Flood Risk Management and the American River Basin: An Evaluation (1995)

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6 Flood Risk Management: Implications for the American River and the United States Since the mid-1960s, escalating costs and environmental opposition have posed formidable barriers to the construction of new flood control projects (NRC, 1993~. Alternatives to construction increasingly are being sought, including nonstructural measures to reduce exposure to flood damages and insurance to compensate for damages incurred. Thus Congress's reluctance to authorize the U.S. Army Corps of Engineers (US ACE) recommended flood control dry dam on the American River (USAGE, Sacramento District, 1991) and its request to con- tinue studies of other alternatives to address the flooding problem (P.L. 102-396) are not unexpected. In November 1994 the Sacramento District of the USACE published its Alternatives Report (USAGE, Sacramento District, 1994a). Although providing only limited detail, the report suggested that the District has responded to past criticisms: it has reconsidered increased flood conveyance and environmental restoration opportunities on the lower American River, credited storage in up- stream hydroelectric reservoirs for flood control under certain circumstances, and considered different assumptions about future Folsom flood operations. In addi- tion, the Sacramento District has employed newly developed USACE risk analy- sis procedures to compare alternatives. This chapter begins with a discussion of the committee's understanding of how the USACE planning and decisionmaking process, described in Chapter 1, was applied in the American River Watershed Investigation (ARWI). The dis- cussion considers the source of the controversy over acceptable alternatives to address the American River flooding problem. Subsequent sections discuss the following aspects of the American River controversy in more detail: 177

178 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN · acceptable flood risk and the flood insurance program, · water project cost sharing, · communication of flood risk' · improved approaches to flood risk management planning, and the water policy and management context. . The chapter concludes with recommendations for reforms to current plan- ning and decisionmaking for the American River situation. Because the commit- tee believes that the lessons of the American River can be transferred to other areas of the nation, parallel recommendations for reform of national policy on flood risk management are also offered. THE AMERICAN RIVER FLOOD RISK MANAGEMENT CONTROVERSY: THE KEY ISSUES The Flood Control Act of 1962 (P.L. 87-874) authorized USACE to study the American River basin in the interest of "flood control and allied purposes." However, the funding to execute this authority was not provided until after the 1986 flood. In providing funds for a one-year reconnaissance study, the commit- tee language in the Fiscal Year 1988 Continuing Appropriations Act (P.L. 100- 202) defined a broad scope for the studies, although the priority was on the imminent flood risk (USAGE, Sacramento District, 1991, hereafter the 1991 ARWI): The conferees are aware that recent information presented by the Corps and the Bureau in a series of three fact-finding hearings in Sacramento reveals that the region may be under a greater threat from serious flooding than was previously believed.... Within this assessment, the Corps should include its analysis of the current and projected water supply demands in the American River basin. Most USACE study authorities mandate that multiple purposes, including flood control, navigation, hydroelectric power, water supply, recreation and fish and wildlife habitat improvements, be addressed. The initial planning task is to focus limited study resources on the most pressing planning problems and oppor- tunities, and the congressional directions for the American River clearly pointed to flood damage reduction through flood control as the priority. However, the public comment record also indicated a strong interest in ensuring reliability and reducing costs of water supply, in increasing hydroelectric power generating capacity, in promoting restoration of environmental resources that had been de- graded by past water development, and in protecting and enhancing recreational opportunities (USAGE, Sacramento District, 1991, Appendix T). Indeed, many who commented were critical of the Sacramento District's 1991 ARWI for its failure to consider any purpose other than flood control. With its planning attention focused on flood control, the Sacramento District

IMPLICATIONS FOR THE AMERICAN RIVER AND THE UNITED STATES 179 proceeded to examine the alternatives for reducing flood risk. Sound planning practice demands that the range of alternatives include combinations of engineer- ing, regulatory, and other public policy measures to, in this case, provide an acceptable degree of flood damage reduction. For example, alternatives for meeting the flood damage reduction purpose might include different sizes of reservoir storage, different restrictions on floodplain settlement, and different levee heights, all in different combinations. Many critics of the 1991 ARWI felt that two sizes of dry dam, each designed without gates to foreclose the option of permanent storage, received favored attention. Ironically, some chastised the District for its focus on the dry dam because these critics wanted a more extensive consideration of a new full-pool dam that would address the flood damage reduc- tion as well as provide for many other purposes. It is worth noting that USACE was instructed by language accompanying the Fiscal Year 1988 Continuing Appropriations Act (P.L. 100-202) to pay special attention to flood control through a dry dam option (USAGE, Sacramento Dis- trict,l991J: The conferees . . . recognize that there may be additional flood protection af- forded by a primarily peak-flow flood control facility (the so-called "dry dam") on the North Fork of the American River above Folsom. The conferees there- fore direct the Corps of Engineers to include further assessments of the relation- ship between such a peak-flow flood control facility and the operation of Fol- som Dam as they may pertain to incidental water, power and recreational benefits. The dissatisfaction with the limited purposes and alternatives considered by the Sacramento District contributed, in part, to the failure of Congress to autho- rize the dry dam proposal. First, even though the financial and environmental impediments to implementing the full-pool alternative akin to Bureau of Reclamation's originally proposed Auburn dam- were formidable, continued support of the full-pool alternative is found among water supply interests. The committee was told of "foothills" communities east of Sacramento (e.g., those within the E1 Dorado Irrigation District) who see a full-pool alternative as a means to ensure their access to water rights and to reduce their future water supply pumping costs. Indeed, some of the SAFCA Board of Directors may still favor a full-pool alternative for the water supply purpose. A dry dam that appears to foreclose water supply expansion will have limited support among these inter- ests. Second, the dry dam also was opposed by canyon protection interests con- cerned about the effects of occasional impoundment on soils, vegetation, and wildlife in the American River canyon (see Chapter 31. Furthermore, canyon protection interests worry that a dry dam will in time be converted to a permanent pool. In opposing the dry dam, canyon protection interests openly state this concern. By 1991, both those who opposed any dam in the canyon and those who

180 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN favored a full-pool multipurpose Auburn reservoir had expressed strong dissatis- faction with the dry dam alternative. The dispute over the Auburn dam proposals has stalled the entire lower American River study process. Recent planning efforts have sought to match environmental restoration concerns with improved levee stability and convey- ance in the Lower American River Parkway corridor. Agreement appears to be near under the auspices of SAFCA's Lower American River Task Force (SAFCA, 1994a). However, there seems to be little progress on resolving disputes over storage in the canyon. In the 1994 Alternatives Report, which has reanalyzed the data, the Sacramento District continued to report that substantially reduced flood risk and increased net benefits could be achieved by construction of storage at the Auburn site. Therefore, a question remains: Can an alternative based on existing storage and on the lower American River levees provide an acceptable level of risk reduction for the city? The ongoing reevaluation of alternatives is expected to help resolve this question. USACE evaluation of alternatives is governed by the Water Resources Council's Principles and Guidelines (P&G) (Water Resources Council, 1983~. The P&G requires the federal agency to recommend the alternative that makes the greatest contribution to national economic development (NED). This alterna- tive maximizes net benefits over costs. The NED plan also must comply with national environmental statutes, applicable executive orders, and other federal planning requirements. The new USACE risk analysis procedures do not change the requirement to develop an NED plan. As is noted in Chapter 4, the proce- dures are intended to provide a more realistic and complete description of the risk and uncertainty associated with reservoir and levee system performance, and the associated flood damage reduction benefits. The estimates of the value of the benefits needed to ascertain the NED plan are obtained in various ways. For flood damage reduction, the avoided future repair costs to property no longer exposed to flooding is the most widely em- ployed benefit measure. Another measure of flood control benefits is the change in property prices with versus without a flood control alternative. Other benefits might be estimated for increased recreational opportunities or enhanced water supply. The alternatives in the 1991 ARWI were compared primarily in terms of flood control benefits. Included in the flood control justification for the dry dam alternative were benefits to be accrued for the still-to-be-developed Natomas area. Critics of the 1991 ARWI noted that this placed the federal government in the position of building a project that would facilitate the development of a flood-prone area, a position they deemed unacceptable. However, future growth in Natomas made up only a small percentage of the total benefits, so removing these benefits from the NED justification did not make any dry dam alternative economically unjus- tified. Nonetheless, it is likely that the political support for a dry dam, given the

IMPLICATIONS FOR THE AMERICAN RIVER AND THE UNITED STATES 181 desire to retain the development near the city, may have been influenced by the prospective development at Natomas (see Chapter 53. The costs in an NED analysis include public and private sector investment and future operation and maintenance spending, as well as monetary values for foregone hydroelectric power generation or water supply. The P&G requirement to comply with applicable environmental laws, which has been interpreted by USACE to include full mitigation of any adverse environmental effects of an alternative, adds to project cost. The uncertain frequency, depth, and duration of inundation behind a dry dam called into question the adequacy of the mitigation offered for damages in the canyon. If the mitigation was not adequate, then the costs of mitigation were understated. This concern, which is discussed in Chapter 3, was the central environmental challenge to the dry dam and was the major mitigation feature of any of the alternatives. However, criticisms of the many alternatives also have been related to concerns about negative environmental effects or foregone oppor- tunities for environmental restoration along the lower American River. Preliminary cost estimates for the array of all alternatives were presented in the 1994 Alternatives Report. Average annual costs (at an 8 percent discount rate) range from $22 million for the minimum environmental impact plan having first costs (up-front construction costs) of $258 million, to $68 million for the dry dam designated as the 1991 NED alternative. In the 1991 ARWI, the first cost estimate for the dry dam was $698 million and in the 1994 Alternatives Report it was$661 million. The foregone benefits of water supply, power, and recreation from Folsom reoperation are presented as $4 million per year. It appears from the available information that these costs were estimated as the costs to construct new storage ($300 per acre-foot) to replace these benefits at another site (USAGE, Sacramento District, 1991~. If this was the estimation method, then this cost estimate is an upper bound because replacement water supply, for example, might be acquired from water markets at lower costs (Science Applications Interna- tional, 1991~. The project costs are shared between levels of government according to formulas fixed by federal law. The 1994 Alternatives Report did not include any cost sharing information; however, the 1991 ARWI indicated that the 1992 cost of the selected plan would have required a $240.5 million local contribution, of which $208 million would have been in contributions of lands, easements, rights of way, and relocation. The most significant share of the nonfederal cost was $107 million to relocate Highway 49. This cost would be borne by the state, leaving $101 million as the local cost for the project (USAGE, Sacramento Dis- trict, 19911. For a flood control project, it is important to estimate the likelihood that an area will be inundated. The "level of protection" has been used to indicate a likelihood of flooding in any year. For ease of exposition, the reciprocal of the annual likelihood that is, the average number of years between occurrences, or

82 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN recurrence interval is commonly used. For example, a flood discharge with a 1- percent chance of being exceeded in any year 1/100 is referred to as the 100- year flood. (A discussion of the meaning and limitations of the term level of protection is found in Chapter 4 and later in this chapter.) The level of protection that is to be recommended by USACE policy tends to coincide with whatever can be achieved by the NED alternative. Thus the NED plan can result in different amounts of residual flood risk for different studies, depending on the site-specific costs and benefits of flood damage reduction. The NED plan in the 1991 ARWI offered a 400-year level of protection. However, SAFCA, for reasons of cost and other considerations, identified a 200-year level of protection from a dry dam alternative as the locally preferred plan. The SAFCA choice was accommodated by USACE budget policy that permits select- ing an alternative other than the NED plan if, in the words of the P&G, ". . . there are overriding reasons for recommending another plan, based on other federal, state, local, and international concerns." The SAFCA preferred plan was recom- mended. Those who were concerned about threats to the canyon asserted that an acceptable level of protection could be achieved with levee elevation, reoperation of Folsom, and other management measures, without any new storage facilities. Critics argued that the only reason the dry dam was supported was to ensure protection for new development in "deep floodplains" at Natomas. The critics cast the choice as between "saving" the canyon and serving speculative land development. However, some supporters of the dry dam felt that any alternative with no storage was less reliable because of uncertainties in the hydrologic mod- eling, the likely effectiveness of reoperation of Folsom, and the structural condi- tion of the levees. In fact, the new USACE risk analysis procedures were devel- oped to directly address and analyze such uncertainty (see Chapter 4~. The Sacramento District favored the 400-year protection dry dam alterna- tive, SAFCA sought 200-year protection through a dry dam, and others argued that an acceptable level of protection was possible without a dry dam. Yet a fourth perspective was that a level of protection only against the 100-year flood was required by federal policy. EPA, for instance, cited FEMA flood insurance purchase requirements as evidence that this was a national standard (Wieman, 19924. USACE policy should, according to EPA, be to develop alternatives that equally achieved the minimum "protection" against the 100-year flood. Then the "least environmentally damaging" alternative to meet that standard should be chosen. This decision logic, rooted in rules of Section 404 (bit of the Clean Water Act, was rejected by USACE as binding on their formal planning. The 1991 ARWI study generated hundreds of letters and much interagency comment. After considering this public agency input, the Sacramento District finally supported the SAFCA preferred alternative, but that recommendation was rejected by Congress at the urging of environmental and water supply interests. Clearly, an "open comment process" did not satisfy those with the ability to block

IMPLICATIONS FOR THE AMERICAN RIVER AND THE UNITED STATES 183 implementation of a dry dam. Although local cost-sharing requirements certainly required the district give serious consideration to the local project sponsor, in this case SAFCA did not represent the myriad regional concerns regarding develop- ment priorities and environmental issues. The planning process in 1991 was preoccupied with reconciling differences between SAFCA and US ACE while other interests were left to exercise political strategies outside the planning pro- cess, ultimately with much success. The proposed dry dam project only partially fulfilled the desires of the local sponsor and did not meet the NED standard of the P&G. Yet even this compro- mised project was opposed by an unusual combination of interests-those who sought to stop any project in the canyon and those who wanted a full-pool reser- voir. Although the two had diametrically opposed positions, neither stood to satisfy its preferences if the 1991 ARWI preferred alternative were implemented. Stopping the SAFCA preferred plan in order to fight for different alternatives in the future must have appeared to each group to be in its own interest. As of March 1995, it did not appear that these positions had changed signifi- cantly. Canyon protection interests have continued to assert that no solution that includes a dry dam could be implemented, but the support for a multipurpose dam had been restated by other interests (Sacramento News and Report, 1995~. Mean- while, SAFCA has continued to advance its preference for a 200-year level of protection, whether or not involving a dry dam. The current decisionmaking situation in the American River basin can be described as a diffusion of separate interests having access to numerous political and legal veto points. This situation is not unusual. USACE has found in recent years that its recommendations are frequently challenged, often with success. The committee thus decided that it was important to comment on selected aspects of the planning and decision-making process, as well as to recommend reforms for federal policy on flood risk, with the expectation that such observations will contribute to reaching a decision in the American River basin. THE CHOICE TO BE MADE: ACCEPTABLE REMAINING FLOOD RISK The committee has not identified any national standard for acceptable levels of flood risk reduction, but it understands the intent of current national policy as follows: investment (private or public) in hazardous areas should, to the extent practicable, internalize the costs of choosing such a location by (1) contributing to the cost of floodwater control works, (2) accepting reasonable restrictions on development in flood-prone areas (foregone development value), and (3) paying adequate insurance premiums against the flood risk remaining after structural and nonstructural measures have been implemented. The committee recognizes that settlement of floodprone areas may bring advantages in terms of access to urban services, opportunities, and amenities (as

84 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN in the case of the Natomas area see Chapter 51. However, the committee also believes that such advantages must be balanced against the threat of water inun- dating a settled area and the damages or loss of life related to the depth of flooding, the velocity of the flow, and the rapidity and duration of the inundation. Such balancing is the essence of flood risk management. Flood risk management decisions are made by individuals and communities when they choose to locate economic activity in flood-prone areas and when they choose to implement par- ticular measures that will reduce the frequency of inundation in an area or the susceptibility to damages from any inundation that does occur. Flood risk in any year can be described by the expected damages from each of the possible inundation events, weighted by the likelihood each event will occur. Flood risk management decisions weigh the avoided damages (benefits' of flood risk reduction against the cost of alternatives for reducing flood risk. Costs of flood risk management are the budget outlays for a flood control project, plus any unmitigated environmental damages from the project. Costs also in- clude the foregone value of activities either removed from, or not located in, a flood-prone area. However, in few instances will the benefits of removing all flood risk justify the costs of an alternative to achieve those benefits. For the American River, for example, flood risk management requires deciding the "ac- ceptable" level of remaining flood risk after certain water control works are constructed and nonstructural measures are implemented for Sacramento and Natomas. There were the factors that led SAFCA to choose a project that yielded a level of flood risk greater than that in the NED plan, but that had a lower cost. The committee is not alone in calling for more attention to residual flood risk. The 1994 report Sharing the Challenge also recommended that new flood- plain occupants be required to purchase actuarially sound insurance equal to the remaining expected flood damages with the alternative in place (especially for areas that rely on levees, as in Sacramento-see Chapter 5~. Such insurance is available through the National Flood Insurance Program (NFIP). The NFIP was developed to ensure that new occupants of flood-prone areas bear a reasonable share of the cost of floodplain occupancy. Expanding the purchase of natural hazards insurance was an objective of a recent bipartisan congressional task force on natural disasters (U.S. Congress, 19943. The task force felt that too-generous disaster aid was an impediment to insurance sale. Its December 1994 report to Congress, motivated by the escalating claims on federal funds by disaster aid payments, stated, ". . . Federal disaster assistance can discourage individuals, communities and state governments from taking action to prepare for, respond to and recover from disasters." The task force went on to state, ". . . if homeowners mistakenly believe that the federal government will rebuild their homes after a natural disaster, they have less incentive to buy all-hazard insurance for their homes." Requiring floodplain communities and individuals to bear the costs of their hazardous locations will help to inform them of flood risks. At present, the NFIP

IMPLICATIONS FOR THE AMERICAN RIVER AND THE UNITED STATES 185 focuses the attention of its purchase requirements on the 100-year floodplain. By not requiring insurance against residual levels of flood risk, the NFIP may be inadvertently stimulating floodplain development and fostering misunderstand- ing of flood risk among the general public. In the committee's view, the decision of SAFCA to choose a reduced-size flood risk reduction project, as well as decisions to develop Natomas, has been made in the absence of a requirement to bear reasonable responsibility for the remaining flood risk. Instead, there may be an implicit assumption that such costs will be borne by others, either as disaster aid payments or by a significant federal contribution to construction of flood control works. In addition to requiring the purchase of actuarially sound flood insurance against residual risk for new development, other land use, emergency planning and floodproofing measures should be pursued for the region as a whole. The first component of a nonstructural plan should be the development and release of information to the public on the nature and extent of flood risks in the region. An inventory of high, medium, and low risk levees should be made available. Devel- oped areas subject to seeps and boils or at some risk from levee overtopping should be designated. Estimates of property damages and life loss owing to dam failure or levee failures in different locations should be provided. Higher risk areas can be compared to lower risk ares and this information can be used to design nonstructural responses for both risk avoidance or to reduce residual risk. Land use development options near Sacramento can be ranked from lowest to highest in terms of flood hazard risk. For example, a land use development scenario for the Rio Linda area could be compared to a land use development scenario for the Natomas area in respect to relative flood hazards and the risk exposure of new populations. Regional emergency evacuation plans in the event of dam or levee failures, or levee overtopping, should be prepared and distributed to neighborhood asso- ciations and through the media. Residual risks may be reduced by home or business owner actions through temporary floodproofing strategies such as win- dow or door dam placement during high risk, levee-associated episodes. Areas where this is a reasonable options should be identified, so that individual property owners can add their own actions to government emergency responses. A com- parable existing model to this in California is property owner participation in earthquake "proofing" of structures and neighborhood planning for earthquake emergency response. Structural and nonstructural measures should be integrated in the regional response to flood risks and measures can be phased in over time to increase public acceptance and funding opportunities. For example, one integrated pack- age might include reoperating Folsom Reservoir, increasing the capacity of the Yolo Bypass, incremental rebuilding lower American River levees and restoring riparian environments, instituting a flood warning and floodproofing program, and requiring elevation of new structures. These measures could be phased in

86 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN during the period it takes to finish planning, funding, and building a reservoir for added protection or they could be adopted as the main flood risk reduction mea- sures, if supported by the current USACE analysis. Funding might come from a combination of sources including state environmental restoration programs, fed- eral housing programs, flood control district assessments, and other federal, state, and local sources. WATER PROJECT COST SHARING A product of the history of federal involvement in flood control project construction in the American River basin, and the federal provision of flood insurance and disaster aid, is a perception that flood risk management is a federal responsibility. For example, the Natomas development plan is to intensely de- velop a flood-prone area once an upgraded agricultural levee system is certified by FEMA as providing "100-year protection" under the NFIP. The exposure to life and property from storms of greater magnitude (lower frequency) is recog- nized, but the presumption seems to be that this remaining flood risk can be ignored, or else that federal or state funds will be employed to upgrade levees and build water control structures. At the turn of this century, floodwater control was motivated by a desire to reclaim flood-prone lands for economic development purposes. Flood control projects, typically levees, were planned by nonfederal governments and land- owner cooperatives who based the desired level of protection on their best tech nical assessment of the flood risk for an area in relation to the expected values of the reclaimed land. The value of flood protection was established when the funds for project construction were paid by benefiting landowners. As discussed in Chapter 1, the levee districts along the American and Sacramento rivers origi- nated at this time and were established with this financing and planning logic. Although a full-fledged federal role in flood control was not established until the Flood Control Act of 1936, federal spending for flood protection in the Sacramento area began in 1917. Among the effects of the early federal presence were a better integration of the disparate system of levees and bypasses, the application of analytical efforts that took a basin perspective, and the shifting of a share of the financial burden for flood control from benefiting landowners in the basin to the national taxpayer. The federal financial role was justified by the beliefs that the benefits from flood protection works extended far beyond the lands protected to the nation as a whole and that the costs of floodwater control would stress the ability of local communities to pay for their own protection (Rosen and Reuss, 1988~. Over time the financial responsibilities for flood control project construction have been modified. The 1986 Water Resources Development Act established that for new projects the federal government is to pay between 25 and 50 percent of the cost of construction. Nonfederal interests are responsible for providing all

IMPLICATIONS FOR THE AMERICAN RIVER AND THE UNITED STATES 187 lands, easements, and rights of way necessary for the project construction. These in-kind contributions can be used to offset the required cost share. The nonfederal cost share for the selected American River dry dam project was estimated to be $240.5 million. Of this cost, $107 million was in the form of lands, easements, and rights of way, primarily for relocation of a bridge on California Highway 49. This bridge relocation was deemed necessary because, when all the storage is employed under an infrequent storm event, road access across the upper canyon area would be cut off for several days. The Sacramento District secured a commitment that the state would make the relocation, but there was no obligation that the relocation be implemented as a condition of the federal project being constructed. Thus, under the cost sharing rules the total cost of $240.5 million significantly overstates the immediate financial obligation of the city and the state. The committee is unable to comment on the cost sharing responsibilities that would arise for the levees or for other alternatives because the application of the formula to consider both in-kind and cash contributions makes such calculations complex. Because of the complexity, the Sacramento District did not report cost sharing burdens for the different alternatives in the 1994 Alternatives Report. The committee understands the logic behind the original federal financial participation in flood control works widespread benefits and limited ability to pay. However, it finds that benefits for any American River project are not widespread and that SAFCA, by national standards, has a significant ability to pay. To reach this conclusion the committee first accepts the Sacramento District's analysis that (1) $37 billion of property to be protected is located entirely within the city and nearby areas and (2) that the damages avoided for all alternatives justify the costs (1994 Alternatives Report). Next it calculates the tax burden on the SAFCA community if the selected project had to be paid for entirely by local beneficiaries. Because the available cost estimates are prelimi- nary, these calculations should be considered illustrative. Assume a bond of $600 million for a project sold at 8 percent interest for a 15-year term. At these terms the annual cost to the locality would be around $70 million. This being so, an assessment of $1.75 per $1,000 of the approximately $40 billion of property value would be adequate to repay the bond. For a $20O,OOO property, the $600 million project would raise property taxes by $400 per year for 15 years. It is also possible to spread the cost of a protection project over all residents of the city, rather than limiting the burden to flood-prone property. Indeed, there is some evidence from other areas that citizens of a city who do not own flood- prone property are willing to tax themselves to help pay for a project to protect flood-prone areas (Shabman and Stephenson, 19921. While the local cost burden to fully fund a flood control alternative appears significant, if a project is built these costs must fall somewhere in the national economy if they are not borne by those who directly benefit from the project.

88 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN COMMUNICATION OF FLOOD RISK The USACE risk and uncertainty analysis procedures (described in Chapter 4) should contribute to understanding the likelihood and consequences of flood events under different risk management alternatives. Unfortunately, USACE has not developed good explanations of its new procedures and the results from their application. The committee reviewed the risk and uncertainty analysis in the 1994 Alternatives Report and found the explanation and presentation of the re- sults to be particularly confusing. No distinction is made between estimates of flood risk calculated with the traditional level of protection methodology and those calculated with the new risk and uncertainty methodology. Both are called "level of protection" and described by a variety of terms. The most common terms in the report are control for T years, T-year level of protection, T-year protection, and T-year flood protection. Yet the use of the term level of protec- tion to describe flood risk is inconsistent with the new USACE guidelines for risk and uncertainty analyses (EC 1 105-2-205, 1994) and confuses the traditional and the new approaches to calculating flood risk. Finding an appropriate way to express the concept of flood recurrence inter- val and the T-year flood is a persistent problem in risk communication. It seems to be fairly well understood that floods (or, more precisely, exceedances of a specified stream flow rate) can be described as a series of random trials with a probability p of "success" at each trial, and with an average time between suc- cesses (recurrence interval) of 1/p trials. (See, for example, Interagency Flood- plain Management Review Committee, 1994.) Nonetheless, most people do not have much experience with the distribution of times between floods, or much experience in describing or discussing such phenomena, and their experience with more familiar random processes such as seasonal rainfalls and temperatures is not directly transferrable to the time distribution of floods. For phenomena like seasonal rainfall or temperature, the average value also is a fairly typical value; the observations tend to be concentrated in some interval in the neighborhood of the mean, and observed values become progressively less frequent at greater distances above and below this interval. The frequency distribution is somewhat bell-shaped, perhaps with some degree of asymmetry or skewness. The fre- quency distribution of times between occurrences of floods exceeding a given magnitude, however, does not have this shape. For exceedances of a given flow rate, the frequency distribution of inter-arrival times has a maximum at year 1 and decreases progressively for longer inter-arrival times. For exceedances of the 100-year flood (the flow rate having 1 percent chance of being exceeded in any year), for example, the probability is 1 percent that the time between occurrences will be 1 year, 0.99 percent that it will be 2 years, and, in general, 1 x (.99)A(n-l) that it will be n years. There is no tendency for the inter-arrival times to cluster around the mean value; such a tendency would exhibit itself as a periodicity in flood occurrences, and such periodicity is not generally observed upon examina

IMPLICATIONS FOR THE AMERICAN RIVER AND THE UNITED STATES 189 lion of flood records. Nonetheless, the temptation to think of the mean value as a typical value is strong, and use of the mean time between occurrences (recur- rence interval) in risk communication may lead to misinterpretation and misun- derstanding. Efforts have been made to improve flood risk communication by avoiding use of the term recurrence interval and emphasizing the concept of percentage chance of occurrence. It is not known whether these efforts have borne fruit. The concepts and terminology of recurrence interval and T-year flood are deeply rooted in the vocabulary of land planning, development, engineering, insurance, and regulation. The 100-year floodplain is the cornerstone of the National Flood Insurance Program and all its associated regulatory and management apparatus. It seems unlikely that these concepts and terms can be eliminated and, consider- ing that they are valid and legitimate concepts, it is not clear that they should be eliminated. It appears that risk communication might best be improved not by use of a limited vocabulary but by improved explanation of the hydrologic and statistical concepts underlying flood risk assessment. One promising way of accomplishing this is by re-casting probability statements about flood risk into terms with which citizens have direct experience. For example, an annual prob- ability of flood occurrence of 1 percent is not readily comprehensible to most nonspecialists; the equivalent statements of more than 1 chance in 6 over a 20- year period or more than 1 chance in 4 over the life of a 30-year mortgage may be more readily interpreted. Also, comparisons with other forms of risk can be valuable. Risk communication is required in many areas of environmental policy. These include regulation of air and water pollution, regulation of hazardous waste and chemicals, issuance of licenses for pesticide use, and review of drugs and the safety of food and food additives. Federal agencies have developed a risk analysis/risk management framework (NRC, 1983; Cohrssen and Covello, 1989) that includes risk communication as an important component of risk management (NRC, 1989; Plough and Krimsky, 1987~. The new USACE risk analysis proce- dures allow the transfer of this framework to flood risk management. This transfer should occur. Public officials, the general public, and home owners need to understand the magnitude and consequences of floods if they are to make informed risk management decisions (Sandman, 19851. "It also allows creation of the trust and understanding necessary for successful risk management within our political system" (Slovic, 19871. The two dimensions of flood risk likeli- hood of an event and its consequences- need to be communicated. The most commonly used description of flood risk is the chance of flooding in a single year. This is often represented by a "return period", which has been called the "level of protection." Level of protection highlights neither the nega- tive consequences of a flood event, its probabilistic nature, nor the differences in the confidence that can be placed in different alternatives to achieve a similar

190 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN calculated level of protection. USACE has committed itself to avoiding the term level of protection, but continued to use it in the 1994 Alternatives Report. "Chance of flooding" is probably a better description of flood risk than is a term like level of protection. Phrases like chance of flooding direct attention to the hazardous event of concern (see Chapter 4~. Using chance of flooding also avoids use of return period. Return period has been incorrectly understood to mean that one and only one T-year event should occur every T years. For example, an article in the Sacramento Bee (Hicks and Blechman, 1994) describ- ing the 1994 Alternatives Report stated that, "Currently, Sacramento levees could withstand a flood of such magnitude that it is expected to occur only once every 78 years." Unfortunately, this misleading statement was extracted from page 1 of the 1994 Alternatives Report. With the new USACE risk analysis procedure that was employed, failure is no longer related to a single T-year design flood, but can depend on different combinations of flood flows, operating decisions, and levee performance. The risk analysis procedures recognize that the flood control system might not per- form its expected flood control function. For example, levees may not be 100 percent reliable even at design flows, and so the likelihood of flooding is deter- mined by more than the rainfall and runoff frequency. In the American River case, the factors that can affect the performance of both reservoirs and levees must be evaluated. The most common form of risk assessment involves identifying events or a sequence of events that can relate to dam or levee failure, identifying the modes of failure, evaluating the likelihood of a particular mode of failure, determining the consequences for each potential failure mode, and calculating the risk costs or expected economic and social losses from the failures. Risk assessments for dams would consider the potential for and consequences of overtopping, flow erosion, slope protection damage, embankment leakage and piping, sliding, deformation, deterioration, earthquake instability, construction problems, gate failures, erosion of spillway, operator error, and catastrophic failures (NRC, 1985~. Risk assessments for levees would consider similar factors, such as overtopping, flow erosion, slope protection dam- age, embankment leakage and piping, subsidence, earthquake instability, con- struction problems, operator error and catastrophic failures. The public also must recognize that flood risk has another dimension consequences. Levee building can provide a good illustration of the kinds of consequences that should be discussed and evaluated in association with a flood risk reduction project. In rivers not bounded by levees, rises in stage usually most affect structures nearest the river, with the effects of overbank flow diminishing with distance from the river. In other locations where levees protect structures in the floodplain, when flows overtop the levee there is a discontinuity in the rela- tionship between flood flow and stage, and its impact on floodplain structures and inhabitants. When a levee fails, the sudden rush of water may inundate structures by many feet of water and cause more damage than would have occurred if the

IMPLICATIONS FOR THE AMERICAN RIVER AND THE UNITED STATES 191 levee had not been constructed. A levee failure is akin to a flash flood. More- over, the development that might be encouraged because of the partial protection levees provide can translate into greatly increased damages if a levee fails. When a reservoir fails to contain a flood, only the extra flood volume is spilled, so that flood stages may rise only a little above the target maximum flood stage. Thus the initial reservoir storage is not lost. By contrast, when a levee is overtopped or breached, it loses all its effectiveness. The formal evaluation of flood control benefits is one reflection of the like- lihood and consequences of flooding. When real property is inundated, the expected annual damages reduced by the project are the NED benefits. Although this dry economic calculation may help to select from among alternatives, it cannot be the only basis, because NED benefits do not convey the consequences of extreme events. First, extreme events have a low probability and so are weighted quite low in the expected damages calculation. Second, the focus only on real property losses may not reflect the different duration of flooding or the rapidity of the rising waters and the threat to evacuation opportunities. Table 6.1 gives several other representations of flood risk that can be used to improve risk communication. Even the numbers that might be developed from applying this table may not adequately convey flood risk in places like Natomas and Sacramento. Reliance on levees of uncertain structural integrity introduces a factor that may not be adequately reflected in Table 6.1. When projects must be operated at a high degree of technical efficiency, there is a hidden possibility of operator failure. TABLE 6.1 Aspects of Flood Risk and Possible Descriptions Safety Physical severity of floods Economic damages Annual probability of flooding Chance of flooding during a structure's economic life Chance of flooding during 20-year or 50-year period Expected loss of life should a flood occur Expected injuries Depth of flooding in different areas Duration of flooding Velocity of water Areal extent of flooding Physical damage to flooded areas (effect of sediment on soil, soil loss, effect on vegetation, etc.) Length of time before economic activities could resume Value of property at risk Dollar loss that would occur with a particular event Expected annual damages due to flooding Expected annual damages for a residential home Annual insurance costs for a policy on flood damages for a home Cost of lost business due to disruption from flooding

92 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN The character of the area that would be inundated is also an important consider- ation. Floodplains surrounded by rivers and having a bowl shape present a different hazard than land that slopes up as one moves away from the river. How deep would the water be? How much warning would there be? Could people escape? Some of the statistics described above could help illustrate these issues. One way to add diversity to descriptions of flood risk is to have USACE, in coopera- tion with those in the decision process, create realistic risk scenarios for the different alternatives. The cooperative building of scenarios can be an excellent way to communicate flood risk. For example, the following scenario is one possible description of the vulnerability of the Sacramento and Natomas areas for storm events that overtop the levee system: Should levees protecting Sacramento south of the American River be threat- ened, residents could attempt to move to higher ground to the south and west farther away from the river, and the depth of flooding would generally not exceed that at the rivers edge; few areas would experience flooding of more than 10 feet. Natomas, on the other hand, is ringed by levees so that residents trying to leave the area would have to find their way across the main highway system to areas with higher ground that are primarily to the west. Moreover, because Natomas is in a depression, a third of the area would flood to over 10 feet, and some to as much as 35 feet in depth. If the Natomas area is subject to a 1 in 100 chance of being flooded in any year, then the probability of at least one flood in 50 years is 40 percent. Therefore, the probability of a relatively catastrophic event within the lifetime of most residents is roughly equal to the probability of flipping a fair coin and getting heads. IMPROVED APPROACHES TO FLOOD RISK MANAGEMENT PLANNING As a result of laws such as the National Environmental Policy Act (NEPA) and the increased power of stakeholders such as environmental groups, the USACE planning process has allowed increased public participation in all stages of planning. The American River planning process, for instance, included three public hearings, receipt of more than 2,000 comment letters and more than 650 pages of response by USACE (1991 ARWI, Appendix T). The result has been escalating conflict over major water management alternatives. Conflicts can occur when people disagree over "facts." People can also disagree because they feel their interests are not being equitably served and because they have different values (Lord, 1979~. In the American River case, value conflicts are especially sharp. For example, as stated in one recent newspaper article, ". . . you have two warring sides: environmentalists and dam supporters. They're religious wars; conflicts of values that are unresolvable" (Hicks and Blechman, 19941. The ability of USACE to act unilaterally in resolving conflict has diminished

IMPLICATIONS FOR THE AMERICAN RIVER AND THE UNITED STATES 193 over the past three decades. In the past, there was a national consensus behind water development, the public accepted without question the expertise housed in executive agencies, and access to the courts and to the legislature to oppose agency decisions was more limited. Today, decisionmaking on any plan requires agreement among those who are affected by, and can block or advance, imple- mentation of an alternative in a variety of different legal and political forums. Resolution of conflict among those who can affect a decision could perhaps be facilitated by the USACE planning process, although it is unlikely that USACE planning and budgeting processes alone will be adequate for reaching all neces- sary agreements for implementation of most large water projects. Plan formulation demands the creation of the widest possible range of engi- neering and institutional alternatives so that agreements can be reached among multiple decisionmakers. The way that plans are formulated can secure support from affected interests. Failure by the Sacramento District and SAFCA to ini- tially incorporate a wide range of purposes and institutional adjustments as a part of plan formulation, and to open the planning process to multiple interests, has been a barrier to agreement on a flood risk management alternative for the Ameri- can River. Federal flood control planning in California in the past decade and a half has been characterized by citizen groups or local governments who are not project sponsors hiring their own consultants to determine what alternatives are techni- cally feasible and to describe the social and environmental impacts mentioned in federal reports more fully. Cases where this has occurred in federal projects in California include not only the ARWI for Sacramento, but also Tecolote Creek, San Diego; Mission Creek, Santa Barbara; Soquel Creek and San Lorenzo River, Santa Cruz; San Pedro Creek, Pacifica; Walnut Creek in the City of Walnut Creek; Wildcat Creek, Richmond; Murderers and Grayson Creek, Pleasanton; Corte Madera Creek, Ross; Napa River, City of Napa; Dry Creek, Roseville; and, Petaluma River, Petaluma (E. Cummings, California Department of Water Re- sources, personal communication, October 3, 19941. In the American River case, a variety of pro bono consultants were brought in to help the Planning and Conservation League evaluate the draft environmental impact report and propose project alternatives not provided by the USACE re- ports. The Environmental Defense Fund hired a hydraulic engineering firm to propose alternatives (Environmental Defense Fund, 1990; Jennings, 1991~. The ad hoc planning investigations suggested alternative approaches to lowering flood risks, including redesign and reoperation of Folsom Dam, operating upstream hydroelectric reservoirs for flood storage, use of surcharge storage in Folsom, and the potential for greater storage in the Sacramento River bypass system. Since the congressional action on the 1991 ARWI, SAFCA has hired con- sultants in geomorphology to help it develop a plan to integrate the rebuilding of lower American River levees with riparian habitat restoration. This work has been an analytical effort in support of the Lower American River Task Force,

94 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN formed by SAFCA to build a consensus among general public and agency stake- holders on finding compatibility between environmental restoration and flood control purposes on the river below Folsom (SAFCA, 1994a). The original proposal to riprap 20 miles of river levees along the American River has been reframed to integrate levee strengthening and riparian restoration projects. By- pass expansion, levee setback, and Sacramento River riparian restoration alterna- tives are being studied. On the upper river, SAFCA has pursued research to help in understanding potential ecological impacts of a dry or multipurpose dam. Meanwhile, an interagency Yolo Basin Working Group and USACE began an assessment of how to integrate flood protection and environmental restoration purposes in the Yolo Bypass. By 1994, interagency agreements had been ap- proved for the multi-objective management of the bypass for endangered species protection, wetland and wildlife habitat restoration, and flood control (California Resources Agency, 1993; Yolo Basin Foundation, 1994~. The intent is that the lower American River levee and bypass improvement projects will enhance the American River Parkway and bypass aesthetic and environmental values while also performing a flood control function. The American River experience prior to 1991, with its focus on flood protec- tion through new storage, resulted in a planning process that was unable to define acceptable alternatives. Failure to expand the planning purposes meant that the Sacramento District could not develop a broad constituency of support, because the plan made flood control a competing purpose against habitat restoration and water supply, rather than developing an integrated package. If multiple purposes had remained the focus of planning, as had been suggested by the original study authorities, alternatives capable of coalition building might have emerged. For example, the failure to include environmental restoration in the lower river as a planning purpose, and the treatment of environmental considerations only as mitigation requirements for the dry dam, may explain the difficulty in reaching agreements. In the American River situation a restoration planning purpose would have focused immediate attention on riparian habitat in the design of levee repairs and on water flows to the delta in the formation of operational rules for all projects in the basin. However, two shifts in the USACE planning process have occurred, each of which should create an opportunity for a new approach to plan formulation. USACE now encourages a broader conception of project planning purposes, including environmental restoration, although change has been difficult (Riley, 1989~. Also, USACE has emphasized planning partnerships in many controver- sial water management situations (e.g., Columbia River and Florida Everglades (Shabman, 19931~. For USACE planning to meet the "acceptability" test of the P&G in a planning partnership, the agency must understand the barriers to agree- ment and then suggest and analyze institutional and operational, as well as engi- neering, measures in plan formulation as a means of securing agreements. Resolution of the risk management disagreements for the American River

IMPLICATIONS FOR THE AMERICAN RIVER AND THE UNITED STATES 195 might be advanced by this new planning approach. A necessary step is to fully incorporate water supply management, recreation, environmental restoration, and hydroelectric power purposes throughout the planning process. The Sacramento District appears to have directed its attention primarily to flood risk reduction and in so doing has motivated opposition to its recommended flood control alterna- tive. This planning approach might be explained by the original authorization language for the study (stressing flood control and a dry dam), or it might be explained by USACE budget priorities in the 1980s being limited to flood control and navigation (Shabman, 1993~. Another possibility is that the district saw its role in meeting these purposes strictly through construction of a storage project or levees. If this was the case, then attention to these purposes, if water project construction alternatives were the solution, led to a full-pool Auburn reservoir, and the district concluded that this was not a viable alternative. In the 1991 ARWI the closest the Sacramento District came to addressing multiple purposes was to discuss the option of converting the dry dam to a full pool at some future date. However, alternatives are not simply engineering measures. They are also the institutional agreements that determine the financial, legal, and political ac- ceptability of a project. Institutional adjustments that would be required for an aggressive reoperation of Folsom, for use of upstream storage, for levee up- grades, or for building acceptance for a dry dam have not been made part of the plan formulation process. The committee has found two areas where this oppor- tunity may have been missed, but emphasizes that the discussion of these oppor- tunities is not meant to endorse any flood risk management approach. One illustration can be drawn from the expressed concerns about purposes other than flood control. While reoperating Folsom under conditions when the reservoir does not recover its storage might reduce the reliability of the water supply, technical means might be available to ensure reliable water from other sources, but these have not been explored. For example, water released to create flood control storage might be retained underground in overdrafted ground water basins in the southern part of the state (Jaguette, 1978~. Another option to meet water supply contracts would be to pump ground water from the Sacramento groundwater basin, which currently has relatively low lifts (and hence costs) in some parts of the basin. Protection against long-term ground water overdraft and compensation to local ground water pumpers would be a part of any such alterna- tive. Representatives of the Central Valley Project's (CVP) power contractors have similar concerns about the availability and costs to their users from Folsom reoperation. Also, it could be very difficult to offset losses to recreational stake- holders, and it may also be much more difficult to meet delta environmental requirements during drought years without adequate water in Folsom. However, the use of Folsom will not result in massive losses to these interests in every year, only in years where flood control operations are driven by large storm events.

96 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN Perhaps some arrangement might be made in consideration of the low frequency of the effects. Additional study would be required to determine if these are technically workable measures; however, the main point is that they all would require insti- tutional adjustments through water and power markets and in other ways as well. Thus if flood control beneficiaries of Folsom reoperation are willing to pay to purchase pumped ground water and alternative power to make up for any losses to the CVP, opposition to Folsom reoperation might be reduced. The Sacramento District or its planning partners in the state and in SAFCA need to incorporate analysis of such institutional measures in any plan formulation that includes reoperation. As this report was in final preparation, SAFCA entered into a contract with the Bureau of Reclamation that appears to implement many of the institutional measures recommended here for gaining agreements on the reop- eration of Folsom (U.S. Department of the Interior, 1994~. Successful planning will recognize the interests that sought a full-pool Au- burn reservoir and will define measures that might bring them into an agreement. These measures will probably not center on obtaining "wet water" but on facili- tating water transfer agreements, cash payments for water conservation programs, or support for construction of water pumping and transfer facilities. While these measures fall outside the Sacramento District's view of its implementation au- thority, the failure to include such measures in plan formulation means that a source of support for any flood risk management alternative is lost. At some point, it may be determined that a desired amount of risk reduction will require a dry dam near the Auburn site. Opponents of the dry dam are concerned about two possible outcomes of such a decision, but institutional mea- sures might be developed to facilitate agreement over concerns about impacts to the American River canyon. First, opponents believe that a dry dam will eventu- ally be converted to a full pool. It is considered politically prudent to oppose any dam, lest a dry dam be the first step toward a full-pool reservoir. SAFCA's suggestion for addressing this concern was to propose an ungated structure. The committee finds an ungated design to be imprudent (see Chapter 3~. Earlier in this section, the committee suggested the kinds of institutional measures that can address the water supply purpose and in so doing reduce the pressure to construct a reservoir with a permanent pool. In combination with such institutional mea- sures, it might also be possible to ensure the pending wild and scenic status for the American River, or to transfer canyon land ownership to a natural area trust, as a condition of dry dam construction. A second concern voiced by opponents to the dry dam is about the uncertain environmental effects of occasional canyon inundation. The Sacramento District has stated that inundation of the canyon would occur several years out of ten, although the exact frequency has never been calculated because the district ap- parently has not completed and reported on the flood control system operation procedures for the dry dam. All that the District has suggested to the committee

IMPLICATIONS FOR THE AMERICAN RIVER AND THE UNITED STATES _ ~ 1_ ~ ~1 ~, ~ ~ 197 1S that the projects will be operated jointly, meaning that for high-frequency events there will be some canyon inundation. The committee believes that a suggestion of the Planning and Conservation League of California with respect to the dry dam (Jennings, 1992' has received too little attention as a possible focus for agreement (if there is a concern that the risk of a no-storage option is unacceptable). The suggested operational strategy would be to use the dry dam as "insurance" against extreme flows, driving down the likelihood of use of the dry dam (for example, it might impound water only in the 100 year 1 percent chance events. The first line of flood protection would achieve high levels of flood damage reduction from a modified and reoperated system with Folsom as the key element. What is significant here is that this approach would reduce the likelihood of the dry dam impounding water, and hence the possibility and frequency of environmental impacts occurring in the canyon would be reduced. This strategy would require gates for operation of the dry dam. As a bonus, a radically reduced frequency of inundation may make relocation of highway 49 less necessary, reducing total project cost by over $100 million. Also, a mitigation strategy for the uncertain effects of infrequent inundation would be needed. An institutional response would be the creation and funding of an "adaptive management" trust fund for the canyon. This fund would have adequate assets to compensate for restoration or replacement elsewhere of the environmental assets of the canyon following any inundation. It would be ini- tially endowed by the beneficiaries of the flood control. Withdrawals from the fund would be made after each inundation, and the amount withdrawn would be replaced by charges against downstream flood control beneficiaries. With these charges as a consideration, the use of the canyon as a last element used in any flood event would be encouraged. The committee recognizes that creativity in identifying and designing insti- tutional measures may fall outside the authority of the Sacramento District. This being the case, and given the central importance of institutional analysis, USACE policy may need to encourage the Sacramento District to structure its planning process differently. The environmental impact statement (EIS' established by the National Environmental Policy Act of 1969 and the Fish and Wildlife Service review of projects under the Fish and Wildlife Coordination Act of 1958 provide for public and agency participation in the formulation of USACE plans. The development of the EIS, as practiced by the District, limits the public and other local, state, and federal agencies to project review roles rather than integrating their contributions into plan formulation. Early integration of disparate interests could focus on building consensus about a full range of measures to be consid- ered, including those that might lie outside the engineering and construction mission of USACE. However, there is no assurance that other agencies and interests will bring the necessary creativity to a newly opened planning process. There is no formula for selecting any mix of agencies and public organizations

98 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN that will bring these insights to planning, but simply acknowledging the need for such creativity is a step in the necessary direction. THE WATER POLICY AND MANAGEMENT CONTEXT Flood risk management decisions for the American River must be addressed within the larger context of California water management. Certain recent federal environmental rulings may affect the opportunities to implement some of the flood risk management alternatives for the American River. Oversight and coor- dination of studies and proposals related to flood control and to other aspects of water management will be required if any alternatives to address the potentially conflicting purposes are to be implemented. The Sacramento District should not be expected to, nor is it able to, provide this oversight and coordination function. There are at least three relevant major federal proposals in various stages of planning and implementation that relate to these environmental concerns: (1) a proposal by the Environmental Protection Agency (EPA) to increase water flow to the Sacramento Delta to reduce the salinity intrusion and its effect on biota, (2) a proposal by Fish and Wildlife Service under the Endangered Species Act to increase flows to the delta to benefit the delta smelt and to declare threatened status for the Sacramento splittail, and (3) several provisions of the Central Val- ley Project Improvement Act (P.L. 102-575, Title 34~. There are also several related state proposals. Recently, EPA proposed a rule establishing three different water quality criteria for the delta: (1) salinity criteria protecting estuarine habitat in the Suisun Bay area, (2) salmon smolt survival indices protecting salmon migration, and (3) an electrical conductivity criterion protecting striped bass spawning on the lower San Joaquin River (EPA, 19943. The primary method for implementing these proposals involves increases in delta outflow. EPA estimated that the increases would average 540,000 acre-feet per year and go as high as 1.1 million acre-feet in very dry years. These increased outflows would be needed primarily from February through June. In March 1994 the California State Water Resources Control Board disputed the proposed criteria (CSWRCB, 1994), and EPA subsequently revised its pro- posal. In an effort to resolve this dispute between federal and state regulatory agencies, which had been ongoing since 1978, then Assistant Secretary of the Interior Elizabeth Rieke and California Secretary for Resources Wheeler an- nounced in June 1994 a Framework Agreement between the Governor's Water Policy Council and the Federal Ecosystem Directorate. The agreement is de- signed to resolve bay-delta management issues and coordinate the regulatory process. Federal agencies involved in the pact are the National Marine Fisheries Service, Bureau of Reclamation, Fish and Wildlife Service, and EPA. State participants are the California Resources Agency (Department of Fish and Game,

IMPLICATIONS FOR THE AMERICAN RIVER AND THE UNITED STATES 199 Department of Water Resources) and the California Environmental Protection Agency (including the State Water Resources Control Board). A major reconciliation was announced on December 15, 1994. State and federal officials, in cooperation with urban, agricultural, and environmental inter- ests, agreed to implement a specific plan to provide ecosystem protection for the bay-delta estuary. The provisions are intended to be in place for 3 years, at which time they would be reviewed for possible revision. They include water quality standards, limitations on exports from the delta, and assurances that the plan is intended to create conditions in the delta that will avoid the need for any addi- tional listings under the Endangered Species Act during the next 3 years. It will be some time before final decisions are made implementing this proposal and before it will be known how the additional flow, if mandated, will be allocated among the various tributaries. However, it is almost certain that Folsom operations would be affected by any increased flow requirement. Owing to its proximity to the delta, Folsom is the first in line to ameliorate adverse water quality in the delta. In January 1994 the Fish and Wildlife Service released two related docu- ments (USFWS, 19941. One proposes threatened status for the Sacramento splittail (a large cyprinid fish); the other proposes the delta area as critical habitat for the delta smelt. These two proposals are closely linked to the EPA salinity criteria mentioned above, and the two agencies are working together to present a unified program to benefit the relevant species. The Central Valley Project Improvement Act (CVPIA, P.L. 102-575, Title 34) includes two major sections that may affect water routing from the American River (USDI, 1993J. The first is an ambitious plan to double the numbers of anadromous salmonids in the Sacramento-San Joaquin basin by the year 2002, compared to the base period of 1967 to 1991. It would involve all of the major tributaries of the Sacramento. The planning process is in very preliminary stages, and there is little documentation available at this time. The two primary require- ments are temperature control and increased minimum flows. The doubling plan for anadromous fish in CVPIA is consistent with one established by the California legislature in 1988 (Chapter 1545/88~. In the imple- mentation of the state plan, the California Department of Fish and Game has a proposal for anadromous fish enhancement (CDFG, 1993) that presumably will be integrated into the CVPIA program. The other relevant section of CVPIA directs the Secretary of the Interior to "dedicate and manage annually 800,000 acre-feet of Central Valley Project yield for the primary purpose of implementing fish, wildlife, and habitat restoration." The source of this additional water is not specified and is the subject of much debate as the new law is being implemented. In the first year, part of the 800,000 acre-feet was dedicated to maintaining releases of no less than 1,750 cubic feet per second from Nimbus Dam from October 1993 through February 1994 (USDI, 1993~. Water provided from CVP

200 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN for delta water quality under the December 1994 state-federal agreement will be credited to the 800,000 acre-feet of obligation. In the continuing effort to solve the myriad problems caused by too much or too little water in the American River basin, more may be asked of Folsom than it can possibly deliver. Efforts to develop reoperation plans will have to take these demands into consideration. Coordination with other environmental con- cerns such as the CVPIA needs to take place to establish regional ecological management priorities. What is needed is enhanced capability for technical systems analysis to support decisionmaking on conflicting water resources goals. Meanwhile, the state's dedication of resources to data collection and statewide planning that might resolve conflict has been radically reduced in recent years. Further, California's Department of Water Resources is now largely funded by revenues from state water project contractors, who represent mainly urban and agricultural water supply interests. Limited resources to conduct data collection, to conduct water policy research, and to create conflict resolution mechanisms may inhibit the ability to reach agreements on such matters as competing de- mands for the storage at Folsom. CONCLUSION Agreements on acceptable level of flood risk and on the alternatives to achieve that level have escaped the American River planning process. If there is to be a resolution of the issue of appropriate flood risk for the American River, alternative planning approaches and new leadership from outside the Sacramento District, while drawing on the resources and expertise housed in USACE and the district, will be needed. Specific attention must be paid to enhanced risk commu- nication to ensure that the full costs and benefits of different alternatives are adequately understood by the public. Toward this end, federal policy should increase the cost responsibility on project beneficiaries. Based on careful consideration of these issues, the committee believes that the following recommendations should be considered: · Future federal participation in flood damage reduction projects for the American River should be conditioned upon SAFCA, working with FEMA and private insurers, requiring landowners to purchase actuarially sound flood insur- ance against residual risk for new development at Natomas and for Sacramento. In particular, SAFCA should either (1) institute a program to require that indi- viduals purchase their own flood insurance related to the risk of the location and development or (2) purchase group insurance for all landowners in the region and recover purchase costs by assessments on landowners who receive coverage. . USACE, FEMA, and other federal agencies should adopt an agreement governing federal participation in structural and nonstructural flood risk manage- ment efforts to require that benefiting local communities have a program requir

IMPLICATIONS FOR THE AMERICAN RIVER AND THE UNITED STATES 201 ing new development to purchase flood insurance at actuarially sound rates for residual flood risk. Existing development should also purchase residual risk insurance, presumably at lower rates than new development. The federal govern- ment, working with private insurers, should develop provisions for sharing the cost of flood insurance premiums with communities and individuals who imple- ment structural and nonstructural flood damage reduction measures. · Before authorizing additional federal financial commitments for flood control on the American River, Congress should explicitly determine whether flood control on the American River constitutes a problem warranting federal involvement based on the presence of widespread national benefits or the limited ability of the community to provide for its own flood protection. . Congress should reform cost sharing requirements in the 1986 Water Resources Development Act (1) to increase the nonfederal cost share signifi- cantly above currently authorized levels, granting exemptions to the higher rate when it is demonstrated that flood control benefits are widespread or that the benefiting communities have limited ability to pay for justified flood protection and (2) to first define all cost sharing requirements as a share of total project costs and then make allowances for documented in-kind contributions to be counted toward the allocated cost share. · The Sacramento District and SAFCA should report the flood risk on the American River as a chance of flooding of 1 in 100 per year (or whatever figure is appropriate). Such annual risk figures should also be converted to the risk over longer time periods. For example, a 1 in 100 year risk results in a 40 percent chance over the next 50 years that floodwaters will overtop or breach the levees and inundate the Sacramento area. The 1986 flood in the area, which has been estimated as a 70-year flood event, should be used as a reference to convey the magnitude of larger and less frequent storms. · The Sacramento District should act with SAFCA and other stakeholders to build and publicize realistic scenarios to describe the consequences of a levee being overtopped. Descriptions of the vulnerability of the Sacramento and Natomas areas to storm events that overtop or breach the levee system should clearly address the extreme depth of flooding possible, the transportation difficul- ties that will be faced, and the problems involved in recovering from flooding in a closed basin. . The traditional term "level of protection" misleads the public and is not consistent with the analytical outcomes expected from the new USACE risk analysis procedures. Therefore, USACE should select a technically sound risk communication vocabulary and approach to communicating flood risk likelihood and consequences (see Chapters 4 and 5) and use it consistently in all its reports and presentations. In addition, USACE should work with FEMA, as well as other agencies, the states, and private insurers, to develop a standardized vocabulary that adequately conveys flood risk and vulnerability. · The Sacramento District and SAFCA should expand the consensus-build

202 FLOOD RISK MANAGEMENT AND THE AMERICAN RIVER BASIN ing efforts of the Lower American River Task Force for the purposes of (1) addressing the full array of purposes that were originally part of the study autho- rization, including water supply and allied purposes and (2) identifying institu- tional agreements that can employed to address these purposes. In this effort, the district and SAFCA might request the leadership and assistance of the State of California's Resources Agency. · USACE should issue guidance to its districts stressing the requirements to maintain a broader view of water resource planning purposes and to address those purposes throughout the planning process in the development and evaluation of institutional as well as engineering measures. · The state of California should not expect the flood control controversy on the American River to be resolved solely through federal leadership. The state needs to increase its participation in, and the resources it dedicates to, the basinwide water resources planning needed to build a consensus on technical and institutional strategies to manage competing water demands, including flood risk management. ~, ~ · For especially contentious disagreements, USACE should advise its Dis- tricts to facilitate but not dominate the local decisionmaking process. That role includes provision of technical analysis as well as initiation of and participation in decisionmaking forums (such as that initiated by SAFCA in the lower Ameri- can River). USACE districts should assist agencies of the federal and state governments and nongovernmental interests to cooperatively develop the data and models, understanding of risks and trade-offs, and possibilities in the formu- lation of alternatives early in the planning process.