scarcely have been foreseen by the d rafters of the original act in 1950.

Furthermore, Congress has never fun ded disaster assistance adequately ou

t of

regular appropriations, which have av eraged about $300 million annually

due-

24 PART I. Fr;or::RALIZING DISASTERS: FROM CO,\\PASSION TO ENTITLEMENT

ing rhe 1990s. Mose clisasrer assistance funding i.s provided from off-budgec "supplementary appropriarions" (giving a new tWJSt co rhe term !l(ppl�nM­ tary) according to rhe catastrophe of the momenc. As shown in Table 1-4, some years are relatively economical (e.g., 1983, 1988, and 1991) whereas others are budget-buscers (l973, 1978, 1990, 1992, 1993, and 1994). Fiscal years 1988-1997 roraled $30. l bi Ilion in supplememal appropriarioos for federal dis­ aster assistance. A rocal of $21.8 61llion was allocated by Congress ro FEMA for disrribucion under the Sra.fford Acr. The remaining $8.3 billion provided under supplemental appropriations was a.llocared ro ocher di�asrer response agencies, including primai:ily the U.S. Departmenc of Agriculture, the Depaccmenc of the Interior, the Small Business Administration, the Army Corps ofEnginee.rs, and the Depamnenc of Tmnsporcation. (See Figure 1-7 .) .FEMA nl.locates portions of ics Scafford Act funds to procure addirional services from these !).{ld ocher mis­ sion agencies. The very large allocations to FEMA since fY 1992 reflcacc rhe major ca.casrrophes of this decade: Hurricane Andrew, che Midwest Flood, the Norrhridge Earthquake, and various Aoods from 1996 ro 1998.

The 1995 Senate Task Force report cridcized rhe use of supplemental appro­ priacions ta fund disasrer ass.iscanc:e on the grounds chat (1) assiscance is coo gen­ eroLlS, (2) the practice appears co be fiscaJly irresponsible, and (3) nonemergtncy icems are funded under disastcr funcling.39 The cask force recommended:

• Tightening criteria for using the emergency safety valve of the Budget Enforcement Act

• Repealing the automatic exemption of emergency appropriations from budgetary points of order

• Cutting other spending to offset the cost of disaster assistance • Discouraging funding for nonemergencies in any supplemencal containing

an emergency designation • Funding disaster programs at historic average levels • Creating a Rainy-Day Fund to cover future expenses for federal disaster relief

Until 1996, supplemental appropriarionnvere routinely designated as "emer­ gency'' and were rhe.refore exempt from the limits of the I 990 Budget Enforce­ menc Acc. In 1996, perhaps in response to the Senate rask force report, chic 104th Congress offset supplememal appropriations for disaster ass..iscance wich rescis­ sions or prior appropriations including Sl billion in unspent FEi\1A funds.39

However, the l05th Congress made a further supplememal appropriarion of $3.3 billion co FEMA on June 12, 1997, ro pay for the costs of cbe Red River Flood with no rescissions. le is nor clear w1Jar tbc furore policy of the Wbice House and Congress will be regarding rescissions co cover additional supple­ mental appropriarioll5.� 1 1n May 1998, however, rescissions to offset a supple­ mental appropriation of $2.4 billion were rnken from programs nor dear to che

CIIAPTER I. SHOULDERING 1'! IE BURDEN

TABLE 1-4 Supplemental Appropriations for Disaster Assistance, Fiscal Years 1970-1998 (dollars in millions)

Fiscal Year Current dollars Constanc 1993 dollars

1970 $305 $l,o98

1971 485 1,659

1972 61 198

1973 2,805 8,682

1974 384 1.105

1975 32 .HS

1976 242 588

1977 904 2,033

1978 3,308 6,924

1979 1,452 2,793

1980 2,797 4,935

1981 233 373

1982 131 195

1983 25 _:,6

1984 153 210

1985 419 55 3

1986 547 702

1987 109 136

1988 55 66

1989 1,207 1,:,8s

1990 2,850 3,14 3

1991 0 0

1992 6,063 6, 224

1993 3,474 3,474

1994 8,412 8,245

1995 2,ns· 2,000

1996 3,900 6 3,600

1997 4,700' 4,400

1998 2,400 d 2,100

Sou,.w: FY 197-1-1994: U.S. Senate Bipanisan Task Foret· nn Funding Disaster

Relief, 1995, Table 5.1; I 995-1997: Office of Managemen t and Budget; l 998:

Legislative History to PL 105-17/4

"PL J04-l9, Ch. X (FEMA only, after Sl billion rescinded by PL 10/4-1'>4)

• PL 104-19 (FEMA share: $3.l billion) 'PL 105-18, Ch. IX (FEMA share: $3.3 billion)

d PL l 05-174 Appropriations for disaster relief and Bosnia peacekeeping forces

offset by rescissions from low-income hou.sing, Amcricor ps, hiling ual educacion,

and airport funds

25

Republican leadership, namely low-income housing, Arnericorps, an<l bilingual education (Table 1-4).

Supplemental appropriation corals, however, do not cell the whole story of federal assistance. They do not cover on-budget disaster appropriations, subsi-

26 PART I. FEDERALIZING DISASTERS: FROM COMPASSION TO ENTITLEMENT

dized loans and insurance payments, and ocher federal expenditures relating to disa,cers not pursuant to a disaster declaration.

The magnitude of federal liabiljcy for disaster assistance obviously depends in pan on the share of such coses assumed by nonfederal interests, chiefly state and local governments. No cosc-sruiring formula was established until the 1974 Disaster Relief Acr prescribed a 25 percent nonfederal share for individ­ ual and family grants.42 The nonfederal contribution co all ocher assistance remajoed subiecc co negmianoo unrd May 1980, when FEMA administratively adopted a general policy of requiring state and local governments to agree co pay 25 percem of the eligible coses of public assistance programs.4.3 This policy removed the admin.isc.racive problem associated with accempring co determine a "reasonable" commitmear for each disaster. Although horly challenged by members of Congress, this established d1e standard ratio of case-sharing chat was later incorporated .into che 1988 Scafford Acr. la effect, however, it belies the "supplementary" federal role b>· codifying chat the bulk of disaster coses will be federal. Also the nonfederal share ofren is covered by "in kjnd" or "safe" match, instead of new allocations.44 Sometimes even federal money can be used for the nonfederal share. After the Midwest Flood of 1993, federal commu­ nity development block granr (CDBG) funds were used for this purpose. (See Chapter 7.)

Even rhe 25 percent nonfederal share has proven negociable. ln approximately 15 severe disasters si nce 1985, the re9uiremenr of a 25 percent nonfederaJ share for marching assistance ro state and local governments has been waived to vary­ mg degrees. The nonfederal share for pub! ic assistance cosrs after rhe Norrhridge Eanh9 uake was set ar LO percenr and for Hurricane Andrew, ar zero. �1 (A non­ federal cost share for individual assistance, however, cannot be waived.)

THE BROADER UNIVERSE OF FEDERAL DISASTER PROGRAMS

Federal assistance provided from the president's Disaster Relief Fund under rhe Stafford Act accounted for 80 percent of rhe $5.4 billion in obligations by FEMA in fiscal year 1994.46 Bur it comprises only an indeterminate fraction of cocaJ federal disascer-rdated assisrance provided in that and ocher fiscal years. Approximately 30 federal programs of many cypes offer some form of disaster service or funding.47 Twenty-six federal deparrmencs and agencies wirh disaster response functions, plus rhe American Red Cross, are encompassed by the Fed­ eral Response Plan coordinared by FEMA.48

There is no systematic compilarion of rhe coral federal costs relating ro disas­ ters. In part this is a definitional problem since agency budgets may not clearly define which expenditures are disaster-related and which are nor. Ir also involves rhe problem of adding up apples and oranges: While the bulk of federal coses are in the form of grants, ocher commirmencs are made as low-interest loans and as

CHAPTl':R 1. SHOULDERING THE BURDEN 27

payments from government-sponsored insurance programs whose coses are defrayed ro varying degrees by premiums paid. There is also a political explana­ tion for the lack of a comprehensive federal database on disaster costs: Congress and the president may prefer to keep the true extent of federal outlays obscure ro avoid charges of "pork barrel politics" arising from the uneven and sometimes politically motivated allocation of disaster declarations and program ourlays. (See Chapter 2.)

Perhaps the only recent attempt to calculate the coral universe of federal spending on disasters was the 1995 report of the Senate Biparcisan Task Force on Funding Disaster Relief.49 The task force escimated federal disaster-related expenditures from 1977 through 1993 devoted to the four stages of disaster assistance: (I) preparedness, (2) emergency response, (3) recovery, and (4) miti­ gation (reduction of furure vulnerability). For the 16-year period under consid­ eration, the task force estimated the grant total of federal spending in all four phases amounted co approximately $119 billion in 1993 dollars (Table 1-5). Of that amount, direct grants to communities and individual victims, including but not limited to the Disaster Assisrance Program, amounced co about $64 bil­ lion. The remainder of che $119 billion, approximately $55 billion, cook the form of low-interest loans and insurance payments. In this case, the actual tax cost is much less than the total outlays, considering repayments of loans and pay­ ment of insurance premiums. The actual federal cost to taxpayers is represented by the amount to which insurance premiums are subsidized and loans are issued at subsidized rates or are forgiven (i.e., not required to be repaid).

Since 1950, Congress has est�blished several disaster-related programs out­ side the framework of the basic disaster assistance aces. These programs are not tied to a presidential declaration and several involve loans or insurance to relieve che burdens on the federal treasury of outright grants. These include principally the National Flood Insurance Program (NFIP), the Small Business Administra­ tion (SBA) disaster loan program for homes and businesses, the Farmers Home Administration (FmHA) disaster loan program, the Federal Crop Insurance Pro-

TABLE. 1-5 Federal Expenditures for Disaster Assistance: Grants, Loans, and Insurance for Fiscal Years 1977-1993 (578 declarations)

Type of Assistance Preparedness Mitigarion Response Recovery TOTAL

1993 Dollars (millions)

$2,232 $27,073

$3,377 $86,989

$119.671

Percent of Expenditure(%)

2 22

3 73

JOO

S011m: U.S. Senare Bipartisan Task Force, 1995, Table I. I

28 PART I. ft:m:RALIZING DIS,\STERS: FROM CO,\\l'ASSION TO ENTITU;MENT

gram, and disasrcr-relaced "community development block grants" (CDBGs) administered by the U.S. Department of Housing and Urban Development. Foremost among rhese programs is rbe National Flood Insurance Program, which is considered in further detail here and in lac.er chapters.

The National Flood Insurance Program Ninety pCFcenc of nacura1 <li.sasccrs in che United States are flood related, and the bulk of disu.srer costs have long_ been incurred in floods.jl! In 1956. Congress authorized a flood insurance program, hue ic was never funded or implemencr::d. Following Hurrrcane Bersy ia 1965, Congress directed the new D.S. Deparr­ ment of Housing and Urban Developmem (HUD) ro reE..'<amine the concept of a national flood insurance program. Boch rhet HUD reµon?1 wrirren by resource economist Marion Clawson, and a parallel report by che Task Force on Federal Flood Control Policy,52 chaired by geographer Gilbert F. White, tentatively pro­ posed a trial of flood insurance as a poremial way to divert some of the costs of floods from the federal taxpayers co properry owners paying insurance premi­ ums.13 The lllrter report ,vas cransmirred to Congress by President Lyndon B. Johnson together with Executive Order I l296 declaring a new federal policy on floodplain management. Coogi;ess esrnbli.shed rbe Narional Flood Insurance Pro­ gram (NFIP) in 1968. 5'1

According to political scientist Pecer May, the NFIP involved a ""bargain with interest groups (e.g., homeowners, homebuilders, _and communities) over the appropriate scrucn.tring of regulatory and insurance provisions. "55 Esscnrially, Congress undertook to make low-cost flood insurance available co property own­ ers (in the absence of affordable flood insurance from the private insurance indus­ try). NFIP coverage, however, would only be available to owners of property in local communities char enact floodplain managemenc regulations sufficienc to meer minimum federal srandards. This esrablisht<l a quid pro quo arrangement char sought to provide affordable flood insurance in communities rhat commit­ ted themselves co reducing future vulnerability (i.e., mitigation). The NFIP also began to map local flood hazard areas, crudely at first and later wirh improved derail. '"Flood hazard rare maps"' (FIRMs) have now been prepared for over 20,000 communities at a cost of more than one billion dollars (Figures 1-3 and 1-4). More than 18,200 of those communities (including counties) are now enrolled in rhe program. FIRMs serve a dual purpose: (l) to idencify areas of flood hazard that muse be locally managed through land use and building regu­ lations, and (2) to provide data needed to calculate NFIP insurance premiums.

The NFIP had lircle immediate effect in rtducing disaster assistance, which reached $2. 5 billion for fiscal year 197 3. 56 Forry-eight presidential disasters wer_e declared in 1972, all but three of which involved flooding, but flood insur­ ance coverage was not yet widely available.

In the wake of cwo flood disasters in 1972-Tropical Storm Agnes on the East

0£!.UU•LWT 0• 1111'.Klff M) "1'1W �Ulnlf'Sf hwtll._.,...w,,....,_

il0LBR00K MA

r-·�C.(lll l'OU�--

--•

.__..'\,

. �'\. '

~ ... !

""

.-, ..

�<, y

✓ .?'

1

.J"r'f!tll.\111.1.tJ,CAll. � g______]!Ol _ lltUO .JOOI nn

: ��0�1-:;� ""' 1 : ���: � .w _ ... APRIL 2B 1972

FIGURE 1-3 An early example of a Flood Insurance Rate Map (FIR.iv\) for Holbrook, Massachusetts. Shaded areas rep resent "l 00-year floodplains." (Federal Insurance Administration, HUD)

u

w:

30 PART I. FEDERALIZING DISASTERS: FROM COMPASSION TO ENTITLEMENT

'•

FIGURE 1-4 A FIR.l\1 for Boulder, Colorado, ca. 1980 showing 100-year (dark shading) and 500-year (light shading) flood hazard areas.

Coast and the flash flood in Rapid Ciry, Sour!, Dakota-Congress passed the Flood Oisasrer Protection Act of 1973_>1 This act enlarged the scope of the incipient NFIP and _required pw:chase of a flood insurance policy by anyone receiving federally related financing involving f-loodprone property. le also added mudslides and erosion as insurable hazards under the NFIP.

The National Flood Insurance Program has expanded rapidly since 1973. As of September 30, 1998, over 4 .1 million policies covering more rhan $482 bil­ lion in floodprone structures and their contents were in force. Coverage increased by 14.3 percent during fiscal year 1997 as a result of aggressive marketing of flood insurance by FEMA and the prospect of heavy flooding on the Wesc Coast due co El N ifio. During seven years between 1984 and 1997, the NFIP cook in more revenue than it paid our. Bur in the other seven years, including all buc one since 1992, che program's outlays exceeded its revenue, resulting in nee bor­ rowing from che U.S. Treasury. As of the en<l of FY 1997, the program was in the red for a total of$ 1 .1 billion (Table 1-6).

. Yet only an estimated 20 co 25 percent of flood prone properties are covered under the program nationally. In the Midwest Flood of 1993, only about one out of five flooded strucrures was insured. Toral NFIP payments in chat disaster

I

CHAPTER I. SHOULDERING THE BURDEN 31

TAULE 1-6 National Flood Insurance Program: Policies, Coverage, and Net Income or Loss: FY 1974-1997

No. of Coverage Net Income Fiscal Year Policies ( l 000s) ($ billions) or (Loss) 1974 385 $8.4 n.a. 1979 1650 $62.5 n.a. 1984 1831 $115 ($61 mill.) 1985 1955 $133 $273 mill. 1986 2075 .$133 $29.7 mill. 1987 2079 $158 $171 mill. 1988 2101 $169 $183 mill 1989 2200 $179 ($ 146 mill.) 1990 2378 $203 $73 mill . 1991 2506 $219 $169 mill. 1992 2561 $229 ($20.4 mill.) 1993 2725 $254 (602 mill.) 1994 280-.! $274 $269 mill. 1995 3261i S325 ($576 mill.) 1996 3546 $369 ($536 mill.) 1997 3811 $422 ($117 mill.)

1986-1997 (CUM. TOTAL) ($1.l billion) --·-- - -------- - ---·- S,mrce: Federal Emergency �fanagemenr Agency/Federnl Insurance Administ:r:i.tion dara

amounted co $293. million, the third highest payom in the history of the pro­ gram (behind Hurricane Hugo in 1989 and the Northeast winter scorms of 1992-1993). Bue this still amounted co only 2 percent of estimated coca! losses of $12 billion in the Midwest Flood, and only 7 percent of direct federal coses paid by taxpayers amounting to $4.2 billion. 58 (See Chapter 7 .)

The NFIP is heavily coastal. (See Tables 1-7 and 1-10.) About 58.7 percent of policies in force and 62.8 percent of insucance coverage in force pertain co coastal communities. As defined by the NFIP, these include municipalities and counties (in the case of unincorporated areas) that border on coastal waters. An unknown portion of the coverage in these communities applies to inland flood hazards, but presumably the largest share of the policies and value of coverage is on or near the actual coastlines. The program is greatly in demand by the own­ ers of recent and opulent development ac the ocean's edge (Figures 1-5 and 1-6).

One of the most serious weaknesses of the National Flood Insurance Program is the problem of repetitive losses. The program bas been notoriously willing to continue insuring structures despite repetitive claims, often with little increase in premium. According to a recent study by che National Wildlife Federation, 74,500 properties (2 percent of insured properties) have accounted for 200,182

32 PART I. FEDERALIZING DISASTERS: FROM COMPASSION TO ENTITLEMENT

TABLE 1-7 National Flood Insurance Program Activity: Coastal and Noncoastal Communities (as of M.arch 31, 1997)

Coastal Communities

(% of NFIP Tora!) Noncoastal Total V-Zone Communities

Communitl Only (% of NFIP Tora!) Total NFIP Policies in Force 2.1 mill. 77,298 1.5 mill. 3.6 mill.

(58.7%) (2.1%) (41.3%) Insurance in Force $247 bill. 54.1 bill. $146 bill. $393 bill.

(62.8%) (2.2%) (37.2%) Toca! Premium $758 mill. $27.5 mill. $522 mill. $1.2 bill.

(63.1%) (36.9%) Average Premium $352 $720 $343 $348 Average Coverage $114,520 $115,615 $96,230 $106,960

(post '8 l) $103,327 (other V)

No. of Claims" 316,472 24,084 331,942 648,414 (48.8%) (3.7%) (51.2%)

Amount of Paid $4. l bill $406 mill. $3.4bill. $7.5 bill. Losses• (54.8%) (5.4%) (45.2%)

Average Loss" $12,972 $25,359 $10,215 $11,561 (post '81) $14,645 (other V)

S011rre: Federal Emergency Monogement Agency (unpublished data) • January I, 1978 chrough March 31, 1997 6 Defined by FEMA as all communities containing a "coastal high hazard area" (V-zone); includes inland portions of such communiries

claims, comprising over one-quarter of all NFIP claims. Payments for repetitive loss prnperties have amounted to $2. 58 billion, or 40 percent of all NFIP payments. Approx­ imately 37 percent of repetitive loss properties flooded three or more rimes with payments totaling $1.4 billion (53 percent of repetitive loss payments).59

The repetitive loss problem reveals a major difference between governmental and private insurance plans. While the latter would either cancel coverage or raise premiums significandy after repetitive losses, rhe government is reluctant to offend anyone. Indeed, there is substantial l obbying by privace property inter­ ests to protect availabili ry of NFlP coverage ar reasonable rares, regardless of acmal loss experience. Federal flood insurance thus is equivalent co an "entitle­ ment" char property owners claim as a right, even when it is subsidi:£ed by tax­ payers. (See Chapter 6.)

FIGURE 1-5 A nearly beachless Ocean City, Maryland, in the mid-l980s. This resort area within a day trip of Washington, D.C., and Baltimore has since undergone repetitive beach nourishment projects. (Photo by R.H. Platt)

FIGURE 1-6 New construction at Sullivan's Island, South Carolina, ca. 1991, on a shore recently ravaged by Hurricane Hugo. These structures are ele­ vated, as required by the NFIP, and are eligible for flood insurance although perched precariously on an eroding beachfront. (Photo by R.H. Platt)

Ci.

,,

34 PART 1. FEDERALIZING DISASTERS: FROM COMPASSION TO ENTITLEMENT

Small Business Administration Disaster Loans The Small Business Administration (SBA) Disaster Loan Program was initiated by Congress in 1953. Unlike ocher SBA activities, disasrer loans are authorized to be issued nor only rn small businesses bur also to homeowners, renants, and nonprofit organizations. Loans are made co such entities that are victims of dis­ asters (as declared by ei cher the president or by rhe administrator of SBA) to help cover uninsured losses. Mose disaster loans are made at below-market interest rates (currently about 4 percent) for long terms (up to 30 years), thus reflecting a federal subsidy as compared with marker loans. SBA expects to be repaid and refers applicants' who lack the ability to repay a loan to FEMA for a possible "Individual and Family Grant," available to low-income households after a pres­ identially declared disaster. SBA secures ics loans, when possible, with liens on the relevant real property and may foreclose in the event of nonpayment. How­ ever, its claim would be subordinate to chose of prior mortgage lenders.60

Since 1953, SBA has approved slightly over 1.4 million disaster loans for a total of $25.5 billion. Loans to homeowners and tenants account for 77 percent of the number of loans and 41 percent of the dollar value, with the remainder largely extended to small businesses. The largest disaster event in the history of the program, not surprisingly, was the Norchridge Earchguake of 1994, which contributed to a total for that fiscal year of 125,861 loans amounting to $4.1 bil­ lion, about four times the recent annual average of about one billion dollars.61

The actual loss rare on SBA disaster loans over the life of the program is 8.27 percent. Table 1-8 shows the number of disasrer loans made by SBA since 1988.

TADLE 1-8 Small Business Administration Disaster Loans

Value of Fiscal Year No. of Loans Loans ($millions) 1988 13,456 $234 1989 5,330 148 1990 51,970 1,320 1991 12,451 356 1992 23,417 794 1993 58,644 1,673 1994 125,861 4,159 1995 45,041 1,217 1996 37,822 987 1997 49,515 1,138 1998* 20,642 495 Total ( 1988-98*) 444,149 $12,521 Total (195 3-98*) 1,407,042 $25,587

So,,,.ce: Small Business Adminisrrarion (unpublished darn)

*Through May 31, 1998

CHAPTER I. SHOULDERING THI': BURDEN 35

U.S. Department of Agriculture Disaster Programs Agriculture is an inherently risky occupation, in which the federal government has long played a paternalistic role. Under a myriad of differenr authorities, the U.S. Department of Agriculture (USDA) provides crop insurance, farm disaster payments, and emergency disaster loans to farm-related businesses. In the midst of depression and drought, the Federal Crop Insurance Corporation was created by the Agricultural Adjustment Acr of 1938 (PL 75-430) to insure wheat pro­ ducers against unavoidable losses.62 Until the Federal Crop Insurance Act of 1980 (PL 96-365), the federal crop insurance program applied only to selected crops in particular counties, with no subsidy in the premium charged to farm­ ers. It was thus a little-used tool for protection against disaster-related crop losses. The 1980 ace sought to expand coverage and to subsidize premiums. Farmers still resisted signing up for crop insurance, in part because ourright dis­ aster payments were becoming increasingly common. By the time of the Mid­ west Flood of 1993, participation in the crop insurance program was about 35 percent nationally.63 In any event, the crop insurance program was nm a self-sup­ porting program. Between 1977 and 1993, the program paid insured farmers a total of$ 13.4 billion at a net cost ro the federal taxpayer of $9.9 billion. Dur­ ing the same period, the Farmers Home Administration (FmHA, now the Farm Service Agency) extended $134 million in disaster loans.64

These programs still failed ro serve the demand in Congress to indemnify farmers against disaster losses. Beginning in 1988, Congress has approved a series of ad hoc supplemental appropriations to fund agricultural disaster pay­ ments among other federal disaster benefits programs. Payments are available ro farmers who experience a greater than 40 percent loss in production in a given year. The amount of the payment is the difference between that 40 percent "self­ absorbed" loss and the market price of the commodity in quesrion. This has resulted in some very large outlays of federal dollars to farmers as direct grants, as opposed to insurance or loans. Under the 1988 act, USDA made cash disaster payments of $3.37 billion to farmers. Several billions more have been expended under subsequent appropriations. After the Midwest Flood of 1993, the USDA disbursed approximately $1.4 billion in disaster payments, in addition ro $1.0 billion in crop insurance payments and $14.7 million in emergency disaster loans through the FniHA.65

The prospect of outright disaster payments discouraged farmers from signing up for the annual costs of participation in the crop insurance program. Congress was undermining its own efforts to move disaster costs toward a self-funding basis by its liberal funding of disaster grants with no contribution by the recip­ ient. However, a policy review after the Midwest Flood of 1993 led to adoption of PL 103-354 in 1994, which provides the following:

• Mandatory participation if farmers are to receive any ocher USDA subsidies • A catastrophic coverage policy for farmers

36 PART I. fEDERALIZlNG DISASTERS: FROM COMPASSION TO ENTITLEMENT

• Analysis and a scoring of disaster spendi ng with crop insurance as the only pro­ duction agriculrure risk management program

• Delivery of catastrophic coverage by both private sector insurance companies and the USDA through its Farm Service Agency

• Legislative constraints limiting Congress' ability to pass furure ad hoc disaster paymencs66

According to Thomas Zacharias , however, the jury is still our as to whether this high-minded legislation will quench the thirst of Congress to vore for fur­ ther agriculrural 'disaster payments.67

HUD Community Development Block Grants Congress in the Community Development Act of 1974 established a program within the Department of Housing and Urban Development (HUD) to shift fed­ eral funds back to local communities to develop "viabl e urban communities, by providing decent housing and a suitable living environment and expandi ng eco­ nomic opportunities principally for persons of low and moderate income.68

These funds were largely encrusted to local governments to use as they wished within the general parameters of the act. Subsequently, the CDBG device was employed by Congress to channel additional disaster relief funds to local com­ munities. Most of these funds were earmarked for HUD in the large supple­ mental appropriations bills adopted after major disasters since the l ate 1980s. After the Midwest Flood of 1993, $450 million was allocated to HUD to be dis­ tributed as CDBG disaster funds co affected communities. Some of the recipients used this money as their " nonfederal share" toward the cost of buyouts of flood­ prone property and other federal assistance. (See Chapter 7 .)

The allocation of CDBG funds for disaster reli ef is especially difficult to track: even the U.S. General Accounting Office complains that "HUD officials could not provide accurate data on the amount of CDBG funds used for disaster assis­ tance. Program appropriations for fiscal years 1989 to 1994 ranged from about $3.1 billion to about $4.4 billion."69

Federal Tax Deductions Congress provides additional benefits to disaster victims through the federal tax code. Businesses in particular may write off many kinds of uninsured expenses involved in rescoring property to predisaster condition. Pursuant to a major dis­ aster declaration, homeowners and businesses may claim a casualty loss deduc­ tion for uninsured losses co real and personal property. Loss in value co a struc­ rure is based on the difference in value before and after the disaster as established by qualified appraisers . The disaster must be "sudden" as opposed to "gradual." Casualty losses to property held for personal, as opposed to business, use are reduced by 10 percent of the taxpayer's adjusted gross income. There is no avail-

CHAPTE':R 1. SHOULDERING Tl-IE l3URDEN

TA0LE 1-9 Services and Costs Incurred by American Red Cross for Hurricane Hugo, 1989

Services/Items Caribbean South Carolina Total Cose to ARC $52,304,827 $ 14,4.'14,231 $66,739,058 Cases Opened 90,000 35,403 125,403 She leers 40 35 75 Meals Served 11,025,67 l 1,133,895 12,159,566 Volunceers 5115 7275 12,390

Source: American Red Cross (unpublished data)

37

able source of data on the costs of the casualty loss deduction to federal tax rev­ enue, but it is presumably a considerable hidden federal subsidy, especially for owners of coastal homes whose appreciated value far exceeds che limics of avail- able flood insurance.

American Red Cross Since its founding by Clara Barton in 1889, the American R ed Cross (ARC) has served as the leadi ng nongovernmental provider of disaster relief to individuals, families, and communities. Before the federal disaster program was initiated in 1950, ARC along with churches, Salvation Army, and other charitable organiza­ cions were the only sources of aid to disaster victims. Even in the present era of lavish federal benefits, the American Red Cross still is the major fromline source of the basic necessities of food, clothing, shelter, and personal counseling. Its local chapters and national organization collaborate in setting up shelters and mass feeding facilities for any disaster regardless of governmental declarations. The cost of ARC programs is normally covered entirely by private donations. In some cases, ARC is reimbursed by FEMA for special services relating to Stafford Act benefits such as temporary housing.70 Table 1-9 indicates the scope of ARC activities in one disaster, Hurricane Hugo.

CONCLUSION: THE PROBLEM OF MORAL HAzARD

Aucborizations for pr:incipal federal gram programs, as summarized by the Office of Management and Budgec (figure 1-7), display a scrong upward trend since FY 1988. Further details on che spatial discribucion ofScafford J\ct outlays, in pari:icular, are provideJ in Chapter 2. It is appropi;iare ro condude thjs brief e.xploracion of che federal disaster ass iscance universe with the question chat drives chis book, namely, do federal disaster programs comribuce u:radvercendy to the very disaster losses chey are intended to relieve. This is the problem known in the insurance industry as "moral hazard.".

38 PART I. FEDERALIZING DISASTERS: FROM COMPASSION TO ENTITLEMENT

,o .. •-

8 :---

. - .

I iii

I • i

l

•'

r

I a.

[�- --·

f6Cltptdt'/'9"1fl�

�.,.. �Mta,ot ::__J� OOlf'MWI\

10..year average

-� '

! Y..Y.:t"U.U///.1_

1988

� .. -1

199S 19i5 1997

FIGURE 1-7 Major disaster assistance authorizations: fiscal years 1988-1997 (in billions, not adjusted for inflation). Compiled by the Office of Management and Budget for the National Research Council Committeeon Assessing the Costs of Natural Disasters, December 1997.

As early as 1973, a White House policy paper recognized char federal disas­ ter assistance had become counterproductive by replacing rather than supplement­ ing nonfederal efforts.

The series of disaster assistance laws chat culminated in d1c pas• sage of PL 93-385 in August, 1972 made rhe federal govemme.nc virtually the sole provider of recovery assistance in case of a major disaster. The concept of such assiscancc being supplemencary co char of che scare and local governments remained as an expression of inrenr, bur was less operac1ve in practice. Aho rhtt benefi11 were so gmerous that indit-idual,, bmi,mses, and com11umitie1 had littl� inam­ tive to take initiatives to red11ce personal and local hazards1 1 (emphasis added).

These benefits have ofren been provided without significant strings attached co reduce vulnerability to future losses co rhe same property or community. Reperirive losses co the same insured properties account for more than 40 per-

CHAPTf,;R I. SHOULDERING THI-: l3URDEN 39

cent of NFIP payments, according to a recent study by the National Wildlife Federacion .72

In 1985, Bruce B. Clary characterized federal disaster policy as "a textbook example of incremental decision making." With reference ro Lowi's typology of public policies as distributive, redistribucive , and regulatory, Clary viewed fed­ eral disaster policies before the late 1960s as "almost entirely distributive" and counterproductive .

The panern of increasing benefits, along with progressively more liberal eligibility criteria and decreasing interest rares for federal loans, continued into the mid- l 970s. By chis rime the federal share of disaster coses had risen co 70 percent (from l percent in 1953). The net effect was ro lessen significantly the likelihood of large property loss from a natural disaster. Bur, in many cases, it promoted poor locational decisions, since the federal government was subsidizing much of the risk.73

Beginning in the late 1960s, particularly with che creation of the National Flood Insuran_ce Program in 1968, Clary identified a shift in federal policy coward "an increasing shift coward regulation." He viewed this as a desirable trend, especially as accompanied by the imposition of a minimum 25 percent nonfederal cost share for disaster assistance.

Yet, in 1994, the Executive Summary of the House Bipartisan Natural Dis­ asters Task Force 7� echoed the 197 3 White House report: "If state and local gov­ ernments believe that the federal government will meet their needs in every dis­ aster, they have less incentive to spend scarce state and local resources on disaster preparedness, mitigation, response, and recovery. This not only raises the costs of disasters to federal taxpayers, but also co our society as a whole as peop le ace encouraged to take risks they think they will not have to pay for. "75

Repeated flooding in California in the winter of 1995, which resulted in the declaration of all counties in that state as disaster areas, reinforced pessimism regarding the effectiveness of past efforts to reduce vulnerability. During the first round of these floods, a front page New York Times article reported criticism of federal policies under the headline: "California Storm Brings Rethinking of Development-A Cycle of Destruction-Some Officials Begin Exploring How to Keep People From Building in Flood Zones." The article reported that:

Critics of federal policy on disaster relief say it has long en­ couraged people tO sray in areas where homes probably would nor be built. ... There is no incentive for a homeowner co buy in­ surance or to move out of harm's way, critics say, when flood

,

40 PART I. FEOERAI.IZIKG DISASTERS: FROM COMPASSION TO ENTITLEMENT

victims know they can rely on federal grams and loans after a flood. 76

Although this newspaper article was based largely on the views of environ­ mentalists, it was reinforced by testimony in February 1995 on behalf of the Association of Srate Floodplain Managers.

If we as a nation are going to bring escalating disaster costs under control we need co embrace the concept of hazard mitigation. Our flood poUcies have nor embraced hazard mitigation and in part are co blame for escalating disaster damages. On an individual project basis, flood control projects have reduced flooding for design floods. Bue at the same time chese policies have enticed additional development increasing the damage potential for severe floods, or have silencly promoted the transfer of flood dam­ ages from one property co another. Likewise, with a benevolent federal government, there has been lircle incentive ac che local and stare levels of government ro minimize the creation of new hazards .77

Such views regarding the counterproductive impact of federal disaster pro­ grams has stimulated reconsideration of the role of hazard micigauon as reflected in the crearion of a FEMA Mitigation Direccorate in 1994 and the drafting of a National Mitigation Strategy (FEMA 1995).78 The evolution and debates con­ cerning the meaning of "mitigation" will be examined in Chapter 3.

Mose commentarors on federal disaster relief policy seem co agree implicitly chat it is appropriate for the federal government ro provide benefits to disaster victims, subject to appropriate conditions. Seldom is the wisdom of federal dis­ aster relief per se called into question. In a departure from the prevailing view, philosopher William B. Irvine asks why victims of natural disasters have a "moral claim" on federal tax money, whereas victims of ocher personal losses, such as a house fire or a stock marker loss, have no such claim. Irvine argues that reliance for recovery should be placed with private insurance coverage (which rebuilt downtown San Francisco after the 1906 Earthquake) and with charitable philanthropy. He would thus return co the period before 1950 when disaster recovery was not a federal function.

W hen che governmenr adopts (either eitplicicly or; implicitly) a policy of making such compensation [for natural disaster losses], ic inadvercemly secs che stage for even greater disasters in the future .... If, after aU, che government adopts a policy of bailing our chose who lose che bee they place when chey pass up earth­ quake insur:ince or build che1r home on a beach, the government

CHAPTER 1. St IOU LOE.RING TIIE BURDEN

unintentionally encourages people to engage in this sort of behav­ ior ("why pay for disaster insurance when you can gee it for free from the government?"). In ocher words, disaster relief today can result in additional disasters tomorrow.79

41

This perception is reflec:ted in the following comment of a real estate developer at North Topsail Beach, the scene of major damage due co Hurricanes Bertha and Fran in 1996, and a reprise by Hurricane Bonnie in 1998: "Do you realize the risk chat people rake every day when people invest in the stock market? People every day take much more risk than buying property on a beautiful beach."80

In a similar vein, but from a homeowner's point of view, ABC News reporter John Scossel, the recipient of federal flood insurance payments for the loss of his oceanfront home, considers such assistance to be "welfare for the wealthy."

In 1980 I built a beach house on the edge of the ocean on Long Island. It was an absurd place to build a house. One block down the road was a desert-like wasteland where a dozen houses had eroded away a few years earlier. Still, my eager-for-the-business architect said, Why not build) If the ocean destroys your house, the government will pay for a new one.

Ir seemed odd that the government would encourage people to take foolish risks, bur che contracrnr was righr. If the ocean rnok my house, Uncle Sam would happily pay co replace it (up to $350,000). Thanks, taxpayers' It's called national flood insur­ ance .... During a fairly ordinary storm, the ocean knocked down my government-approved pilings and ate my house. It was an upsetting loss for me, but financially I made our just fine. Federal flood insurance paid for the house-and its contents.81

Finally, as an ironic commentary on how far che pendulum of federal disaster response has swung since 1950, the following editorial entitled "Awash in Tax Dollars" appeared in the Raleigh, North Carolina, NewJ & Obm·ver actually object­ ing co the overgenerosity of federal assistance to coastal communities struck by Hurricane Fran a year earlier.

In the Wake of-Hurricane Fran, North Carolina's coasral commu­ nities and residents mined taxpayer accounts to rebuild in fragile areas. Such generosity encourages overdevelopment, ac great expense .... The allocation of hundreds of millions in taxpayer dollars has led the federal government co undermine what state officials have been crying to do for decades--<liscourage develop­ ment in coastal areas that are vulnerable not just to hurricanes bur co heavy storms of any kind.82

42 PART I. FEDERALIZING DISASTERS: FROM COMPASSION TO ENTITLEMENT

APPENDIX TO CHAPTER 1

National Flood l nsurance Program Activity for Coastal Counties by State (Excluding Great Lakes)

Premium Tora! Total Claim Policies in Revenueb Coverage" No. of Payments'

Force" ($ O00s) ($ millions) Losses' ($ 000s) Alabama 21,690 8,704 2,258 10,938 108,847 California 181,742 74,125 28,392 23,345 199,331 Connecticut 23,698 14,693 3,157 11,166 83,606 Delaware 15,247 6,708 1,848 2,589 15,305 Florida 1,624,220 532,534 190,850 92,456 1,069,313 Georgia 35,846 15,834 5,133 2,061 17,496 Hawaii 47,687 14, 11 l 5,433 3,175 53,155 Louisiana 265,977 102,389 27,812 115,517 1,113,016 Maine 4,457 2,617 528 1,943 11,927 Maryland 31,470 7,972 2,706 1,890 10,899 Massac h user ts 29,720 18,818 4,549 18,991 188,689 Mississippi 19,172 7,268 1,911 5,931 33,108 New Hampshire 1,915 991 181 1,002 5,193 New Jersey 121,128 61,447 15,165 41,095 296,846 New York 45,103 30,022 7,056 23,147 186,224 North Carolina 57,035 24,503 7,213 19,644 218,359 Oregon 9,038 4,194 1,120 1,059 9,050 Puerto Rico 42,495 13,242 2,198 14,106 65,088 Rhode Island 6,128 4,227 764 1,229 8,661 South Carolina 105,311 43,506 14,662 21,742 384,120 Texas 123,826 45,091 14,069 50,015 406,115 Virgin Islands 2,014 1,099 202 2,030 21,514 Virginia 9,913 4,408 1,139 1,096 3,695 Washington 7,632 3,302 819 1,355 16,489 TOTAL 2,833,044 1,041,820 339,177 467 4,525,401

Source: FEMA (unpublished daca) "AsofJune30, 1998 • Currenc year 'Over life of NFIP

NOTES

I. Frank P. Bourgin (no dare). "'Legislative Hisrory of Federal Disaster Relief, 1950-1974." Washington, D.C.: FEMA (mimeo).

2. U.S. Code Cong. and Admin. New,. Legis. Hise. (1950), 4024. 3. PL 81-875, sec. 3. 4. Dennis S. Mileti (1975). DiJa,ter Relief and Rehabilitation in the United State,: A

Rmarch Ammnent. Monograph NSF-RA-E-75-009. Boulder: University of Colorado Inscicure of Behavioral Science, Table 111-1.

CHAPTER I. SHOULDERING THE BURDEN 43

5. Peter May (1985). Recovering From Cara,rrophe,: Federal Di.ra,ter Relief Policy and Pol­

itic,, Westport, Conn.: Greenwood Press, Table 2.1.

6. General Accounting Office (GAO) (1980). Federal Di,asrer AJJiJtance: \Vhat Shoflld

tbe Policy Be? PAD-80-39, App. Ill-Comments by ,he Federal Emergency Managem ent

Agency. FEMA today still classifies disaster assistance inco two broad categories: publ ic

assistance (PA) and individual assistance (IA). Each of chese incorporates an array of spe­

cific benefit programs. The proportion of federal funds devoted co PA and IA has be en

approximately 5 col since 1988. 7. Community disaster loans may be canceled by the associate direccor of FEMA fo

r

State and Local Programs and Support upon a finding that during the three fiscal yea rs

fo1lowing the disaster, the revenues of a local government that received a community d is­

aster loan are insufficient co meet its operating budget because of disaster-related revenu e

losses and additional unreimbursed disaster-related municipal operating expenses. (44

CFR 206.36l(g)). 8. U.S. Code Cong. and Admin. New,. Legis. Hist. for PL 81-875 (1950), 4024.

9. PL 100-707, sec. 401. 10. 44 CFR sec. 206.36(6). 11. Richard T. Sylves (1996). '"The P olitics and Budgeting of Federal Emer­

gency Management," in Richard T. Sylves and William H. Waugh, Jr., eds., Di,aJter

11-!anagement in the U.S. and Canada. Springfield, Ill.: Charles C. Thomas, Publi sher,

Led. 12. PL 100-707, sec. 102(2). 13. PL 93-288, Sec. 102(1). 14. Sylves, note 11, 30. l 5. Ibid. 16. U.S. General Accounting Office (1981). Reque,t, For Federal DiJa,ter AJJiJta11c

e Need

Better Evaluation. CED-82-4. Washington, D.C.: GAO, iv.

17. Ibid., V. 18. House Subcommittee on Investigations and Oversight (1987). Tbe Feder

al Emer­

i:ency Management Agency'$ Propo,ed Di,a,ter Relief l?.eg11latiom. (I 00th Cong., 1 st sess.).

Washington, D.C.: U.S. Government Printing Office, 3.

19. Ibid., 4-5. 20. PL 100-707, sec. 320. 21. Sylves, note 11, 26--45. 22. GAO (1981), note 16, I. 23. Federal Emergency Management Agency (1997). Multi-Hazard Ide

ntification and

Ri,k AmJJment. Washington, D.C.: FEMA, xvii.

24. Keith Bea (1992). FEMA and the Diwter Relief F11nd. Washingco n, D.C.: Con­

gressional Research Service, 17. Peter May, note 5, 23 referred co disa ster assistance as an

"entitlement" in 1985. 25. Ibid., 16. 26. Richard A. Andrews, Director of California Governor's Office of E

mergency Ser-

vices, pers. comm., December 15, 1997. 27. FEMA Office of Inspector General (1994). "Audit of FEMA"s Mitig

ation Pro­

grams," Report H-16-94. Washington, D.C.: FEMA.

44 PART l. FEDERALIZING DISASTERS: FROM COMPASSION TO ENTITLEMENT

28. U.S. Senate Bipartisan Task Force on Funding Disaster Relief0995). Federal DiJ­aJter AssiJtance. Washingron, D.C.: U.S. Government Printing Office, 70. 29. Ibid. 30. Ibid., 53, citing National Academy of Public Administration (NAPA) 0993).Coping with Catastrophe. Washingron, D.C.: NAPA, xi. 31. General Accounting Office 0995). Srarement of Judy A. England-Joseph ro Sen­ate Committee on Appropriations, Subcommittee on VA, HUD, and Independent Agen­cies on "Information on Expenditures and Proposals ro Improve Effectiveness and ReduceFuture Coses" (GAO/T-RCED-95-140). Washington, D.C.: GAO. 32. NAPA 0993), note 30, 18. 33. National Performance Review 0993). Creating a Government that Work.r Better andCom Lm: FEMA. Washingcnn, D.C.: Office of the Vice President, I. 34. Ibid. 35. GAO 0995), note 31. 36. Richard T. Sylves, Presentation co National Research Council Committee on Assessing the Coses of Natural Disasters, December I 5, 1997. 3 7. Sy Ives, note 11, p. 34. 38. Senate Task Force, note 28, Table I. I. 39. Ibid., 84. 40. Omnibus Consolidated Rescissions and Appropriations Ace of 1996 (PL 104-134). 41. Alan Rhinesmich, Office of Management and Budget. Presentation to National Research Council Committee on Assessing rhe Costs of Na rural Disasters, December 15,1997.

42. PL 93-288, sec. 408(6). 43. GAO 0981), note 16, 36. 44. Ibid. 45. Senate Task Force, note 28, 15. 46. GAO 0995), note 31, 2. 47. Bea, note 24, 11. 48. Federal Emergency Management Agency ( 1992). Federal Respon1e Plan. Washing­ron, D.C.: U.S. Government Printing Office. 49. Senate Task Force, note 28. 50. Federal Emergency Mnnagemenr Agency ( I 98 I). Evaluation of the Economic, Socialand Environm,111111 Ejf.ar of Floodplam Reg11l,mo111. Washington, D.C.: FEMA, 1. 5 I. U.S. Congress ( 1966} l11111ranu and Other Program1 for Financial Assi1tance to Flood Victin11. Senate Committee on Banking and Currency (89th Cong., 2d sess.) Washington,D.C.: U.S. Government Printing Office. 52. Task Force on Federal Flood Control Policy (I 966). A Unified National Prng,·am forManaging Flood Lo1m. House Doc. 465 (89th Cong. 2nd sess.) Washington, D.C.: U.S.Governmenr Printing Office. 53. Rutherford H. Platt (1986). "Floods and Man: A Geographer's Agenda," in RobertW. Kates and Ian Burton, eds., Geog,aphy, Resources, and Environment (Vol. 2). Chicago:University of Chicago Press, 28-68.

CHAPTER J. SHOULDERING THE BURDEN 45

54. PL 90-448, Tide XIII. The National Flood Insurance Act is codified at 42 USCA 4001 er seq.

55. May, note 5, 19. 56. Rutherford H. Platt (1976). "The National Flood Insurance Program: Some Mid­

stream Perspectives." Journal of the American lmtimte of Plannm 42(3): 303-313.

57. PL 9.,-234. 58. Rutherford 1--1. Platt (1995). "Report on Reports: Sharing the Challenge: Flood­

plain Management into the 21st Century." Envi.-onment 37(1): 25-29, at 26. 59. David Conrad (1998). Hi!!,her Ground. Washington, D.C.: National Wildlife Fed­

eration. 60. Senate Task Force, note 28, 102-108; Becky Bramley. SBA Loan Officer, pers.

comm.June 19, 1998. 6 I. Small Business Administration, unpublished data, as of May 31, l 998.

62. Senate Task Force, note 28, 119. 63. T homas P. Zacharias (1996). "Impacts on Agricultural Production: Huge Finan­

cial Losses Lead co New Policies," in Stanley A. Changnon, ed., The Great Flood of 1993: Caum, impacts, and Re1pomcs. Boulder, Colo.: Westview Press, 163-182, at 181.

64. Senate Task Force, note 28, Tables 1.7 and 1.9. 65. Jnceragency Floodplain Managemem Review Committee (1994). Sharing the Chal­

lenge: Floodplain Management into the 2 I st Cent11ry. Washington, D.C.: U.S. Government Printing Office, Tables 1.5, 1.6, and 1.9.

66. Zacharias, note 62, I 81.

67. Ibid., I 82. 68. PL 93-303, Title 1, sec. lOl(c). 69. U.S. General Accounting Office (1996). Disa11er A11istance: lmprnvement1 Needed in

Detmnining Eligibility for PT1hlic Assistance, (GAO/RCED-96-113). Washington, D.C.:

GAO, 15. 70. Kenneth Deutsch, American Red Cross. Pers. Comm., July 7, 1998. 71. President of che United Scates (1973). New App,·oaches to Federal Disa1ter Prepared­

nm and A11istance. House Doc. 93-100 (93rd Cong., !st sess.). Washington, D.C.: U.S. Government Printing Office, 5.

72. Conrad, note 58. 73. Bruce B. Clary (l985}. "The Evolution and Structure of Natural Hazard Policies,"

Public Admi11iJtration RevieU' (45): 20-28. 74. House of Representatives Bipartisan Natural Disasters Task Force (1994). Report.

(Dec. 14). Mimeo. 75. Ibid., I.

76. The New Yo.-k Times (1995). "California Storm Brings Rethinking of Development"

(January 15): 1 and 20. 77. Doug Plasencia, Testimony of the Association of Seate Floodplain Managers before

the Senate Subcommittee on Transportation and lnfrascruccure, February 14, I 995 (mimeo).

78. Federal Emergency Management Agency ( 1995). National 1\!itigatio11 Strategy: Mit- igation .. . Reducing the Impact of Na111ral f-lazardJ. Washington, D.C.: FEMA.

46 PART I. FEDJ::RALIZING DISASTERS: FROM COMPASSION TO ENTITLEMENT

79. William B. Irvine (1990). ··saying No to Federal Disaster Relief." Freeman 40(3): 104-105.

80. John Srarling, real esrare developer, Norrh Topsail Beach, N.C., as quoted in The News & Observer (Raleigh, N.C.), December 21, 1989.

81. John Stusse! (1995). "Swept Away by Welfare for the Wealthy." The Wall Stmt Journal (August 10): 14.

82. Editorial: "Awash in Tax Dollars." News & Observer, November 11, 1997, 1-'iA.

CHAPTER2

U.S. Federal Disaster Declarations: A Geographical Analysis

Ute J. Dymon 1 and Rutherford H. Platt

INTRODUCTION

Average annual loss of life from natural disasters in the United States fortunately has decreased during the twentieth century, in part due rn improved warning

and emergency response capabilities.2 However, the rising economic costs of dis­ asters to government at all levels and rn society have stimulated widespread con­ cern in Congress and among informed observers.3 As discussed in Chapter I, the rapid rise in economic costs of natural disasters have been fueled in pare by an increase in the number of declared disasters, the occurrence of a series of unusu­ ally large disasters, and the broaJening of allowable categories of federal assis­ tance. FEMA outlays for public assistance, the largest category of funding pro­ vided under the Stafford Act, totaled$ 1.0 billion during fiscal years 1983-1988 but amounted to $6.5 billion for fiscal years 1989-1994 (both time periods in constant 1995 dollars).4 Similarly, the average annual number of declarations

issued rose from 26 for the period 1984-1988 to 45 for 1993-1997 (Table 1-3). The upward trend of disaster costs, bemoaned on all sides, is by no means

clear-cur, however. As Figure 2-1 indicates, the level of Stafford Act outlays dis­

played two peaks between 1989 and 1995 and otherwise was fairly confused.

Those peak calendar years of 1992 and 1994 reflected Hurricane Andrew and the

Northridge Earthquake, respectively. The question naturally arises as to whether

those catastrophes were outliers or exceptions to "normal" disaster experience, or

are they tocsins of future catastrophes. In the midst of the bizarre weather attrib­ uted El Nino in 1998, one is tempted to choose the latter. Indeed, a future Southern California or Bay Area Earthquake, expected in rhe next 30 years or so, could make Northridge look insignificant. The January 17, 1995, earthquake in

Kobe, Japan, which is widely regarded as a model for the next major California

earthquake, inflicted 6308 deaths and 43,177 injuries, and damage exceeding

$100 billion.5

47