If you don’t recall, NAFSMA is the National Association of Flood and Stormwater Management Agencies, and I am attending NAFSMA’s 46th annual conference in Colorado Springs, Colorado.
Today I had the pleasure of addressing the attendees as part of the legal panel and I chose to use my time to talk about the lawsuit that was filed against FEMA challenging its Risk Rating 2.0 (RR2.0) Program. The lawsuit, styled as Louisiana et al. v. Mayorkas, was filed by ten states, 44 Louisiana parishes (counties), two towns, twelve levee districts, and an association. These plaintiffs argued that FEMA created a bait-and-switch program in which communities were encouraged to join the National Flood Insurance Program (NFIP) and invest in projects to lower risk, all in exchange for the promise of affordable flood insurance for their residents. The plaintiffs sued because they allege that FEMA has been raising rates significantly, using a secret methodology called RR2.0, which no one understands, and that FEMA is not charging rates based on actual known risks.
The suit was filed in June 2023, and the plaintiffs asked for a trial and a preliminary injunction to stop FEMA from using the RR2.0 program to set insurance rates. In March of this year, the Court evaluated cross-motions for summary judgment (where the parties argue to the Court that the case can be ruled on right away) and issued an important Order that will set the tone and direction for the lawsuit moving forward.
The first issue the Court needed to evaluate was whether all plaintiffs were proper parties. Under accepted court doctrines, only parties that have standing can bring claims. To provide a simple example, if Donald Duck hurts Mickey Mouse, Mickey can sue Donald for damages to Mickey, but Daffy Duck doesn’t have standing to bring that claim. Here, the question was whether each plaintiff had alleged a legally recognized interest that made them a proper plaintiff. After extensive analysis of the various claimed interests of the plaintiffs, the Court found that the ten states had alleged a cognizable interest based on alleged economic harm from the RR2.0 program. Likewise, three of the parishes had a cognizable interest based on being policyholders under the NFIP. However, as to the remaining plaintiffs, none had alleged appropriate interests, and therefore, none had standing to be plaintiffs in the case. The Court also found that none of the plaintiffs were proper parties to bring allegations under the National Environmental Policy Act (NEPA), and thus, that cause of action would be dismissed.
Having established the correct parties to be at the table, the Court then turned to the request for a preliminary injunction that would bar FEMA from using RR2.0. In evaluating such a request, a court needs to evaluate the likelihood that the plaintiffs will prevail on the merits, consider the irreparable injury that will occur to the plaintiffs prior to a decision on the merits (at trial), consider if an injunction would harm the other party – here FEMA in its administration of the NFIP, and also consider the public interest. The Court, in this case, jumped right into the second factor and noted that while there would be economic harm to the Plaintiffs, that harm would be relatively small and would only be incurred for several years until trial. The Court contrasted this against the significant harm to the United States of being unable to use RR2.0. The Court noted FEMA’s statement that the old rate-setting machine had been disabled and was no longer available. Based on these two factors, the Court found that an injunction would not be appropriate.
With its March 2024 Order, the Court has now set the stage for the parties to proceed to the work leading up to trial: amendments to the complaint, discovery, motions, and trial preparation. My guess is that the next significant moment in this case will be in 18-24 months. Until that time, RR2.0 remains the rate-setting law of the land.
Hello Again from NAFSMA
