Department of Homeland Security 

Office of Inspector General 

FEMA Policy Relating to Coastal Velocity Zones
 

OIG-09-71 May 2009 
 

 

Office of Inspector General 

U.S. Department of Homeland Security

Washington, DC 20528

 May 27, 2009 

MEMORANDUM FOR: 	 The Honorable W. Craig Fugate 

 Administrator 

Federal Emergency Management Agency 

FROM: Richard L. Skinner 

Inspector General 

SUBJECT: FEMA Policy Relating to Coastal Velocity Zones 

(OIG-09-71) 

We reviewed FEMA’s policy for public assistance and hazard mitigation projects located 

in Coastal Velocity Zones (V Zones).1

 Ambiguities in the policy led FEMA staff to 

approve and obligate funds for ineligible projects.2 We are recommending that FEMA: 

(1) clarify its policy regarding federal assistance for recovery projects located in V 

Zones; (2) harmonize its V Zones policy with that of other federal departments and 

agencies charged with implementing Executive Order 11988; and, (3) update its 

floodplain management training accordingly. 

Policy 

The Code of Federal Regulations (44 CFR Part 9) establishes FEMA policy, procedures, 

and floodplain management responsibilities in implementing Executive Order 11988,3 

Floodplain Management. It describes an 8-step decision making process that FEMA 

staff followed to approve and obligate funding for 34 public assistance projects located in 

V Zones in Louisiana between March 2006 through August 2008. During this period, 

FEMA staff also approved two Hazard Mitigation Grant Program projects involving 

1

 V Zones are an area of special flood hazard identified on Flood Insurance Rate Maps extending from 

offshore to the inland limit of primary frontal dune along an open coast and any other area subject to high 

velocity wave action from storms or seismic sources. 2 We did not analyze FEMA’s legal conclusions. 

3

 Executive Order 11988 was signed by the President on May 24, 1977. The Executive Order requires that 

each federal agency provide leadership and take action to reduce the risk of flood loss, to minimize the 

impact of floods on human safety, health and welfare, and to restore and preserve the natural and beneficial 

values served by floodplains in carrying out its responsibilities. 
 

1,273 residential properties, of which 198 have been funded, that are located in V Zones 

in Louisiana. FEMA staff told us they followed the 8-step process to determine project 

eligibility based upon training and guidance, and it was not until the later part of calendar 

year 2008 that they realized FEMA regulations (44 CFR §9.11 (d)(1)) prevent them from 

approving new construction, including any temporary facilities or replacement projects, 

in V Zones.4

 They also told us they believe they have identified all the properties that 

are impacted by the V Zones issue in Louisiana. However, this issue may also exist in 

Texas and Mississippi, as well as other states with V Zones. 

FEMA issued a memorandum to Gulf Coast Transitional Recovery Office Directors on 

December 18, 2006, that discussed Executive Order 11988. It underscored that all 

FEMA programs, including mitigation programs, are responsible for implementing the 

requirements of 44 CFR Part 9. It also recognized “that implementing this requirement 

can sometimes be a challenge, and the value of the decision-making process and these 

requirements may not be fully understood.” There is no mention, however, of V Zones or 

prohibitions on public assistance or mitigation projects located in coastal high hazards 

areas. The memorandum employed the use of FEMA’s decision-making process to 

minimize the impacts of floods and to create safer communities: 

“While [Executive Order] 11988 is fundamental to FEMA’s mission to 

reduce the risk of flood loss and minimize the impacts of floods on human 

health, safety, and welfare, it requires all Federal agencies to lead by 

example and take action to attain these standards and restore and preserve 

natural and beneficial functions inherent in floodplains. The overall 

strategy calls for avoiding actions in or adversely affecting floodplains 

unless there is not practicable alternative. It is not the intent of the Order 

to prohibit all Federal actions in the floodplain, but rather create a 

consistent policy against such development without evaluation and 

justification. 44 CFR 9 contains FEMA’s decision-making process for 

achieving the objectives of the Order.” 

FEMA headquarters issued another memorandum to Gulf Coast Transitional Recovery 

Office Directors on June 5, 2007, about complying with floodplain management in 

coastal high hazard areas on the Gulf Coast. This memorandum underscored that FEMA 

is not permitted to fund new construction of facilities or structures, other than those that 

are functionally dependent or facilitate open space use (44 CFR 9.4 and 44 CFR 59.1), in 

a coastal high hazard area. However, the decisions to approve and obligate funding for 

26 of the 34 public assistance projects located in V Zones within the State of Louisiana, 

based upon the 8-step process, were made prior to the issuance of this memorandum. 

4

 Although the placement of temporary and permanent new structures in V Zones is ineligible for FEMA 

funding, FEMA can fund the repair of damaged structures that are located in V Zones. In some instances, 

the costs of repair or replacement facilities that are “functionally dependent” upon their location or in close 

proximity to water are eligible, 44 CFR §59.1 defines “functionally dependent” use. Bridges, water control 

facilities, piers, and marinas are examples of facilities that require proximity to water. 

2 
The 8-step decision-making process was implemented by the Environmental and Historic 

Preservation staff assigned to the Louisiana Transitional Recovery Office. FEMA 

officials told us the staff were generally contractors familiar with floodplain management 

and the principles and objectives of Executive Order 11988 and the decision-making 

process described in 44 CFR 9. 

Training 

A training module was also developed for FEMA program staff that addressed Executive 

Order 11988 and FEMA’s implementation requirements of the Executive Order through 

44 CFR 9. The training module did not prohibit public assistance or mitigation projects 

in V Zones. Instead, it emphasized: “New construction and substantial improvement 

structures shall be elevated on open works such as on piles, columns, and piers, rather 

than on fill in all cases in coastal high hazard areas (V Zones) and elsewhere, where 

practicable.” As such, FEMA program staff believed that projects located in V Zones 

were allowed when: (1) the structure was properly elevated and used specific 

construction standards to mitigate against flood and wind hazards; (2) the site is the only 

practicable alternative; and, (3) harm to and within the floodplain is minimized. 

Reconstruction Mitigation 

In addition to the training module allowing new construction when done properly, the 

FEMA Mitigation Directorate introduced the Hazard Mitigation Grant Program (HMGP) 

reconstruction grant pilot program on February 15, 2006. The intent of the program was 

to incorporate mitigation directly into the reconstruction process and thereby create more 

disaster resistant communities. According to FEMA guidance for the pilot program, 

“mitigation reconstruction activities may involve the demolition of the existing structure 

followed by replacement on site with a hazard resistant (flood, wind and fire) codecompliant structure.” FEMA also distributed coastal construction guidance (FEMA 55 

Coastal Construction Manual, FEMA 499 Homebuilder’s Guide to Coastal Construction) 

to facilitate implementation of the pilot program activities. FEMA officials told us that 

this pilot and the subsequent construction manuals reaffirmed their belief that public 

assistance and mitigation projects in V Zones were allowed. On December 2, 2008, the 

FEMA Mitigation Directorate determined that the HMGP reconstruction grant pilot 

program was not consistent with FEMA environmental considerations regarding wetlands 

and floodplains and could not to be used to fund projects located in coastal high hazard 

areas or V Zones. 

Implementation of Executive Order 11988 

It is important to note that other federal departments and agencies have funded new 

construction in floodplains. For example, the Department of Defense is spending $287 

million to build 1,028 new homes for Kessler Air Force Base personnel in Biloxi, MS on 

coastal lowlands devastated by Hurricane Katrina. The new homes are being built on 18­

foot elevations and with walls designed to withstand 140-mile-per-hour-winds. The U.S. 

Department of Housing and Urban Development (HUD) made $100 million in grant 

3 
• • • • • 

 

 

funds available to the Mississippi Development Authority for 24 public housing projects, 

13 of which are in floodplain areas. The Mississippi Development Authority followed 

HUD’s 8-step decision making process (24 CFR 55.20) to determine eligibility and 

requires elevation for all new construction. For the Biloxi East End Homes project, the 

structures will be built on columns and elevated to 23 feet.5 

FEMA regulations regarding the implementation of public assistance and mitigation 

projects located in V Zones is derived from Executive Order 11988, which requires 

federal agencies and responsible entities to avoid direct or indirect support to floodplain 

development wherever there is a practicable alternative.6 FEMA’s policy not to fund new 

construction in V Zones aligns with this Executive Order and its regulations. However, 

FEMA continues to approve and fund substantial improvement projects7

 and provide 

insurance under the National Flood Insurance Program to properties located in V Zones. 

Because these policies directly support recovery and community development in V 

Zones, it is understandable that FEMA staff would be confused about prohibitions on 

other types of recovery assistance in V Zones. 

Recommendations 

We recommend that FEMA clarify its policy regarding V Zones by addressing: (1) why 

repairs and substantial improvements are allowed, but new construction that incorporates 

mitigation actions are prohibited; and, (2) why FEMA continues to market and sell 

insurance policies in V Zones thereby encouraging settlement in hazardous areas. 

Furthermore, we recommend that FEMA (1) harmonize its V Zones policy with that of 

other federal departments and agencies charged with implementing Executive Order 

11988; and, (2) update its floodplain management training accordingly. The removal of 

ambiguity regarding FEMA’s V Zone policy will benefit FEMA staff charged with 

making decisions about recovery assistance, as well as help disaster victims better 

understand the basis for those decisions. 

We conducted this review to determine how funds for projects located in V Zones were 

inadvertently approved and obligated. The nature and brevity of this review precluded 

the use of our normal audit protocols. We appreciate the extensive assistance and full 

cooperation we received from FEMA staff located at the Transitional Recovery Office in 

New Orleans, as well as input from FEMA management in Washington, DC. 

5 U.S. Department of Housing and Urban Development, Office of Inspector General, Reconstruction of 

Public Housing Damaged by Hurricane Katrina On the Mississippi Gulf Coast, September 2008, IED-08­

003. 

6 FEMA officials told us that a federal interagency workgroup, which includes FEMA, has been convened 

to review the efficacy of Executive Order 11988. 

7 Substantial improvement (44 CFR 9.4) means any reconstruction, rehabilitation, addition, or other 

improvement of a structure, the cost of which equals or exceeds 50 percent of the market value of the 

structure before the ‘‘start of construction’’ of the improvement. This term includes structures that have 

incurred ‘‘substantial damage,’’ regardless of the actual repair work performed. 

4 
Please advise my office within 30 days of the actions taken or planned to implement our 

recommendations, including target completion dates for any planned actions. Should you 

have any questions concerning this report, please call me, or your staff may contact Matt 

Jadacki, Deputy Inspector General, Office of Emergency Management Oversight, at 

(202) 254-4100. 

5 
ADDITIONAL INFORMATION AND COPIES 

To obtain additional copies of this report, please call the Office of Inspector General (OIG) at (202) 254-4199, 

fax your request to (202) 254-4305, or visit the OIG web site at www.dhs.gov/oig. 

OIG HOTLINE 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal or noncriminal 

misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

• Fax the complaint directly to us at (202) 254-4292; 

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, 

Attention: Office of Investigations - Hotline, 

245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

The OIG seeks to protect the identity of each writer and caller.