TUNKHANNOCK TWP. — In fall 2011, about a month after the flooded Meshoppen Creek spilled over its banks and into their basement, Pete and Sharon Morgan applied for federal flood assistance to help them move out of their home.

They won’t get it, at least not anytime soon, due to a little-known policy the Federal Emergency Management Agency issued May 5.

It’s because of their gas lease with Chief Oil & Gas LLC. FEMA indefinitely banned the use of hazard mitigation assistance money for properties that could eventually host horizontal drilling and hydraulic fracturing, even if the leases don’t allow for development on the surface.

Under its hazard mitigation assistance program, FEMA pays to acquire properties in flood zones or reduce flood risks by raising or relocating structures. The agency creates these incentives so it doesn’t have to return with disaster dollars after every flood event.

The property title usually goes to local governments, which can use it as open space, allowing floodplains or wetlands to act as natural flood buffers.

The Morgans are one of eight households in Pennsylvania — five in Wyoming County and three in Lycoming County, according to the state Emergency Management Agency — whose applications for hazard mitigation assistance won’t yield payouts because of their gas leases.

The new policy was the subject of a Wednesday roundtable discussion at Wyoming County 911 Center in Tunkhannock, organized by U.S. Rep. Lou Barletta, R-11, Hazleton. FEMA deputy associate director for mitigation Roy Wright attended, along with state and local emergency managers and gas industry representatives.

“We, right now, need to have some direction on what to do, how to get these mitigated,” Wyoming County emergency director Gene Dziak told Wright. “Next month is three years (since the flood). We need to get these people out of these properties.”

Pennsylvania Emergency Management Agency chief deputy director Robert Full told Wright he wished he had cleared all 21 households that applied for assistance after Hurricane Irene and Tropical Storm Lee before the May 5 rule. It will only apply for future acquisitions, not those already approved, Mr. Wright said.

“We were very concerned from the moment it was announced,” Full said. “It was implemented like overnight.”

Barletta, along with Lou D’Amico and Kevin Moody of the Pennsylvania Independent Oil and Gas Association and Lauren Parker of the Marcellus Shale Coalition, all expressed dismay that the agency did not seek industry input on the policy.

Ziak and Full said the same about Pennsylvania emergency managers.

Wright confirmed FEMA did not conduct a formal comment-seeking approach. He also pointed out that this grant program always required a “clean title,” a property free of encumbrances, burdens or limitations.

That would likely have prevented FEMA involvement with a property undergoing conventional oil and gas development, when the well pad is positioned vertically over the producing part of the well bore. Now, leased properties with oil- or gas-rich shale below won’t stand up to FEMA’s “clean title” requirements.

“I’ll be honest with you, this has been difficult for us,” Wright said.

The policy might not last forever.

FEMA is waiting on studies by the U.S. Environmental Protection Agency, the Bureau of Land Management and the Department of Energy on the environmental effects of horizontal drilling and fracking, he said.

After those agencies release their findings, FEMA could take another look at what risks underground horizontal drilling and fracking might pose to open spaces and floodplain functions. The agency is willing to hear arguments from grant applicants, Mr. Wright said.

Morgan, the Meshoppen homeowner whose gas leased blocked his flood grant, said he was always skeptical about the process.

“I took matters into my own hands after nothing happened for a year,” he said.

He pointed out the embankment he built in his backyard and the staircase and cellar door he put in place of the basement door. In his basement, his utilities and water heater sit high up on cinder blocks.

Overall, he’s put in about $20,000 in flood-proofing, he said.

He and his wife still felt nervous during heavy rains until recently, when a local businessman used his equipment to build gentler curves and levies on Meshoppen Creek at no cost to the neighbors.

He wouldn’t name the man, who doesn’t like the recognition, he said.