The opinion of the court was delivered by: WADDY
This action for declaratory and injunctive relief challenges the constitutionality of the National Flood Insurance Program (the "Program"), 42 U.S.C. §§ 4001-4128,
and the administrative regulations implementing the Program, 24 C.F.R. §§ 1909.1-1925.14. Plaintiffs are the State of Missouri, 40 political subdivisions in 12 states, and 30 individual landowners and associations of landowners within federally designated flood zones.
Defendants are the Secretary of Housing and Urban Development, who is charged with establishment and implementation of the Program, 42 U.S.C. § 4011(a), the Deputy Administrator of the Federal Insurance Administration and the Assistant Administrator for Flood Insurance. The Court has jurisdiction of this substantial federal question, without regard to the amount in controversy, pursuant to 28 U.S.C. § 1331(a).
The National Flood Insurance Program is attacked on three independent grounds: (1) The State and local governments, on their own behalf and as parens patriae, challenge the Program as violative of constitutional principles of federalism and state sovereignty under the Tenth Amendment. (2) Plaintiff landowners and landowner organizations contend that the Program constitutes a taking of their land without the payment of just compensation as required by the Fifth and Fourteenth Amendments. (3) All plaintiffs claim that the Program provides inadequate due process protections and that it is an irrational exercise of Congressional power under the Fifth and Fourteenth Amendments.
The Court previously heard and, ruling from the bench, denied plaintiffs' Motion for a Preliminary Injunction.
At the conclusion of that hearing the parties agreed that no real questions of fact were in dispute and that this action involved strictly legal propositions. Consequently, this case is now before the Court on the parties' cross-motions for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure.
The National Flood Insurance Program
In August 1968, the National Flood Insurance Act of 1968 was enacted as Title XIII of the Housing and Urban Development Act of 1968.
Administered by the Department of Housing and Urban Development (HUD), the Program is a federally subsidized plan to protect property owners, and the United States, against flood damage resulting in ". . . personal hardships and economic distress which have required unforeseen disaster relief measures and have placed an increasing burden on the Nation's resources . . . ." 42 U.S.C. § 4001(a)(1). As a condition of eligibility for government supported flood insurance, the 1968 Act required HUD designated flood-prone communities to adopt local flood plain management measures to reduce or avoid flood damage. 42 U.S.C. §§ 4022, 4102.
The availability of subsidized flood insurance under the National Flood Insurance Act of 1968 did not, by itself, provide sufficient incentive to attract extensive local community enrollment in the Program. See S. Rep. No. 93-583, 93d Cong., 1st Sess. 4, reprinted in  U.S. Code Cong. & Ad. News 3217, 3220 (Senate Report). Finding a strong public policy favoring participation in a flood insurance plan of national scope, 42 U.S.C. § 4002(a)(5), in December 1973, Congress passed the Flood Disaster Protection Act of 1973.
The 1973 Act sought to significantly enhance the attractiveness of enrollment in the Program through a dual scheme of sanctions against both non-participating communities, as a whole, and against flood-prone designated property located in an area which is eligible for and participating in the Flood Insurance Program, but which is not covered by flood insurance.
Section 202 of the 1973 Act, as originally enacted, denied both federal financial assistance for acquisition or construction purposes
and federally-related financing by private lending institutions
for use in HUD designated flood-prone localities, unless the community in which the property is situated participated in the Program. This Section was amended by Section 703 of the Housing and Community Development Act of 1977
to remove the prohibition against the extension of financing by federally supervised private lending institutions in flood hazard areas of non-participating communities. The amendment left untouched the direct federal assistance sanctions which extend to direct federal grant aid as well as to FHA and VA home mortgages.
Section 102 of the 1973 Act, the counterpart of Section 202 applied to property located in participating communities where flood insurance is available under the Program, denies both direct federal financial assistance
and federally-related financing by private lending institutions
for acquisition or construction purposes, unless the property is covered by flood insurance.
In sum, Congress has mandated that in order to protect the nation's investment in property that is situated in a known hazardous area, the community in which that property is located must participate in the Program to be eligible for federal assistance, and further, that property located in a participating community must be covered by flood insurance not only to be eligible for direct federal assistance, but also to receive mortgage money from a federally supervised private institution. See Senate Report at 10. Acceptance into the Program is, of course, contingent upon the community's adoption of local flood plain management efforts consistent with HUD promulgated guidelines.
Tenth Amendment Challenge
The State and local government plaintiffs claim that the National Flood Insurance Program violates their sovereign powers and the principles of federalism embodied in the Tenth Amendment to the Constitution, which declares that:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
Those plaintiffs specifically complain of a loss of control over the traditionally local governmental function of regulating the community's land use; the cost of administering and enforcing the federally approved zoning regulations required for acceptance into the Program; and the loss to the local tax base resulting from a decline in the community's property values when Program sanctions attach.
While they recognize that the federal government may impose various conditions and terms upon the receipt of federal benefits by the states, plaintiffs contend that in this instance Congress overstepped the Tenth Amendment limitations on its power. They argue that the National Flood Insurance Act of 1968 presented the local governments with the usual choice between complying with the federal conditions and accepting the benefits of the Program, or not adopting the federal standards and foregoing the benefits, but that the broadened sanctions of the Flood Disaster Protection Act of 1973 changed the Program into a ...