Coastal property owners fight insurance revisions Erosion-protection cuts urged, derided


A small piece of legislation, an amendment to a housing bill pending in the Senate, is pitting environmentalists against property owners in a furious battle over some of the nation's most valuable real estate: the beach.

The amendment's purpose is to limit federal flood insurance protection of coastal property at high risk from erosion.

Environmental groups say the flood insurance, unavailable or prohibitively expensive on the private market, has encouraged destructive and dangerous development of the nation's shores. They say it must be cut back.

Property owners and developers, outraged and panicked at the prospect of losing a benefit they have enjoyed for years, call it a thinly disguised federal land grab.

In exchange for continued insurance benefits, the measure would outline areas prone to erosion where new construction or substantial improvements would be limited or prohibited.

In the areas of imminent erosion, property owners would be paid to relocate or raze their buildings. If they chose to stay put, their insurance benefits would be limited and they would lose coverage after their next claim.

In Maryland, major erosion problems are found along the Chesapeake Bay and its tributaries and -- most dramatically -- at Ocean City, where a multimillion-dollar stand of protective dunes wiped out in a winter northeaster is to be replaced this summer.

The resort's town manager, Dennis M. Dare, said last night that resort officials were unaware of the flood insurance proposal before it swept through the House. But since then, he said, the mayor and council have made their views known to Maryland's senators, Democrats Paul S. Sarbanes and Barbara A. Mikulski, that the bill needs refinements to protect Ocean City.

Mr. Dare said the flood insurance proposal "appears to have a good logic," but "it leaves some very important definitions up in the air. And if those interpretations were made by the regulatory agencies, it could have a real detrimental effect on developed areas such as Ocean City."

He also said that government investment in protecting Ocean City property through the dunes project and property value through the flood insurance program is more than offset by the tax revenues generated by the resort.

The proposal passed the House last year, 388 to 18, after a series of hearings at which scientists told of erosion threatening at least 70 percent of the nation's coastline; insurance experts said the federal government faced billions of dollars in potential damage claims; and environmentalists testified that the cheap federal insurance was encouraging people to build on beaches that were better left alone.

The proposal has moved to the Senate, where it is attached to a housing bill that is expected to come up for a vote in a subcommittee of the Senate Banking Committee in the next few weeks. But since the insurance revisions passed in the House, builders, real estate agents and beachfront property owners have mounted a counterattack.

At national conferences, local meetings and in letters to government officials, they have argued that under the guise of setting insurance regulations the federal government is trying to deprive them of the use of their land. The changes would send property values plunging, they say, because banks would not grant mortgages on property without insurance.

To the dismay of staff members at the Federal Emergency Management Agency who helped write the measure, one of its sharpest critics is C. M. "Bud" Schauerte, who heads the Federal Insurance Agency, the FEMA division that administers the flood insurance program.

Mr. Schauerte was appointed to head the agency after the revisions were well under way and has called them "back-door federal land-use control" and "despicable."

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