The Federal District Court in Gulfport may consider stayingaspects of the planned National Flood Insurance Program rate hikesimposed by a 2012 law until the litigation is resolved oraffordability studies are concluded, a senior research attorney atthe University of Mississippi concluded in a newpaper. 

The court may find less flexibility to alter certain changesmandated by the law, the Biggert-Waters Act of 2012, such as theissuance of new policies at full-risk rates, the analysis states.This particular change has been cited as an impediment to housingsales, the paper notes.

Niki Pace, an adjunct professor with the Mississippi-Alabama SeaGrant Legal Program, based at the University of Mississippi LawSchool, says her analysis is contingent on the court ruling infavor of the states who brought the suit on several proceduralissues. Her analysis was first published Thursday on Law360.

The suit was filed in October by the Mississippi InsuranceDepartment. It is now being supported through friends of the courtbriefs by Florida, Louisiana, Alabama, South Carolina andMassachusetts.

Michael Chaney, Mississippi insurance commissioner, says heremains optimistic that the court will consider the potentiallydevastating impact of implementation of B-W on individualhomeowners as well as the nascent recovery of real-estate marketsin making a decision.

In comments on the Senate floor last Thursday about legislationthat some in Congress say would junk the 2012 law that mandatedthat National Flood Insurance Program customers be chargedactuarial rates, Sen. Mary Landrieu, D-La., said, "We better wakeup and realize the economic impact this is going to have on theentire country if this is not fixed. This is not about millionaireson a beach.

"This is about the middle class and working hard where you needto live to work," Landrieu said, citing the seafood, energy andshipping industries. 

Landrieu made her comments in disclosing that the Senate hasagreed to consider legislation delaying the rate hikes early nextyear.

Pace notes in her paper that "this litigation is only one pieceof a multifaceted effort to reform the 'reforms'" imposed by thelaw, the Biggert-Waters Act. She acknowledges that, "Congressionalintervention may be the best long-term solution." 

The Federal Emergency Management Agency, which administers theNFIP, contends that the states lack standing to sue because thelegislation is a direct federal action.

Pace says, "FEMA has argued that MID does not meet Article IIIstanding requirements, in its individual capacity or on behalf ofits citizens under parens patriae, because the state has neitherestablished the requisite injury in fact nor shown that its claimsare redressable by the court in the event of a favorableruling. 

"Under parens patriae, the state is acting in itsquasi-sovereign capacity and suing on behalf of its citizens as awhole."

FEMA also contends in a brief that the suit is fundamentallyflawed because Mississippi is wrong in stating that theaffordability report must be sent to Congress before the rates areimplemented, stating the two issues are fundamentallyunrelated.

Pace says for MID to succeed, it must show that FEMA "failed totake a discrete agency action that it was required to take."

She says this standard prevents courts from reviewing broadprogrammatic attacks against agency action and limits the court'sability to mandate a particular type of action, leaving the meansof accomplishing the act to the agency's discretion.

In this case, Pace says, the affordability study required by aprovision of B-W specifies that FEMA will contract with theNational Academy of Sciences (NAS) to conduct the study for amaximum cost of $750,000. 

NAS was unable to comply with the time and funding constraints;it proposed a two-phase approach, FEMA said in its brief becausesufficient funds to pay for the study were not appropriated.

Pace said FEMA anticipates phase one will be complete in March2015. "The state parties argue that FEMA's advancement of the rateincreases without the full benefit of the affordability analysiswas an arbitrary and capricious decision," Pace says.

Pace says that, through its briefs, Mississippi has respondedwith a detailed assertion of standing both in its own capacity andon behalf of the citizens of Mississippi under the doctrine ofparens patriae.

In particular, Pace says Mississippi asserts the followinggrounds for standing: (1) FEMA failed to complete the studies, (2)FEMA failed to consult with MID before instituting rate changes,(3) FEMA's actions impacted MID's zone of interest, i.e. thecommissioner's rights to consultation, (4) impacts on Mississippipolicyholders violated MID's quasi-sovereign interest under parenspatriae, and (5) FEMA's violations of the federal statute impairedMID's quasi-sovereign interest under parens patriae. 

As to parens patriae standing, MID strived to clarify in itsbriefs that it is not seeking to "protect its citizens from theoperation of a federal statute," but rather, is seeking to enhancethe operation of a federal program by compelling FEMA to enforceB-W, Pace says.