Federal Policy Conflicts Could Raise Flood Insurance Costs, Leave Thousands Unaware of Dam Risks

Conflicting federal policies are creating significant challenges for thousands of residents in flood-prone areas, potentially raising their flood insurance costs and leaving them unaware of the dangers posed by dams upstream from their homes and workplaces. These issues stem from a complex interplay between FEMA’s flood insurance policies and national security measures implemented after the September 11, 2001, terror attacks.

To help communities obtain discounts on flood insurance, FEMA’s Community Rating System (CRS) rewards local governments that accurately map flood risks, including those from potential dam failures. However, other federal agencies, such as the Federal Energy Regulatory Commission (FERC) and the U.S. Bureau of Reclamation, restrict access to critical information about dam failure risks, citing national security concerns. These restrictions make it nearly impossible for many communities to meet FEMA’s criteria for insurance discounts, placing homeowners at a financial disadvantage and increasing the risk of unpreparedness in the event of a dam-related flood.

The policy conflict has been a longstanding issue, with federal officials being warned of its dangerous implications for years. Despite these warnings, progress has been slow. For example, while the U.S. Army Corps of Engineers has recently started publishing maps of areas that could be flooded by dam failures, other agencies continue to withhold similar information. The Bureau of Reclamation, which oversees some of the nation’s largest dams, has announced plans to revise its information-sharing policies by 2025, but full implementation could take over eight years.

The impact of these restrictions is already being felt in various communities. Sacramento, California, for instance, is one of the most at-risk regions for catastrophic flooding due to its location near the Folsom Dam. Despite achieving a high score in FEMA’s CRS, Sacramento County was unable to qualify for the top flood insurance discount because of the Bureau of Reclamation’s restrictions on dam failure data. This has left residents paying higher premiums and without vital information that could help them prepare for potential disasters.

Similarly, in Phoenix, Arizona, local officials have expressed frustration that conflicting federal policies are unfairly penalizing communities striving to secure better insurance rates for their residents. Without access to complete dam failure information, these communities are unable to fully meet FEMA’s requirements, resulting in higher costs for homeowners.

The problem is compounded by the growing risks associated with climate change. As intense storms become more frequent, the likelihood of dam failures and severe flooding increases. This has already been seen in states like Georgia, Minnesota, New York, South Carolina, Texas, and Wisconsin, where floodwaters have breached or damaged dams, leading to evacuations and costly repairs.

Despite the evident risks, the U.S. Government Accountability Office (GAO) has raised concerns that FEMA’s CRS discounts may not be actuarially justified, as the program’s focus on flood mitigation and public awareness does not directly reduce the risk of flooding for insured properties. Moreover, the complexity and cost of participating in the CRS deter many communities from joining, leaving a large portion of the country without the benefits of the program.

Efforts to reform the system have been slow. While FEMA is once again seeking public input on potential changes to the CRS, any updates are not expected until 2026. Meanwhile, communities like Roseville, California, which has managed to navigate the bureaucratic maze to secure the top discount, remain outliers. Most jurisdictions struggle to meet the stringent requirements due to the lack of accessible dam-related data.

In addition to the financial and safety concerns, the situation underscores the need for better coordination between federal agencies. The current system leaves communities in the dark about the true extent of their flood risks, undermining efforts to protect lives and property. As the debate over national security versus public safety continues, residents in flood-prone areas are left to navigate the consequences, often at great personal and financial cost.