As we enter what we hope will be a bountiful new year, 2025 may prove to be the annus horribilis for floodplain development in Oregon. Due to recent litigation concerning FEMA’s National Flood Insurance Program (NFIP), as of Dec. 1, 2024, most local governments in Oregon were required to either stop issuing permits for development within FEMA 100-year floodplains immediately or adopt restrictive habitat assessment and mitigation requirements intended to protect anadromous fish habitats.

FEMA’s new regulatory approach was rushed in execution and complex in substance. Still, its essence is simple: For the first time, FEMA intends to use the NFIP to protect fish habitat, though it was originally designed to protect human life and property alone. At least for the time being, this will make most new developments in mapped floodplains substantially more difficult and costly, if not impossible.

A long, winding path to development prohibitions

The NFIP was conceived to support the private and public flood insurance market by identifying areas of special flood hazard (commonly known as 100-year floodplains) and ensuring the availability of flood insurance for those regions. Though the NFIP contains many complexities, its compliance component requires local governments to adopt a floodplain regulatory program —which, once certified, qualifies property in such municipalities for federally supported flood insurance.

The NFIP was never intended to protect wildlife habitats. The program can and often does protect certain habitats, but these are positive externalities of floodplain development regulation. In 2016,the National Marine Fisheries Service (NMFS) issued a biological opinion in response to lawsuits brought by environmental groups over alleged loss of salmon and steelhead habitat in Oregon due to the NFIP’s regulation of floodplain development. FEMA embarked on a long process of selectively updating its floodplain maps and devising a new regulatory program that would meet NMFS recommendations.

In 2023, FEMA started to review the draft implementation plan through the National Environmental Policy Act process; it continues to work on a final environmental impact statement. Environmental organizations in September 2023 filed a new lawsuit, which alleged that FEMA had been too slow to implement NMFS’ biological opinion. Last July, FEMA pivoted toward immediate regulatory changes and imposed three options upon local governments for protection of habitat within mapped floodplains. FEMA required local governments to select these “pre-implementation compliance measures” (PICMs) no later than Dec. 1, 2025. The measures mandate either adoption of a model floodplain ordinance created by FEMA, review of individual development projects and a habitat assessment and mitigation on a case-by-case basis, and/or prohibition of all new floodplain development.

The new reality for construction within floodplains

As presented by FEMA, the PICMs appear simple enough and preserve some development rights within floodplains. As always, though, the devil is in the details — both practical and technical.

Even local governments that do not adopt a moratorium on all new floodplain development will need a significant ramp-up period to develop the procedures and expertise necessary to implement either permit-by-permit habitat assessment or FEMA’s model regulations. Consequently, new floodplain development is effectively halted in many communities for now.

Even if the model code or habitat assessment pathways (or both) are implemented, the continuing availability of development lands within floodplains would not be certain. For local governments that choose to allow case-by-case habitat assessment, applicants must be prepared to demonstrate their project will result in “no net loss” of floodplain habitat. Although mitigation may be applied to offset habitat loss, bottlenecks of available capacity and expertise among engineering and environmental consultants to make those determinations, and of local government staff to review them, will undoubtedly form. Similarly, the infancy of accepted practices for assessing habitat and identifying adequate mitigation measures will provide development opponents with a new weapon to slow or immobilize projects in floodplains.

The FEMA model ordinance appears to provide a more objective method for applying a no-net habitat loss standard, but whether it can be applied practically to enable development in floodplains is far from certain. This is principally due to the ordinance’s stringent mitigation conditions, which require developers to identify and obtain property at the same flood elevation or elevation band as the project site. The mitigating lands must be permanently protected from development to compensate for both volumetric (i.e., the amount of flood storage the project will displace) and impervious surface impacts.

Crucially, mitigation land may not be disturbed to provide additional flood storage. It can be located on site, within the same reach as the source of water associated with the floodplain, or within the “same hydrologically connected area,” but each location is problematic. Given Oregon’s relatively tight urban growth boundaries, on-site mitigation will take a significant bite out of urban lands that lie within floodplains but were previously expected to meet that community’s development needs. At this point, off-site mitigation is conceptual, given there is neither an established method for acquiring mitigation sites nor a market for them.

It seems clear that without some policy moderation imposed by either the courts or FEMA itself, local governments and landowners will be compelled to look beyond floodplains for developable land unless and until a workable off-site mitigation approach can be created and a market for mitigation lands evolves. This might not affect communities that have few or no urban floodplains, but many communities (particularly in coastal areas) could see a significant portion of their developable land suddenly become unavailable. Whether this new normal remains in place or not,2025 promises a wild ride through these treacherous floodplain policy waters.

Column first appeared in the Oregon Daily Journal of Commerce on January 17, 2025.

This article summarizes aspects of the law and opinions that are solely those of the authors. This article does not constitute legal advice. For legal advice regarding your situation, you should contact an attorney.