Disaster Response to Quake Insurance Plan

Nothing unites Californians like the fear of an earthquake.

Which is why, when word went out among the Golden State’s Washington contingent that a federal agency was proposing that state and local governments should insure public buildings against earthquakes and other natural disasters to be eligible for federal disaster aid, it was all hands on deck.

“It’s sort of like hearing a flood is gonna hit and everyone runs out and buys sandbags,” said Eve Maldonado, Washington representative of the League of California Cities.

“There was a flurry of activity,” Maldonado said. “We knew that we had to react quickly and we had to band together quickly.”

The proposal by FEMA Director James Lee Witt would require local governments seeking disaster relief to either have bought commercial insurance for public buildings, or to maintain a dedicated self-insurance fund equal to at least 5% of the buildings’ value.

To the average consumer, that may not seem onerous.

After all, it is illegal to drive your car without auto insurance. You can’t get a mortgage without homeowners’ insurance. Why should local governments be able to come knocking on the federal government’s door in a crisis without insuring themselves?

But no one ever asked or expected it before. Coming to the aid of the states has been such an accepted practice of the federal government for so many years that commercial insurance companies don’t even sell disaster insurance to local governments. And even if there were disaster insurance to be had, it would cost a bundle.

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The proposed FEMA rule, which was to have been published in June, would have given local government agencies just three years to buy the insurance.

So when the folks representing what is arguably the nation’s most disaster-prone state heard they hadn’t even been consulted on the new rule, they were more than a little upset.

“Have you ever tried getting disaster insurance in California? The costs are astronomical. Where are school systems, cities, hospitals going to get the money for it?” said Rep. Sam Farr (D-Carmel).

“These are big institutions and it will cost a lot of money. And is it really good public policy to require them to carry all this insurance when we’re only going to come to the feds if there is a major disaster?” he continued. “This regulation doesn’t make any sense.”

FEMA officials say they are just trying to keep down the escalating cost of federal disaster relief.

In the last decade, the agency has paid out $25.5 billion in such relief nationwide. More than $9 billion of that went to California. In 1994 alone, the year of the Northridge earthquake, California received more than $5 billion.

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If Team California has anything to say about it, FEMA will have to find another way to save money.

Less than two weeks after word of the proposed regulations leaked out, Witt had letters on his desk from Gov. Gray Davis, the mayors of Los Angeles and San Francisco, U.S. Sens. Dianne Feinstein and Barbara Boxer and all 52 members of the state’s congressional delegation.

San Francisco Mayor Willie Brown got the U.S. Conference of Mayors to adopt a resolution asking the agency to reconsider.

When Davis’ representatives in Washington found out that new FEMA rules are subject to review by the Office of Management and Budget, they called up the White House to make sure the agency’s proposal would get close scrutiny.

And when, at Davis’ request, the National Governors Assn. invited anyone interested to a meeting with FEMA officials, the room was packed with Californians.

Last week, Farr’s office managed to get language into a House appropriations bill directing a General Accounting Office study of the financial impacts of FEMA’s proposed regulation.

“Earthquakes are the perfect issue; they’re nonpartisan, they’re nicely geographically dispersed around the state, and everybody can fundamentally understand them,” said Sarah Mathias, assistant director of federal government relations for the University of California. “And they are unique to California. So everyone realizes we have to work together on this. No one is going to do it for us.”

So far, the pressure has worked. In June, FEMA officials announced they would delay publishing the new rules until they gather input from cities and members of Congress.

“When California is going to be hit, we circle the wagons,” said Sherry Greenberg, executive director of the California Democratic Congressional Delegation. “We all know what it’s like to wake up to an earthquake in the morning, so it was very easy to get the word out about this.”