Stephen R. Burch Margaret R. Burch v. Federal Insurance Administration, and Its Director Federal Emergency Management Agency

Citations: 23 F.3d 849; 1994 U.S. App. LEXIS 9906; 1994 WL 167910Docket: 93-1749

Court: Court of Appeals for the Fourth Circuit; May 5, 1994; Federal Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The case involves Stephen and Margaret Burch, who owned an oceanfront home in Nags Head, NC, and sought federal flood insurance under the National Flood Insurance Act of 1968 (NFIP). Concerned about erosion threatening their property, they sought assistance from the North Carolina Division of Coastal Management (DCM) to relocate their home. For federal relocation assistance, the property must be in a state of "imminent collapse" due to erosion. DCM initially found the Burch house was within the "zone of imminent collapse," but later determined it did not meet the required criteria, as the house was located forty feet from the first line of stable vegetation, exceeding the calculated zone based on an erosion rate of three feet per year. The U.S. Court of Appeals, led by Judge Wilkinson, ruled that the Federal Emergency Management Agency (FEMA) retains final authority over relocation benefits and determined substantial evidence supported FEMA's conclusion that the Burches had not relocated their house adequately to qualify for continued federal flood insurance. Consequently, the court reversed the lower district court's ruling that had favored the Burches.

The imminent collapse zone is a flexible regulatory concept under 44 C.F.R. Sec. 63.17(b)(6), which allows for the consideration of "unusual erosive or stability conditions." The Division of Coastal Management (DCM) determined that the Burch property was at heightened risk from storm overwash due to its low elevation and lack of a frontal dune, extending the imminent collapse zone forty feet landward, which included the Burch house. The Burches sought guidance from DCM on relocating their home to maintain eligibility for federal flood insurance, needing to move to the 30-year setback, defined as thirty times the average annual long-term erosion rate. DCM used a state-published rate of three feet per year, establishing the 30-year setback at ninety feet from the vegetation line.

On September 24, 1990, the Burches filed a claim for federal relocation benefits with FEMA and relocated their home to the designated ninety feet. However, on March 6, 1991, FEMA notified them that it did not consider the three feet per year rate, stating it underestimated the erosion risk. Instead, FEMA calculated that the Burch house needed to be 180 feet from the vegetation line to qualify for flood insurance, leading to the denial of coverage due to the house being only ninety feet away.

The Burches sued FEMA in federal court, claiming the denial was erroneous. The district court ruled in their favor, finding that FEMA improperly relied on differing erosion rates. The court noted that FEMA did not dispute DCM's imminent collapse finding based on the three feet per year rate and held that FEMA's use of a six feet per year rate for the 30-year setback calculation was invalid. The court ordered FEMA to provide insurance coverage to the Burches, and FEMA has since appealed the decision.

The outcome of the case hinges on the interpretation of the National Flood Insurance Act of 1968, enacted to enable residents in high-risk flood areas to afford insurance through federal and private collaboration. Originally, the Act did not incentivize property owners to relocate before flooding, as benefits were only given post-damage, leading to a disincentive to move. This issue was addressed by the Upton-Jones Amendment in the 1987 Housing and Community Development Act, which allows property owners to receive financial assistance for relocating structures at risk of imminent collapse. To maintain federal flood insurance for relocated structures, they must be moved beyond specified erosion setbacks—30 years for smaller structures and 60 years for larger ones, calculated based on average annual recession rates.

The House Conference Report indicated that this amendment aimed to reduce flood damage and insurance claims by encouraging proactive relocation of threatened structures. The amendment also allows state or local authorities to certify imminent collapse, subject to regulatory criteria that include gathering specific scientific data. In this case, it is confirmed that North Carolina was authorized to make imminent collapse determinations and collected the necessary data for the Burch property.

The Burches argue that North Carolina's imminent collapse determinations should be accepted by FEMA under the Act and its regulations, as FEMA is not challenging the overall adequacy of the state's certification program. They contend that, based on the state's erosion rate of three feet per year, their relocated home would meet the 30-year setback requirement and remain eligible for federal flood insurance. However, the court is not convinced. It clarifies that both the average annual long-term erosion rate and the imminent collapse determination are federal matters that FEMA can establish after reviewing scientific and technical data. The relevant statute stipulates that relocation payments are contingent upon FEMA’s final compliance determination, and regulations outline FEMA's review process of state certifications, allowing FEMA to accept or reject state determinations on a case-by-case basis. Furthermore, FEMA retains the authority to independently decide the erosion rate for a specific site. Legislative history supports the notion that while states aid in preliminary assessments, final decisions regarding structure relocations under the National Flood Insurance Program (NFIP) rest with FEMA, ensuring uniformity across the program irrespective of state coastal management laws. The inquiry concludes that FEMA did not fail to fulfill any statutory or regulatory obligations in its determinations.

The district court found FEMA at fault for using different erosion rates in its assessments of the Burch property. This conclusion was based on the incorrect legal assumption that FEMA must accept the state’s erosion rate if it agrees with the state’s imminent collapse determination. However, FEMA retains the authority to independently assess erosion rates. In this instance, FEMA determined an erosion rate of six feet per year, supported by aerial photographs, data from the University of Virginia, and historic flood information. This rate led to a calculated imminent collapse zone of forty feet and a thirty-year setback of 180 feet, both derived from the same erosion rate.

FEMA’s approach aligns with regulations that allow the use of a consistent erosion rate for both imminent collapse and setback calculations. The court expressed skepticism towards the Burches’ argument for a disparity in erosion rates (six feet short-term and three feet long-term), which would extend the imminent collapse zone and potentially lead to repeated federal relocation payments. Such an outcome would undermine the Upton-Jones Amendment’s intent to relocate homes away from hazards. The court emphasized that the Burch property remains insufficiently relocated from the ocean, warranting the reversal of the district court's judgment that reinstated federal flood insurance coverage for the Burches. The definitions of "erosion" and "recession" rates are effectively interchangeable in this context.

The FEMA letter implies an erosion rate of six feet per year, which was used to determine that the Burch property is within a zone of imminent collapse, calculated to be forty feet based on the formula outlined in 44 C.F.R. Sec. 59.1. Consequently, a 30-year setback of 180 feet was also established using the same erosion rate. The regulations permit using the same rate for both imminent collapse and setback calculations, and FEMA adhered to this principle. The court expresses skepticism regarding the Burches' argument for a differentiated erosion rate, which would extend the imminent collapse zone while minimizing the required relocation distance. Such a decision would contradict the Upton-Jones Amendment's intent to ensure relocated homes are moved out of harm's way, potentially leading to future erosion threats and further federal relocation payments. The Burches' failure to await FEMA's final determination regarding their claim results in their home being too close to the ocean, leading to the reversal of the district court's ruling that reinstated their federal flood insurance coverage.