In mid-June, massive floods swept through Montana. Many of the people whose homes flooded didn’t have flood insurance, largely because they didn’t think they needed it. But with climate change, that map is shifting. Despite the scale of the damage and its unprecedented nature, a spokesman for the Federal Emergency Management Agency said that people need to “take responsibility for their own disaster recovery,” and that FEMA would not be able to make them whole.
What the Montana floods underscore is that natural disasters are getting worse, and no one is immune. On Friday’s episode of What Next: TBD, I spoke with Craig Fugate, who served as FEMA administrator under President Obama, about what happens when the old disaster playbook needs an overhaul. Are we left to fend for ourselves? Our conversation has been edited and condensed for clarity.
Lizzie O’Leary: Some people might assume that when there’s an emergency, like the floods in Montana, the federal government just shows up. But that’s not actually how it works. Can you give us a little FEMA 101?
Craig Fugate: FEMA doesn’t step in until a governor has requested from the president a disaster declaration. As part of that request, the governor certifies in writing that the disaster exceeds the capability of the state to manage. In most cases, what that refers to is lack of insurance, and FEMA is being asked to support a state financially for the extraordinary cost.
In disasters that I have covered, often you see people not fully understand what FEMA helps with, what they don’t help with, what you have to show. How does that process work?
It goes back to the origination of the Stafford Act, which is the legislation that FEMA operates disasters under. Congress did not intend for FEMA to be the primary response to disasters. It was based upon non-duplication of benefits. The simplest thing is if you’re getting money from somewhere else, you shouldn’t be getting money from FEMA. When we say FEMA, let’s be clear about this: This is the federal taxpayer, this you and me. But FEMA is allowed to provide assistance where there is a lack of insurance or the insurance didn’t cover all the losses. This is, to a certain degree, what happened in Montana.
FEMA is not designed to make people whole. They’ll see that the maximum amount from the program that FEMA provides to individual assistance for families and individuals is around $35,000. The average person gets far less than that. It’s not designed to do a full recovery, and it is woefully inadequate for families trying to recover from a flood.
In Montana, you have a local spokesman for FEMA essentially saying, “Look, you’ve got to manage your own recovery.” At the same time, you have residents who said, “I have my house in an area that had never flooded before, that did not seem to be an historical floodplain. Why in the world would I have flood insurance?” How are people supposed to make sense of that scenario?
Well, it’s not easy. What happened in Montana is happening all over the country. Increasingly, we’re seeing the results of climate change. Record-setting rain events that are causing flooding in areas that have never flooded before. Within government, we were trying to identify the higher-risk areas, and Congress put a requirement on there: If you live in a high-risk area for flooding, you needed to purchase flood insurance. Those special flood risk areas were identified in FEMA maps that are called flood insurance rate maps. Somehow the bureaucracy of the terminology got translated, and what the public heard is, “Those are flood zones and those are flood maps. If I don’t live in that flood zone, I don’t have a flood risk, and I don’t have to buy flood insurance.” That’s not what it meant.
So we’ve got entire swaths of the country where people think that they don’t live in a flood zone, and they don’t need flood insurance. What it’s done is it’s resulted in large numbers of people that are not insured against one of the fastest-growing risks that we’re seeing as a result of climate change.
In April, FEMA changed the way it quantified risk for the first time in 50 years under a plan called Risk 2.0. The agency altered how premiums for flood insurance are set, pricing them on a much more individual level. Why the change?
FEMA’s moving in the direction of trying to price the risk by household versus just by areas to better reflect the risk to the home and steps people have taken to mitigate that. So that’s one step. The second thing that I think FEMA’s been doing for a long time, and we saw in the last couple of budget cycles, is big increases in what they call the pre-disaster mitigation programs. They call it now Building Resilient Infrastructure and Communities. It’s the idea of taking over a billion dollars and putting grants out to state and local governments to start looking at how they can reduce the impacts of natural hazards before they occur. People always look at FEMA, and I’m like, “Well, FEMA is not the answer in many cases. Congress needs to act.” FEMA has its authorities, and it has its funding, and Congress says what you can do with it. But we see other complimentary programs like HUD Community Block and Development Grants. They provide, in some cases after very significant disasters, community block grant dollars.
That was something I saw happen in Puerto Rico when I covered the aftermath of Hurricane Maria. Block grants were also given to local governments in Texas after Hurricane Harvey.
The problem is these are what I call one-offs. It’s not a standard program. To a certain degree, it’s not even authorized every time they do it. They have to start from scratch with rules. It delays the money getting out there. It usually takes two to three years for that money to actually make it to the states much less to homeowners. That’s a long time if you got a home that’s been flooded, trying to make repairs.
There is another key issue here. We’ve been talking a lot about homeowners, and FEMA’s programs are generally directed at them. But a storm or a flood doesn’t care if you own or rent. What happens to renters after these types of disasters?
Renters are caught in this dynamic where they’re dependent upon the people they rent from having the insurance and making the repairs. But we’re seeing a crisis in rental rates going up. What tends to happen in rental properties after disasters is either they don’t get rebuilt because the owners didn’t have insurance and they just sell the land and they get redeveloped in something else, or when they rebuild it, they’re now pricing it to the new value, and it’s pricing people out.
In New Orleans in the decade after Katrina, rents jumped by 33 percent. The national average for that time was just 6 percent. After a disaster, renters are often left to fend for themselves.
If you look at the FEMA programs, even the HUD programs, they tend to be biased toward homeowners. Renters get limited assistance. They’ll get short duration rental assistance, but there’s nothing really addressing the longer-term issue. As rents go up, how do people stay in their communities with affordable properties when they can’t afford the new cost?
Well, how do they?
They move. You look at Lake Charles, Louisiana. I think they’ve been hit by three hurricanes. When you talk to the workers there, they’re being pushed out because what’s getting rebuilt is much better than what they were renting, and the price of those rental properties are going beyond what they can pay. We are seeing a migration of renters being pushed out of communities and are either having to face driving longer distances to get to their jobs, or they’re relocating. Now you’re starting to see the secondary effects of the workforce being impacted and the unavailability of workers. This is on top of COVID and what we’ve seen in the Great Resignation and trouble getting workers.
You’ve noted that FEMA is aware that it has an equity problem and that marginalized communities have long been left out of the rebuilding process. Is that starting to change?
One step President Biden took was he asked all the agencies to go back through their programs and identify the biases and try and identify why we’re seeing the biases. We already know on the top end that for FEMA it’s homeownership. But even within homeownership, if you go into a lot of communities, particularly historically African-American communities, people didn’t always go down to the courthouse to record deed changes as members of the family died. They didn’t go to attorneys. So you have a disaster and they go apply for assistance, and FEMA says, “There’s no record of you owning this home.” In the effort of stomping out fraud, which became a big political issue after Hurricane Katrina, if you can’t prove you’re the homeowner, you can’t get assistance.
This is not an indictment of FEMA. Within the federal government, you don’t get rewarded for taking risk, and playing it safe is usually the best bet if you’re civil service. The program is supposed to be equal to all, yet the way it’s administered creates inequities. I think the FEMA team are really using this executive order from the president to get to some of the root causes to eliminate them.
There’s the idea of managed retreat, a whole community saying, “All right, we are not going to rebuild here. We’re going somewhere else.” It happened after Superstorm Sandy in some places, but what do you think of it?
It actually started as far back as 1993 and the big Midwestern floods. At the time, under Director James Lee Witt, FEMA began working with communities and said, “Instead of putting you back in the river plain to flood out again, why don’t we take the whole town and move it up on that hill?” Again, these were small numbers, but it demonstrated that FEMA did have that ability. In Florida, we’ve had some communities from the ’80s and ’90s that flooded routinely. We went in, bought them out, moved them. So it is something that can be done, but there’s also challenges you run into. One is the historical context. We have historical communities that if we don’t rebuild, we lose that era. Some industries are very dependent upon very vulnerable coastal areas that, again, workforce and housing are key. A lot of local governments have tremendous pressure to keep communities where they’re at. But we’re seeing it even in the state of Louisiana. Gov. Edwards has worked with some of the communities, and they made a decision on one of the tribal areas. They had, basically because of sea level rise and repetitive flooding, made the agreement to relocate the whole community.
Another place I think is going to accelerate even more is going to be in Alaska. The challenge in Alaska is a lot of these communities that need to relocate won’t necessarily be from a federally declared disaster. Between permafrost and the erosion of coastlines, we have seen communities in Alaska having to relocate. The question’s going to be, how do we pay for that? Not all these events are triggering federal disasters where you at least have some of the Stafford Act funding to do this.
I’ve covered a lot of disasters. People always complain about FEMA. But now, the complaint isn’t “FEMA’s doing a bad job in my town, or FEMA isn’t helping me.” It’s maybe that FEMA has so much to deal with that it can’t meet this need or that the need is beyond the scope of what FEMA is supposed to do. Does FEMA need to change its mission, or is there, I don’t know, some other agency, some other plan that needs to happen?
The first step is that we’ve got to admit the system isn’t designed for the frequency and severity of climate-induced weather-related disasters. There are a lot of people say, “Well, climate change is a myth.” I say, record-setting weather events that are occurring on a monthly basis cannot be ignored. If nothing else, whether you believe in climate change or not, if we’re having this many record-setting weather events that are causing massive damage, the one thing we should understand is what we built for in the past isn’t working today, and we got to do something different.
For more on managed retreat and how we can respond to rising waters, read this series from Future Tense and New America’s Future of Land and Housing program.