National Flood Insurance Program: Additional Guidance on Building Requirements to Mitigate Agricultural Structures' Damage in High-Risk Areas Is Needed
Published: 2014-06-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: NFIP helps protect property in high-risk floodplains by, among other things, requiring communities that participate in the program to adopt floodplain management regulations, including building requirements for new or substantially improved structures such as elevating, dry flood-proofing, or wet flood-proofing structures.
GAO was asked to evaluate the possible effects of NFIP, including its building requirements, on farmers in riverine areas that have a high risk of flooding. This report examines, among other things, the effects of building requirements on farmers in high-risk areas and options that could help address any challenges farmers face. To do this work, GAO analyzed laws, regulations, and FEMA policy and claims data; interviewed 12 state and local floodplain managers, 24 farmers, and 6 lenders in 8 selected communities in California, Louisiana, North Carolina, and North Dakota (selection based on geographic diversity, presence of high-risk flood areas, and type of farming that required on-site structures); and interviewed flood management and planning experts and FEMA officials.
section_title: What GAO Found
paragraphs: The effects of the National Flood Insurance Program's (NFIP) building requirements for elevating or flood-proofing agricultural structures in high-risk areas varied across selected communities, according to interviews GAO conducted with floodplain managers and farmers. Specifically:
Floodplain managers and 12 farmers in selected rural communities with whom GAO spoke in Louisiana, North Carolina, and North Dakota generally were not concerned about these requirements. Most of these farmers told GAO that they had land outside the high-risk areas where they could build or expand their structures, or they could elevate their structures relatively easily.
Floodplain managers in selected California communities told GAO that farmers in their communities had been adversely affected by the building requirements. They said that most farm land was in high-risk areas and elevation of structures would be difficult and costly—due to the relatively deep flood depths, structures would be required to be elevated up to 15 feet to comply with the building requirements. They also indicated that some structures were difficult to make watertight below the projected flood level (dry flood-proofing).
According to a California floodplain manager and several farmers with whom GAO spoke, the farmers who were adversely affected by the building requirements have had to work around outdated Federal Emergency Management Agency (FEMA) guidance that does not fully address the challenges of vast and relatively deep floodplains or reflect industry changes. For example, the 1993 guidance from FEMA allowed an alternative flood-proofing technique (wet flood-proofing) that permits water to flow through certain agricultural structures in expansive high-risk areas. However, farmers in the California communities told GAO this was not a viable option because pests might enter openings and contaminate crops stored inside. FEMA typically updates guidance as needed but acknowledged the need for additional guidance that covers all of the different types of agricultural structures and reflects recent developments in the size and scale of farm operations, including supporting structures that were expensive to build and replace. Additional and more comprehensive guidance would allow FEMA to better respond to recent developments and structural needs in vast and deep floodplains.
Some local floodplain managers, farmers, and lenders from the selected communities identified options to help farmers manage the challenges of building or expanding agricultural structures in high-risk areas, but many of the options would entail certain risks and may run counter to the objectives of NFIP. For example, one commonly cited option calls for exempting agricultural structures from building requirements, with farmers assuming all of the flood risk and opting out of federal disaster relief. Both FEMA and the experts noted such an exemption could set a precedent, leading others to ask for similar exemptions. Further, FEMA officials stated that the agency had no legal authority to allow farmers or any other group to opt out of disaster relief.
section_title: What GAO Recommends
paragraphs: The Administrator of FEMA should update existing guidance on mitigating the risk of flood damage to agricultural structures to include additional information that reflects recent farming developments and structural needs in vast and deep floodplains. FEMA agreed with the recommendation.

section_title: Letter
paragraphs: The National Flood Insurance Program (NFIP) is the federal  government’s key effort to minimize the damage and financial effect of  floods. NFIP has been the main source of insurance against flood  damage for most residents and businesses, including farmers, since  1968. Community participation in NFIP is voluntary, but in order for  residents and businesses to purchase flood insurance through the  program, communities must join NFIP and adopt at least the minimum  standards for floodplain management regulations, including building  requirements. In communities participating in NFIP, owners of properties  in special flood hazard areas (SFHA) obtain mortgages from federally  regulated lending institutions or federal agency lenders or who receive  direct financial assistance for acquisition or construction purposes are  required to purchase flood insurance. As of the end of fiscal year 2013,  about 22 percent (1.21 million out of 5.54 million) of all NFIP policies were  located in rural and agricultural riverine SFHAs. According to the Federal  Emergency Management Agency (FEMA), about 5 percent of NFIP  policies cover nonresidential buildings, including agricultural buildings.
NFIP has been the subject of two new laws passed by Congress and  signed by the President since 2012 and other congressional efforts to  modernize the program and improve its finances after the program  sustained heavy losses from major hurricanes, especially Hurricane  Katrina in 2005. Starting in 2003, Congress appropriated $1.2 billion for  the Map Modernization initiative, a comprehensive effort intended to  upgrade the nation’s inventory of flood maps to a digital format. On July 6,  2012, the President signed into law the Biggert-Waters Flood Insurance  Reform Act of 2012 (Biggert-Waters Act) and introduced many changes  to, among other things, strengthen the future solvency of NFIP. For  example, it required FEMA to phase out almost all discounted insurance  premiums (commonly referred to as subsidized premiums), end the  practice of allowing premiums for properties that were remapped into a  higher-risk flood zone to be calculated, in many cases, the same way as  they were before they were remapped (grandfathering rates), and  improve flood risk mapping, among other things. However, on March 21,  2014, the President signed into law the Homeowner Flood Insurance  Affordability Act of 2014 (2014 Act), which repealed or altered portions of  the Biggert-Waters Act. Because of these changes, some concerns  regarding the elimination of subsidized premiums and grandfathering may  no longer be valid.
Some in the agricultural industry have questioned the effects of many of  these changes on farmers and rural residents. For example, FEMA’s  mapping updates could place large portions of certain agricultural areas  in SFHAs, so property owners in these areas could be required to  purchase flood insurance if they do not have it and could see rates on  existing policies rise. They could also be subject to floodplain  management regulations that cover SFHAs, including building  requirements that could raise the costs of new construction and involve  mitigation efforts, such as elevating structures. We were asked to  evaluate the possible effects of NFIP including floodplain regulations and  insurance mandates on farmers and rural residents in high-risk rural and  agricultural riverine floodplains.
This report discusses (1) the effects on farmers and rural residents of  NFIP’s building requirements for agricultural and residential structures, (2)  the effects on rural residents and farmers of the mandatory purchase  requirement and changes in premium rates, and (3) options that have  been proposed to address any issues resulting from changes to NFIP  requirements, and stakeholders’ views on these proposals.
For all objectives, we analyzed relevant laws, including changes made by  the Biggert-Waters Act and the 2014 Act, as well as FEMA regulations  and policies, and conducted a literature review. We also interviewed  FEMA and Department of Agriculture (USDA) officials, representatives of  national farming and floodplain management organizations,  representatives of agricultural floodplain management organizations,  lenders, and the insurance industry. We conducted case studies in eight  selected NFIP communities in California, Louisiana, North Carolina, and  North Dakota. We selected these geographically diverse locations  because they were located at least partially in or near high-risk  floodplains and included farms that produced crops or livestock requiring  onsite agricultural structures.
To examine any effects that farmers and rural residents have faced as a  result of NFIP’s building requirements and the mandatory purchase  requirement, we interviewed state and local floodplain managers,  agricultural extension service officials, and agricultural lenders to obtain  their views on how NFIP requirements had affected or could affect  farmers and rural residents. Local floodplain managers and agricultural  extension specialists helped us identify farmers and rural residents who  had been remapped into SFHAs and could provide first-hand  perspectives, and we conducted interviews with some of these  individuals. To identify ways to address any challenges farmers and rural  residents faced in complying with NFIP’s building requirements and the  mandatory purchase requirement, we gathered ideas from local floodplain  managers, agricultural lenders, farmers, and rural residents that we met  with during our case studies. We then asked experts from flood  management, city and regional planning organizations, cognizant  academics, and officials from FEMA to comment on the ideas we  gathered.
We conducted this performance audit from August 2013 to June 2014 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: National Flood Insurance Program
paragraphs: Floods are the most frequent natural disasters in the United States,  causing billions of dollars of damage annually. In 1968, Congress created  NFIP to address the increasing cost of federal disaster assistance by  providing flood insurance to property owners in flood-prone areas, where  such insurance was either not available or prohibitively expensive. Since  its inception, the NFIP has been a key component of the nation’s efforts  to minimize or mitigate the financial impact of flood damage on property  owners and limit federal expenditures after floods occur. Community  participation is central to NFIP’s success. In order to participate in the  program, communities must adopt and agree to enforce floodplain  management regulations to reduce future flood damage. In exchange,  NFIP makes federally backed flood insurance available to homeowners  and other property owners (for example, farmers and other businesses) in  these communities. As of May 2014, about 22,052 communities were  participating in the program.
section_title: Insurance Coverage
paragraphs: Property owners can purchase flood insurance to cover both buildings  and contents for residential and nonresidential properties. Insurable  structures must have two or more outside rigid walls and a fully secured  roof that is affixed to a permanent site. NFIP’s maximum coverage limit  for residential policyholders is $250,000 for buildings and $100,000 for  contents. For nonresidential policyholders, the maximum coverage is  $500,000 for buildings and $500,000 for contents. Agricultural structures  are considered nonresidential structures, so items such as grain stored in  a bin or a tractor stored in a shed are covered by contents coverage.  Policyholders purchase separate policies for each structure they insure.  Deductibles range from $1,000 to $5,000 on residential structures and  $1,000 to $50,000 on nonresidential structures.
When NFIP was created, property owners were not required to buy flood  insurance, so participation was voluntary. Congress amended the original  law in 1973 to require some property owners to purchase flood insurance  in certain circumstances (mandatory purchase requirement). The  mandatory purchase requirement applies to owners of properties located  in SFHAs in participating communities with mortgages held by federally  regulated lenders or federal agency lenders, or who receive direct  financial assistance for acquisition or construction purposes. Individuals in SFHAs who receive federal disaster assistance after September 23,  1994, for flood losses to real or personal property are also required to  purchase and maintain flood insurance on the property as a condition for  receiving future disaster assistance. The 2014 Act permits residential  policyholders to forgo coverage for detached structures that do not serve  as residences.
section_title: NFIP Building Requirements for SFHAs
paragraphs: The 1973 Act also added certain requirements that, according to FEMA  officials, were intended to encourage community participation in NFIP.  Specifically, communities are required to adopt and agree to enforce  adequate floodplain management regulations as a condition of  participation in NFIP. In exchange, flood insurance and certain federal  disaster assistance will be made available to property owners in the  community. Community ordinances or regulations must be consistent with  NFIP’s minimum regulatory requirements, although communities may  exceed the minimum criteria by adopting more comprehensive  regulations. The following are some of the key NFIP building  requirements and alternatives for new and substantially improved or  substantially damaged structures located in riverine SFHAs.
Elevation. All new and substantially improved or substantially  damaged structures must be elevated to or above the base flood  elevation (BFE). The BFE is the projected level that flood water is  expected to reach or exceed during a flood with an estimated 1  percent chance of occurring in any given year. The flood depth— height at which structures should be built—is calculated by the  difference between the BFE and ground elevations that is established  by topographic surveys.
Dry flood-proofing. Nonresidential structures, including agricultural  structures, may be flood-proofed instead of elevated. Nonresidential  structures that are dry flood-proofed are designed to be watertight  below the BFE.
Wet flood-proofing. FEMA also has guidance to allow communities to  grant some categories of nonresidential structures, including certain  agricultural structures, an exception from the requirement that certain  structures be elevated or dry flood-proofed. This variance enables  certain structures to be wet flood-proofed—applying permanent or  contingent measures to a structure and/or its contents that prevent or  provide resistance to damage from flooding by allowing flood waters  to enter the structure. FEMA has instructed communities that  variances may be issued for certain types of agricultural structures  located in wide, expansive floodplains that are used solely for  agricultural purposes, such as storage, harvesting, or drying. These  types of structures include grain bins, corn cribs, general purpose  barns open on at least one side, and buildings that store farm  machinery and equipment.
section_title: Rate Setting for NFIP Premiums
paragraphs: FEMA bases premium rates for NFIP policies on a property’s risk of  flooding and several other factors. Specifically, FEMA uses location and  property characteristics, such as flood zone designation, elevation of the  property relative to the property’s BFE, building type (e.g., residential or  nonresidential), number of floors, presence of a basement, and the year  of construction relative to the year of a community’s original flood map.
Additionally, FEMA uses data on prior claims, coverage amount, and  policy deductible amount.
NFIP has historically had two types of flood insurance premium rates:  those that reflect the full risk of flooding to a property (full-risk rates) and  those that do not. Properties that have not been charged property-specific  full-risk rates have included those with grandfathered and subsidized  rates. The largest number of subsidized policies has been for properties  built before the initial flood insurance rate maps became available. The  authority for subsidized rates was included in the National Flood  Insurance Act of 1968 as an incentive to encourage participation in the  program.
In July 2012, Congress enacted the Biggert-Waters Act, which made  significant changes to FEMA’s ability to charge subsidized rates. These  changes phased out existing subsidies for certain types of properties  through 25 percent annual premium increases until the full-risk rate is  reached, including business properties, residential properties that are not  a primary residence, properties that have experienced or sustained  substantial damage exceeding 50 percent of fair market value or  substantial improvement exceeding 30 percent of fair market value, and  severe repetitive loss properties. For other properties, the Biggert-Waters Act raised the cap on annual premium rate increases from 10  percent to 20 percent, by risk class. The Biggert-Waters Act also  prohibited subsidies from being extended for homes sold to new owners  and removed them if properties were not covered or had a lapse in  coverage after the date of enactment of the act as a result of the  policyholders’ deliberate choice. However, the 2014 Act reinstated  premium subsidies for properties that were purchased after July 6, 2012,  and properties not insured as of July 6, 2012. It also generally limited  annual increases in property-specific premium rates to 18 percent for  policies not covered by the 25-percent increases by the Biggert-Waters  Act, although it changed the substantial improvement threshold to 50  percent from the Biggert-Waters Act’s 30 percent. The 2014 Act does  not remove the phase out for policies covering nonprimary residences,  severe repetitive loss properties, and business properties, among others.
The Biggert-Waters Act also generally prohibited the grandfathering of  rates after future remapping and required any rate increases stemming  from future remapping to be phased in over time. However, the 2014 Act  eliminated the Biggert-Waters Act’s changes to grandfathering provisions,  but included a provision which may prohibit grandfathering in limited  situations.
section_title: Flood Zone Mapping
paragraphs: FEMA creates maps that show the degree of flood hazard so that  properties in participating communities can be assigned actuarial  premium rates—that is, rates that reflect the full risk of flooding—for  insurance purposes.  Flood maps, also show SFHAs for which  communities must adopt and enforce building requirements as part of  their NFIP participation. Lending institutions use flood maps to identify  properties that are required to have flood insurance and to help ensure  that the owners buy and maintain it. FEMA engineers create flood maps  using statistical information such as data for river flow, storm tides,  hydrologic/hydraulic analyses, and rainfall and topographic surveys. The  results of the topographic and flood hazard analyses are combined and  integrated into digital maps that depict floodplain boundaries and the  projected height of the base flood—the flood level that has a 1 percent  chance of being equaled or exceeded in any given year.
NFIP establishes flood zone designations through its mapping process  (see table 1). Areas designated as A, AE, V, or VE zones have a high risk  of flooding and are considered SFHAs. Areas designated as V or VE  zones are located along the coast and have an additional hazard  associated with storm waves. Areas with a moderate to low risk of  flooding are designated as B, C, or X zones. Areas where flood risk is  possible but undetermined are designated as D zones. For the purpose of  our study, we are considering areas with flood zone designations  beginning with an A to be high-risk riverine floodplains.
FEMA is required by statute to assess the need to revise and update all  floodplain areas and flood risk zones at least every 5 years. The agency  has undertaken two initiatives to update and modernize its flood maps.  Until 2003, flood maps were created and stored in paper format. From  2003 to 2008, FEMA spent $1.2 billion to upgrade the nation’s flood maps  to digital format as part of the Map Modernization initiative. Through this  program, FEMA created digital flood maps for more than 92 percent of  the population.Risk MAP—to improve the quality of data used in flood mapping. FEMA’s  goals for the initiative include addressing gaps in flood hazard data;  increasing public awareness of risk; and supporting mitigation planning by  state, local, and tribal entities.
In fiscal year 2009, FEMA began a 5-year initiative— Risk MAP’s primary areas of focus are coastal flood hazard areas, areas  affected by levees, and significant riverine flood hazards. Risk MAP  received $325 million in appropriations in fiscal year 2009, but  appropriations have declined since, falling to about $216 million in fiscal  year 2014. According to FEMA officials, FEMA prioritizes its mapping  projects based on needs and risk and balances them with available  funding. Need is determined by assessing current flood data and changes  since the last update. Risk is assessed largely by population and the  number of structures and their exposure to flood hazards. While rural and  agricultural areas may have needs identified, they are generally low risk  and thus may not be a high priority for map updates. FEMA officials, low-risk areas are more likely to receive approximated  mapping studies than detailed mapping studies. Approximated mapping  studies are not based on the same quality or quantity of data as are  detailed studies. Maps made using approximated studies also do not  show the BFE. This may require that communities or property owners in  those areas obtain a BFE from local or state officials, developers, or other  organizations. They may also develop their own BFE by hiring an  engineer or surveyor or using guidance provided by FEMA, according to  FEMA officials.
However, according to FEMA officials, some rural or agricultural areas would have been  a part of these mapping efforts because for Risk MAP, FEMA maps on a watershed basis,  which is a large area of land that may include both populated and unpopulated areas. accredited levee. In order to have a levee accredited, the owners or  community officials must demonstrate that the levee system provides  adequate flood protection and has been adequately maintained by  submitting an engineering certification indicating that the levee complies  with established criteria. If a levee receives accreditation, property owners  in the area it protects may not be subject to the mandatory purchase  requirement if the area is not mapped as an SFHA. In some cases, areas  behind accredited levees are still prone to flooding due to a lack of interior  drainage or flooding from other sources and will therefore still be mapped  as an SFHA, resulting in the property owners behind that levee still being  required to purchase flood insurance.
section_title: Rural and Agricultural Areas Located in Riverine SFHAs
paragraphs: Because FEMA does not identify whether floodplains are in urban or rural  areas for the purposes of administering NFIP, we used available data to  estimate the location of rural communities and agricultural areas in  riverine SFHAs. We defined rural areas as areas that are not considered  urbanized areas or urban clusters using U.S. Census Bureau data. We  defined agricultural areas as those counties with 50 percent or more of  their land areas used in agriculture, according to USDA’s Atlas of Rural  and Small-Town America. Figure 2 shows the location of riverine SFHAs  according to FEMA’s flood map data in the areas we defined as  agricultural areas and rural communities.
Our analysis of FEMA data showed that the population mapped in rural  and agricultural SFHAs stayed about the same during FEMA’s Map  Modernization initiative, though certain areas saw increases or  decreases.increased by 0.11 percent through Map Modernization, while the  population in urban SFHAs decreased by 0.8 percent.
section_title: Effects of NFIP Building Requirements Varied for Farmers in Selected Communities, but Additional Guidance May Help Those Adversely Affected
paragraphs: Based on interviews with floodplain management officials, farmers, and  others in selected communities, the effects of NFIP’s building  requirements for agricultural structures have generally varied. To comply  with these requirements, new or substantially improved nonresidential  structures in high-risk areas must be elevated or dry flood-proofed. FEMA  guidance issued in 1993 noted that communities could allow wet flood- proofing that permits water to flow through a structure, for some  nonresidential structures, including certain types of agricultural structures  located in vast, expansive floodplains. However, the agency  acknowledged that the methods included in the guidance do not cover all  of the different types of agricultural structures located in vast flood plains  with deep flood depths and may not reflect the changes in the size and  scale of farm operations in recent years. Without additional guidance from  FEMA, farmers may face challenges in effectively complying with its  building requirements.
subsections: section_title: Effects of NFIP Building Requirements Varied, with Some Farmers Having Faced Difficulties Flood- Proofing Agricultural Structures
paragraphs: We found that the effects of NFIP building requirements varied in selected  communities and the requirements negatively affected certain farmers  who were located in vast floodplains with relatively deep flood depths. We  selected eight geographically diverse locations in SFHA riverine  floodplains in California, Louisiana, North Carolina, and North Dakota that  supported crops or livestock requiring onsite agricultural structures.Representatives from FEMA, USDA, and national floodplain management  and farm organizations told us that they were unaware of any farmers in  these states or others that faced negative effects on their operations from  the NFIP building requirements (e.g., elevation, dry flood-proofing, or wet  flood-proofing for certain nonresidential structures). State and local  floodplain managers we spoke with from Louisiana, North Carolina, and  North Dakota also said that they were not aware of any widespread  concerns that farmers were having with NFIP’s building requirements or  of any negative effects the requirements might be having on agricultural  expansion. Correspondingly, 12 farmers in the communities we selected  concurred with these views and generally told us that they had not been  adversely affected by NFIP building requirements.
However, state and local floodplain managers we spoke with from  California said that some farmers in their state had been negatively  affected by the requirements. The California state floodplain manager told  us that the affected farmers typically lived and operated in agricultural  areas behind levee systems that trapped water and had deep flood  depths—up to 15 feet in some areas, compared with 1 to 6 feet in other  states. The deep flood depths make it difficult for the farmers to build  new structures in accordance with NFIP requirements because of the cost  and complexity of elevating and dry or wet proofing the new structures.  This challenge is especially difficult in several counties along the lower  Sacramento River, including Sutter and Yolo Counties where building  requirements had affected farmers’ ability to expand or rebuild agricultural  structures, according to the California state floodplain manager. In  addition, representatives of an agricultural floodplain management group  whose members are primarily from California’s Central Valley said that  farmers they represented were concerned about the financial and  technical feasibility of elevating or flood-proofing some agricultural  structures to meet NFIP’s building requirements. The 11 farmers we  spoke to in these two communities shared these concerns and told us  that they had experienced similar negative effects due to the NFIP  building requirements.
Two key factors may partly explain the differing views of farmers in  California as compared to those in the other selected rural and  agricultural communities regarding the effects of NFIP building  requirements. First, SFHAs in the two California communities have  greatly increased in size in recent years compared to the other  communities (see fig. 3). According to FEMA, the increase was mainly a  result of areas behind unaccredited levees at risk of flooding being  remapped into SFHAs. Second, the requirement to elevate or dry flood- proof structures above the BFE is harder to meet in the California  communities because the flood depth is up to 15 feet in certain areas,  compared to the other selected communities in North Dakota and  Louisiana whose flood depths range from 1 to 6 feet.
Farmers in Louisiana, North Carolina, and North Dakota generally have  been able to expand their operations in areas outside of SFHAs. For  example, local floodplain managers in Duplin and Tyrrell Counties (North  Carolina) told us that huge livestock processing plants were usually built  outside of SFHAs after Hurricane Floyd in 1999 destroyed millions of  livestock in the state. Because of the severe damage from this  hurricane, the state encouraged farmers to build their agricultural  structures outside of SFHAs whenever possible. In addition, according to  some farmers we spoke to in the selected Louisiana communities, at least  a portion of their farmland was in non-SFHA areas, and they built or  expanded their agricultural structures in those areas. As a result, they  were not required to comply with the NFIP building requirements because  those structures were not built in SFHAs. Further, four farmers in the  Louisiana communities told us that they generally built their agricultural  structures at the highest points on their farms, areas that were outside the  SFHA.
Updated levee analysis can result in levee de-accreditation—that is, a determination that  a levee no longer meets federal design, construction, maintenance, and operation  standards to provide protection from a major flood. Subsequently, areas behind the levees  can be remapped into SFHAs. See 44 C.F.R. §§ 65.10, 65.14. process crops that far from the harvest area (which lay inside the SFHAs)  because the walnuts could be damaged during transport.
We also found that the California farmers from our selected communities  experienced greater challenges in relation to elevating structures than  farmers in other areas. Local floodplain managers from the selected  communities in Louisiana, North Carolina, and North Dakota told us  farmers in their communities typically needed to raise building  foundations by just a few feet (which they were generally able to do by  adding fill dirt) to meet the BFE requirements for structures built inside  SFHAs. Farmers we spoke to also concurred with these views. For  example, a farmer from Louisiana’s St. Landry Parish who grows rice and  soybeans and raises crawfish told us that although most of his structures  were outside of the SFHA, he took precautionary steps to elevate them  all—those outside it as well as those within it—by at least 2 feet based on  his experience with regular flooding in the past and estimated future  flooding trends. However, in both Sutter and Yolo Counties in California,  the flood depths were relatively deeper (up to 15 feet in some areas). The  Sutter County floodplain manager explained that elevating a structure 3 or  more feet could require a base, or building pad, that occupied much more  square footage than the structure. It could require additional land to build  a slope that was not too steep to allow access to the structure. A slope  that was too steep could present an obstacle for truck and equipment  movement, making it impractical to conduct business. Further, 7 farmers  there told us that it was technically difficult and cost prohibitive to elevate  structures to the required height.
According to state and local floodplain managers and farmers we spoke  with, farmers in Sutter and Yolo Counties who were subject to the NFIP  building requirements were also facing challenges flood-proofing their  new or substantially expanded agricultural structures to comply with NFIP  building requirements. FEMA allows new, substantially improved, or  substantially damaged nonresidential structures, including agricultural  structures, to be dry flood-proofed (made watertight below the BFE).  However, according to FEMA guidance, dry flood-proofing is often  feasible only when the flood depth is less than around 3 feet, because  deeper flood depths produce pressure on structures that may crack the  walls or cause them to collapse. In addition, a local floodplain manager  and a farmer told us that, regardless of the flood depth, it would be  difficult to dry flood-proof structures used for rice and fruit drying because  these buildings needed large openings for fan exhausts to dry the crops  and prevent moisture from spoiling them (see fig. 4).
section_title: Guidance on Alternative Methods for Flood- Proofing Does Not Fully Address Risks in Vast, Deep Flood Depth Areas
paragraphs: FEMA has provided guidance on wet flood-proofing as an alternative to  elevation and dry flood-proofing for certain nonresidential structures,  including agricultural structures, but officials recognize that this guidance  still may not be sufficient for assisting farmers in riverine floodplains with  deep flood depths. Realizing the need to provide alternative methods to  meet building requirements after a catastrophic flood in the Midwest in  1993, in the same year, FEMA issued guidance that allowed certain  structures that cannot be elevated or dry flood-proofed to be wet flood- proofed, allowing water to flow through a building while minimizing  damage to the structure and its contents.may not be viable for certain agricultural structures. For example,  according to Sutter County’s floodplain manager, USDA and the Food  and Drug Administration have requirements for the water-tight storage of  certain farm products, making wet flood-proofing not a viable option. The  walnut farmer from Sutter County that we spoke to further explained that  as a result of these requirements, he had to seal the structure to prevent  cross-contamination of different crops, something that is important for  allergy sufferers. Another farmer told us that if water could get into  openings, so could pests that would damage crops. Further, crops such  as rice would be ruined if moisture enters the structure.
Furthermore, FEMA’s current guidance does not take into account  important changes to the agricultural industry that have occurred in recent  years. According to FEMA and USDA officials, the agricultural industry  has become more consolidated, which has greatly increased the size and  scale of farm operations. For example, supporting agricultural structures  are now much more expensive to build and replace and may represent  unique challenges not envisioned in the existing guidance. Such changes  in the agricultural industry underscore the need for FEMA to periodically  update and provide additional guidance that reflects current conditions.
The absence of current guidance on alternative methods has led some  farmers to “work around” the building requirements. Six farmers we  interviewed in Yolo and Sutter Counties in California told us that they  worked around the building requirements while trying to expand their  businesses. Two farmers in these communities told us that they had  quickly built their facilities before flood map revisions placed their farms in  SFHAs. A nursery farmer in Sutter County built a laboratory in an existing  warehouse to avoid building a separate structure, although he lost the  warehouse function. Three of the farmers said that instead of building  new structures, they were careful to make incremental additions or  repairs that were below NFIP’s substantial improvement threshold. Two  of the farmers also told us that, rather than building anything separately,  they attached every expansion to an existing structure, thus sacrificing  space for loading and unloading. Because it is costly, or, in certain  circumstances, not technically feasible to comply with current NFIP  building requirements, some farmers in our selected California  communities were concerned about future expansion after recent map  updates. Three farmers cited the importance of agriculture to the local  economy and said that agriculture was the best use for floodplains.However, these workarounds may not fully address the long-term  expansion needs of these farmers, and more importantly, the  workarounds may ultimately defeat the purpose of the NFIP building  requirements because they may increase the risks of flood damage to the  structures.
FEMA officials stated that it is their practice to update technical guidance  as needed and recognized that the challenges some farmers faced in  expanding or building agricultural structures in SFHAs might call for  additional approaches for complying with NFIP building requirements.  Officials explained that FEMA has not updated the guidance for wet flood- proofing in over 20 years because the agency thought the guidance  covered the types of agricultural structures that could be feasibly wet  flood-proofed. However, FEMA has identified the need for better ways to  protect structures, especially in wide, expansive floodplains where flood  depths may range from a few feet to 20 feet or more in depth. In  particular, FEMA officials said they would like to further evaluate the  vulnerability of structures and their contents to flood hazards and identify  how mitigation measures, such as elevation, dry and wet flood-proofing,  and other measures could be used to minimize flood damage. FEMA also  plans to solicit input from structure manufacturers and from farmers.
FEMA officials told us that they intend to begin updating all technical  bulletins, including the 1993 bulletin, in the next 18 months; however, they  are at a preliminary stage and have not yet identified resources for such a  study or determined its scope and time frames for completion. In addition,  FEMA officials told us that, although a recent statutory mandate in the  2014 Act for providing new guidelines on alternatives to elevation is  specifically required for residential structures, they plan to issue broader  guidance that could apply to nonresidential structures as well.
Without updating and providing additional guidance, FEMA is missing an  opportunity to help farmers who face challenges in effectively complying  with its building requirements, especially if more agricultural production  areas are remapped into SFHAs. Such guidance may not only be needed  by farmers in the selected communities in California that we reviewed, but  also in other similar agricultural areas across the country. Specifically,  FEMA officials noted that there are other agricultural areas in vast riverine  floodplains with deep flood depths across the country— some up to 37  feet—including Southwest Illinois, Northeast Arkansas, Southwest  Mississippi, Southeast North Carolina, and Northwestern Missouri.
section_title: Building Requirements Have Had Other Negative Effects on Rural Communities
paragraphs: Some stakeholders from selected communities stated that NFIP’s building  requirements in SFHAs could contribute to the long-term economic  decline of some small towns in rural areas. The local floodplain manager  from Yolo County told us that in addition to difficulties in building and  expanding agricultural structures, demand for farm worker housing is  strong, and the requirement that new or substantially improved homes be  elevated up to or above the BFE, which can be up to 15 feet, adds  significantly to the already high price of housing. The floodplain manager  stated that NFIP building restrictions that make it infeasible to build or  expand agricultural structures, including farm worker housing, could  reduce both the tax base and the economic stability of the county by  driving agricultural businesses elsewhere. However, according to FEMA,  the current building requirements are effective in reducing flood-related  damage and the loss of life because of specific requirements, such as  elevation. Further, according to FEMA, properties that adhere to building  requirements sustain less damage and as a result, may have lower  insurance premiums, which in turn could make insurance rates more  affordable and attract broader participation in the program.
Farmers and rural residents we interviewed in Yolo County expressed  similar concerns about the economic viability of their communities. For  example, one farmer told us that a small nearby town that had been  remapped into an SFHA would likely have trouble attracting viable  businesses to keep the community thriving, because the building  restrictions meant that businesses could only take over existing  structures. Some residents of Yolo County also told us their fire station  needed a new roof, which would have been considered a substantial  improvement because its cost would have exceeded 50 percent of what  the building was worth. However, according to the residents, the county  had not allowed permits for any new buildings or substantial  improvements to existing buildings since the 2012 map update because  FEMA had not designated the BFE for the community. For these reasons,  and because undertaking a substantial improvement would have meant  elevating or dry flood-proofing the fire station, the town had to do minimal  repairs, keeping the costs under the substantial improvements threshold.
section_title: Mandatory Purchase Requirements and Premium Changes Have Affected Rural Residents More Than Farmers
paragraphs: The mandatory purchase requirement and premium changes resulting  from remapping and the elimination of subsidies and grandfathered rates  appear to have affected rural home markets more than they have farming  operations. For example, some homes affected by these changes might  have lost value and become harder to sell and some development has  been halted according to some state and local floodplain managers, rural  residents, and developers we spoke with. Further, farmers often did not  need to buy flood insurance on some structures because they were able  to provide their own financing or take other measures, such as obtaining  a loan only on land without structures.
subsections: section_title: Mandatory Purchase Requirement’s Effect on the Residential Home Market
paragraphs: The mandatory purchase requirement and potential premium rate  increases associated with recent map updates and, in some cases,  legislative changes to NFIP, are likely to affect the residential real estate  markets in rural areas more than the farming operations in those same  areas, according to state floodplain managers and other stakeholders in  our selected communities. Representatives from national farm  organizations were unaware of any effects of the mandatory purchase  requirement on farmers; and local floodplain managers, agricultural  lenders, and 12 farmers we spoke with in the selected communities  generally agreed that mandatory purchase requirements had not affected  agricultural land values.
However, all of the state floodplain managers with whom we spoke had  heard concerns about the effects on the rural residential real estate  market of increased rates resulting from the elimination of some subsidies  and grandfathering provisions. In addition, some local floodplain  managers, agricultural lenders, and five farmers we spoke with expect  that being mapped into an SFHA would have a negative impact on the  value of residential housing in certain communities either now or in the  future. For instance, one agricultural lender in both selected communities  in Louisiana said that being mapped into an SFHA would decrease the  value of residential homes on the market in rural communities because of  the increased cost of flood insurance premiums. Also, a resident with  whom we spoke who lived in a rural part of Louisiana’s Rapides Parish  said that being mapped into an SFHA had reduced the value of his house  and made it more difficult to sell, because prospective buyers would see it  as prone to flooding. Similarly, in Walsh County, North Dakota, three  residents told us that the requirement to buy flood insurance and the rate  increases seen in their community after the SFHA was expanded in a  2012 map update had nearly halted the residential real estate market in  their community. One resident said that he had tried to move but could  not, because potential buyers walked away when they realized his home  was in an SFHA.
Some concerns were also raised about the overall affordability of NFIP  insurance for homeowners mapped into SFHAs. Representatives of the  Property Casualty Insurers Association of America told us that remapping  would likely cause some affordability concerns as more areas were  moved into high-risk zones. However, they noted that remapping would  likely not impact residents of rural areas any differently than it would  remapped residents in urban areas. Similarly, two residents of Walsh  County, North Dakota, told us that the rate increases associated with their  recent map change had made it hard for them to now afford to live in their  homes. Concerns were also raised about the affordability of insurance  premiums and the impact on the housing market once the phasing out of  subsidized rates established in the Biggert-Waters Act and the elimination  of grandfathering provisions began, but some of these concerns may no  longer be relevant, because the 2014 Act amended sections of the  Biggert-Waters Act that would have resulted in rate increases for some  residential policyholders.
At the same time, local floodplain managers and residents of some  selected communities said that NFIP insurance requirements associated  with being in an SFHA could lead to positive outcomes for rural towns,  including more mitigation actions and less development in the floodplain.  For instance, the local floodplain manager of Duplin County, North  Carolina, said that the few homeowners in the SFHA who had not  elevated their homes would probably choose to do so, since mitigation  actions could lower premium rates. Similarly, a resident of Walsh County,  North Dakota who was concerned about rate increases after being  mapped into an SFHA, said that he and some of his neighbors had  already elevated their homes above the BFE or were considering  elevating them. In addition, the local floodplain managers from Sutter  County, California, and Duplin County, North Carolina, both stated that  inhibiting development in SFHAs could help manage the adverse impacts  of floods and help meet one of FEMA’s goals of mitigation. We heard  about areas in most of our selected communities where development had  begun prior to a map update but was halted when the areas were  remapped into SFHAs. For example, in Yolo County, California, and St.  Landry Parish, Louisiana, we visited developments that had been partially  built before being remapped into SFHAs. The developers in both areas  said that the elevation requirements and probable decline in the value of  the homes because of the flood insurance requirements would make  further development economically infeasible. In both cases, the  developers were not sure what would happen to the undeveloped land.  We also heard from local floodplain managers in Duplin County, North  Carolina, and Yolo and Sutter Counties in California that being mapped  into an SFHA had halted development in parts of their counties.
While the lack of development in SFHAs may be beneficial for floodplain  management, the local floodplain managers and other stakeholders in  Yolo and Sutter Counties in California noted the possible negative effects  of being remapped into SFHAs—including changes in building  requirements and insurance costs—on residents of small rural towns. As  with building requirements, members of the selected communities said  that insurance costs associated with being remapped into an SFHA could  contribute to the long-term economic decline of some small towns. For  instance, the local floodplain manager in Yolo County, California, told us  that the town with the unfinished development that we discussed  previously would probably enter a long, slow decline, in part because of  recent changes in building requirements and insurance costs resulting  from being remapped into an SFHA. He added that not only was it no  longer economically feasible to develop certain areas within the town’s  borders, but also most of the town’s inhabitants were farm workers who  could not afford flood insurance for their houses. However, he said that  NFIP requirements were only one factor that was impacting the economic  future of this town. In addition, he noted that changes to building  requirements and insurance costs resulting from being remapped into an  SFHA would not impact all small towns in the same way and that other  towns in the community would prosper despite being remapped into  SFHAs. An agricultural lender we spoke with in Yolo County agreed that  being remapped into SFHAs could have long-term economic impacts on  rural towns that depended on the agricultural economy, because farm  businesses that were already operating on thin profit margins could be  hurt by the additional cost of flood insurance. This is because farmers  must accept the market price for their crops, and therefore it may be  difficult to pass the price of flood insurance on to their customers,  according to one farmer and one lender we spoke with in California. In  addition, the local floodplain manager in Sutter County said that some  small businesses that supported agriculture, such as a local tractor  dealership, had already seen premium rate increases due to the Biggert- Waters Act eliminating their subsidies. He believed that some of these  small businesses would have to close because they would not be able to  afford the full-risk rates for business structures.
section_title: Many Farmers May Not Be Required to Buy Flood Insurance
paragraphs: Like NFIP’s building requirements, the mandatory purchase requirement  and changes in flood insurance premiums have had limited effects on  farmers we spoke to in the selected communities, except some in  California. Many of those we spoke with—including FEMA and USDA  officials, representatives of national farming organizations and a  floodplain management organization, all state floodplain managers, and  one insurance industry organization—were not aware of farm businesses  that had been adversely impacted by flood insurance costs. However,  representatives of an agricultural floodplain management group, whose  members were primarily from California’s Central Valley, said that its  members were concerned that the cost of flood insurance on their  structures in areas that had recently been remapped into SFHAs could  make their businesses unsustainable. For example, according to a rice  farmer in California, recent mapping updates placed his structures in an  SFHA, raising his flood insurance premiums substantially. He said that his  flood insurance premiums were now his third largest production expense.  Three farmers in Yolo and Sutter Counties and the local floodplain  manager in Sutter County were also concerned about rate increases they  expected in the next year as NFIP moved toward full-risk rates.  However, six farmers we spoke with in the California communities told us  that their flood insurance premiums were a very small portion of their total  production cost. In addition, some of the farmers from these communities  chose to purchase flood insurance even though they were not required to  do so and considered it another cost of doing business.
According to state floodplain managers for most of the selected  communities, many farmers were not required to insure their structures,  for varying reasons.  For instance,  In the two Louisiana communities we reviewed, all but one of the  farmers with whom we spoke had farm structures only on parts of  their land that lay outside SFHAs. None of these farmers voluntarily  purchased flood insurance on these structures.  In North Carolina, the floodplain manager said that many farms in the  state were sponsored by large corporations that funded the  construction of any necessary structures, and as a result farmers did  not need loans that might include a mandatory purchase requirement.
In contrast, the floodplain manager from California said that institutions  that provided loans to farmers for structures, such as rice or prune dryers,  might require flood insurance as a condition of the loan, even if they were  not required to do so.
Among other requirements, buildings with two or more outside rigid walls and a fully  secured roof that are affixed to a permanent site are considered insurable structures,  according to NFIP regulations. 44 C.F.R. § 59.1. delayed planting a new crop because he lacked the cash to do so and  did not want to take out a loan because he would have had to  purchase flood insurance. He said that he expected it would take him  2 years to raise the needed money.
Also, almost all (five of six) of the agricultural lenders with whom we  spoke had concerns about requiring farmers to purchase flood insurance  on farm structures that had little or no value, such as dilapidated sheds or  chicken coops. These lenders told us that this issue was their most  significant concern in implementing the mandatory purchase requirement  for farm loans. These structures often provide little to no economic value  to farmers, and lenders said that they would not require insurance on  them in the absence of the mandatory purchase requirement because  they did not need to use the structures as collateral. Two of the lenders  told us that they had lost business because of this requirement. Further,  one lender told us that it was difficult to determine the replacement value  of a building that the appraiser valued at zero or in some cases did not  even include in the appraisal. One lender told us that in these situations  their loan officers worked with the farmers to exclude the structures from  the mortgage to avoid the mandatory purchase requirement.
section_title: Options to Address Concerns about NFIP Requirements in Agricultural and Rural Areas Involve Trade- Offs and Risks
paragraphs: Local floodplain managers, farmers and lenders identified several options  to help farmers located in SFHAs manage NFIP requirements for building  new or substantially improved structures and lowering the cost of NFIP  insurance. The most commonly cited option involved exempting  agricultural structures from NFIP building requirements and the  mandatory purchase requirement. Other options included charging  insurance premiums based on an area’s historical flood losses,  accounting for some level of protection by certain unaccredited levees,  providing need-based assistance to farmers and rural residents, and  increasing funding for mitigation efforts. However, FEMA officials, experts  from national floodplain management and city and regional planning  organizations, and academics told us that many of these options carried  risks and may run counter to the NFIP objectives.
Exempt Agricultural Structures. The most commonly cited option from  farmers and local lenders, mainly from California and Louisiana, involved  exempting new agricultural structures and those that needed substantial  improvements from NFIP building requirements and the mandatory  purchase requirement. Legislation has been proposed to amend NFIP to  include relaxing NFIP requirements for some agricultural structures,  including the Agricultural Structures Building Act of 2013, which aims to  allow farmers to repair, expand, and construct agricultural structures  without elevation in SFHAs. In addition, one group has advocated the  creation of a separate agricultural zone that would not require expensive  elevation and dry flood-proofing but would require wet flood-proofing of  certain structures. Some farmers from Sutter and Yolo Counties in  California told us that they did not believe that the flood risk for their areas  was high, since these counties have not experienced a major flood since  the 1950s. The farmers have said that they would be willing to assume all  risks and opt out of federal disaster relief if they could expand and  construct buildings without being required to follow NFIP building  requirements.
However, experts from national floodplain management organizations and  academics told us that such exemptions were counter to the objectives of  NFIP and carried significant risks. For example, one expert indicated that  it might be difficult to differentiate agricultural structures from other  nonresidential structures that may also store agricultural products (e.g., a  corner store or a large industrial facility that may also store grain in an  adjacent warehouse). He said that the tendency would be to classify any  structures that could be remotely related to agriculture as agricultural  structures. Further, experts we spoke to indicated that such an exemption  could set a precedent, leading others to ask for similar exemptions.
FEMA officials shared these views, adding that FEMA had no legal  authority to allow farmers or any other specific population group to opt out  of disaster relief. According to FEMA officials, allowing farmers to assume  all risks and not receive disaster relief would require further legislative  changes to the Stafford Disaster Relief and Emergency Assistance Act.
Furthermore, one of the primary goals of FEMA’s building requirements is  to help reduce flood-related property damage. Complying with FEMA’s  building requirements would reduce flood-related losses and lower  insurance premiums for compliant structures, according to FEMA officials.  They added that this reduction in turn may help attract broader  participation in the program. Exempting structures may defeat this goal  and encourage farmers to build noncompliant structures in high-risk areas  that may inadvertently cause damage to nearby communities, according  to officials. For example, agricultural structures that do not adhere to  building requirements—that is, that are not elevated or flood-proofed— could be washed downstream, creating blockages that could cause  additional flooding in communities there. Both FEMA and the experts told  us that while farmers might view their choices as affecting only  themselves, flood mitigation needed to be considered holistically from the  perspective of risks to the larger community. Further, experts indicated  that exempting structures may reinforce farmers’ potential misperceptions  of their flood risks.
Charge Insurance Premiums Based on Historical Losses to  Flooding. Some farmers, rural residents, state and local floodplain  managers, and other organizations have suggested creating a variable  premium rate structure based on historical flood risks in different areas.  For example, some farmers from California told us that they should pay  lower flood insurance premiums than others residing in areas that the  farmers consider to be more flood-prone areas, such as coastal areas, as  these farmers had not experienced flooding since the 1950s and did not  perceive their flood risks as significant. However, according to FEMA the  premium rates are determined by flood zone, among other factors, and  policyholders in high-risk coastal areas (V zones) already pay higher  rates than policy holders in other zones. Further, FEMA stated that flood  maps already account for historical floods, in addition to other factors.  According to the national floodplain management expert we spoke with,  some states that had so far collected less in claims from NFIP than other  states might welcome this option. But they also noted that people  tended to underestimate their long-term flood risks.
Exempt Low-Value Agricultural Structures. As mentioned earlier,  lenders from four of the selected communities suggested giving them the  flexibility to decide whether a farmer needed flood insurance on low-value  agricultural structures. Some lenders told us that they did not need to use  the low-value structures as collateral. Experts indicated that this option  could be further explored, provided that independent third parties  appraised the structures and confirmed their values. FEMA officials also  noted that federal financial regulators, not the agency, set the standards  for insurance requirements for low-value structures and that FEMA did  not have the authority to dictate to lenders what they could do. According  to FEMA, in some instances lenders may require insurance even though  it may not be required under the law. Therefore, farmers may face the  prospect of paying for flood insurance coverage on properties that have  low value.
Account for Some Protection Provided by Unaccredited Levees.  According to a floodplain manager from Sutter County, California, and  others, unaccredited levees still provide some protection and insurance  premiums should reflect this fact. The experts we spoke with said that this  option would help adjust insurance rates and provide more flexibility for  policyholders in adhering to NFIP building requirements and mandatory  purchase requirements. FEMA recognizes that unaccredited levee  systems may still provide some measure of protection against flooding  and has developed Levee Analysis and Mapping Procedures (LAMP) to  account more precisely for the level of protection levees provide when  mapping flood risk. LAMP’s goal is not to reduce insurance rates but to  use the best scientific methodologies to more accurately determine flood  risks and help ensure that premiums are based on the most accurate  determination of flood risk. For example, LAMP may determine that an  area around the levee should be in zone D (a non-SFHA area with  undetermined risks). The levee may still technically not be accredited, but  structures located in zone D have no mandatory purchase requirement or  building requirements because it is not considered as SFHA.  Policyholders in this zone would not be required by law to purchase  insurance, but FEMA strongly advises that they do. However, some  experts said that determining the safety of levees was difficult. FEMA  officials noted that while LAMP allowed for a more detailed analysis of  unaccredited levees, this analysis might not always result in lower BFEs,  smaller SFHAs, or reduced NFIP premiums. FEMA and other experts  emphasized that levees were never 100 percent safe and that  communities needed to acknowledge the possibility that any levee— including those that are accredited to provide protection for a 1 percent  annual event—could fail.
Provide Need-Based Assistance. Some farmers also cited need-based  assistance as an option to help those who could not afford NFIP  premiums to meet the insurance requirements. In general, stakeholders  agreed that this option warranted further exploration, since flood  insurance has been an affordability issue for many people. We have  previously identified targeted assistance or subsidies based on financial  need of policyholders as an option to consider to reduce the financial  impact of subsidies on NFIP.
See GAO, Flood Insurance: More Information Needed on Subsidized Properties,  GAO-13-607 (Washington D.C.: July 3, 2013). the agency currently does not have the statutory authority or resources to  provide need-based and targeted assistance to help property owners with  NFIP insurance premiums. As required by the Biggert-Waters Act and the  2014 Act, the National Academy of Sciences is studying the issue of  affordability but has not yet produced its report. FEMA officials said that  it would be premature to comment on how need-based assistance might  operate.
FEMA supports a variety of flood mitigation activities that are designed to reduce the risk  of flood damage and the financial exposure of NFIP. These activities, which are mostly  implemented at the state and local levels, include hazard mitigation planning; the adoption  and enforcement of floodplain management regulations and building codes; and the use of  hazard control structures such as levees, dams, and floodwalls or natural protective  features such as wetlands and dunes. Additionally, property-level mitigation options  include elevating a building to or above the area’s base flood elevation, relocating the  building to an area of less flood risk, or purchasing and demolishing the building and  turning the property into green space. large communities with high population densities, according to FEMA  officials. The officials indicated that in general, agricultural areas and  rural communities may be unlikely to meet these criteria and thus may  have difficulty obtaining mitigation funding.
section_title: Conclusion
paragraphs: A number of rural and agricultural areas have recently been mapped into  SFHAs. Farmers with new or substantially improved structures in these  areas must now comply with NFIP building requirements, and farmers in  some locales—specifically counties that we visited in California—face  challenges meeting them. Based on information from FEMA, complying  with NFIP’s building requirements may be a broader problem applicable  to agricultural communities that have vast floodplains with deep flood  depths similar to those in California. The two options of complying with  the program’s building requirements—elevating and dry flood-proofing— are not always feasible for certain structures in these types of locations.  For example, farmers in areas with deep flood depths cannot realistically  elevate large structures to meet FEMA requirements and may not be able  to dry flood-proof all structures. With regard to wet flood-proofing for  some nonresidential structures, including certain agricultural structures,  FEMA last updated its guidance for granting such variances in 1993.  Although FEMA typically updates guidance as needed and acknowledges  the challenges some farmers face, it has not updated its guidance with  alternatives for complying with building requirements in over 20 years, or  expanded it to reflect changes in the agricultural industry. Updated and  detailed guidance that provides alternative mitigation methods for  protecting agricultural structures from flooding and takes into account  relevant changes to the agricultural industry would be an important step in  assisting farmers in identifying feasible alternatives to complying with  building requirements in expansive floodplains with deep flood depths.
section_title: Recommendation for Executive Action
paragraphs: As FEMA determines the scope of its efforts to revise its existing  guidance, we recommend that the Secretary of the Department of  Homeland Security (DHS) direct the Administrator of FEMA to update  existing guidance to include additional information on and options for  mitigating the risk of flood damage to agricultural structures to reflect  recent farming developments and structural needs in vast and deep  floodplains.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Department of Homeland Security  (DHS) for its review and comment. DHS provided written comments that  are presented in appendix IV. In its comments, DHS concurred with our  recommendation to update existing guidance to include additional  information on and options for mitigating the risk of flood damage to  agricultural structures to reflect recent farming developments and  structural needs in vast, deep floodplains. In particular, the letter noted  that FEMA recognizes that agriculture is a good use of the floodplain.  Further, changes in the agricultural industry and the diversity of  agricultural structures are important to recognize in future guidance.  FEMA stated that it is working to determine the best approach to update  its guidance, but has not yet determined a completion date. FEMA also  provided technical comments, which we incorporated, as appropriate.
As agreed with your offices, unless you publicly release the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to FEMA and  other interested parties. In addition, the report is available at no charge on  the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-8678 or garciadiazd@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. Key contributors to this report are listed in  appendix V.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report discusses (1) the effects on farmers and rural residents of the  National Flood Insurance Program’s (NFIP) building requirements for  agricultural and residential structures, (2) the effects of the mandatory  purchase requirement and changes in premium rates, and (3) options that  have been proposed to address any issues resulting from changes to  NFIP requirements and stakeholders’ views on these proposals. We  focused our review on riverine rural and agricultural floodplains and  excluded coastal areas.
For all objectives, we analyzed relevant laws, as well as Federal  Emergency Management Agency (FEMA) regulations and policies,  including building requirements for properties located in special flood  hazard areas (SFHA), flood mapping modernization efforts, and the  analysis and mapping procedures for unaccredited levees. statutory requirements such as the mandatory purchase requirement for  properties located in SFHAs. We reviewed the Biggert-Waters Flood  Insurance Reform Act of 2012 (the Biggert-Waters Act), including  provisions to phase out some premium subsidies. We also reviewed  provisions of the Homeowner Flood Insurance Affordability Act of 2014  (2014 Act) that repealed or altered portions of the Biggert-Waters Act.
We identified and reviewed research on the effects of NFIP requirements  on farmers and rural residents.
Levees are man-made structures, usually earthen embankments, designed and  constructed in accordance with sound engineering practices to contain, control, or divert  the flow of water to provide protection from temporary flooding. 44 C.F.R. § 59.1. Levees  that are accredited by FEMA can result in a community being mapped in a flood zone with  a lower risk than it would be without the accredited levee. regional planning organizations (i.e., American Planning Association,  Association of State Floodplain Managers, and National Association of  Flood & Stormwater Management Agencies). We interviewed academics  in the areas of floodplain management, officials from FEMA’s Mapping,  Insurance, Building Science and Flood Management Branches, and  officials from Department of Agriculture’s (USDA) Economic Research  Service and Rural Development branches. In addition, we interviewed  representatives of Agricultural Floodplain Management Alliance (AFMA)  members primarily in California, and the insurance industry.
To identify the locations of rural and agricultural areas in SFHAs, we  distinguished rural and agricultural land areas from urban land areas.  FEMA does not make such a distinction for the purposes of administering  NFIP. To make these distinctions, we first analyzed data from the U.S.  Census Bureau (2010) and USDA’s Atlas of Rural and Small Town  America (2007) to determine the rural and agricultural areas within the  United States. We defined rural areas as areas that were not considered  urbanized areas or urban clusters using Census data and agricultural  areas as counties where 50 percent or more of the land area was used  for farming. We considered all other areas as urban (see fig. 5). We  reviewed information available online from the Census web site and the  USDA web site on the data quality assurance processes for the data. We  concluded that the Census and USDA data that we used were sufficiently  reliable for purposes of using them as a base for this determination.
We provided FEMA the data on rural and agricultural areas described  above. FEMA mapping specialists used the data we provided them and  combined it with FEMA’s flood map data. For the rural and agricultural  areas with maps that had been converted to a digital format as of  February 2014, FEMA mapped the SFHAs. For the rural and agricultural  areas that had flood maps that had not yet been converted to digital  format as of February 2014, FEMA showed these areas on the map.  FEMA excluded areas with coastal flood zones from the map.
To determine the number and percentage of policyholders located in rural  and agricultural riverine SFHAs, we determined which ZIP codes were in  the rural, agricultural, and urban areas. If 50 percent or more of land area  of a ZIP code was within a rural or agricultural area, we considered it a  rural or agricultural ZIP code. We analyzed FEMA’s policy data as of  September 30, 2013, (most recently available fiscal year-end data), to  determine how many policies were zoned in an SFHA in the ZIP codes  we deemed rural or agricultural using the method described above. We  excluded policies with a coastal flood zone designation because the  scope of this study was on riverine flooding. To determine the  percentage of the population mapped into or out of SFHAs because of  FEMA’s Map Modernization initiative, we analyzed available FEMA data  on the number of people that received a map change at the Census Block  Group level under this initiative. We determined which Census Block  Groups were in rural and agricultural ZIP codes and compared the  number of people that received a change in SFHA designation in those  Census Block Groups to population data from the 2010 Census, which  was also provided by FEMA. We reviewed documentation on how the  data were collected and interviewed a FEMA official on the usability of the  data. We determined these data were sufficiently reliable for our  purposes.
To assess any effects of NFIP’s building requirements and the mandatory  purchase requirement on farmers and rural residents, we conducted case  studies in eight selected NFIP communities. We selected these  communities using the following criteria:  crop and livestock production requiring nonresidential farm structures  or nearby on-farm processing (e.g., rice, corn, soybeans, cotton,  sugar beets, hogs, chickens, and cattle (dairy));  some agricultural land located in SFHAs that was prone to flooding;  and geographic variations (e.g., East coast, West Cost, the South and the  Midwest) of the riverine agricultural areas located in SFHAs across  the country.
We selected California, Louisiana, North Carolina, and North Dakota as  key states. We then interviewed four state floodplain managers from each  state to obtain their views on any effects NFIP building requirements and  the mandatory purchase requirement have had or could have on farmers  and rural residents. In addition, we solicited their input, as well as  additional input from three state agricultural extension specialists in  California, Louisiana, and North Carolina, in identifying two additional  communities in their states that met our criteria.  The eight selected  communities were:  Sutter County, California; Yolo County, California;  Rapides County, Louisiana; St. Landry Country, Louisiana; Duplin  County, North Carolina; Tyrrell County, North Carolina; Cass Country,  North Dakota; and Walsh Country, North Dakota.
We interviewed eight local floodplain managers and five agricultural  extension service officials in the suggested communities to obtain their  views on the effects of NFIP on farmers and rural residents. We also  requested the help of the floodplain managers and extension personnel in  identifying local farmers and rural residents with properties located in  SFHAs. The local officials helped us identify a total of 24 farmers and 10  rural residents from the selected communities. Although we provided the  officials with guidance for the characteristics of persons identified, we did  not independently verify that all of our criteria were met and acknowledge  that some selection bias may be present since we relied on local officials  for selecting the farmers to participate in our study. We contacted the  people identified for each community. We conducted structured interviews  with all farmers and rural residents who had been remapped into SFHAs  according to local officials and could provide first-hand perspectives on  any challenges they faced in complying with NFIP’s building requirements  and the mandatory purchase requirement. We also discussed identified  options to address these challenges.
We spoke with some farmers and rural residents who had been  remapped into SFHAs after their community’s initial flood map had been  established and some farmers and rural residents who were not currently  mapped into an SFHA. We also spoke with six agricultural lenders about  the effect insurance requirements had on farmers and rural residents and  with two developers about the effects of the requirements on rural  communities. We then summarized all interviews and analyzed them by  category of questions: NFIP building requirements, the mandatory  purchase requirement, effects on the community, and options to address  these challenges.
Table 2 shows, for each of the eight selected communities, the number of  farmers and rural residents with whom we spoke and the major crops  produced by those farmers. We could not obtain the same number of  interviews in each community, because the local floodplain managers and  agricultural extension specialists who provided referrals to people  provided different numbers and types of contacts in each of the selected  communities. In addition, the relationships between the local floodplain  manager and the contacts sometimes differed, and in some cases a  relationship may have affected our ability or inability to obtain an interview  with that person. For example, some successful contacts served on  community water management task forces with the local floodplain  manager.
We visited California and Louisiana and interviewed the local farmers and  residents. For the other two states (North Carolina and North Dakota), we  interviewed the farmers and rural residents by telephone.
The purpose of our extensive work in these selected communities was to  illustrate and more fully understand farmers’ and residents’ experiences in  dealing with NFIP’s requirements. Our individual interviews were not  designed to demonstrate the extent of an issue such as a survey might do  and we determined that personal contact would prove more reliable in  completing interviews with this rural population. In addition, through  individual interviews we were able to obtain a more complete  understanding of each person’s perspective, the reasons for their  opinions or attitudes on specific topics and their insights into concerns  related to NFIP requirements, all of which would supplement the  information provided by state and local NFIP officials. The combination of  design, targeted research questions, multiple sources of information, the  use of selected representative communities to address the research  questions and systematic analyses all serve to support greater  generalizability of our findings. Nevertheless, due to the differing nature of  communities and their responses to the NFIP requirements, a possibility  exists that had we selected different communities we might have found  some different results. We believe that the patterns and consistency of  our findings within and across our selected cases support the widespread  applicability of our findings.
To identify options to address any challenges farmers and rural residents  faced in complying with NFIP’s building requirements and the mandatory  purchase requirement, we gathered suggestions from local NFIP  administrators, local lenders, farmers, and rural residents that we met  with during our case studies. We then asked experts from flood  management and city and regional planning organizations, cognizant  academics, and officials from FEMA to comment on the ideas that we  gathered and summarized their views.
To determine historical NFIP premium and claims amounts, we analyzed  annual NFIP premium data for years 1994-1998 and 2000-2013, and the  NFIP claims database as of September 30, 2013 (most recently available  fiscal year-end data). We adjusted these premium and claim amounts for  inflation to report them in constant 2014 dollars. We conducted electronic  testing including checks for outliers and missing data. We also  interviewed FEMA officials on the usability and reliability of the data and  reviewed our past assessments of these data. We determined these data  were sufficiently reliable for our purposes. We determined the premiums  and claims attributable to rural and agricultural areas and to urban areas  using the ZIP codes for rural, agricultural, and urban areas we found  using the method described above. We used 2007 agricultural data and  2010 rural and urban data as the base years for determining whether a  ZIP code area was rural, agricultural, or urban. As a result, we may  under-represent the premiums and claims attributable to the rural and  agricultural areas for earlier years because urban areas have tended to  grow larger over time. Data were not available for 1999 and the years  prior to 1994 that would allow us to determine the premium amounts  comparable to the premium amounts we reported for 1994 through 2013.  FEMA told us that the available premium data for 1999 and years prior to  1994 was for all policies that had been in place during the year, as  opposed to the policies in force at a specific point in time of each year.  Using these data would have resulted in overstated premiums. Also,  FEMA told us that in some of the earlier years ZIP codes were not  reported consistently from the insurance companies. In some years, ZIP  codes were not available at all (1978–1981, 1983, and 1992).
section_title: Appendix II: Analysis of National Flood Insurance Program (NFIP) Premiums and Claims, Rural and Agricultural and Urban
paragraphs: We analyzed FEMA data on National Flood Insurance Program (NFIP)  premiums and claims from 1994 through 2013 (except 1999) to determine  the claims paid to and the premiums taken-in by FEMA from rural and  agricultural riverine areas and urban riverine areas. We also analyzed  the total premiums and claims for rural and agricultural areas and urban  areas on a state-by-state basis for this time period.
Overall, our analysis of premiums and claims indicates that in both rural  and agricultural and urban areas nationwide, policyholders have  historically received more in claims than they have paid in premiums.  However, flooding is a highly variable event, with losses differing widely  from year to year. Therefore, analysis of historical data can lead to  unreliable conclusions about the actual flood risk faced by a given state or  area. Also, catastrophic events greatly impact the long-term aggregate  experience of a state. While the difference between premiums and claims  in rural and agricultural and urban areas is not a meaningful measure of  whether policyholders are paying premiums commensurate with their risk  because NFIP premiums are intended to cover losses as well as  operating expenses, among other reasons, it provides additional  descriptive information.
Table 3 shows NFIP premiums and claims of policyholders in rural and  agricultural areas from 1994 through 2013 (except 1999). This information  provides some indication of the trends over this period for rural areas.
Similarly, table 4 provides 1994-2013 (except 1999) premium and claims  data for urban areas.
Table 5 includes available premium and claims data by year in the rural  and agricultural riverine areas of each state. Because comparable 1999  premium data were not available, the ratio of claims to premiums for  some states may be distorted. In 1999, some states on the east coast  experienced large losses from Hurricane Floyd likely resulting in high  claim amounts. According to FEMA, for example, NFIP policyholders in  the state of North Carolina received over $141 million in claims between  September 1999 and June 2000. If the premiums and claims for 1999  were included, the ratio of claims to premiums for states affected by  Hurricane Floyd could have been larger.
Table 6 provides the same premium and claims information for urban  areas by state.
Additional study would be required to determine whether policyholders in  some states with lower losses are paying a higher premium than is  appropriate for their risk and others paying too little. For example, our  analysis did not control for differences in the type of policy purchased,  such as the mix of certain property types across states and insurance  coverage amounts, which could affect both premiums and claims. In  addition, we did not control for differences in the mix of subsidized and  full-risk policies or the impact of subsidized premiums on our results. As  we have reported previously, some states have a relatively large number  or proportion of subsidized properties that generally would lead to higher  expected claims relative to premiums. The limitations in setting full-risk  rates that we discussed in the prior report could result in systematic  mispricing relative to risk that becomes apparent only over long periods.  Further, the analysis conducted for this report included both subsidized  and full-risk properties, and so the results should be considered in this  context.
section_title: Appendix III: Additional Information on Selected Agricultural and Rural Communities
paragraphs: The following are some basic characteristics of the selected communities:  Sutter County, California; Yolo County, California; Rapides Parish,  Louisiana; St. Landry Parish, Louisiana; Duplin County, North Carolina;  Tyrrell County, North Carolina; Cass Country, North Dakota; and Walsh  Country, North Dakota. Tables 7 to 14 show, for each individual  community, the total number of National Flood Insurance Program (NFIP)  policies, the number of policies in a special flood hazard area (SFHA), the  number of miles of levees in the county, and the top agricultural  commodities in the county. Figures 6 to 11 show FEMA’s flood maps for  the counties, when available.
section_title: Appendix IV: Comments from the Department of Homeland Security
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Triana McNeil and Jill Naamane  (Assistant Directors); Simin Ho (Analyst in Charge); Emily Chalmers;  William Chatlos; Barbara El Osta; Melissa Kornblau; John Mingus; Marc  Molino; and Ruben Montes De Oca made key contributions to this report.