Risk study: $21.8 billion in property in Oroville inundation path

Risk Management Solutions, a leading catastrophic risk modeling company headquartered in Silicon Valley, did a “what if?” modeling of a breach of the Oroville Dam. Risk Management Solutions estimated there is $21.8 billion in damageable property in the Oroville Dam inundation path. See RMS, What If The Oroville Dam Had Collapsed Completely? March 3, 2017.

Dam inundation is not covered by standard insurance policies. Only NFIP flood insurance covers flooding. But only buildings in 100 year flood plains are required to have flood insurance – and not even those buildings if they are behind FEMA certified levees. Risk Management Solutions compared the FEMA 100 year flood zones with the Oroville Dam inundation path, and found that areas with no flood insurance would include most cities: Biggs, Gridley, Live Oak, Oroville, South Oroville, Thermalito, and Yuba City.

There are similar issues with the San Luis Dam inundation path – and also billions of dollars of property at risk, with no insurance that would cover flooding from dam failure. Both Oroville Dam and San Luis Dam are known to have seismic issues – San Luis Dam has a Bureau of Reclamation initiated formal Corrective Action Study, and Oroville Dam has a mandate by the FERC five year Independent Consultant dam safety review to do a seismic re-evaluation. (See the Matt Weiser, Oroville Dam earthquake investigation may be needed, Sacramento Bee, November 29 2013.)

Failure of Oroville and San Luis Dams is not only an enormous economic risk for the Sacramento and San Joaquin Valleys, it is also an enormous risk for the California budget. Under the 1999 Paterno decision, the state of California could be liable for inverse condemnation if courts later found that the Department of Water Resource’s operations or maintenance of these large dams exposed people and property to unreasonable risk. The Paterno decision states:

“The condemnation clause of the California Constitution provides in part that ‘Private property may be taken or damaged for public use only [citation omitted] when just compensation, ascertained by a jury unless waived, has first been paid to, or into court for, the owner.’ (Cal. Const., art. I, § 19.) Where the government damages property without first paying for the right to do so, the owner may sue for inverse condemnation. [citations omitted.]”

“….the only way to determine whether a damaged private landowner has thereby been forced to contribute a compensable “disproportionate” share of the public undertaking is to determine whether the system, as designed, constructed, operated, and maintained, exposed him to an ‘unreasonable’ risk of harm, either individually or in relation to other landowners.’ ” [citations omitted.]”

It seems clear that it is in the best interests of both the public and the state of California that the seismic and structural issues with these 1960s era dams be carefully considered and adequately remediated, both in the interim and with long term solutions.

1 FEMA 100 year flood plains                                                                                       Source: RMS

2 Oroville inundation area                                                                                                  Source: RMS

Leave a Reply