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10 states sue FEMA to block higher flood insurance rates
The lawsuit, led by Louisiana, is the most serious challenge yet of the new rates, which will increase premiums for some households by as much as 1,000 percent.
CLIMATEWIRE — Ten states are suing the Federal Emergency Management Agency over new flood insurance rates that have increased costs for millions of households.
The states, which include Louisiana, Texas and Florida, argue that FEMA's rate-setting method is illegal. They are asking a federal court to block the agency from implementing the new rates for its National Flood Insurance Program.
FEMA's program "has now become a disaster of its own, placing Louisiana families on a path to foreclosure,” Louisiana Attorney General Jeff Landry (R) said at a news conference Thursday.
The lawsuit, filed Thursday, is the most serious challenge to FEMA's new insurance rates since the agency began implementing them in October 2021 using improved flood modeling and a more refined analysis. The NFIP covers 4.7 million properties and provides 90 percent of flood insurance in the United States.
FEMA says its new rate structure, known as Risk Rating 2.0, more accurately reflects the flood risk for each property and ends a decadeslong practice of charging many policyholders too little. The new rate structure is taking effect as people renew policies and will be fully implemented by Sept. 30.
But the rates have generated an uproar in the nation’s most flood-prone states, where FEMA projects that average premiums will increase by as much as 1,000 percent, jumping to $7,500 a year from less than $700. The average premium nationwide will double, to $1,808 from $888. Each policyholder’s increase will be phased in over years under a federal law that sets an 18 percent limit on the amount that any premium can rise in a year.
FEMA declined to comment, saying it does not comment publicly on active litigation.
Landry, who is running for governor this year, filed the lawsuit in federal court in Louisiana on behalf of 10 states, as well as 43 of Louisiana’s 64 parishes, three of its municipalities and 12 of its regional flood-control authorities.
Louisiana faces the steepest increases of any state. In nine parishes — all on or near the coast — the average NFIP premium is projected to more than triple, according to FEMA’s estimate.
Every state attorney general joining the lawsuit is Republican, although the rate restructuring is not partisan. FEMA began developing the new rates during the Obama administration and continued through the Trump administration before the rates took effect under President Joe Biden. Some of the most vocal critics in Congress are Democrats such as Senate Majority Leader Chuck Schumer of New York and Sen. Robert Menendez of New Jersey.
Most of the state plaintiffs are heavily reliant on the NFIP. Florida, Texas, Louisiana, South Carolina, Virginia and Mississippi each have more than 55,000 policyholders. Florida alone has 1.7 million policies — about 35 percent of the national total. Residents in the six states have collected a total of $52 billion in flood claims, which accounts for two-thirds of the total payments nationwide, according to an E&E News analysis of FEMA records.
But the other plaintiffs — Idaho, Montana, North Dakota and Kentucky — have fewer than 20,000 policyholders. Idaho has fewer than 4,000 policyholders, which is fewer than all but four states.
'Secret program'
The legal argument against FEMA centers in part on the agency’s decision not to release documents showing how it developed the new insurance rates.
“FEMA has developed a secret program with secret inputs,” Louisiana Solicitor General Liz Murrill said at Thursday’s news conference. Murrill, who is Landry's deputy, is running for attorney general this year.
FEMA has declined to give information to state and local officials. In January, the agency rejected an official written request from St. Charles Parish, La., which then sued FEMA in April for the documents.
FEMA has not responded to that lawsuit. But it told the parish in its rejection notice that the documents are exempt from federal disclosure law because they involve “privately held data” that is “very valuable” to the contractor who sold the material to FEMA.
Louisiana officials also said Thursday that FEMA’s new rates are “arbitrary and capricious” and do not account for costly mitigation measures, such as levee construction, that state and local officials have undertaken to protect homes from flood damage.
“This new rating system has defeated everything we’ve done in the past and everything Louisiana has done in the past,” Gordon Dove, president of Terrebonne Parish, said Thursday. “This [lawsuit] is crucial to the survival of everyone in Louisiana.”
Terrebonne Parish — a medium-income coastal area of 105,000 people — will see its average NFIP premium more than quadruple from $873 to $3,536.
The biggest complaint at the hourlong news conference Thursday was about the magnitude of the insurance rate increases. Numerous officials said they would make flood insurance unaffordable to Louisiana residents and businesses.
“This is completely disruptive to the housing and business market in this state,” Landry said.
Congress created the NFIP in 1968 after insurance companies stopped covering flood damage because it was too costly and unpredictable. The program has been forced to borrow $35 billion from federal taxes to pay the massive claims that occurred after Hurricane Katrina in 2005 and Hurricane Harvey in 2017. The program still owes $20.5 billion.
Minho Kim contributed to this report.
