Law changes could mean billions in flood insurance costs

Before Hurricane Katrina overtopped and buckled levees to submerge most of New Orleans, the unwelcome distinction of being the largest American city to be swamped by a failed levee was held by Grand Forks, N.D.

When the spring thaw came in 1997, the levee protecting the Great Plains city was high enough to stop a 54-foot flood. The Red River crested at 56 feet.

More than 80 percent of the city flooded, causing more than $2 billion in damage, including 11 downtown buildings gutted by fires that no one could reach. The only saving grace was that the waters spread slowly enough that the 60,000 residents could evacuate by car; only a few had to be pulled out by boat or helicopter. No one died.

Today, Grand Forks and its smaller neighbor across the river, East Grand Forks, Minn., are much-changed cities. Hundreds of homes in the lowest spots have been torn down and replaced by parkland.

A new $400-million flood protection system includes 30 miles of levees, two miles of floodwalls, 10 miles of diversion channels, and 22 automated pump stations. The new levees are designed to hold back a 60-foot river stage, something that history has shown to happen only about once in 250 years.

Although the system was built by the U.S. Army Corps of Engineers with a mix of federal, state and local money, a regional levee district supported by special taxes and fees must maintain and operate the levees.

Since the work was completed last year, home and business owners in the cities are no longer required to carry federal flood insurance, and development behind the defenses is largely unrestricted.

But for Grand Forks and hundreds of other communities across the country that have spent billions to bring levees up to at least a 100-year-flood protection standard, the federal insurance and building exemption could come to a costly end.

As Congress works to update the federal flood insurance program by September, lawmakers are considering requiring everyone with property behind a dam or levee -- no matter how sound -- to carry flood coverage. For cities, businesses and governments across the nation, that could add billions of dollars in new insurance costs.

The universal flood insurance requirement would not take effect until after the Federal Emergency Management Agency completes a campaign to update local flood-risk maps by the end of this decade. It would officially recognize what flood experts have warned for years: any structure built by people to hold back water can fail or be overtopped if the water gets high enough.

The House proposes only to study the change; the Senate bill requires FEMA to alter the rules. Lawmakers must craft a compromise later this summer.

"The reason that there is a dike, levee or dam is because it is in a residual risk area,'' said Sen. Chris Dodd, D-Conn., chief sponsor of the flood insurance reform legislation in the Senate. "Anything made by man or nature, there is no guarantee in perpetuity that it is going to survive."

That notion doesn't sit well with Sen. Byron Dorgan, D-N.D., who helped establish Grand Forks' new levee system.

"We're saying, 'yes, you paid a lot of money for flood protection,' but now FEMA must say it doesn't matter a bit, it's irrelevant,'' Dorgan said in an exchange with Dodd last month.

In fact, Grand Forks Mayor Michael Brown, despite being a booster of the levees, agrees it's a good idea for folks in his town to continue buying federally backed flood insurance. He's one of 5,500 people in the city who carry flood coverage today, according to FEMA.

"Our home is the biggest investment most of us have and its up to us to be responsible. We think the levee system is very strong.

"But I'd have to agree that there is residual risk for flooding. We're pretty confident that we're protected along the river, but the levee won't protect us from a flash flood or flooding from some interior drainage failure," Brown said.

E-mail Lee Bowman at Scripps Howard News Service at bowmanl(at)shns.com.

(Distributed by Scripps Howard News Service, http://www.scrippsnews.com)