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Wednesday, June 19, 2024


FEMA, DEP Revising Coastal Zone Rules

A FEMA map of Cape May County.

By Vince Conti

WASHINGTON – Stone Harbor’s governing body heard that the borough may have to hire staff to handle the impact of a new floodplain ordinance pushed by the Federal Emergency Management Agency (FEMA).  

In 2020, FEMA’s Region II office announced a new coastal area flood study to update flood insurance rate maps for coastal New Jersey and New York.  

FEMA’s new Risk Rating 2.0 went into effect Oct. 1 for new flood insurance policies, with plans to extend the rating system to all National Flood Insurance Program (NFIP) policies by April 2022. 

These changes and more are coming from a federal agency mired in debt. FEMA’s NFIP currently owes over $20 billion to the U.S. Treasury. As recently as 2017, Congress canceled $16 billion of the NFIP’s debt. 

In New Jersey, the state Department of Environmental Protection (DEP) is seeking to devise and implement a sweeping reform of coastal development regulations called for in Gov. Phil Murphy’s Executive Order 100 in January 2020.  

New Jersey Protecting Against Climate Threats (NJPACT) is just beginning to roll out changes to permitting and other regulations that are likely to significantly impact coastal area development. 

Risk Rating 2.0  

A major initiative by FEMA is intended to change the way the agency prices flood insurance and determines property flood risk. FEMA calls it “equity in action” since it sets premiums that are tied to individual property value and risk.  

The agency promotes the fact that many current property owners with flood insurance will see a premium discount. For coastal properties, an increase is a more likely result. 

FEMA’s spreadsheet on total policies broken out by the projected impact of Rating Risk 2.0 shows that Cape May County leads the state’s 21 counties in the number of policies in effect with 52,015. Of those, the projection is that about 19% of the policies should see a rate discount, which is lower than the state and national projections for rate discounts.  

The data shows the largest percentage of policies, 70%, in the category that would see up to a $120 increase in premiums. The other 11% of county policies would have larger increases. 

The rates are only being projected for year one of the new pricing scheme. Rating Risk 2.0 holds out the possibility of an increase in rates each year up to a cap of 18% per annum. The point is that increases can compound over several years. 

Climate changes and projected sea level rise also animate the reaction to the new flood insurance policies. The new rate-setting system is intended to have those with homes most in danger of flooding carry more of the burden of insurance.  

Some argue, among them Sen. Robert Menendez (D-NJ), that the rate-setting system is likely to cause many owners of more modest shore homes to abandon insurance, weakening rather than strengthening the overall system. 

The policies subject to the rate changes are not spread evenly across the state. According to NFIP data, 47% of the 217,200 policies in force in New Jersey are in Cape May County (52,015) or Ocean County (49,261). 

Community Rating System 

As FEMA implements its new pricing system, the Community Rating System (CRS) discount takes on even more importance. The CRS is an incentive program that rewards community floodplain management practices that exceed the minimum requirements of the NFIP. 

The reward comes in the form of community flood insurance premium discounts that can range from 5% to 45% depending on the community rating.  

The rating scheme runs from the best at one, with a 45% discount, to a score of nine, which earns a 5% discount. A class 10 community is not participating and receives no discount. Each level in the rating scheme earns an additional 5%. 

In Cape May County, 11 of the 16 municipalities are participating in the CRS program, with Avalon and Sea Isle City with the highest scores at class 3, earning their residents 35% discounts. Ocean City is a class 4. Cape May, Stone Harbor, Upper Township, and Wildwood are all class 5 communities. Cape May Point and Wildwood Crest are class 6, with Lower Township at class 7. 

As of the FEMA lists for Oct. 1, 2021, West Wildwood, Middle Township, Woodbine, Dennis Township, and West Cape May were not participating communities.  


The DEP says that NJPACT is an effort to develop a regulatory environment that is commensurate with the changing level of risk produced by climate change. The agency says that rule changes will lead to new regulatory areas. 

Critics argue that the state is relying too heavily on a limited set of studies leading to premature regulatory changes. 

A new 165-page rule concerning limits on emissions from gas-fueled power plants and commercial and industrial boilers shows an agency that is forging ahead with its ambitious effort to reform the regulatory structure. The press by the state to approve wind farm licenses is another example of the state’s commitment to respond to climate change. Communities are already seeing changes to how stormwater must be managed. 

More change is likely sooner rather than later. 

What it All Means 

What it all means is that change is coming rapidly to the policies and practices that have governed coastal development in the Garden State.  

Some fear that shore communities will become even more exclusively a haven for the very rich, as they are the ones who will be able to shoulder the increasing costs.  

Others worry that plans to ameliorate the impact of climate change and combat sea level rise in New Jersey’s coastal communities will carry a price tag unlikely to be paid by federal dollars in a coming era of intense competition for limited funds. 

Whatever the outcome, Cape May County is at the very beginning of significant changes in practices coming from federal and state sources. The agenda is ambitious and is likely to come with increased costs. 

To contact Vince Conti, email 

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