HomeMy WebLinkAbout992307.tiff Pt. 61, App. A(3) 44 CFR Ch. I (10-1-98 Edition)
Insurer shall by the same written notice give This policy covers only a residential con-
the Insured the opportunity to add the coy- dominium building in a regular program
erage limits of the earlier policy to those of community. If the community reverts to
the later policy., as of the effective date of the emergency program status during the policy
later policy. term and remains as an emergency program
In either case, the Insured must pay the community at time of renewal, this policy
pro rata premium for the increased coverage cannot be renewed.
limits within .0 days of the written notice.
In no event shall the resulting coverage lim- INSURING AGREEMENT
its exceed the statutorily permissible limits Agreement of insurance between the Fed-
of coverage under the Act or the Insured's in- eral Emergency Management Agency
surable interest,whichever is less. (FEMA), as Insurer, and the Insured.
The Insurer shall make a refund to the In-
The Insurer insures the Insured against all
eared, according to applicable l Flood Direct physical loss by or from flood to the in-
• Insurance Program rules, of the premium for
the policy not being kept in effect. eared property,based upon:
For purposes of this paragraph W., the 1. The Insured having paid the correct
term effective date means the date coverage amount of premium; and
that has been in effect without any lapse was 2.The Insurer's reliance on the accuracy of
first placed in effect. In addition to the pro- the information and statements the Insured
visions of this paragraph W. for increasing has furnished: and
policy limits, the usual procedures for in- 3. All the terms of this policy, the National
creasing limits by mid-term endorsement or Flood Insurance Act of 1968, as amended, and
at renewal time, with the appropriate wait- Title 44 of the Code of Federal Regulations.
ing period, are applicable to the policy the On this basis, the Insured is insured up to
Insured chooses to keep in effect. the lesser of:
1. The actual cash value, except as provided
Article 9—What Law Governs in Article 8, not including any antique value,
This policy in governed by the flood incur- of the property at the time of loss; or
ance regulations issued by FEMA, the Na- 2. The amount it would cost to repair or re-
tional Flood Insurance Act of 1968, as amend- place the property with material of like kind
ed (42 U.S.C. 4001, et seq.) and Federal corn- and quality within a reasonable time after
mon law. the loss.
In witness whereof, the Insurer has executed Article T—Persons Insured
and attested these presents.
JAMES L. WrIT, The following are insured under this policy:
Director, Federal Emergency Management A. The named Insured condominium associa-
Ayeacy tion, unit owners in the insured residential
condominium building and legal representa-
(The information required under the terms of tives;
this policy has been approved by the Office of B. Any mortgagee and trustee earned in
Management and Budget under OMB control the application and declarations page, as well
number 3067-0C21). as any other mortgagee or loss payee deter-
mined to exist at the time of a loss See Ar-
[58 FR 62432, Nov. 26, 1993, as amended at 62 tide 10, paragraph L.), in the order of prece-
FR 8398, Feb. 25, 1997; 62 FR 66029, Dec. 17, dence and to the extent of their interest but
1997] for no more, in the aggregate, than the inter-
est of the named Insured.
APPENDIX A(3) TO PART 61 Article 2--Aelrzitions
FEDERAL EMERGENCY MANAGEMENT AGENCY, As used in this Policy:
FEDERAL INSURANCE ADMINISTRATION Act means the National Flood Insurance
STANDARD FLOOD INSURANCE POLICY Act of 1968 and any acts amendatory thereof.
Actual Cash Value means the replacement
[Issued Pursuant to the National Flood In- cost of an insured item of property at the
surance Act of 1968, or Any Acts Amendatory time of loss, less the value of physical depre-
Thereof(Hereinafter Called the Act), and Ap- ciation as to the item damaged.
plicable Federal Regulations in Title 44 of Application means the statement made and
the Code of Federal Regulations, Subchapter signed by the Insured, or the Insured's agent,
B] and giving information on the basis of which
the Insurer determines the acceptability of
RESIDENTIAL CONDOMINIUM BUILDING
A 38OCIATION POLICY the risk, the policy to be issued and the cor-
rect premium payment, which must accom-
Read the policy carefully. The coverage pany the application in order for the policy to
provided is subject to limitations, restric- be issued. The application is a part of this
tions and exclusions. flood insurance policy.
286 992307
Federal Emergency Management Agency Pt. 61, App. A(3)
Association means the group of unit owners walls, shear walls, posts, piers, pilings, or
which manages the described Residential Con- columns.
dominium Build'.ing. Emergency Program Community means a
Base flood means the flood having a one community wherein a Flood Hazard Bound-
percent chance of being equalled or exceeded ary Map(FHBM)is in effect and only limited
in any given year. amounts of insurance are available under the
Basement means any area of the building, Act.
including any sunken room or sunken por- Expense Constant means a flat charge per
tion of a room, having its floor subgrade policy term, paid by the Insured to defray the
(below ground level)on all sides. Federal Government's policywrlting and
Building means a walled and roofed strut- other expenses.
ture, other than a gas or liquid storage tank, Expiration Date means the ending of the in-
that is princl&ally above ground and affixed surance coverage provided by this policy on
to a permanent site, including a walled and the expiration date shown on the declare-
roofed building in the course of construction, Lions page.
alteration or repair and a manufactured (i.e., Federal policy fee means a flat charge per
mobile)home on a permanent foundation, sub- policy term, paid by the Insured to defray
ject to Article 6, paragraph H. certain administrative expenses incurred in
Cancellation means that ending of the in- carrying out the National Flood Insurance
surance coverage provided by this policy Program not covered by the expense con-
prior to the expiration date. scant. This fee was established by section
Coastal High Hazard Area means an area 1301(a)(1)(B)(11f) of the National Flood Insur-
subject to high velocity waters, including ance Act of 1968, as amended, 42 U.S.C. 4014,
hurricane wave wash and tsunamis. and is not subject to producers' commis-
Coinsurance means that the Insurer's li- skins, expense allowances, or state or local
ability for loss under the policy shall be in an premium taxes.
amount which is of no greater proportion to Flood means:
the amount of loss than the amount of Maur- A. A general and temporary condition of
ance which the Insured has purchased to partial or complete inundation of normally
cover the property bears, at the time of loss, dry land areas from:
to the value of the insured property under 1. The overflow of inland or tidal waters.
the terms and conditions of this policy, pro- 2. The unusual and rapid accumulation or
vide'', if the property is insured at the time runoff of surface waters from any source,
of loss in an amount equal to the lesser of 80 3. Mudslides (i.e., mudflows) which are
percent or more of its full replacement cost proximately caused by flooding as defined in
or the maximum amount of insurance avail- subparagraph A-2 above and are akin to a
able under the National Flood Insurance Pro- river of liquid and flowing mud on the sur-
gram, the loss will be adjusted, subject to the faces of normally dry land areas as when
policy's limit of coverage and all of the other earth is carried by a current of water and de-
terms and conditions of the policy, as if the posited along the path of the current.
amount of insurance and the value of the in- B. The collapse or subsidence of land along
sured property are equal. the shore of a lake or other body of water as
Condominium means a system of individual a result of erosion or undermining caused by
ownership of units in a multi-unit building or waves or currents of water exceeding the cy-
buildings or in single-unit buildings as to clical levels which result in flooding as de-
which each unit owner in the condominium fined in subparagraph A-1 above.
has an undivided interest in the common Improvements means fixtures, alterations,
areas of the building(s) and facilities that or additions comprising a part of the insured
serve the building(s), building, including the units within the
Declarations Page is a computer generated insured building.
summary of in::ormation furnished by the In- Manufactured home means a building trans-
eared in the application for insurance. The portable in one or more sections, which is
declarations page also describes the term of built on a permanent chassis and designed to
the policy, limits of coverage, and displays be used with or without a permanent founda-
the premium and the name of the Insurer. tion when connected to the required atilt-
The declarations page is a part of this flood ties. The term manufactured home does not
insurance police/. include park trailers, and other similar vehi-
Direct Physical Loss By or From Flood means Iles. To be eligible for coverage under this
any loss in the nature of actual loss of or policy, a manufactured home must be on a per-
physical damage, evidenced by physical manent foundation and, if located in a
changes, to the insured property (building or FEMA designated Special Hazard Area, must
personal property) which is directly and meet the requirements of paragraph H. of Ar-
proximately caused by a flood (as defined in title 6.
this policy). Mobile home means a manufactured home.
Elevated Building means a non-basement National Flood Insurance Program means the
building which has its lowest elevated floor program of flood insurance coverage and
raised above ground level by foundation floodplain management administered under
287
Pt. 61, App. M3) 44 CFR Ch. 1O0-1-98 Ellition)
the Act and applicable Federal regulations in Article 3—Losses Not Covered
title 44 of the Code of Federal Regulations, The Insurer only provides coverage for di-
subchapter B. rect physical loss by or from flood which means
Policy means the entire written contract
between the Insured and the Insurer, includ- the following are not covered:
ing this printed form, the application, and A. Compensation, reimbursement or allowance
declarations page, any endorsements which for:
may be issued and any renewal certificates 1. Loss of use of the insured property or
indicating that coverage has been instituted prem1eesr
for a new po&y and policy term. Only one 2. Loss of access to the insured property or
building, specifkully described by the Insured in premises.
the application, may be insured under this poi- 3. Loss of profits.
Icy, unless application to cover more than one 4. Loss resulting from interruption of busi-
building is made on a form or in a format ap- nese, profession, or manufacture.
proved for that purpose by the Federal Insur- 5. Any additional living expenses incurred
ance Administrator. while the insured building is being repaired
Post-FIRM building means a building for or is uninhabitable for any reason.
which the start of construction or substan- 6. Any increased cost of repair or recon-
tial improvement occurred after December struction as a result of any ordinance regu-
31, 1974, or on or after the effective date of 'sting reconstruction or repair except as pro-
the initial Flood Insurance Rate Map(FIRM) vided in Coverage D—Increased Cost of Corn-
for the community in which the building is pliance.
located, whichever is later. 7. Any other economic loss.
Pre-FIRM raved building means a building B. Losses from other casualties, including loss
for which the start of construction or sub- caused by:
stantial improvement occurred on or before 1. Theft, fire, windstorm, wind, explosion,
December 31, 1974, or before the effective earthquake, land sinkage, landslide, desta-
date of the initial FIRM for the community bilization or movement of land resulting
in which the building is located, whichever is from the accumulation of water in sub-
later. surface land areas, gradual erosion, or any
Probation Additional Premium means a flat other earth movement except such mudslides
charge per policy term paid by the Insured on (i.e., mudflows) or erosion as is covered
all new and renewal policies issued covering under the peril of flood.
property in a community that has been 2. Rain, snow, sleet, hail or water spray.
placed on probation under the provisions of 3. Land subsidence, sewer backup, or seep-
44 CFR 59.24. age of water unless, subject to additional
Regular Program Community means a com- deductibles as provided for at Article 7, (a)
munity wherein a FIRM is in effect and full there is a general and temporary condition
limits of coverage are available under the of flooding in the area, (b) the flooding is the
Act. proximate cause of the land subsidence,
Residential Condominium Building means a sewer backup, or seepage of water, (c) the
building owned by the members of a con- land subsidence, sewer backup, or seepage of
dominium association containing one or more water damage occurs no later than 72 hours
residential units and in which at least 75 per- after the flood has receded, and (d) the in-
cent of the floor area within the building is sured building must be insured, at the time of
residential. the loss, for at least 80 percent of its replace-
Residential Condominium Building Associa- ment cost or the maximum amount of insur-
tion Policy means a policy of flood insurance ance available under the National Food In-
coverage issued to an Association pursuant to surance Program.
the Act. 4. Freezing, thawing, or the pressure or
Special hazard area means an area having weight of ice or water.
special flood, mudslide (i.e., mudflow), and/or 5. Water, moisture, mildew, mold or
flood-related erosion hazards, and shown on a mudslide (i.e., mudflow) damage resulting
FI-IBM or FIRM as Zone A, AO, A1-30, AE, primarily from any condition substantially
A99, Ali, AR, VO, V1-30, VE, V, M or E. confined to the insured building or from any
Unit means a single family dwelling unit, condition which is within the Insured's con-
in a Residential Condominium Building. trol (including but not limited to design,
Valued policy means a policy contract in structural or mechanical defects, failures,
which the Insurer and the Insured agree on stoppages or breakages of water or sewer
the value of the property insured, that value lines, drains, pumps, fixtures or equipment).
being payable in event of total loss. C. Losses of the following nature:
Walled and Roofed means the building has 1. A loss which is already in progress as of
in place two or more exterior, rigid walls and 12:01 a.m. of the first day of the policy term,
the roof is fully secured so that the building or, as to any increase in the limits of cov-
will resist flotation, collapse and lateral erage which is requested by the Insured, a
movement. loss which is already in progress as of 12:01
288
Federal Emergency Management Agency Pt. 6L App. A(3)
a.m. on the date when the additional cov- • In the Units Within the Building, In-
erage becomes effective. stalled:
2. A loss from a flood which 1s confined to • Built-in Dishwashers.
the premises on which the insured property • Garbage Disposal Units.
Is located unless the flood is displaced over • Hot Water Heaters.
two acres of the premises. • Kitchen Cabinets.
3. A loss caused by the Insured's modifies- • Built-in Microwave Ovens.
tion to the insured property which mated- • Plumbing Fixtures.
ally increases the risk of flooding. • Radiators.
4. A loss caused intentionally by the In- • Ranges.
eared. • Refrigerators.
5. A loss caused by or resulting from power,
heating or cooling failure, unless such fall- • Stoves.
ore results from physical damage to power, 4. Materials and supplies to be used in con-
heating or cooling equipment situated on the structing, altering or repairing the building
premises where the described building or unit while stored inside a fully enclosed building:
is located, caused by a flood. a. At the property address; or
6. A loss to any building or contents located b. On an adjacent property at the time of
on property leased from the Federal Govern- loss; or
ment, arising from or incident to the flood- c. In case of another building at the prop-
ing of the property by the Federal Govern- erty address which does not have walls on all
ment where the lease expressly holds the sides, while stored and secured to prevent
Federal Government harmless, under flood flotation out of the building during flooding
insurance issued under any Federal Govern- (the flotation out of the building shall be
ment program, from loss arising from or in- deemed to establish the conclusive presump-
cident to the f.00ding of the property by the tion that the materials and supplies were not
Federal Government. reasonably secured to prevent flotation, in
which case no coverage is provided for such
Article 4—Property Covered (Subject to Articles materials and supplies under this policy).
3.5 and 6 Provisions, Which Also Apply to the 5. A building in the course of construction
Other Articles, Terms, and Conditions of This before it is walled and roofed subject to the
Policy,Including the Insuring Agreement) following conditions:
Coverage A—Building Property a. The amount of the deductible for each
loss occurrence before the building ie walled
This policy covers the Resideltial Condomin- and roofed is two times the bductible which
ium Building (the building) at the premises is selected to apply after the building is
which is described in the application, and in- walled and roofed;
eludes: b. Coverage is provided before the building
1. The entire building, for its real property is walled and roofed only while construction
elements, including all units within the is in progress, or if construction is halted,
building and the improvements within the only for a period of up to 90 continuous days
units. thereafter, until construction is resumed;
2. Additions and extensions attached to and
and in contact with the building by means of c. There is no coverage before the building
a common wall (but see Article 6, paragraph is walled and roofed where the lowest floor,
D.2.). including basement floor, of a non-elevated
3. Fixtures, machinery and equipment, in- building or the lowest elevated floor of an
eluding the following property, all while elevated building is below the base flood ele-
within the building, including-its units, as to vation in Zones AH, AE or A1-30 or is below
which coverage is not provided under "Cov- the base flood elevation adjusted to include
erage B—Personal Property": the effect of wave action in Zones VE: or Vl-
• Furnaces. 30. The lowest floor levels are based on the
• Wall Minors Permanently Installed. bottom of the lowest horizontal structural
• Permanently Installed Corner Cupboards, member of the floor in Zones VE or V1-30
Bookcases,Paneling,and Wallpaper. and the top of the floor in Zones AM. AE or
• Ventilating Equipment. Alm
• Fire Extinguishing Apparatus.
• Venetian Blinds. Coverage B—Personal Property
• CAwnings
andir Conditioners.
Copies. A. Subject to paragraphs B. and C. below,
• Awnings Canopies.
• Elevator Equipment. this policy covers personal property which is
• Fire Sprinkler Systems. in or on the insured, fully enclosed building
• Outdoor Antennas and Aerials. and is:
• Pumps and Machinery for Operating 1. Owned by the unit owners of the con-
them. dominium in common, i.e., as to which each
• Carpet Permanently Installed Over Un- unit owner has an undivided ownership inter-
finished Flooring. est; or
289
Pt. 61, App. A(3) 44 CFR Ch. I (10-1-98 Edition)
2. Owned solely by the Condominium Asso- ance applying under this policy to the prop-
dation and used exclusively in the conduct of arty covered.
the business affairs of the condominium.
9. Such personal property is also covered Coverage D—Increased Cost of Compliance
while stored at a temporary location, as ex- Coverage
pressly authorized under this policy (see Ar- Increased Cost of Compliance coverage
tide 5, paragraph B.2.). (Coverage D) is for the consequential loss
B. Coverage for personal property includes brought on by a floodplain management ordi-
the following property, whether owned by nance or law affecting repair and reconstruo-
the Association ar unit owner and subject to tion involving elevation, floodproofing, relo-
paragraph A. 1. and 2., above, for which coy- cation, or demolition (or any combination
erage is not provided (irrespective of the thereof) of a structure, after a direct loss
manner in which the property is installed in caused by a "flood" as defined by this policy.
or adapted to the building) under "Coverage (Floodproofing activities eligible for Coy-
A—Building Property": erage D and referred to hereafter in this poi-
• Clothes Washers. icy are limited to residential structures with
• Clothes Dryars. basements that satisfy the criteria of 44 CFR
• Food Freezers. 60.6 (b) or (c) and to non-residential strut-
• Air Conditioning Units Installed in the tures.)
Building. The limit of liability under this Coverage
• Portable Dishwashers. D (Increased Cost of Compliance)will not ex-
• Carpet, including wall-to-wall carpet, ceed 315.000. This coverage is only applicable
over finished flooring and whether or not it to policies with building coverage (Coverage
is permanently installed. A i and is in addition to the Building limit
• Carpet not permanently installed over you selected on your application, and ap-
unfinished flooring. pears on the Declarations Page. No separate
• Outdoor equipment and furniture stored deductible applies. The maximum amount
inside the dwel:.ing or another fully enclosed collectible under this policy for both Cov-
building at the property address. erage A (Building Property) and Coverage D
•Portable microwave ovens and "cook- (Increased Cost of Compliance), however,
out" grills, ovens and the like. cannot exceed the maximum permitted
C. Limitation:. Under this "Coverage }3--- under the Act.
Personal Property", the Insured shall not be eligibility
reimbursed for loss as to the following per- A structure covered under Coverage A—
sonal property to the extent the loss to any Building Property—sustaining a loss caused
one or more of such property exceeds. indi- by a "food" as defined by this policy must:
vidually or in total, $250.00: I. Be a structure that is a repetitive loss
• Artwork, including but not limited to, stwiict,Ure. ;' repetitive loss structure means a
paintings, etchings, pictures, tapestries, art structure, covered by a contract for flood in-
glass windows including their frames. statu- surance issued pursuant to the Act, that has
Incurred flood-related damage on 2 occasions
ary, marbles, and bronzes:
during a 10--year period ending on the date of
• Rare books: the event for which a second claim is made,
• Necklaces, bracelets, gems, precious or in which the cost of repairing the flood dam-
semi-precious stones, watches, articles of age, on the average, equaled or exceeded 25%
gold, silver, or:platinum; or o;. the market value of the structure at the
• Furs or any article containing fur which time of each sacs flood event. In addition to
represents its principal value. the current claim, the National Flood. Insur-
Coverc.ge C—Debris Removal a„ce Program must have paid the previous
qualifying claim, and the State or commu-
This insurance covers expense incurred in pity must have a cumulative, substantial
the removal of debris of, or or, or from the damage provision or repetitive loss provision
building or personal property covered here- in its flood plain management law or ordi-
under, which may be occasioned by loss nance being enforced against the structure;
caused by a flood. Under these provisions or
coverage extends to: 2. Be a structure that has had flood damage
1. Non-owned debris from beyond the in which the cost to repair equals or exceeds
boundaries of the described premises which 50% cf the market value of the structure at
is physically on the insured property (i.e., on the time of the flood event. The State or
the building or the personal property). community :oust have a substantial damage
2. Parts of the insured property anywhere: provision in its floodplain management law
a. On the described premises: and or ordinance being enforced against the
b. On property oeyond the boundaries of structure.
the described premises. This Coverage D will not pay for Increased
The total liability under this policy for Cost of Compliance to meet State or commu-
both loss to property and debris removal ex- nity floodplain management laws or ordi-
pense shall not exceed the amount of insur- fiances which exceed the minimunn criteria
290
Federal Emergency Management Agency Pt. 61, App. A(3)
at 44 CFR 60.3, except as provided in 1. above (2)When the building is repaired or rebuilt,
or a. or b.as follows: it must be intended for the same occupancy
a. Elevation or floodprooflng in any risk as the present building unless otherwise re-
zone to preliminary or advisory base flood quired by current floodplain management or-
elevations provided by FEMA which the dinances or laws.
State or local government has adopted and is Exclusions
enforcing for flood-damaged structures in Under this Coverage D (Increased Cost of
such areas. (This includes compliance activi- Compliance), we wilt not pay for:
ties in B, C, X, or D zones which are being (1)The cost associated with enforcement of
changed to zones with base flood elevations. any floodplain management ordinance or law
This also includes compliance activities in in communities participating in the Enter-
zones where base flood elevations are being gency Program.
increased, and a flood-damaged structure (2)The cost associated with enforcement of
must comply with the higher advisory base any ordinance or law that requires any in-
flood elevation.) Increased Cost of Compli- eared or others to test for, monitor, clean up,
ance coverage does not respond to situations remove, contain, treat, detoxify or neutral-
in B, C, X, or D zones where the community ize, or in any way respond to, or assess the
has derived its own elevations and is enforc- effects of pollutants. Pollutants include but
ing elevation or floodprooflng requirements are not limited to any solid, liquid, gaseous
for flood-damaged structures to elevations or thermal irritant or contaminant, includ-
derived solely by the community ing smoke, vapor, soot, fumes, acid, alkalis,
b. Elevation or floodprooflng above the chemicals and waste. Waste includes but is
base flood elevation to meet State or local not limited to materials to be recycled, re-
"freeboard" requirements, i.e., that a struc- conditioned or reclaimed.
ture must be elevated above the base flood (3) The loss in value to any covered build-
elevation. ing or other structure due to the require-
Under the minimum NF]P criteria at 44 ments of any ordinance or law.
CFR 60.3(b)(4). States and communities must (4) The loss in residual value of the
require the elevation or floodprooflng of undamaged portion of a building demolished
structures to the base flood elevation where as a consequence of enforcement: of any
elevation data are obtained from a Federal, State or local floodplain management law or
State, or other source. Such compliance ac- ordinance.
tivities are also eligible for this Coverage D. (5) Any increased cost of compliance under
This coverage will also pay for the Mere- this Coverage D:
mental cost, after demolition, or relocation, (a) Until the covered building is actually
of elevating or floodprooflng a structure dux- elevated, floodproofed, demolished or relo-
ing its rebuilding at the same or another site sated on the same or to another premises;
to meet State or local floodplain manage- and
ment laws or ordinances, subject to Exclu- (b)Unless the covered building is elevated,
orlon ('7). floodproofed, demolished, or relocated as
This coverage will also pay to bring a soon as reasonably possible after the loss,
flood-damaged structure into compliance not to exceed two years.
with State or local floodplain management (6) For any code upgrade requirements,
laws or ordinances even if the structure bad e.g., plumbing or electrical wiring, not ape-
received a variance before the present loss cifically related to the State or local flood-
from the applicable floodplain management plain management law or ordinance.
requirements. (7)For any compliance activities needed to
Conditions bring additions or improvements made after
(1) When a structure covered under Cov- the loss occurred into compliance with State
erage A—Building Property-sustains a loss or local floodplain management laws or ordi-
caused by a "flood" as defined by this policy, nances.
our payment for the loss under this Coverage (8) Loss due to any ordinance or law that
D will be for the increased cost to elevate, you were required to comply with before the
floodproof, relocate, demolish, or any tom- current loss.
bination thereof, caused by enforcement of (9) For any rebuilding activity to stand-
current State or local floodplain manage- ards that do not meet the NFIP's minimum
ment ordinances or laws. Our payment for el- requirements. This includes any situation
igible demolition activities will be for the where the insured has received from the
cost to demolish and clear the site of the State or community a variance in connec-
building or a ;portion thereof caused by en- ton with the current flood loss to rebuild
forcement of current State or local flood- the property to an elevation below the base
plain management ordinances or laws. Eligi- flood elevation.
ble activities for the cost of clearing the site (10) For any structure insured under a
will include those necessary to discontinue Group Flood Insurance Policy issued pursu-
utility service to the site and ensure proper ant to 44 CFR 6L17.
abandonment of on-site utilities. Other Provisions
291
Pt. 61, App. A(3) 44 CFR Ch. I 00-1-48 EditIon)
(1) increased Cost of Compliance coverage to any other benefits under the policy's,build-
will not be included in the calculation to de- ing coverage.
termite whether coverage meets the SUS/„ re- For reimbursement under this paragraph
placement cost requirement under Article 9 C. to apply, the following conditions must be
or for payment under Article 3.B.ii for ions met:
from land subsidence, sewer kirk;sp, or deep- a. The insured property must be in immi-
age of water. nent danger of sustaining flood damage; and
(2) All other conditions and prev-islore of b. The threat of flood damage must be of
the policy apply. such imminence as to lead a person of com-
mon prudence to apprehend flood damage;
Article 5—Speruu Previsions Applicable to and
Coverage A, ter, and C c. A general and temporary condition of
flooding in the area must occur, even if the
A. 7'his policy is not a valued policy. Incas flooding does not reach the insured property,
will be paid, pr ivided the Insured has pur- or a legally authorized official must issue an
chased a sufficient amount of ccverage, i.e., evacuation order or other civil order for the
in an amount equal to tee lesser of the value community in which the insured property is
of the damaged property under the terms and located calling for measures to preserve life
conditions of this police (and regardless of end property from the peril of flood.
whether the amount of ',nsurance purchased
is greater than such valor; or t e limit cf Article 6—:Property Not Covered
coverage permlt',ed under the Act. This policy shall not cover any of the fol-
B. Insured Proper;y, Covered Locations. The lowing:
building; and personal r:,pertg :ire covered • . Valuables and commercial property, mean-
while the property bi ioc.ted. ing:
1. At the property address show or.. the an' 1. 4 ccounts. bills, currency', deeds, evi-
plication; and fences of debt, money, coins, medals, post-
2. For 45 days at sir:cther ;:.lace above age stamps, securities, bullion. manuscripts,
ground level or outside of the spe:rial hail crd of her valuable papers or records, and per-
area, to which any of the insured propert:' sf)nal property used in a business.
shall necessarily be removed. in order :ri) p•o-- 2. Personal property used in connection
test and preserve it from i flood., due: to the w till .1.:y incidental commercial occupancy
imminent danger : ; lusi: ',provided. personal or use of the building.
property so re,:no'?HS_ must be ')'laced in a i. r':'33er Per wateer or in Ote open, mean-
fully enclosed „uiIdz rg -)r otherwise reason- liar:
ably protected frcrn t1:-:e eiemxen::s to be I. A building and personal property in the
sured against lass;. jr, 'n Bich cask. tb,:- rea.s m- bmzldi.i located entirely in, on, or over water
able expenses .t:cerre- `.,_ ?+i;•.ird.. In- or sec..urc of mean high tide, if the building
cludinly the v- :'.le la 1. J2?. at;.•' ,t. 4rev r iV!IS newly constr'uct,ed or substantially im-
ing Federal rr ...:: , .,,,..rig!,!. ra:-,e'i, In ncoT ng prove•fsor :r after October 1, 1982.
any of ,he 1* s °e[ c r , Ir cr,;i Personal property in the open.
away from t1 jl0 ! i) '. 1 be r.i.a- . . .S tructurm other than buildings, including:
horsed in at amen: , t es..eeri t;JOG.00. 1. Fences, retaining walls, seawalls, bulk-
This policy's deductible a3rictints as pro'rided heads, wharves, piers, bridges, and docks.
for at Article 7 t'::.a11 n at be applied to this 2. Indoor and outdoor swimming pools.
reimbursement, bu, shah =;e applied w ally i. Open str'scturee and personal property
other oenefitts ninth-c this policy :: ?overage. located in, on, or over water, including boat
C. Coverage For Certain. Loss Mitigation houses or any structure or building into
Measures. W1ier the nsz..rance under this poi- which boats are floated.
icy covers a buildings, reasonable expenses in- 4. Underground structures and equipment,
purred by the Insured for the purchase of the including wells, septic tanks and septic aye-
following :terns are also covered, in an agr- temsO
gregat m e aount net to exceed 375(1.00' D. Other real property. including:
1. Sandbags, Including sand to fill teem 1. Land. land values, lawns. trees, shrubs,
and plastic sheeting and lumber used in con- plants, and growing crops.
2. Those portions of walks, walkways,
nection with them:
decks, driveways, patios, and other surfaces,
Z. Fill for temporary levees;
all whether covered or not and all of what-
3. Pumps; angr ever kind of construction, located outside
4. Wood; the perimeter, exterior walls of the insured
all for the purpose of saving the building due !wilding.
to the imminent danger of a flood loss, in- E. Other personal property,meaning:
eluding the value of the lusured's own labor 1. Animals, livestock, birds, and fish.
at prevailing Federal rninimum wage rates. 2. Aircraft.
The policy's (eiidinc deductible amount, as 3. Any self-propelled vehicle or machine
provided for n Areess ;•, shah. net be applied and motor vehicle (other than motorized
to . ;s rein .ursemer.:.. ;•xi;, shall be applied equipment. pertaining to the service of the
292
Federal Eminyency Management Agency Pt. 61, App. A(3)
described unit or building, operated win- • Elevators, dumbwaiters, and relevant
cipally on the premises of the Insured, and equipment, except for such relevant equip-
not licensed for highway use) including their ment located below the base flood elevation if
parts and equipment. such relevant equipment was installed on or
4. Trailers on wheels and other rec- after October 1, 1967.
rational vehicles whether affixed to a per- G. Property below ground,meaning a building
manent foundation or on wheels. or unit and its contents, including personal
5. watercraft including their furnishings property and machinery and equipment,
and equipment. which are part of the building or unit, where
6. Personal property owned by or in the more than 49 percent of the actual cash value
care, custody or control of a unit owner, ex- of such building or unit is below ground, un-
cept for the property described in Article 4 less the lowest level is at or above the base
under "Coverage B—Personal Property", flood elevation by reason of earth having
paragraph B. of this policy. been used as an insulation material in con-
F. Basements, building enclosures lower than junction with energy efficient building tech-
the elevated floors of elevated buildings, and niques.
personal property as follows: H. Certain manufactured homes, meaning a
1. In a special hazard area, at an elevation manufactured (i.e., mobile) home located or
lower than the lowest elevated floor of an placed within a FEMA designated Special
elevated Post-FIRM building, including a man- Hazard Area that is not anchored to a perma-
ufactured(i.e., mobile) home: nent foundation to resist notation,, collapse,
a. Personal property or lateral movement:
b. Building enclosures, equipment, machin- I. By over-the-top or frame ties to ground
ery, fixtures and components, except for the anchors;or
required utility connections and the foot- 2. In accordance with manufacturer's spool--
Inge, foundation, posts, pilings, piers or fications; or
other foundation walls and anchorage sys- 3. In compliance with the community's
e
tern as required for the support of the build- unless it is management requirements;
emeobil
ing.
it a manufactured (i.e., mobile) home
in-
2.In a basement as defined in Article 2: on a permanent foundation continuously a. Personal property. sured by the National Flood Insurance Pro-
b. Building equipment, machinery, fixtures gram at the same site at least since Septem-
and corn bet 30, 1982.
ponents, including finished walls, L Containers such as but not limited to gas
floors, ceilings and other improvements, ex- tanks or liquid tanks.
cent for the required utility connections, f3- J. Buildings and their contents mate ineli-
berglass insulation, drywalls and sheetrock gible for flood insurance pursuant to the pro-
walls, and ceilings but only to the extent of visions of the Coastal Barrier Resources Act,
replacing drywalls and sheetrock walls in an 16 U.S.C. 3501 et seq., and the Coastal Barrier
unfinished manner (i.e., nailed to framing Improvement Act of 1990, Pub. L. 101-591, 16
but not taped, painted, or covered). U.S.C. 3501 et seq.
3. Provided, with regard to both 1. and 2.,
above, the following building and personal Article 7—Deductibles
property items connected to a power source A. Each loss to the insured property is sub-
and installed in their functioning location jest to a deductible provision under which
are covered so long as the Insured has put- the Insured bears a portion of the loss before
chased building and personal property cov-
erage,as appropriate: payment ie made under the policy.
• Sump pumps. B. The loss deductible shall apply sepa-
• Well water tanks and pumps. rately to each building and personal property
coverage loss including, as to each, any ap-
• Oil tanks and the oil in them. purtenant structure loss and debris removal
• Cisterns and the water in them. expense.
• Natural gas tanks and the gas in them. C. For any flood insurance policy issued or
• Pumps and/or tanks used in conjunction renewed for any property located in Zones A,
with solar energy. AO, AH,Al-A30, AE, AR, AR/AE,AR/AH, AR/
• Furnaces. AO, AR/A1-A30, ARJA, VO, V1-V30, VE, or V
• Hot water heaters. where the rates available for buildings built
• Clothes washers and dryers. before the effective date of the initial Flood
• Food freezers and the food in them. Insurance Rate Map or December 21, 1974,
• Air conditioners. whichever is later, are used to compute the
• Heat pumps. premium, the amount of the deductible for
• Electrical junction and circuit breaker each loss occurrence is determined as fol-
boxes. lows: The Insurer shall be liable only when
• Stairways and staircases attached to the such loss exceeds 51.000, or the amount of
building which are not separated from the any other deductible that the Insured se-
building by elevated walkways. looted when it applied for this policy or sub-
• Clean-up. sequently by endorsement.
293
Pt. 61, App. A.(3) 44 CFR Ch. I (10-1-98 Edition)
D. For policies other than those described perimeter walls of at least 800 square feet
in paragraph C. above, the amount of the de- nor do they apply to any loss where insured
ductible for each loss occurrence is deter- property is abandoned and remains as debris
mined as follows: The Insurer shall be liable at the property address following a loss.
only when such loss exceeds $500.00, or the F. If the building sustains a total loss or if
amount of any higher deductible which the the Insurer should pay the entire building
Insured selected when it applied for this pol- loss proceeds under these Replacement Cost
icy or subsequently by endorsement. Provisions, there is no requirement that the
E. Notwithstanding the applicable deduct- building be rebuilt at the insured property
ible in paragraphs C. or D. above, an addi- address.
tional deductible in the sum of $250.00 shall
apply separate:'.y to each building and con- Article 9—Coinsurance(For Building Coverage
tents loss before payment is made under the Only)
policy for land subsidence, sewer backup, or
seepage of water as provided for in Article 3, A. In consideration of the rate and form
paragraph B.3. under which this policy is written, it is ex-
pressly stipulated and made a condition of
Article 8—Replacement Cost Coverage(For this contract that the Insurer's liability for
Building Coverage Only) loss under this policy shall be in an amount
Subject to Articles 7 and 9, this policy will, which is of no greater proportion to the
in the event of a loss for which there is cov- amount of loss than the amount of insurance
erage and subject to the limits of building which the Insured has purchased to cover the
coverage purchased, pay the full cost of re- insured property bears, at the time of loss,
pair or replacement of the damaged parts of to
the replacement cost value of the insured
the building without deduction for deprecia- property, as follows:
tion. Under this Article: 1. If at the time of loss the total amount of
A. The following outdoor property, wheth- insurance applicable to the insured property
er attached to the insured building or not, is the lesser of 80 percent or more of the full
are excluded from Replacement Cost Cov- replacement cost of the insured property or
erage: Antennas, aerials, carpeting, awnings, the maximum amount of insurance available
appliances, and other outdoor equipment. under the National Flood Insurance Program,
B. Carpeting inside the insured building the loss will be adjusted, subject to the poi-
and laid over or affixed to finished or unfin- icy's limit of coverage and all of the other
ished flooring is excluded from Replacement terms and conditions of this policy, as If the
Coat Coverage. amount of insurance and the value of the in-
c. The Insurer's liability for loss under eared property are equal.
this policy shall not exceed the smallest of 2. If at the time of loss the Insured has not
the following amounts: purchased the maximum amount of insur-
1. The limit of liability of this policy appli- ance available under the National Flood In-
cable :,o the damaged or destroyed building; surance Program, or if the replacement cost
or value of the covered property at the time of
2. The cost to repair or replace the building the loss times 80 percent is greater than the
or any part t:aereof with material of like amount of insurance purchased to cover the
kind and quality on the same premises and property, the full cost of replacement or re-
intended for the same occupancy and use; or pair of the insured property, subject to the
3. The amount actually and necessarily ex- terms and conditions of this policy, arising
pended in repairing or replacing said building out of a covered loss, shall not be paid and
or any part thereof intended for the same oc- Payment shall be made as follows:
cupancy and use. To the extent the Insured has not pur-
D. The Insurer shall not be liable for any chased insurance in an amount equal to the
loss on a Replacement Cost Coverage basis lesser of 80 percent or more of the full re-
unless and until actual repair or replacement placement cost of the insured property at
of the damaged building, or parts thereof, is the time of loss or the maximum amount of
completed. insurance available under the National Flood
E. These Replacement Cost Provisions do Insurance Program, the Insured will not be re-
not apply to any manufactured (i.e., mobile) imbursed fully for a loss. The amount of loss
home which when assembled is not at least 16 to be paid in such cases shall be determined
feet wide or does not have an area within its in accordance with the following formula:
Insurance Carried x Amount of Loss = Limit of Recovery
Insurance Required
294
Federal Emergency Management Agency P. 61, App. A(3)
a. Example .1: The insurance carried is under the National Flood Insurance Program)
2600,000.00, the replacement cost value of the and the amount of the loss is$240,000.00. The
building is 51,000,000.00 (which is available formula is applied as follows:
$500,000.0(2 x$240,000.00=$500,000.00 x$240,000.00=$149,500.00 Limit of Rc covery'
$1,000,000.00x80% $800,000.00
*(8150,000 Less Deductible)The balance of the loss, there is other insurance made available
loss in the sum of$90,500.00 is not covered. under the Act, in the name of a unit owner
b. Example 2: The insurance carried is which provides coverage for the same loss
$1,850,000.00, the replacement cost value of covered by this policy, this policy's coverage
the building is 22,000,000.00 and the amount of shall be primary and not contributing with
lose Is 21,000,000.00. The formula is not ap- such other insurance.
plied because $1,850,000 exceeds $1,600,000 D. Amendments and Waivers, Assignment:
(22,000,000x80%). The Insured is paid the full This Standard Flood Insurance Policy cannot
amount of the loss(S1 Million). be amended nor can any of its provisions be
B. In determining if the whole amount of waived without the express written consent
insurance applicable to the building is 80 per- of the Federal Insurance Administrator. No
cent or more of the full replacement cost of action the Insurer takes under the terms of
such building: this policy can constitute a waiver of any of
1. The replacement cost value of any its rights. Except in the case of 1. a contents
covered building property described in Article only policy and 2. a policy issued to cover a
4 shall be included and the replacement cost building in the course of construction, as-
value of any building property described in signment of this policy, in writing, is allowed
Article 4 which constitutes property not coy- upon transfer of title.
ered under this policy shall not be included. E. Voidance, Reduction or Reformation of the
2. Regarding improvements, only the re- Coverage:
placement cost value of improvements in- 1. Voidance:This policy shall be void and of
stalled by the Association shall be included. no legal force and effect in the event that
any one of the following conditions occurs:
Article 10—General Conditions and Provisions a. The property listed on the application is
A. Pair and Set Clause: If there is loss of an not eligible for coverage, in which case the
article which is part of a pair or set, the policy is void from its inception;
measure of loss shall be a reasonable and fair b. The community in which the property is
proportion of the total value of the pair or located was not participating in the National
set, giving con3lderation to the importance Flood Insurance Program on the policy's incep-
of said article, but such loss shall not be con- tion date and did not qualify as a panicipat-
strued to mean total loss of the pair or set. ing community during the policy's term and
B. Concealment, Fraud: This policy shall be before the occurrence of any loss;
void, nor can this policy be renewed or any c. If, during the term of the policy, the par-
new flood insurance coverage be issued to the ticipation in the National Flood Insurance
Insured if any person insured under Article 1, Program of the community in which the prop-
paragraph A., whether before or after a loss, erty is located ceases, in which case the pol-
has: icy shall be deemed void effective at the end
1. Sworn falsely, or willfully concealed or of the last day of the policy year :in which
misrepresented any material fact; or such cessation occurred and shall not be re-
2. Done any fraudulent act concerning this mewed.
insurance (see paragraph E.1.d.below); or In the event the voided policy included 3
3. Willfully concealed or misrepresented policy years in a contract term of 3 years, the
any fact on s. "Recertification Question- Insured shall be entitled to a pro-rata refund
nafre," which causes the Insurer to issue a of any premium applicable to the remainder
policy based on a premium amount which is of the policy's term;
less than the premium amount which would d. In the event any Insured or its agent
have been payable were it not for the has:
misstatement of fact (see paragraph F. (1) Sworn falsely; or
below). (2) Fraudulently or willfully concealed or
C. Other Insurance: If a loss covered by this misrepresented any material fact including
policy is also covered by other insurance, facts relevant to the rating of this policy in
whether collectible or not, the Insurer will the application for coverage, or upon any re-
pay only the proportion of the loss that the newal of coverage, or in connection with the
limit of liability that applies under this pol- submission of any claim brought under the
icy bears to the total amount of insurance policy, in which case this entire policy shall
covering the loos, provided, if at the time of be void as of the date the wrongful act was
295
Pt. 61, App. A(3) 44 CFR Ch. I (10-1-98 Ecltlon)
committed or from its inception if this policy the Insurer shall give a notice of additional
Is a renewal policy and the wrongftil act oc- premium due and the right of reformation
curred in connection with an application for shall continue in force for the benefit only of
or renewal or endorsement of a policy issued the mortgagee or trustee, up to the amount
to the Insured in a prior year and affects the of the Insured's indebtedness, for 30 days
rating of or premium amount received for after written notice to the mortgagee or
this policy. Refunds of premiums, if any, trustee.
shall be subject to offsets for the Insurer's F. Policy Renewal: The term of this policy
administrative expenses (including the pay- commences on its inception date and ends on
ment of agent's commissions for any voided its expiration date, as shown on the declara-
policy year) in connection with the issuance lions page which is attached to the policy.
of the policy; The Insurer is under no obligation to:
e. The premium submitted is less than the 1. Send the Insured any renewal notice or
minimum set forth in 44 CFR 81.10 in connec- other notice that the policy term is coming
tion with any application for a new policy or to an end and the receipt of any such notice
policy renewal, in which case the policy is by the Insured shall not be deemed to be a
void from its inception date. waiver of this provision on the insurer's
2. Reduction of Coverage Limits or Reforma- part.
Hon: In the event that the premium payment 2. Assure that policy changes reflected in
is not sufficient (whether evident or not) to endorsements submitted during the policy
purchase the amount of coverage requested term are included in any renewal notice or
by an application, renewal, endorsement, or new policy sent to the Insured. Policy changes
other form and paragraph E.1.d. does not includes the addition of any increases in the
apply, then the policy shall be deemed to pro- amounts of coverage.
vide only such coverage as can be purchased This policy shall not be renewed and the
for the entire term of the policy, for the coverage provided by it shall not continue
amount of premium received, subject to in- into any successive policy term unless the re-
creasing the amount of coverage pursuant to newel premium payment is received by the
44 CFR 61.11; provided, however: Insurer at the office of the National Flood In-
a. If the insufficient premium is discovered nuance Program within 30 days of the expire-
by the Insurer;prior to a loss and the Insurer tion date of this policy, subject to paragraph
can determine the amount of insufficient E. above. If the renewal premium payment is
premium from information in its possession mailed by certified mail to the Insurer prior
at the time of its discovery of the insuffi- to the expiration date, it shall be deemed to
dent premium. the Insurer shall give a no- have been received within the required 30
tine of additional premium due, and if the days. The coverage provided by the renewal
Insured remits and the Insurer receives the ad- policy is in effect for any loss occurring dur-
ditional premium required to purchase the ing this 30-day period even if the loss occurs
limits of coverage for each kind of coverage before the renewal premium payment is re-
as was initially requested by the Insured ceived, so long as the renewal premium pay-
within. 30 days from the date the Insurer ment is received within the required 30 days.
gives the Instred written notice of addi- In all other cases, this policy shall terminate
tional premium due, the policy shall be re- as of the expiration date of the last, policy
formed, from its inception date, or, in the term for which the premium payment was
case of an endorsement, from the effective timely received and in that event, the In-
date of the endorsement, to provide flood in- surer shall not be obligated to provide the
surance coverage in the amount of coverage Insured with any cancellation, termination,
initially requested. policy lapse, or policy renewal notice.
b. If the insufficient premium is discovered In connection with the renewal of this poi-
by the Insurer at the time of a loss under the icy, the Insured may be requested during the
policy, the Insurer shall give a notice of pre- policy term to recertify, on a Recertification
mium due, and if the Insured remits and the Questionnaire the Insurer will provide, the
Insurer receive:. the additional-premium re- rating information used to rate the most
quired to purchase (for the current policy recent application for or renewal of insur-
term and the previous policy term, if then in- ance.
sured) the liml''.us of coverage for each kind of Notwithstanding the Insured's responsibil-
coverage as was initially requested by the ity to submit the appropriate renewal pre-
Insured within 30 days from the date the In- mium in sufficient time to permit its receipt
surer gives the Insured written notice of ad- by the Insurer prior to the expiration of the
ditional premium due, the policy shall be re- policy being renewed, the Insurer has. estab-
formed, from its inception date, or, in the fished a business procedure for mailing re-
case of an endorsement, from the effective newal notices to assist Insureds in meeting
date of the endorsement, to provide flood in- their responsibility. Regarding the business
surance coverage in the amount of coverage procedure, evidence of the placing of any
initially requested. such notices into the U.S. Postal Service, ad-
c. Under subparagraphs a. and b. as to any dressed to the Insured at the address appear-
mortgagee or trustee named in the policy, ing on its most recent application or other
296
Federal Emergency Management Agency Pt. 61, App. A(3)
appropriate form (received by the Insurer a. A policy of flood insurance has been ob-
prior to the mailing of the renewal notice), twined or is being obtained in substitution
does, In all respects, for purposes of the Na- for this policy and the Insurer has received a
tional Flood Insurance Program, preeump- written concurrence in the cancellation from
tively establish delivery to the Insured for any mortgagee of which the Insurer has ao-
all purposes irrespective of whether the In- tual notice, or
eared actually received the notice. b. The Insured has extinguished the in-
However, in the event the Insurer deter- sured mortgage debt and is no longer re-
mines that, through any circumstances, any quired by the mortgagee to maintain the
renewal notice was not placed into the U.S. coverage. Refund of any premium, under this
Postal Service, or, if placed, was prepared or subparagraph 1., shall be pro rata but with
addressed in a manner which the Insurer de- retention of the expense constant and the Fed-
termines could preclude the likelihood of its oral policy fee.
being actually and timely received by the In- 2. The Insured cancels because the Insurer
eared prior to the due date for the renewal has determined that the property is not, in
premium, the following procedures shall be fact, in a special hazard area; and the Insured
followed: was required to purchase flood insurance cov-
In the event that the Insured or its agent erage by a private lender or Federal agency
notified the Insurer, not later than 1 year pursuant to Public Law 93-234, section 102
after the date on which the payment of the and the lender or
renewal premium was due, of a nonreceipt of agency no longer requires
the retention of the coverage. In this event,
a renewal notice prior to the due date for the if no claims have paid pending,been or are
renewal premium, which the Insurer deter- the premium payments will be refunded in
mines was attributable to the above cis- full, according to applicable National Flood
cumstance, the Insurer shall mall a second Insurance Program regulations.
bill providing a revised due date, which shall K. Loss Clause: Payment of any lose under
be 30 days after the date on which the bill is this policy shall not reduce the amount of in-
mailed. surance applicable to any other loss during
If the renewal payment requested by rea-
son of the second bill is not received by the the policy term which arises out of a separate
revised due date, no renewal shall occur and
under; provided, that all loss arising out of a
occurrence of the peril insured against here-
the policy shall remain as an expired policy as
of the expiration date prescribed on the policy. continuous or protracted occurrence shall be
G. Conditions Suspending or Restricting In- deemed to constitute loss arising out of a
surancc:Unless otherwise provided in writing single occurrence.
added hereto, the Insurer shall not be liable L. Mortgage Clause: (Applicable to building
for loss occurring while the hazard is in- coverage only and effective only when the
creased by any means within the control or policy is made payable to a mortgagee or
knowledge of the Insured. trustee named in the application and. declara-
H. Liberalizati.nn clause: If during the period tions page attached to this policy or of whom
that insurance '.s in force under this policy or the Insurer has actual notice prior to the
within 45 days prior to the inception date payment of loss proceeds under this policy.)
thereof, should the Insurer have adopted Loss, if any, under this policy, shall be pay-
under the Act, any forms, endorsements, able to the aforesaid as mortgagee or trustee
rules or regulations by which this policy as interest may appear under all present or
could be extended or broadened, without ad- future mortgages upon the property de-
ditional premium charge, by endorsement or scribed in which the aforesaid may have an
substitution of form, then, such extended or interest as mortgagee or trustee, in order of
broadened insurance shall inure to the bens- precedence of said mortgages, and this insur-
fit of the Insured as though such endorse- ance, as to the interest of the mortgagee or
ment or substitution of form had been made. trustee only therein, shall not be 'avail-
Any broadening or extension of this policy to dated:
the Insured's benefit shall only apply to 1. By any act or neglect of the mortgagor
losses occurring on or after the effective date or owner of the described property; nor
of the adoption of any forms, endorsements, 2. By any foreclosure or other proceedings
rules or regulations affecting this policy. or notice of sale relating to the property; nor
I. Alterations end Repairs: The Insured may, 3. By any change in the title or ownership
at the Insured's own expense, make alter- of the property; nor
ations, additions and repairs, and complete 4. By the occupation of the premises for
structures in the course of construction. purposes more hazardous than are permitted
J. C'ancellatior. of Policy By Insured: The In- by this policy, provided, that it in case the
sured may cancel this policy at any time but mortgagor or owner shall neglect to pay any
a refund of premium money will only be premium due under this policy, the rnortga-
made when: gee or trustee shall, on demand, pay the
1. The Insured cancels a policy having a same.
term of 3 years, on an anniversary date, and Provided,also, that the mortgagee or trust-
the reason for the cancellation is that: ee shall notify the Insurer of any change of
297
Pt. 6L App. A(3) 44 CFR Ch. I (10-1-98 Edition)
ownership or occupancy of the building or in- d. The actual cash value or replacement
crease of hazard which shall come to the cost, whichever is appropriate, of each darn-
knowledge of said mortgagee or trustee and, aged item of insured property and the
unless permitted by this policy, it shall be amount of damages sustained;
noted thereon and the mortgagee or trustee e. The names of mortgagees or anyone else
shall, on demand, pay the premium for such having a lien, charge or claim against the in-
increased hacard for the term of the use sired property;
thereof; otherwise, this policy shall be null f. Details as to any other contracts of in-
and void. surance covering the property, whether valid
If this policy is cancelled by the Insurer, it or not;
shall continue in force for the benefit of the g. Details of any changes in ownership,
mortgagee or trustee for 30 days after writ- use, occupancy, location or possession of the
ten notice to the mortgagee der trustee of insured property since the policy was issued;
such cancellation and shall then cease. h. Details as to who occupied any insured
Whenever the Insurer shall pay the molt- building at the time of loss and for what pur-
gagee or trustee any sum for loss under this pose; and
policy and shall claim that, as to the mortga- 1. The amount the Insured claims is due
gor or owner, no liability therefor existed, under this policy to cover the loss, including
the Insurer s:sall, to the extent of such pay- statements concerning:
ment, be thereupon legally subrogated to all (1)The limits of coverage stated in the pot-
the rights.of the party to whom such pay- icy; and
ment shall be made, under all securities held (2) The cost to repair or replace the darn-
as collateral to the mortgage debt, or may, aged property (whichever costs less).
at its option, pay to the mortgagee or trust- 4. Cooperate with the Insurer's adjuster or
ee the whole principal due or to row due on representative in the investigation of the
the mortgage with interest, and shall there- claim;
upon receive a full assignment and transfer 5. Document the loss with all bills, re-
of the mortgage and of all such other securi- ceipts, and related documents for the
ties, but no subrogation shall impair the amount being claimed;
right of the mortgagee or trustee to recover 6. The insurance adjuster whom the Insurer
the full amount of said mortgagee's or trust- hires to investigate the claim may furnish
ee's claim. the Insured with a proof of loss form, and she
M. Mortgagee Obligations: If the Insured or be may help the Insured to complete it.
fails to render proof of loss, the named mort- However, this is a matter of courtesy only,
gagee or trustee, upon notice, shall render and the Insured must still send the insurer a
proof of loss in the form herein specified proof of loss within 60 days after the loss
within 60 days thereafter and shall be subject even if the adjuster does not furnish the
to the provisions of this policy relating to ap- form or help the Insured complete it. In com-
praised and time of payment and of bringing plating the proof of loss. the Insured must
suit. use its own judgment concerning the amount
N. Loss Payable Clause (Applicable to con- of loss and the justification for the amount.
tents items only): Loss, if any, shall be ad- The adjuster is not authorized to approve
justed with t:oe Insured and shall be payable or disapprove claims or to tell the Insured
to the Insured and loss payee as their inter- whether the claim will be approved by the
ests may appear. Insurer.
O. Requirements in Case of Loss: Should a 7. The Insurer may, at its option, waive the
flood loss occur to the insured property, the requirement for the completion and filing of
Insured must: a proof of loss in certain cases, :in which
1. Notify the Insurer in writing as soon as event the Insured will be required. to sign
practicable; and, at the Insurer's option, swear to an ad-
2. As soon as reasonably possible, separate juster's report of the loss which includes in-
the damaged and undamaged property, put- formation about the loss and the damages
ting it in the best possible order so that the needed by the Insurer in order to adjust the
Insurer may examine it; and claim.
3. Within 6) days after the loss, send the 8. Any false statements made in the course
Insurer a proof of loss, which is the Insured's of presenting a claim under this policy may
statement as to the amount it is claiming be punishable by fine or imprisonment under
under the policy signed and sworn to by the the applicable Federal laws.
Insured and Furnishing the following infor- P. Options After a Loss: Options the Insurer
mation: may, in its sole discretion, exercise after loss
a. The date and time of the loss; include the following:
b. A brief acplanation of how the loss hap- 1. Evidence of Loss: If the Insurer specifi-
pened; cally requests it, in writing, the Insured may
c. The Insured's interest in the property be required to furnish a complete inventory
damaged (for example, "owner") and the in- of the destroyed, damaged and undamaged
Wrests, if any, of others in the damaged property, including details as to quantities,
property; costs, actual cash values or replacement cost
298
Federal Emergency Management Agency Pt. 61, App„ A(3)
(whichever is appropriate), amount of lose ("salvage") after a loss and reduce the
claims, and any written plans and specifics- amount of the loss proceeds payable to the
tions for repair of the damaged property Insured under the policy by the value of the
which can reasonably be made available to salvage.
the Insurer. 8. Appraisal:If at any time after a loss, the
2. Examination Under Oath and Access to the Insurer is unable to agree with the Insured
Condominium As7ocIation's Articles of Assocla- as to the actual cash value—or, if applicable,
flan or Incorporation, Property Insurance Poll- replacement cost—of the damaged property
ciew, and Other Condominium Documents: The so as to determine the amount of lose to be
Insurer may require the Insured to: paid to the Insured, then:
a. Show the Insurer, or its designee, the 1. On the written demand of either the In-
damaged property; surer or the Insured, each shall select a com-
b. Be examined under oath by the bumper petent and disinterested appraiser and notify
or its designee; the other of the appraiser selected within 20
c. Sign any transcripts of such examine- days of such demand.
tions; and 2. The appraisers shall first select a corn-
d. At such reasonable times and places as petent and disinterested umpire and failing,
the Insurer may designate, permit the In- after 15 days, to agree upon such umpire,
surer to examine and make extracts and cop- then on the Insurer's request or the Insured's
ies of any condominium documents, including request, such umpire shall be selected by a
the Articles of Association or Incorporation, judge of a court of record in the State in
Bylaws, rules and regulations, Declarations which the insured property is located.
of the condominium, property insurance poll- 3. The appraisers shall then appraise the
ties, and other condominium documents; and loss, stating separately replacement cost, ac-
all books of accounts, bills, invoices and teal cash value and loss to each item; and,
vouchers, or certified copies thereof if the failing to agree, shall submit their dif-
originals are lost, pertaining to the damaged ferences, only, to the umpire.
property. 4. An award in writing, so itemized, of any
3. Options to Repair or Replace: The Insurer two (appraisers or appraiser and umpire)
may take all or any part of the damaged when filed with the Insurer shall determine
property at the agreed or appraised value the amount of actual cash value and loss or,
and, also, repair, rebuild or replace the prop- should this policy's replacement cost provi-
erty destroyed or damaged with other of like stuns apply, the amount of the replacement
kind and quality within a reasonable time, cost and loss.
on giving the Insured notice of the Insurer's 5. Each appraiser shall be paid by the party
intention to do so within 30 days after the re- selecting him or her and the expenses of ap-
ceipt of the proof of loss heroin required praisal and umpire shall be paid by both par-
under paragraph O. above. ties equally.
4. Adjustment Options: The Insurer may ad- T. Action Against the Insurer: No suit or ac-
just loss to any insured property of others tion on this policy for the recovery of any
with the owners of such property or with the claim shall be sustainable in any court of
Insured for their account. Any such insur- law or equity unless all the requirements of
ance under this policy shall not inure di- this policy shall have been complied with,
rectly or indirectly to the benefit of any car- and unless commenced within 12 months
rier or other bat lee for hire. next after the date of mailing of notice of
Q. When Loss Payable: Loss is payable with- disallowance or partial disallowance of the
in 60 days after the Insured files its proof of claim. An action on such claim against the
loss (or within 90 days after the insurance Insurer must be instituted, without regard to
adjuster files an adjuster's report signed and the amount in controversy, In the United
sworn to by the Insured in lieu of a proof of States District Court for the district in
loss) and ascertainment of the loss is made which the property shall have been situated.
either by agreement between the Insured and U. Subrogation: In the event of any pay-
the Insurer in writing or by the filing with ment under this policy, the Insurer shall be
the Insurer of an award as provided in pare- subrogated to all the Insured's rights of re-
graph S. below. covery therefor against any party, and the
If the Insurer rejects the Insured's proof of Insurer may require from the Insured an as-
loss in whole or in part, the Insured may ac- alignment of all rights of recovery against
cept such denial of its claim, or exercise its any party for loss to the extent that pay-
rights under this policy, or file an amended ment therefor is made by the Insurer. The
proof of loss as long as it is filed within 60 Insured shall do nothing after loss to preju-
days of the date of the loss or any extension dice such rights; however, this insurance
of time allowed by the Administrator. shall not be invalidated should the Insured
R. Abandonment: The Insured may not waive in writing prior to a loss any or all
abandon damaged or undamaged insured rights of recovery against any party for loss
property to the Insurer. occurring to the described property.
However, the Insurer may permit the In- V. Continuous Lake Flooding: Where the
sured to keep damaged, insured property insured building has been inundated by rising
299
Pt. 62 44 CFR Ch. t (10-1-98 Edition)
lake waters continuously for 90 days or more lug period, are applicable to the policy the
and it appears reasonably certain that a con- Insured chooses to keep in effect.
tinuation of this flooding will result in dam-
age, reimbursable under this policy, to the Article 11—What Law Governs
insured building equal to or greater than the This policy is governed by the flood insur-
building policy limits plus the deductible(s) or ance regulations issued by FEMA, the Na-
the maximum payable under the policy for Lionel Flood Insurance Act of 1968, as amend-
any one building loss, the Insurer will pay ed (42 II.S.C. 4001, et seq.) and Federal corn-
the Insured the lesser of these two amounts mon law.
without waiting for the further damage to In witness whereof, the Insurer has executed
occur if the Insured signs a release agreeing and attested these presents.
to:
1. Make no further claim under this policy; JAMES L. Wrrr,
and Director, Federal Emergency Management
2. Not seek renewal of this policy; and Agency.
3. Not apply for any flood insurance under
the Act for property at the property location (The information required under the terms of
of the insured building. this policy has been approved by the Office of
If the policy term ends before the insured Management and Budget under OMB control
building has been flooded continuously for 90 number 3067-0021.)
days, the provisions of this paragraph V. still
apply so long as the first building damage re- [58 FR 62439, Nov. 26, 1993, as amended at 62
imbursable under this policy from the contin- FR 8369, Feb. 25, 1997; 62 FR 66029, Dec. 17,
uous flooding occurred before the end of the 1997
policy term.
W. Duplicate Policies Not Allowed: Property PART 62-SALE OF INSURANCE
may not be insured under more than one pol-
icy issued under the Act. When the Insurer AND ADJUSTMENT OF CLAIMS
finds that duplicate policies are in effect, the
Insurer shall by written notice give the In- Subpart A—Issuance of Policies
mired the option of choosing which policy is
to remain in effect, under the following pro- Sec.
cedures: 62.1 Purpose of part.
1. If the Insured chooses to keep in effect 62.2 Definitions.
the ;policy with the earlier effective date, the 62,3 Servicing agent.
Insurer shall by the same written notice give 62.4 Limitations on sale of policies.
the Insured an opportunity to add the coy- 5 Premium refund.
erage limits o:i the later policy to those of the
earlier policy, as of the effective date of the 62.6 Minimum commissions.
later policy. Subpart B—Claims Adjustment and
2. If the Insured chooses to keep in effect Judicial Review
the policy with the later effective date, the
Insurer shall by the same written notice give 62.21 Claims adjustment.
the Insured the opportunity to add the cov-
erage limits of the earlier policy of those of 6222 Judicial review.
the later policy, as of the effective date of the Subpart C—WMe-Your-Own (WYO)
later policy. Companies
either use, the Insured must pay the
pro rata premium for the increased coverage
limits within 30 days of the written notice. 62.23 WYO Companies authorized.
In no event shall the resulting coverage rim- 62.24 WYO Company participation criteria:
its exceed the statutorily permissible limits new applicants.
of coverage under the Act or the Insured's in- APPENDIX A TO PART 62—FEDERAL EMEa-
sureble interest, whichever is leas. GENCY MANAGEMENT AGENCY, FEDERAL
The Insurer shall make a refund to the In- INSURANCE ADMINISTRATION, FINANCIAL
sured, according to applicable National Flood ASSISTANCE/SUBSIDY ARRANGEMENT
Insurance Program rules, of the premium for APPENDIX B TO PART 62--NATIONAL. FLOOD IN-
the policy not being kept in effect. SURANCE PROGRAM
For purposes of this paragraph W., the AUTHORITY: 42 U.S.C. 4001 et seq,: Reorga-
term effective date means the date coverage nization Plan No. 3 of 1978, 43 FR 41943, 3
that; has been in effect without any lapse was CFR, 1978 Comp., D. 329; E.O. 12127 of Mar. 31,
first placed in effect. In addition to the pro- 1979,44 FR 19367, 3 CFR, 1979 Comp., p. 376.
visions of this paragraph W. for increasing
policy limits, the usual procedures for in- SOURCE: 43 FR 2573, Jan. 17, 1978, unless
creasing limits by mid-term endorsement or otherwise noted. Redesignated at 44 FR 31177,
at renewal time, with the appropriate wait- May 31, 1979.
300
Federal Emergency Management Agency §62.5
Subpart A,Issuance of Policies the Administrator designates in part 64
of this subchapter as eligible for the
162.1 Purpose of part. sale of flood insurance under the Pro-
The purpose of this part is to set gram, other than in accordance with
forth the manner in which flood insur- this part, and the Standard Flood In-
ance under the Program is made avail- surance Policy.
able to the general public in those com- (b) The agreement and all activities
munities designated as eligible for the thereunder are subject to title VI of
sale of insurance under part 64 of this the Civil Rights Act of 1964, 42 2000d, FU.S.C.
ederal
subchapter, and to prescribe the gen- regul and to the applicable Federal
eral method by which the Adminis- regulations and requirements issued
trator exercises his/her responsibility from time to time pursuant thereto. No
regarding the manner in which claims person shall be excluded from partici-
patron in, denied the benefits of, or
for losses are paid.
subjected to discrimination under the
§62,2 Definitions. Program, on the ground of race, color,
sex, creed or national origin. Any corn-
The definitions set forth in part 59 of plaint or information concerning the
this subchapter are applicable to this existence of any such unlawful dis-
part. crimination in any matter within the
§622 Sex viaing agent purview of this part should be referred
to the Administrator.
(a) Pursuant to sections 1345 and 1346 [43 FR 2573, Jan. 17, 1978. Redesignated at 44
of the Act, the Administrator has en- FR 31177, May 31, 1979, as amended at 48 FR
tered into the Agreement with a aervic- 44544. Sept. 29, 1983; 49 FR 4751, Feb. 8, 1984]
ing agent to authorize it to assist in
issuing flood insurance policies under §62$ Premium refund.
the Program in communities des- A Standard Flood Insurance Policy-
ignated by the Administrator and to holder whose property has been deter-
accept responsibility for delivery of mined not to be in a special bsvard
policies and payment of claims for area after the map revision or a Letter
losses as prescribed by and at the dis- of Map Amendment under part 70 of
cretlon of the Administrator. this subchapter may cancel the policy
(b) National Con-Serv, Inc., whose of- within the current policy year provided
flees are located in Rockville, Mary- (a) he was required to purchase or to
land, is the servicing agent for the Fed- maintain flood insurance coverage, or
eral Insurance Administration. both, as a condition for financial as-
(c) The servicing agent will arrange sistance, and (b) his property was lo-
for the issuance of flood insurance to cated in an identified special hazard
any person qualifying for such cov- area as represented on an effective
erage under parts 61 and 64 of this sub- FFIBM or FIRM when the financial as-
chapter who submits an application to sistance was provided. If no claim
the servicing agent in accordance with under the policy has been paid or is
the terms and conditions of the con- pending, the full premium shall be re-
tract between the Agency and the serv- funded for the current policy year, and
icing agent. for an additional policy year where the
[43 FR 2573, Jan. 17, 1978. Redesignated at 44 insured had been required to renew the
FR 31177, May 31, 1979, as amended at 48 FR policy during the period when a revised
44544, Sept. 29, 1983; 49 FR 4751, Feb. 8, 1984; map was being reprinted. A Standard
58 FR 62447, Nov.26, 1993] Flood Insurance Policyholder may can-
cel 62.4 Limitations on sale of policies. eel a policy having a term of three (3)
years, on an anniversary date, where
(a) The servicing agent shall be the reason for the cancellation is that
deemed to have agreed, as a condition a policy of flood insurance has been ob-
of its contract that it shall not offer tained or is being obtained in substi-
flood insurance under any authority or tution for the NFIP policy and the
auspices in any amount within the NFlP obtains a written concurrence in
maximum limits of coverage specified the cancellation from any mortgage of
in §61.6 of this subchapter, in any area which the NFIP has actual notice; or
301
§62.6 44 CFR Ch. 1O0-1-98 Edition)
the policyholder has extinguishing the diately rewritten for a new term with
insured mortgage debt and is no longer the same amount(s) of coverage and
required by the mortgagee to maintain with premium calculated at the then
the coverage. In such event, the pre- current rate and, as to return pre-
mium refund shall be pro rata but with mium, returned, pro rata, to the in-
retention of the expense constant. sured based on the former policy's pre-
[43 FR 2573. Jan. 17, 1978. Redesignated at 44 mium rate.
FR 31177, May 31, 1979, as amended at 49 FR [46 FR 13515, Feb. 23, 1981, as amended at 53
33658, Aug. 24, 1964; 53 FR 16279, May 6, 1988) FR 15221, Apr. 28, 1988; 57 FR 19641, May 7,
$62.6 Minimum commissions. 1992]
(a) The earned commission which Subpart B—Claims Adjustment
shall be paid to any property or cas- and Judicial Review
ualty insurance agent or broker duly
licensed by a state insurance regu- $62,21 Claims adjustment
latory authority, with respect to each
policy or renewal the agent duly pro- (a) In accordance with the Agree-
cures on behalf of the insured, in con- ment, the servicing agent shall arrange
nection with policies of flood insurance for the prompt adjustment and settle-
placed with the NFIP at the offices of ment and payment of all claims arising
its servicing agent, but not with re- from policies of insurance issued under
spect to policies of flood insurance the program. Investigation of such
issued pursuant to Subpart C of this claims may be made through the facili-
part, shall not be less than $10 and is ties of its subcontractors or insurance
computed as follows: adjustment organizations, to the ex-
(1) In the case of a new or renewal tent required and appropriate for the
policy, the following commissions shall expeditious processing of such claims.
apply based on the total premiums paid (b) All adjustment of losses and set-
for the policy term: tlements of claims shall be made in ac-
cordance with the terms and conditions
Commis of the policy and parts 61 and 62 of this
Premium amount Sons(per-
cent) subchapter.
Feat 32,000 of Premium 15
§62.22 Judicial review.
Excess of$2.0(0 5
(a) Upon the disallowance by the Fed-
(2) In the case of mid-term increases eral Insurance Administration or the
in amounts of insurance added by en- servicing agent of any claim on
dorsements, the following commissions grounds other than failure to file a
shall apply based on the total pre- proof of loss, or upon the refusal of the
mimes paid for the increased amounts claimant to accept the amount allowed
of insurance: upon any such claim, after appraisal
— pursuant to policy provisions, the
Comma
Premium amount lions(per. claimant within one year after the date
cent) of mailing by the Federal Insurance
First V,000 of Premium 15 Administration or the servicing agent
Excess of$2,000 5 of the notice of disallowance or partial
— disallowance of the claim may, pursu-
(b) Any refunds of premiums author- ant to 42 U.S.C. 4072, institute an se-
ized under this subchapter shall not af- tion on such claim against the Federal
fect a prev.Lousiy earned commission; Insurance Administrator in the U.S.
and no agent shall be required to re- District Court for the district in which
turn that earned commission, unless the insured property or the major por-
the refund is made to establish a corn- tion thereof shall have been situated,
mon policy ':,erm anniversary date with without regard to the amount in con-
other insurance providing coverage troversy.
against loss by other perils in which (b) Service of process for all judicial
case a return of commission will be re- proceedings where a claimant, is suing
quired by the agent on a pro rata basis. Director pursuant to 42 U.S.C. 4071
In such cases, the policy shall be blame- shall be made upon the appropriate
302
Federal Emergency Management Agency §62.23
United States Attorney, the Attorney (e) In carrying out its functions
General of the United States, and the under this subpart, a WYO Company
Federal Insurance Administrator of the shall use its own customary standards,
Federal Emergency Management Agen- staff and independent contractor re-
cy. sources, as it would in the ordinary and
[43 FR 2578, Jan. 17, 1978. Redesignated at 41 necessary conduct of its own business
FR 31177, May 31, 1979, as amended at 47 It affairs, subject to the Act and regnla-
43061 Sept. 30, 1982; 49 FR 33879,Aug. 27, 1994] tions prescribed by the Administrator
under the Act.
Subpart C—Write-Your-Own (f) To facilitate the marketing of
(WYO) Companies flood insurance coverage under the
Program to policyholders of WYO Corn-
§62.23 WYO Companies authorized. Denies, the Administrator will enter
(a) Pursuant to section 1345 of the into arrangements with such comps
Act, the Administrator may enter into nies whereby the Federal Government
arrangements with individual private will be a guarantor in which the pri-
sector property insurance companies many relationship between the WYO
whereby such companies may offer Company and the Federal Government
flood insurance coverage under the will be one of a fiduciary nature, i.e.,
Program to eligible applicants for such to assure that any taxpayer funds are
insurance, including policyholders in- accounted for and appropriately ex-
mired by them under their own prop- pended. In furtherance of this end, the
erty business lines of insurance pursu- Administrator has established "A Plan
ant to their customary business prac- to Maintain Financial Control for Bust-
tices including their usual arrange- ness Written Under the Write Your
ments with agents and producers, in Own Program", a copy of which is in-
any State in which such WYO Compa- eluded in appendix B of this part and
nies are licersed to engage in the busi- made a part of these regulations.
ness of property insurance. Arrange- (g) WYO Companies shall not be
ments entered into by WYO Companies agents of the Federal Government and
under this subpart shall be in the form are solely responsible for their obliga-
and substance of the standard arrange- tions to their insureds under any flood
ment, entitled "Financial Assistance/ insurance policies issued under agree-
Subsidy Arrangement", a copy of ments entered into with the Adminis-
which is included in appendix A of this trator.
part and made a part of these regula- (h) To facilitate the underwriting of
tions. flood insurance coverage by WYO Corn-
(b) Any duly licensed insurer so en- panies, the following procedures will be
gaged in the Program shall be a wyo used by WYO Companies:
Company. (1) To expedite business growth, the
(c) A WYO Company is authorized to WYO Company will encourage its
arrange for tie issuance of flood insur- present property insurance policy-
ance In any. amount within the maxi- holders to purchase flood insurance
mum limits of coverage specified in through the NFIP WYO Program.
§61.6 of this subchapter, as Insurer, to (2) To conform its underwriting prac-
any person qualifying for such coy- tices to the underwriting rules and
erage under parts 61 and 64 of this sub- rates in effect as to the NFIP, the WYO
chapter who submits an application to Company will establish procedures to
the WYO Company; coverage shall be carry out the NFIP rating system and
issued under the Standard Flood Insur- provide its policyholders with the same
ance Policy. coverage as is afforded under the NFIP.
(d) .A WYO Company issuing flood in- (3) The WYO Company may follow its
surance coverage shall arrange for the customary billing practices to meet
adjustment, settlement, payment and the Federal rules on the presentment
defense of all claims arising from poli- of premium and net premium deposits
cies of flood insurance it issues under to a Letter of Credit bank account au-
the Program, based upon the terms and thorized by the Administrator and re-
conditions of the Standard Flood Insur- duction of coverage when an under-
ance Policy. payment is discovered.
303
§62.23 44 CFR Ch. I (10-1-98 Edition)
(4) The WY() Company is expected to be binding upon the FIA. For example,
meet the recording and reporting re- the entire responsibility for providing
quirements of the WYO Transaction a proper adjustment for both combined
Record Reporting and Processing Plan. wind and water claims and flood-alone
Transactions reported by the WYO claims is the responsibility of the WYO
Company under the WYO Transaction Company. The responsibility for pro-
Record Reporting and Processing Plan viding a proper adjustment for corn-
will be analyzed by the NFIP Bureau & bined wind and water claims is to be
Statistical Agent. A monthly report conducted by listing in concert with
will be submitted to the WYO Company the Single Adjuster provisions listed in
and.the FIA. The analysis will cover appendix A.
the timeliness of WYO Company sub- (2) The WYO Company may use its
missions, the disposition of trans- staff adjusters, independent adjusters,
actions that have not passed systems or both. It is important that the Corn-
edits and the reconciliation of the to- pany's Claims Department verifies the
tals generated from transaction reports correctness of the coverage interpreta-
with those submitted on the WYO Com- tions and reasonableness of the pay-
pany's reconciliation reports. ments recommended by the adjusters.
(5) If a WYO Company rejects an ap- (3) An established loss adjustment
plication from an agent or a producer, Fee Schedule is part of the Arrange-
the agent or producer shall be notified ment and cannot be changed during an
so that the business can be placed Arrangement year. This is the expense
through the NFIP Servicing Agent, or allowance to cover costs of independent
another WYO Company. or WYO Company adjusters.
(6) Flood insurance coverage will be (4) The normal catastrophe claims
issued by the WYO Company on a sepa- procedure currently operated by a WYO
rate policy form and will not be added, Company should be implemented in the
by endorsement, to the Company's event of a claim catastrophe situation.
other property insurance forms. Flood claims will be handled along
(7) Premium payment plans can be with other catastrophe claims.
offered by the WYO Company so long (5) It will be the WYO Company's re-
as the net premium depository require- sponsibility to try to detect fraud (as it
ments specified under the NFIP/WYO does in the case of property insurance)
Program accounting procedures are and coordinate its findings with PIA.
met. A cancellation by the WYO Com- (6) Pursuant to the Arrangement, the
pang for non-payment of premium will responsibility for defending claims will
not produce a pro rata return of the net be upon the Write Your Own Company
premium deposit to the WYO Company. and defense costs will be part of the
(6) NFIP business will not be assumed unallocated or allocated claim expense
by the WYO Companies at any time allowance, depending on whether a
other than at renewal time, at which staff counsel or an outside attorney
time the insurance producer may sub- handles the defense of the matter.
mit the busir.ess to the WYO Company Claims in litigation will be reported by
as new business. However, it is permis- WYO Companies to FIA upon joinder of
sible to cancel and rewrite flood poli- issue and FIA may inquire and be ad-
cies to obtain concurrent expiration vised of the disposition of such litiga-
dates with other policies covering the tion.
property. (7) The claim reserving procedures of
(f) To facilitate the adjustment of the individual WYO Company can be
flood insurance claims by WYO Compa- used.
nies, the following procedures will be (3) Regarding the handling of sub-
used by WYO Companies. rogation, if a WYO Company prefers to
(1) Under the terms of the Arrange- forego pursuit of subrogation recovery,
ment set forth at appendix A of this it may do so by referring the matter,
part, WYO Companies will adjust with a complete copy of the claim file,
claims in accordance with general to FIA. Subrogation initiatives may be
Company standards, guided by NFl? truncated at any time before suit is
Claims manuals. The Arrangement also commenced (after commencing an ac-
provides that claim adjustments shall tion, special arrangement must be
304
Federal Emergency Management Agency 962.23
made). FIA, after consultation with forming claims audits are expected to
FEMA's Office of the General Counsel possess claims expertise which would
(OGC), will forward the cause of action allow them to ascertain whether the
to OGC or to the NFIP Bureau and Sta- scope of damage was proper, and if all
tistical Agent for prosecution. Any applicable NFIP policy provisions were
funds received will be deposited, less properly followed. Persons performing
expenses, in the National Flood Insur- underwriting audits should be able to
ance Fund. ascertain if the risk has been properly
(9) Special allocated loss adjustment rated, which would necessitate being
expenses will include such items as: aware of special NFIP rating situa-
nonstaff attorney fees, engineering fees tions, such as elevated buildings.
and special investigation fees over and (2) Meet the recording and reporting
above normal adjustment practices. requirements of the WYO Transaction
(10) The customary content of claim Record Reporting and Processing Plan
files will include coverage verification, and the WYO Accounting Procedures
normal adjuster investigations, includ- Manual. Transactions reported to the
ing statements where necessary, police National Flood Insurance Program's
reports, building reports and investiga- (NFIP's) Bureau and Statistical Agent
tions, damage verification and other by the WYO Company under the WYO
documentation relevant to the adjust- Transaction Record Reporting and
ment of claims under the NFIP's and Processing Plan and the WYO Account-
the WYO Company's traditional claim Sag Procedures Manual will be analyzed
adjustment practices and procedures. by the Bureau and Statistical Agent
The WYO Company's claim examiners and a monthly report will be submitted
and managers will supervise the adjust- to the WYO Company
ment of flood insurance claims by staff the eal the timeliness The
f
and independent claims adjusters. tnelysis will Company o , e
(11) The 'YO Company will extend the WYO rap submissions, the
o
reasonable cooperation to FEMA's Of- disposition otpassof transactions edits
tioan whthe ich c-
line of the General Counsel on matters not pass systems oand generated rec-
line to litigation and subroga- from
onciliation of the totals with
tion, under paragraph (i)(8) of this sec- srom transaction reports those
pion. submitted on WYO Company reconcili-
(j) To facilitate establishment of fi- ation reports.
nancial controls under the WYO Pro- (3) Cooperate with FEMA's Office of
gram, the Wn'O Company will: Financial Management on Letter of
(1) Select a Certified Public Account- Credit matters.
ant (CPA) firm to conduct biennial au- (4) Cooperate with FIA in the imple-
dits of the financial, claims and under- mentation of a claims reinspection pro-
writing records of the company. These gram•
audits shall be performed in accord- (5) Cooperate with FIA in the ver-
ance with the Government Auditing ification of risk rating information.
Standards issued by the Comptroller (6) Cooperate with FEMA's Office of
General of the United States (con- the Inspector General on matters per-
monly known as the "yellow book"). taining to fraud.
FIA further requires that pre-selected (k) To facilitate the operation of the
policy and claims files the CPA firm is WYO Program and in order that a WYO
asked to review are in addition to any Company can use its own customary
files that the auditors may select for standards, staff and independent con-
their sample. A report of the detailed tractor resources, as it would in the or-
biennial audit conducted will be filed dinary and necessary conduct of its
with the Fit which, after a review of own business affairs, subject to the
the audit report, will convey its deter- Act, the Administrator, for good cause
ruination to the Standards Committee, shown, may grant exceptions to and
The CPA firm chosen to conduct the waivers of the regulations contained in
audit is expected to use qualified, this title relative to the admi:nistra-
skilled persons with the requisite back- tion of the NFIP.
ground in property insurance and a (1)(1) WYO Companies may, on a vol-
knowledge of the NFIP. Persons per- untary basis, elect to participate in the
305
§62.24 44 CFR Ch. I (10-1-98 Edition)
Mortgage Portfolio Protection Pro- lineated on the appropriate FEMA
gram (MPPP), under which they can map, necessitating flood insurance cov-
offer, as a last resort, flood insurance erage for the duration of the loan;
at special h:.gh rates, sufficient to re- (iii) Describe the procedure to follow
cover the full cost of this program in should the mortgagor wish to challenge
recognition of the uncertainty as to the determination;
the degree o:[risk a given building pre- (iv) Request evidence of a valid flood
Bents due to the limited underwriting insurance policy or, if there is none,
data required, to properties in a lend- encourage the mortgagor to obtain a
ing institution's mortgage portfolio to Standard Flood Insurance Policy
achieve compliance with the flood in- (SF1P) promptly from a local insurance
surance purchase requirements of the agent (or WYO Company);
Flood Disaster Protection Act of 1973. (v) Advise that the premium for a
Flood insurance policies under the MPPP policy is significantly higher
MPPP may only be issued for those than a conventional SFIP policy and
properties that: advise as to the option for obtaining
(i) Are determined to be located with- less costly flood insurance; and
in special flood hazard areas of commu- (vi) Advise that a MPPP policy will
nities that are participating in the be purchased by the lender if evidence
NFIP, and of flood insurance coverage is not re-
(ii) Are not covered by a flood insur- ceived by a date certain.
ance policy even after a required series (5) The second notification letter
of notices have been given to the prop- must remind the mortgagor of the pre-
erty owner (mortgagor) by the lending vious notice and provide essentially
institution of the requirement for ob- the same information.
taining and maintaining such coverage, (6) The final notification letter must:
but the mortgagor has failed to re- (i) Enclose a copy of the flood insur-
spond. a.nce policy purchased under the MPPP
(2; WYO Companies participating in on the mortgagor's (insured's) behalf,
the MPPP trust provide a detailed im- together with the Declarations Page,
plementation package to any lending (ii) Advise that the policy was pur-
institution that, on a voluntary basis, chased because of the failure to re-
chooses to participate in the MPPP to spond to the previous notices, and
ensure the lending institution has full (iii) Remind the insured that similar
knowledge If the criteria in that pro- coverage may be available at signifi-
gram and must obtain a signed receipt cantly lower cost and advise that the
for that package from the lending in- policy can be cancelled at any time
stitution. Participating WYO Compa- during the policy year and a pro rata
nies must also maintain evidence of refund provided for the unearned por-
compliance with paragraph (1)(3) of this tion of the premium in the event the
section for review during the audits insured purchases another policy that
and reviews required by the WYO Fi- is acceptable to satisfy the require-
nancial Control Plan contained in ap- ments of the 1973 Act. "(Approved by
pendix B of this part. the Office of Management and Budget
(3) The mortgagor must be protected under OMB control number 3067-0229.)"
against the ].ending institution's arbi- [61 FR 51219, Oct. 1, 19961
trary placing of flood insurance for
which the mortgagor will be billed by 462.24 WYO Company participation
being sent three notification letters as criteria: new applicants.
described in paragraphs (1)(4) through New companies seeking to partici-
(6) of this section. pate in the WYO Program, as well as
(4) The initial notification letter former WYO Companies seeking to re-
must: turn to the WYO Program, must; meet
(i) State the requirements of the standards for financial capability and
Flood. Disaster Protection Act of 1973, stability, for statistical and financial
as amended; reporting, and for commitment to Pro-
(ii) Announce the determination that gram objectives.
the mortgagor's property is in an iden- (a) To demonstrate the ability to
tilled special flood ba7.Qrd area as de- meet the financial requirements, an
306
Federal Emergency Management Agency Pt 62, App. A
applicant.for entry or reentry into the WYO Company, a WYO vendor, a serv-
WYO Program must: ice bureau or related organization. Ay
(1) be a licensed property insurance piicant commies shall also nacre, in
company; addition to a Principal Coordinator, a
(2) have a five (5) year history of corporate officer point of contact-- an
writing pro:7erty insurance; individual, e.g., at the level of a Senior
(3) discicse any legal proceedings, Executive Vice President, who reports
suspensions. judgments, settlements, directly to the Chief Executive Officer
or agreements reached with any State or the Chief Operating Officer. Each
insurance department, State attorney applicant shall furnish the latest avail-
general, State corporation comm ission, able information regarding the number
or the Federal government during the of its fire, allied lines, farmowners
immediate prior five (5) years regard- multiple peril, homeowners multiple
lag the company's business practices; peril, and commercial multiple peril
(4) submit its most recent National policies in force, by line, and the corn-
Association of Insurance Commis- parry's Best's Financial Size Category
sioners (NAIC) annual statement; for the purpose of setting t arke:zing
(5) submi'., as data become available, goals.
information to indicate that the com-
pany meets or exceeds NAIC standards [59 °38572, July 29, 1994]
for risk-based capital and surplus; and APPENDIX A TO PART 62---FEDERAL
(6) submit its last State or regional EMF.R.GEN.7CY M_NAG vI;.,NT .AG ICY.
audit, which should contain no mate- FED LNsoB A_cE ADS vfccism.b-
rial negative findings. T.ION, FINANCIAL AS IS TAN CE,1 SUB-
(b) An applicant for entry or reentry s=7,: _AT-RAN
into the WYO Program must also pass
a test to determine the company's abil- Purpose: To assist the company in c nder-
ity to process flood insurance and meet writing flood insurance using tre Standard
the Transaction Record Reporting and Flood Insurance Policy.
Processing (TRRP) Plan requirements Accounting Data: Pursuant to Sectior. 1310
of the WY0 Financial Control Plan. of the Act, a Letter of Credit shall be issued
Unless the test requirement is waived, for payent as provided for herein from the
Natiomnal Flood Insurance Fund.
e.g., where the company's reporting re-
""ee=ve Date: October 1, :99E,
quirements will be fulfilled by an al-
Issued By: Federal Emergency Management,
ready qualified performer, the appli- abency, Federal Insurance F .ri;.r-cstrat on,
can:. must prepare and submit test out- Washington,DC 20472.
put monthly tape(s) and monthly fi-
nancial statements and reconciliations ART:IcLr. —Faun Gs. P7.3 a?Os.
. for processing by the NFLP Bureau and Au os_i-r
Statistical Agent contractor. For test Whereas, the Congress in its "Finding and
purposes, no error tolerance will be al- Declaration of FL-pose" in the National
lowed. If the applicant fails the initial Flood Insurance Act of 1_963, a:: amended.
test, a second test will be run, which ("the Act") recognized the benefit of having
the applicant must pass to participate the National Flood Insurance Program (the
in the Program. "Program" or "NFIP") "carried out to the
mar.imurn extent practicable by the private
(c) To sztisfy the requirement for insurance industry"; and
corr..mitmez.t to Program goals, includ- Whereas, the Federal Insurance Adminis-
ing marketing of flood insurance poll- t.ation (F IA) recognizes this Arrangement as
ties, the company shall submit infer- coming under the provisions of Section 1345
mation concerning the company's of the Act; and
plans for the Write Your Own Program Whereas, the goal of the FL?, is to develop
including plans for the training and a program with the insurance industry
support of producers and staff, market- where, overtime, some risk-bear ng role for
ing plans and sales targets, and claims the ,ndustry will evolve the
intended by the
Congress (Section 1304 o Act): and
handling and disaster response plans. Whereas, the insurer 'hereinafter the
Applicants ::rust also identify those as- "Ccrr_pany") under this Arrangement shall
pects of their planned flood iusuxa nce charge rates established by the FT...I..; tzd
operations '.o be performed by another whereas. this arrangement will subsidize
organization, managing agent, another all flood policy losses by the Corrigan y; and
307
Pt 62, App. A 44 CFR Ch. I (10-1-98 Edition)
Whereas, thie,Financial Assistance/Subsidy Transaction Record Reporting and Process-
Arrangement has been developed to enable ing Plan for the Company Program and the
any interested qualified insurer to write Financial Control Plan for business written
flood Insurance under its own name; and under the WY0 (Write Your Own) Program.
Whereas, one of the primary objectives of 44 CFR part 62, appendix B. These data shall
the Program is to provide coverage to the be validated/edited/audited in detail and
maximum number of structures at risk and shall be compared and balanced against
because the insurance industry has market- Company reports.
ing access thrcugh its existing facilities not b. Monthly financial reporting procedure
directly available to the FLA., it has been shall be in accordance with the WY0 Ac-
concluded that coverage will be er,.ended to counting Procedures.
those who would not otherwise be insured B. Time Standards. Time will be measured
under the Program; and from the date of receipt through the date
Whereas, flood insurance policies issued mailed out. All dates referenced are working
subject to this Arrangement shall be only days, not calendar days. In addition to the
that insurance written by the Company in standards set forth below, all functions per-
its own name under prescribed policy condi- formed by the company shall be in accord-
tions and pursuant to this Arrangement and ance with the highest reasonably attainable
the Act: and quality standards generally utilized in the
Whereas, over time, the Program is de- insurance and data processing field. Contin-
signed to increase Industry participation. ual failure to meet these requirements may
and, accordingly, reduce or eliminate G-ov- result in limitations on the company's an-
ernment as the principal vehicle for deliver- thority to write new business or the removal
ing flood insurance to the public; and of the Company from the program. Applies:
Whereas, the direct beneficiaries of this bie time standards are:
A.0 angement will be those Company policy- 1. Application Processing—I5 days (note: if
holders and applicants for flood insurance the policy cannot be mailed due tc insuffl-
who otherwise would not be covered against cient or erroneous information cr. insuffi-
the peril of flocd. cient funds, a request for correction or added
Now, therefore, the ,e ties hereto znutu- moneys shall be mailed within 10 days);
ally undertake the following: 2. Renewal Processing-7 days.
3_ Endorsement Processing-15 days.
A.RTIcLE U-L1 NDERTAK NG OF TEE COMPANY 4. Cancellation Processing-15 days.
A. Eligibility Requirements for Par'„icipa- 5. Claims Draft Processing-7 days from
. completion of file examination.
Lion in the NFIP:
1. Policy Administration. AlI fund receipt, 6. Claims Adjustment-45 days average
re c, cA ni nl, tirationely deposit from the receipt of Notice of Loss (or equiva-
require- lent)through completion of examination.
ments, and disbursement in connection with C. Single Adjuster Program. To ensure the
all Policy Administration and any other re- maximum responsiveness to the NFIP policy
lated activities or correspondences, must holders following a catastrophic event, e.g.,
meet all requirements of the Financial Con- a hurricane, involving insured wind and flood
troI Plan. The Company shall be responsible damage to policyholders, the Company shell
for: agree to the adjustment of the combined
a. Compliance with the Community Eligi- flood and wind losses utilizing one adjuster
bility/R.ating Criteria under an NFIP-approved Single Adjuster
b. Making Policyholder Eligibility Deter- Program using procedures issued by he Ad-
minations ministrator. The Single Adjuster procedure
c. Pclicy Issuance shall be followed in the following
d. Policy Endorsements cases:
I. Where the flood and wind coverage is
e. Policy Cancellations
f. Policy Correspondence provided by the Company;
Payment Co Correspondence
o Agents' Commissions 2. Where the flood coverage is provided by
gthe Company and the wind coverage is pro-
2. Claims Processing. All claims processing vided by a participating State Property In-
must be processed in accordance 'with the surance Plan, Windpool Association. Beach
processing of all the companies' insurance Plan, Joint Under writing Association, FAIR
policies and with the Financial Control Plan. Plan, or similar property insurance mecha-
Companies will also be required to comply aisle; and
with FIA Policy Issuances and other quid- 3. Where the flood coverage is provided by
ance authorized by FIA or the Federal Emer- the Company and the wind coverage is pro-
g-ency Management Agency("FEMA"). vided by another property insurer and the
3- Deports. State Insurance Regulator has determined
a. Monthly Financial Reporting and Sta- that such property insurer shall, in the in-
tistic< Transaction reporting requirements. terest of consumers, facilitate the adjust-
All monthly financial reporting and stasis- ment of its wind loss by the adjuster engaged
tical transaction reporting shall be in ac- to adjust the flood loss of the Company.
cordance with the requirements of the NFIP D. Policy Issuance.
308
Federal Emergency Management Agency Pt 62, App. A
1. The flood insurance subject to this As- the Company's marketing, operating and ad-
rangement stall be only that insurance writ- ministrative expenses, except for allocated
ten by the Company in its own name pursu- and unallocated loss adjustment expenses de-
ant to the Act. scribed in Section C. of this Article, which
2. The Corr.pany shall issue policies under amount shall be a minimum of 316% of the
the regulations prescribed by the Adminis- Company's written premium on the policies
trator in accordance with the Act. covered by this Arrangement.
3. All such policies of insurance shall con- The amount of expense allowance retained
form to the regulations prescribed by the Ad- by the company may be increased to a rnaxl-
ministrator pursuant to the Act, and be mum of 32.9%, depending on the e oxtent to
issued on a form approved by the Adminis- which the company meets the marketing
trator. goals for the 1997-1998 Arrrangemant year
4. All policies shall be issued in consider- contained in marketing guidelines estab-
ation of such premiums and upon such terms liehed pursuant to Article 11G. The amount
and conditions and in such States or areas or of any increase shall be paid to the company
subdivisions thereof as may be designated by after the end of the 1997-1998 Arrangement
the Administrator and only where the Com- year.
pany is licensed by State law to engage in The Company, with the consent of the Ad-
the property insurance business. ministrator as to terms and costs, shall be
5. The Administrator may require the entitled to utilize the services of a national
Company to discontinue issuing policies sub- rating organization, licensed under state
ject to this Arrangement immediately in the law, to assist the FLk in undertaking and
event Congressional authorization or appro- carrying out such studies and investigations
priation for the National Flood Insurance on a community or individual ris;.basis, and
Program is withdrawn. in determining more equitable and accurate
E. The Company shall separate Federal estimates of flood insurance risk premium
flood insurance funds from all other Corn- rates as authorized under the National Flood
parry accounts, at a bank or banks of its Insurance Act of 1968, as amended. The Corn-
choosing for the collection, retention and pany shall be reimbursed in accordance with
disbursement.of Federal funds relating to its the provisions of the WYO Accounting Proce-
obligation usider this Arrangement, less the dures Manual for the charges or fees for such
Company's expenses as set forth in Article services.
III, and the operation of the Letter of Credit C. Loss Adjustment Expenses shall be re-
established pursuant to Article IV. All funds imbursed as follows:
not; required to meet current expenditures 1. Unallocated loss adjustment +3ha11 be an
shall be remitted to the United States Tress- expense reimbursement of 3.3% of the in-
ury, in accordance with the provisions of the curred loss (except that it does not include
WY'O Accounting Procedures Manual. "incurred but not reported").
F. The Company shall investigate, adjust, 2. Allocated loss adjustment expense shall
settle and defend all claims or losses arising be reimbursed to the Company pursuant to a
from policies issued under this Arrangement. "Fee Schedule" coordinated with. the Corn-
Payment of flood insurance claims by the pany and provided by the Administrator.
Company shall be binding upon the FLA.. 3. Special allocated loss expenses shall be
G. The Company shall market flood insur- reimbursed to the Company in accordance
ance policies in a manner consistent with with guidelines issued by the Administrator.
the marketing guidelines established by the D. Loss Payments.
Federal Insurance Administration. 1. Loss payments under policies of flood in-
surance shall be made by the Company from
ARTICLE III--Loss COSTS, EXPENSES, Ex-
PENSE REIMBURSEMENT' AND PREMIUM RE- funds retained Article the bank Section Eacco it;s) fs uch
lisped under II, E toad, if such
FLNDS funds are depleted, from fends derived by
A. The Company shall be liable for operas- drawing against the Letter of Credit estab-
ing, administrative and production expenses, lisped pursuant to Article IV.
including any State premium taxes, divi- 2.Loss payments include payments as a re-
dends, agent;', commissions or any other ex- suit of litigation which arises under the
pease of whatever nature incurred by the scope of this Arrangement, and the Authori-
Company in the performance of its oblige- ties set forth above. All such loss payments
tions under this Arrangement but excluding must meet the documentation requirements
otter taxes sr fees, such as surcharges on of the Financial Control Plan and of this Ass
flood insurance premium and guaranty fund rangement. The Company will be reimbursed
assessments. for errors and omissions only as set forth as
E. The Company shall be entitled to with- Article IX of this Arrangement.
hold, as operating and administrative ex- 3. Notification of claims in litigation
'senses, including agents' or brokers' com- against the company. To ensure reimburse-
missions, an amount from the Company's menu of costs expended to defend a claim in
written premium on the policies covered by litigation against the Company. the Corn-
this Arrangement in reimbursement of all of pany must promptly notify FLA.
309
Pt 62, App. A 44 CFR Ch. 1 (10--1-98 Edition)
Prompt notice, in duplicate, of any such within thirty days of the recommendation
claim in litigation within the scope of this made by the WYO Standards Committee.
section (D) shall be sent to the FM along E. Premium refunds to applicants and pol-
with a copy of any material pertinent to the icyholders required pursuant to rules con-
claim in litigation. FIA shall forward one tained in the National Flood Insurance Pro-
copy of all such claims to the Associate Gen- gram (NFL&) "Flood Insurance Manual"
eral Counsel for Litigation, FEMA OGC, to shall be made by the Company from Federal
ensure that the FEMA OGC is aware of all flood insurance funds referred to in Article
pending litigation. Following the initial no- II, Section E. and, if such funds are depleted,
Lice of claims in litigation, to ensure expedi- from funds derived by drawing against the
thous reimbursement, the company must Letter of Credit established pursuant to Ar-
submit all pertinent material and billing title IV.
documentation as it becomes available.
Within 60 days of the receipt of a notice of ARTICLE IV—UNDERTAE NGs OF T..HE
claim in litigation by the Company, the GOvgR'ei ''T
Company must submit an initial case analy- A. Letter(s) of Credit shall be established
sis and legal fee estimate for billing support. by the Federal Emergency Management
Failure to meet these notice requirements Agency (FEMA) against which the Company
may result in the Administrator's decision may withdraw funds daily, if needed, pursu-
not to reimburse expenses for which FIA and ant to prescribed procedures implemented by
the FEMA OGC have not been notified in a FEMA. The amounts of the authorizations
timely manner. will be increased as necessary to meet the
4. Limitation on Litigation Costs. Follow- obligations of the Company under Article III.
ing receipt of notice of such claim, the Office Sections C, D, and E. Request for funds shall
of General Counsel (OGC), FEMA, shall re- be made only when net premium income has
view the information submitted. If it is de- been depleted. The timing and amount of
termined that the claim is grounded in ac- cash advances shall be as close as is a.dminis-
tions by the Company that are outside the tratively feasible to the actual disburse-
scope of this Arrangement, the National ments by the recipient organization for al-
Flood Insurance Act, and 44 CFR chapter 1. lowable Letter of Credit expenses.
subchapter B. and/or involve issues of in- Request for payment on Letters of Credit
surer/agent negligence as discussed in Arti- shall not ordinarily be drawn more fre-
cle IX of this Arrangement, the OGC shall quently than daily nor in amounts less than
make a recommendation to the Adminis- 55,000, and in no case more than 55,000,000 un-
trator as to whether the claim is grounded in less so stated on the Letter of Credit. This
actions by the Company that are signifi- Letter of Credit may be drawn by the Com-
cantly outside the scope of this Arrange- pany for any of the following reasons,
tent. In the event the Administrator deter- 1. Payment of claim as described in. Article
mines that the claim is grounded in actions M. Section D;
by the Company that are significantly out- 2- Refunds to applicants and policyholders
side the scope of this Arrangement, the Corn- for insurance premium overpayment, or if
pany will be notified, in writing, within thir- the application for insurance is rejected or
ty (30) days of the Administrator's, decision, when cancellation or endorsement of a poi-
if the decision is that any award or judgment icy results in a premium refund as described
for damages arising out of such actions will in Article III, Section E; and
not be recognized under Article III of this 3. Allocated and nnntlocated Loss Adjust-
Arrangement as a reimbursable loss cost, ex- ment Expenses as described in Article III,
pense or expense reimbursement. In the Section C.
event that the Company wishes to petition B. The FIA shall provide technical assist.
for reconsideration the determination that it ance to the Company as follows:
will not be reimbursed for the award or judg- 1. The FLA's policy and history concerning
ment made under the above circumstances, underwriting and claims handling.
it may do so by mailing, within thirty days 2. A mechanism to assist in clarification of
of the notice declining to recognize any such coverage and claims questions.
award or judgment as reimbursable under 3. Other assistance as needed.
Article IR a written petition to the Chair-
man of the VYO Standards Committee es- ARTICLE V—COl4dENCEA`-ENT AND
tablished under the Financial Control Plan. 2r.RnELEATI0N
The WYO Standards Committee will, then,
consider the petition at its next regularly A. Upon signature of authorized officials
scheduled meeting or at a special meeting for both the Company and the FIA. this Ar-
called for that purpose by the Chairman and rangement shall be effective for the period
issue a written recommendation to the Ad- October 1 through September 30. The FIA
ministrator within thirty days of the meet- shall provide financial assistance only for
ing. The Administrator's final determination policy applications and endorsements at-
will be made, in writing, to the Company cepted by the Company during this period
310
Federal Emergency Management Agency Pt 62, App. A
pursuant to the Program's effective date, un- any order or directive duly issued by the De-
derwriting and eligibility rules. partment of Insurance of any Jurisdiction to
B. By June 1, of each year, the FIA shall which the Company is subject, the-Company
publish in the FEDERAL REGISTER and make agrees to transfer, and the Government will
available to the Company the terms for the accept, any and all WYO policies issued by
re-subscription of this Financial Assistance/ the Company and in force as of the date of
Subsidy Arrangement. In the event the Corn- such inability or failure to perform. In such
pang chooses not to re-subscribe, it shall no- event the Government will assume all obli-
tify the FIA to that effect by the following gations and liabilities owed to policyholders
July 1. under such policies arising before and after
C. In the event the Company elects not to the date of transfer and the Company will
participate in the Program in any subse- immediately transfer to the Government all
quent fiscal year, or the FIA chooses not to funds in its possession with respect to all
renew the Company's participation, the FIA, such policies transferred and the unearned
at its option. may require (1) the continued portion of the Company expenses for operat-
performance of this entire Arrangement for a ing, administrative and loss adjustment on
period not to exceed one (1) year following all such policies.
the original term of this Arrangement, or
any renewal thereof, or (2) the transfer to ARTICLE VI—INFORMATION AND ANNUAL
the FIA of: STATEMENTS
1. All data received, produced, and main- The Company shall furnish to FEMA such
twined through the life of the Company's par- summaries and analyses of information in-
ticipation in the Program, including certain eluding claim file information, and property
data, as determined by FIA, in a standard address, location, and/or site information in
format and medium; and its records as may be necessary to carry out
2. A plan far the orderly transfer to the the purposes of the National Flood Insurance
FIA of any continuing responsibilities in ad- Act of 1968, as amended, in such form as the
ministering the policies issued by the Corn-
FIA, in cooperation with the Company, shall
pany under the Program including provisions
for coordination assistance; and prescribe. The Company shall be a property/
3. All claims and policy files, including casualty insurer domiciled in a State or ter-
those pertaining to receipts and disburse- ritory of the United States. Upon request,
ments that have occurred during the life of the Company shall file with the FIA a true
each policy. In the event of a transfer of the and correct copy of the Company's Fire and
services provided, the Company shall provide Casualty Annual Statement, and Insurance
the FIA with a report showing, on a policy Expense Exhibit or amendments thereof as
basis, any amounts due from or payable to filed with the State Insurance Authority of
insureds, agents, brokers, and others as of the Company's domiciliary State.
the transition date. ARTICLE VII—CASH MANAGEMENT AND
D. Financial assistance under this Ar- ACCOUNTING
rangement may be canceled by the PIA in its
entirety upon 30 days written notice to the A. FEMA shall make available to the Com-
Company by certified mail stating one of the pany during the entire term of this Arrange-
following reasons for such cancellation: (1) ment and any continuation period required
Fraud or misrepresentation by the Company by FIA pursuant to Article V, Section C., the
subsequent to the inception of the contract, Letter of Credit provided for in Article IV
or (2) nonpayment to the FIA of any amount drawn on a repository bank within the Fed-
due the FIA. Under these very specific condi- era/ Reserve System upon which the Com-
tions, the FIA may require the transfer of pany may draw for reimbursement of its ex-
data as shown in Section C., above. If trans- penses as set forth in Article IV that exceed
fer is required, the unearned expenses re- net written premiums collected by the Com-
tained by the Company shall be remitted to pany from the effective date of this Arrange-
the FIA. In such event the Government will went or continuation period to the date of
assume all obligations and liabilities owed to the draw.
policyholders under such policies arising be- B. The Company shall remit all funds, in-
fore and after the date of transfer. eluding interest, not required to meet cur-
E. In the event the Act is amended, or re- rent expenditures to the United States
pealed, or expires, or if the FIA is otherwise Treasury, in accordance with the provisions
without authority to continue the Program, of the WYO Accounting Procedures Manual
financial assistance under this Arrangement or procedures approved in writing by the
may be canceled for any new or renewal busi- PIA.
ness, but the Arrangement shall continue for C. In the event the Company elects not to
policies in farce that shall be allowed to run participate in the Program in any subse-
their term under the Arrangement. quent fiscal year, the Company and FIA
F. In the event that the Company is unable shall make a provisional settlement of all
to, or otherwise fails to, carry out its oblige- amounts due or owing within three months
tions under this Arrangement by reason of of the termination of this Arrangement.This
311
179-173 0--98--11
Pt 62, App. A 44 CFR Ch. 1O0-1-98 Edition)
settlement shall Include net premiums col- ability attached to that delay, error or o;mis-
looted, funds drawn on the Letter of Credit, sion to the extent permissible by law.
and reserves for outstanding claims. The However, in the event that the Company
Company and FIA. agree to make a final set- has made a claim payment to an insured
tlement of accounts for all obligations aria- without including a mortgagee (or trustee)
ing from this Arrangement within 18 months of which the Company had actual notice
of its expiration or termination, except for prior to making payment, and subsequently
contingent liabilities that shall be listed by determines that the mortgagee (or trustee)
the Company. Al; the time of final settle- is also entitled to any part of said claim pay-
ment, the balance,if any, due the FIA or the ment, any additional payment shall not be
Company shall be remitted by the other im- paid by the Company from any portion of the
mediately and the operating year under this premium and any funds derived from any
Arrangement shall be closed. Federal Letter of Credit deposited in the
bank account described in Article II, section
ARTICLE VIII AR.RITRATI0N E. In addition, the Company agrees to hold
If any misunderstanding or dispute arises the Federal Government harmless against
between the Company and the FIA with ref- any claim asserted against the Federal Gov-
erence to any factual issue under any provi- ernment by any such mortgagee (or Trustee),
sions of this Arrangement or with respect to as described in the preceding sentence, by
the FIA's non-renewal of the Company's par- reason of any claim payment made to any an-
ticipation, other than as to legal liability sured under the circumstances described
under or interpretation of the standard flood above.
insurance policy, such misunderstanding or ARTICLE X—or'i:iclnl.s NOT To BENEFIT
dispute may be submitted to arbitration for
a determination that shall be binding upon No Member or Delegate to Congress, or
approval by the FIA. The Company and the Resident Commissioner, shall be admitted to
FIA may agree on and appoint an arbitrator any share or part of this Arrangement, or to
who shall investigate the subject of the mis- any benefit that may arise therefrom; but
understanding or dispute and make a deter- this provision shall not be construed to ex-
mination. If the Company and the FIA can- tend to this Arrangement if made with a cor-
not agree on the appointment of an arbitra- poration for its general benefit.
tor, then two arbitrators shall be appointed,
one to be chosen by the Company and one by ARTICLE XI- OFFBET
the FIA. At the settlement of accounts the Corn-
The two arbitrators so chosen, if they are pany and the FIA shall have, and may exer-
unable to reach an agreement, shall select a cise, the right to offset any balance or bal-
third arbitrator who shall act as umpire, and ances, whether on account of premiums,
such umpire's determination shall become commissions, losses, loss adjustment ex-
final only upon approval by the FIA. penses, salvage, or otherwise due one party
The Company and the FIA shall bear in to the other, its successors or assigns, here-
equal shares all expenses of the arbitration. under or under any other Arrangements
Findings, proposed awards, and determine- heretofore or hereafter entered into between
tions resulting from arbitration proceedings the Company and the FIA. This right of off-
carried out under this section, upon objec- set shall not be affected or diminished be-
tion by FIA or the Company, shall be inad- cause of insolvency of the Company.
missible as evidence in any subsequent pro- All debts or credits of the same class,
ceedings in any court of competent jurisdic- whether liquidated or unliquidated, in favor
tion. of or against either party to this Arrange-
This Article shall indefinitely succeed the ment on the date of entry, or any order of
term of this Arrangement. conservation, receivership, or liquidation,
ARTICLE IX--ERRORS AND OMISSIONS shall be deemed to be mutual debts and cred-
its and shall be offset with the balance only
The parties shall not be liable to each to be allowed or paid. No offset shall be al-
other for damages caused by inadvertent lowed where a conservator, receiver. or liq-
delay, error, or omission made in connection uidator has been appointed and where an ob-
with any transaction under this Arrange- ligation was purchased by or transferred to a
ment. In the event of such actions, the re- party hereunder to be used as an offset.
sponsible party must attempt to rectify that Although a claim on the part of either
error as soon as possible after discovery of party against the other may be unliq,uldated
the error and act to mitigate any costs in- or undetermined in amount on the date of
curred due to that error. In the event that the entry of the order, such claim will be re-
steps are not taken to rectify the situation garded as being in existence as of the date of
and such action leads to claims against the such order and any credits or claims of the
company, the NFIP, or other related enti- same class then in existence and held 'oy the
ties, the responsible party shall bear all li- other party may be offset against it.
312
Federal Emergency Management Agency Pt. 62, App. B
ARTICLE XII—BQUAL OPPORTUN1Tl ARTICLE XVI—RELATIONSmP BETWEEN THE
The Company shall not discriminate PARTIES (FEDERAL GOVERNMENT AND COM-
against any applicant for insurance because P` )AND THE INSURED
of race, color, religion, sex, age, handicap, Inasmuch as the Federal Government is a
marital status, or national origin. guarantor hereunder, the primary relation-
ship between the Company and the Federal
ARTICLE XIL[—RESTRICTION ON OTHER FLOOD Government is one of a fiduciary nature, i.e.,
INSURANCE to assure that any taxpayer funds are ac-
counted AB a condition of entering into this Ar- for and appropriately expended. The
Company is not the agent of the Federal
rangement, the Company agrees that in any Government. The Company is solely respon-
area in which the Administrator authorizes sible for its obligations to its insured under
the purchase of flood insurance pursuant to any flood policy issued pursuant hereto.
the Program. all flood insurance offered and
sold by the Company to persons eligible to [62 FR 39910, July 24, 1997, as amended at 63
FR
buy pursuant to the Program for coverages 32761, June 16, 1998]
available under the Program shall be written
pursuant to this Arrangement. APPENDIX B TO PART 62--NAT1[ONAL
However, this restriction applies solely to FLOOD INSURANCE PROGRAM
policies providing only flood insurance. It A Plan to Maintain Financial Control for Thai-
does not apply to policies provided by the- ness Written Under the Write Your Own Pro-
Company of which flood is one of the several gram
perils covered, or where the flood insurance Under the Write Your Own (WYO) Pro-
coverage amount is over and above the lim- gram, the Federal Insurance Administrator
its of liability available to the insured under (Administrator) may enter into arrange-
the Program. ments with individual private sector insur-
ARTICLE XIV--ACCESS TO BOOKS AND RECORDS ante companies that are licensed to engage
in the business of property insurance, where-
The FIA and the Comptroller General of by these companies may offer flood insur-
The United States, or their duly authorized ance coverage to eligible property owners
representatives, for the purpose of investiga- using their customary business practices. To
Lion, audit, send examination shall have ac- facilitate the marketing of flood insurance
cess to any books, documents, papers and coverage, the Federal Government will be a
records of the Company that are pertinent to guarantor of flood insurance coverage for
this Arrangement. The Company shall keep WYO Company policies issued under the
records that fully disclose all matters perti- WYO Arrangement. To ensure that any tax-
payer funds are accounted for and appro-
nentmiums and claims paid or payable under Ad-
ministration (VIA) and WYO Companies will
priately expended, the Federal Insurance Ad-
policies issued pursuant to this Arrange-
implement this Financial Control Plan. Any
ment. Records of accounts and records relat- departures from the requirements of this
ing to financial assistance shall be retained Plan must be approved by the Adminis-
and available for three (3) years after final trator. The authority for the WYO Program
settlement of accounts, and to financial as- is contained in section 1345 of the National
sistance, three (3) years after final adjust- Flood Insurance Act of 1968, 42 U.S.C. 4081,
ment of such claims. The FIA shall have ac- and 44 CFR parts 61 and 62, ¢461.13 and 62.23.
cess to policyholder and claim records at all The WYO Financial Assistance/Subsidy Ar-
times for purposes of the review, defense, ex- rangement (Arrangement) which is included
amination, adjustment, or investigation of in appendix A of this part is hereby made a
any claim under a flood insurance policy part of this Financial Control Plan..
subject to this Arrangement. WYO Companies are subject to audit, ex-
amination, and regulatory controls of the
ARTICLE XV—COMPLIANCE WrrR Acr AND various states. Additionally, insurance corn-
REGULATIONS pany operating departments are customarily
subject to examinations and audits per-
This Arrangement and all policies of insur- formed by Company internal audit or quality
ance issued pursuant thereto shall be subject control departments, or both, and independ-
to the provisions of the National Flood In- ent CPA firms. It is intended that this Plan
surance Act of 1968, as amended, the Flood use to the extent possible, the findings of
Disaster Protection Act of 1973, as amended, these examinations and audits as they per-
the National Flood Insurance Reform Act of Lain to business written under the WYO Pro-
1994, and Regulations issued pursuant there- gram(Parts 3 and 4).
to and all Regulations affecting the work The WYO Financial Control Plan contains
that are issued pursuant thereto, during the several checks and balances that can, if
term hereof. properly implemented by the WYO Company,
313
Pt. 62, App. El 44 CFR Ch. i (10-1-98 Edttton)
significantly reduce the need for extensive from the implementation of the Financial
on-site reviews of Company files by the FIA Control Plan. Adverse actions include; but
staff or their designee. Furthermore, we be- are not limited to, the FIA'Operatioa;s Divi-
lieve that this process is consistent with cue- sion's recommendation not to renew a par-
tomary reinsurance practices and avoids du- ticular Company's WYO arrangement.
piication of examinations performed under This Plan includes the following guide-
the auspices of individual State Insurance lines:
Departments, NAIC Zone examinations, and Part 1--Transaction Record Reporting and
independent CPA firms. Processing Plan Reconciliation Procedures
The WYO Financial Control Plan requires Part 2—Claims Reinapection Program
the WYO Company to meet the minimum re- Part 3—Financial Audits. Underwriting
quirements established by the Standards Audits, Claims Audits, Audits for Cause, and
Committee. The Standards Committee con- State Insurance Department Audits
sists of four (4) members from FIA, one (1) Part 4—Reports Certifications
member from the Federal Emergency Man- Part 5--WYO Financial Assistance/Subsidy
agement Agency's (FEMA's) Office of Finan- Arrangement(Incorporated by Reference)
cial Management, one (1)member designated Part 6—Transaction Record Reporting and
by the Administrator who is not directly in- Processing Plan (Incorporated by Reference)
volved in the WYO Program, and one (1) part 7—Write Your Own (WYO)Accounting,
member from each of six (6) designated WYO Procedures Manual (Incorporated by Ref-
Companies, pools or other entities. erence)
The WYO Financial Control Plan must re-
quire the WYO Company to: PAI r 1—TRANSACTION RECORD REPORTING
1. Have a biennial audit of the flood insur- AND PROCESSING PLAN RECONCILIATION PRO-
ance financial statements and claims and un- CEDURES, TRANSACTION RECORD REPORTING
derwriting activity conducted by an inde- AND PROCESSING PLAN RECONCILIATION OB-
pendent accounting firm at the Company's JECTIVES
expense to ensure that the financial data re-
ported to FIA accurately represents the The objectives are: To reconcile trans
flood. insurance activities of the Company. action detail with monthly financial state
Require that the CPA firm's audit be per- ments submitted by the WYO Companies; to
formed in accordance with GAO yellow book assess the quality and timeliness of submit-
requirements. Require that the auditors con ted data; and to provide for the i,ientifica-
duct their own review sample, even if pre-se- tion and resolution of discrepancies in the
lected policy and claims files are given to data. The reliance on computer processing to
them for review. perform the review of transaction and finan-
2. Meet the recording and reporting re- cial data will help minimize the necessity for
quirements of the WYO Transaction Record on-site audits of WYO Companies. Reconcili-
Reporting and Processing Plan. Transactions ation of the statistical reports submitted
reported to t:ae National Flood Insurance will be performed by the WYO Companies
Program's (NFIP's) Bureau and Statistical and independently by the NFU' Bureau and
Agent by the WYO Company under the WYO Statistical Agent.
Transaction Record Reporting and Process- The review of monthly financial state-
ing Plan will be analyzed by the Bureau and ments and transaction lever detail will in-
Statistical Agent and a monthly report will volve six areas:
be submitted to the WYO Company and the A. Financial control;
FIA. The analysis will cover the timeliness B. Quality control (audit trails);
of the WYO Company's submissions, the die- C. Quality review of submitted data;
position of transactions that do not pass sys- D. Policy rating;
tame edits, and the reconciliation of the E. Timeliness of reporting; and
• total. generated from transaction reports F. Monthly reports.
with those submitted on the WYO Company's
A. Financial Control
reports (part D.
3. Cooperate with FEMA's Office of Finan- 1. WYO Companies are required to submit
cial Management on Letter of Credit mat- a reconciliation report (Exhibit "A") with
ters. the submission of transaction level detail.
4. Cooperate with FIA in the implements- This report will reconcile the transaction
tion of a claims reinspection program (part records data to the financial report,, explain-
2). ing any discrepancies.
5. Cooperate with FIA in the verification of 2. WYO Companies are required to submit,
risk rating information. on a form approved by the Administrator, a
6. Cooperate with FEMA's Office of the In- tape transmittal document with the submis-
spector General on matters pertaining to sion of the statistical tape containing trans-
fraud. action detail. This will be used to validate
The Standards Committee will review and record counts and dollar amounts.
make a recommendation to the Adminis- 3. The NFIP will review, at a minimum.
trator concerning any adverse action arising the .Iategories )n the attac•ned format and
314
Federal Emergency Management Agency Pt. 62. App. B
produce a similar report reconciling the 2. The NFIP will produce reports based on
transaction data to the monthly financial review of submitted data within thirty days
statement submitted by each WYO Company. after the due date or the first processing
4. To facilitate financial reconciliation, cycle subsequent to the receipt of WYO Corn-
transaction records which do not pass var- pany submissions, whichever is later.
Sous edits employed by the NFIP to review
the quality of submitted data will be so idea- F. Monthly Reports
titled, but will be maintained whenever pos- 1. Reports for each WYO Company's data
sible until the error is corrected by the corn- submission will be sent to the respective
pang in order to reconcile all financial data WY0 Company
submitted to the NFIP. and the FIA explaining any
discrepancies found by the NFIP review.
.8.Quality Control 2. Report to WYO Companies. Transaction
records that fail to pass the quality review
Transaction level detail will be maintained or policy rating edits will be reported to the
in policy and claim history files for record- appropriate Company in transaction detail
keeping and audit purposes. with error codes, classification of errors as
C. Quality Review of Submitted Data either critical or non-critical and any codes
used by the Company to identify the source
1. Transaction records will be edited for of the transaction data.
correct format and values. 3. Reports to WYO Companies and the FIA:
2. Relational edits will be performed on in- a. Summary statistics will be generated for
dividual transactions as well as between poi- each monthly submission of transaction
icy and claim transactions submitted data. These will include:
against those policies. 1. Absolute numbers of transactions read
3. Record validation will be performed to and transactions rejected by transaction
check that the transaction type is allowable type; and
for the type of policy or claim indicated. ii. Dollar amounts associated with trans-
4. Errors will be categorized as critical or actions read and transactions rejected.
non-critical.The rate of critical errors in the b. Summary statistics for all policy and
submission of statistical data will be the claim records submitted to date (which may
basis by which company performance is re- each be the result of multiple transactions)
ported to the Standards Committee. Critical will be generated. separately for critical and
errors include those made in required data non-critical errors. These will include:
elements.Required data elements: i. Absolute number of policy and claim
a. Identify the policyholder, the policy, the records on file and those containing errors;
loss, and the property location; and
b. Provide information necessary to rate li. Relative values for the number of
the policy; records containing critical errors.
c. Provide information used in financial c. Control totals will be generated for
control; and tapes submitted to and processed by the
d. Provide information used for actuarial NFIP. This front-end balancing procedure
review of NFIP experience. will include:
5. Non-critical errors are those made in 1. Numbers of records submitted according
data elements reported by the WYO Comps- to the NFIP compared with numbers of
nies at their option. records submitted according to the WYO
D. Policy Ratans Company transmittal document; and
11. Dollar amounts submitted according to
1. The rating will be validated by the NFIP the NFIP compared with dollar amounts sub-
for all policies for which the following trans- mitted according to the WYO Company
actions have been submitted: transmittal document.
a. New Business; d. If there is any discrepancy between the
b. Renewals; NFL' reading of dollar amounts from the
c. Endorsements involving type A trans- tape and the WYO Company tape transmittal
action records; and document, then the monthly statistical tape
d. Corrections of type A transaction submission will be rejected and returned to
records previously submitted for premium the Company. The rejected tape must be cor-
transactions. rested and resubmitted by the next monthly
2. Incorrect rating will be considered a submission due date.
critical error. e. In oases where the NFIP reconciliation
E. Timeliness of F.eport:nq of transaction level detail with the financial
statements does not agree with the-econcili-
1. WYO Companies will be expected to sub- ation report submitted by the WYO Com-
mit monthly statistical and '_`lnanoial reports pony. a separate report will be generated and
within thirty days of the end of the month of transmitted tc the Company for resolution
record. azd to the FIA.
315
Pt. 62, App. B 44 CFR Ch. I (10-1-98 Edition)
Reporting of Company Rating to the Standards Address:
Committee and the Administrator
A. Satisfactory Rating Reel Number(s)of Enclosed
An annual end of the year report will be Tapes:
submitted to convey the satisfactory rating
of WYO Companies' submission of trans- Density
action data ant the reconciliation of these LRECL
data with financial reports. Blocksize
B. Unsatisfactory Rating File Name (DSN)
The report of an unsatisfactory rating will Contact Person
be submitted as soon as errors and problems ---
reach critical threshold levels. This rating Contact Number
will be based on: Continuing problems in rec- IBU No. (WYO Use Only)
onciling transaction data with financial re-
ports; statistics on the percentage of trans- Monthly Reconciliation—Net Written
actions submitted with critical errors; the Premiums
percentage of policy and claim records on
file that contain critical errors; and late sub- Company name
mission of statistical and financial reports. Co. NAIC No.
EXHIBIT"A"--WYO WTATISTnCAL WAPE— Month/year ending
WR.AN 6MITnAL DOCUMENT Date submitted
Date Sent: Preparer's name
WYO Prefix Code: Telephone No
Monthly statistical transactions report
Nomhy financial report
Trans.code Record count Premium amount
Net Written premiums $
(Income statemert-tine 100 11 $
15
17
Unprocessed statisticsa:
(+)Prior month's 20 '
(-)Current month's 23
Other—Explain:
(+)Current month's 26 (-)
(-)Prior month's 29 (-)
14 and 81 (+)
Total Total:
(Add 11 Through 23 less 26 and 29)
Comments:
Monthly Reconciliation—Losses Month/year
Company name Date submitted
Co. NAIC No. _
Trans.code Record count ices/psis
recowsiea
100 Net paid losses
(Income statement line 115)
Unprocessed statistical:
31 $
140(*) Prior month's 34
37
150(—)Current month 40
43
160 Salvage not tD be reported by transaction(explain).
170 Other--Explain 46 and 61
49
64
84 and 87
31.6
Federal Emergency Management Agency Pt. 62, App. B
Trans.code Record count Las/Paid
remarks
52 Recovery �._..._...._._.__.. .._...._.____..._.._.
Salvage
67 Recovery
Salvage
Subrogation
Total:._..... Total: __.........._..____..
(Sum of tines 1C O,140,160,and 170 less 150) ._ (Add 31,34,40 through 84 lees 52 and 67)
Canmenb:
Monthly Reconciliation—Special Allocated Co. NAIC No.
LAE Month/year ending
Company name Date submitted
Monthly statistical transaction report
fly financial repot
Trans.code Record cam I Amounts
Special allocated hss adjustment expenses
(Other loss and LIE Calc.—Une 655) _._.._....__....._.....
71 5
74
Unprocessed statistical:
(«)prior Mourn..._..._ —
)Current Month
Other--Blain: _........_...._.._._.....
(1)
(2) _........_...._.._.._....
Total: _.._........._......._.._....._...._._......._....... Tots:
Comments:
Monthly Reconciliation—Net Policy Service Fee Amount:
Fees
Total:
Company Name (Approved by the Office of Management and
Co. NAIC No. Budget under OMB control number 3067-
Month/Year Ending 0169.)
Date Submitted PART 2-Ci,A1mS REINSPECrICN PECGRAM
Monthly Financial Report WTO-NFIP CLAIMS REIN5PECrION PROGRAM
Net Policy Service Fees (Income Statement To keep WYO-NFIP Claims Management
Line 170): informed, to assist in the overall claims op-
eration, and to provide necessary assurances
Unprocessed statistical: and documentation for dealing with GAO,
Congressional Oversight Committees, and
(+) Prior Month's the public, the FIA and WYO Companies
(-)Current Month's have established a Claims Reinspectlon Pro-
Other—Explain: gram. The Program is comprised of the fol-
lowing major elements:
(1) ._ A. All flies are subject to reinspection.
(2) ._ B. Files for reinspection may be randomly
Total selected by flood event, or size of loss, or
class of business, as determined by WYO-
Comments: NFIP Claims Management.
Monthly Statistical Trantisotioa Report C. WYO-NFIP Claims Management will
utilize a binomial table to define sample size
Record Count: for reinspections prior to payment. A larger
317
Pt. 62, App. B 44 CFR Ch. 1 (10-1-98 Edition)
sample may be used depending upon error controls, and the extent of compliance with
ratio, laws and regulations.
D. An agreed upon sample of closed files, e. Any WYO Company which has been sub-
by event, will be subjected to reinspection as ject to a comprehensive audit by the CPA
well. firm under contract with the FEMA CRC- is
E. A WYO representative will conduct the exempted by its selected Certified Public Ac-
reinspection, accompanied by an NFIP Gen- countant firm. Only the remaining
eral Adjuster. unaudited fiscal year of the two years nor-
F. A joint, single report will be issued by mealy to be reviewed under the biennial
the WYO Company representative and the audit will be examined. Policy and claim re-
NFIP General Adjuster. lated financial data as reported to the NFU?
G. Copies of reinspection reports will be are proper and adequately supported by un-
forwarded to the Claims Management of both derlying documentation.
the WYO Company and the NFU'. .8. Audits for Cause
PART 3---BIENNIAL FINANCIAL AUDITS, UNDER- In accordance with the terms of the Ar-
wRrrnaa AUDrrs, CLAIMS AUDITS, AUDITS rangement, the Administrator, on his/her
FOR CAUSE, AND STATE INSURANCE DEPART- own initiative or upon recommendation of
MENT AUDITS the WYO Standards Committee or the FEMA
Inspector General, may conduct for-cause
A.Biennial Financial, Underwriting and Claims
Audits audits of participating companies. The fol-
lowing criteria, in combination or independ-
1. Objectives of WYO Biennial Financial ently, may constitute the basis for initiation
Underwriting and Claims Audit. The bien- of such an audit.
nial, financial, underwriting and claims
audit is intended to provide the Federal 1.Underwriting
Emergency Management Agency with inde- a. Excessively high frequency of errors in
pendent assessment of the quality of finan- underwriting.
cial controls over activities relating to the i. Issuing policies for ineligible risks.
Company's participation in the National ii. Issuing policies in ineligible commu-
Flood Insurance Program as well as the in- nities.
tegrity of the underwriting and claims data iii. Consistent premium rating errors.
reported to FEMA. iv. Missing or insufficient documentation
a. Participating WYO companies are re- for submit for rate policies.
sponsible for selecting and funding independ- v. Other patterns of consistent errors.
ent Certified Public Accounting firms to b. Abnormally high rate of policy cancella-
conduct the biennial audits. Such costs are tions or non-renewals.
considered part of the normal administrative c. Policies not processed in a timely lash-
cost of operating the WYO program and as ion.
such are included in the WYO expense allow- d. Duplication of policy coverage noted.
ance. e. Relational type edits indicate an usually
b. The WYO Company's representative will high or low premium amount per policy for
be notified in writing to arrange for a bien- the geographical area.
nial audit. This notice should provide the f. Biennial audit results indicate usual vol-
WYO Company at least 120 days to prepare time of errors in underwriting.
for the biennial audit. 2. Claims
c. It is also intended that the biennial a. Reinspection indicates consistent pat-
audit will reduce if not eliminate the need terns of:
for FEMA auditors or their designees to con- i. Losses being paid when not covered.
duct on-site visits to WYO companies in ii. Statistical information being reported
their review of financial activity. However, on original loss adjustment found to be in-
the requirement may still exist for such vis- correct on reinspection.
its to occur as determined by the auditors. iii. Salvage/subrogation not being ade-
The CPA firm's audit shall be performed in quately addressed.
accordance with GAO yellow book require- iv. Consistent overpayment of claims.
ments. Further. the CPA firm is required to b. Unusually high count of erroneous as-
select its own sample, even though FIA may signments and/or claims closed without pay-
provide them with pre-selected policy and ment(CWP).
claim files for review.In addition, nothing in c. Unusually low count of CWP. (May indi-
this section should be construed as limiting cate inadequate follow-up of claims submit-
the ability of t:ae General Accounting Office ted).
or FEMA's Office of Inspector General to re- d. Average claim payments that ,signifi-
view the activities of the WYO Program. cantly exceed the average for the Program as
d. The purpose of the biennial audit is to a whole.
provide opinion on the fairness of the finan- e. Lack of (adequate) documentation for
vial statements, the adequacy of internal paid claims.
318
Federal Emergency Management Agency Pt. 62, App. B
f. Claims not processed in a timely fashion. rent processing activities, planned changes
g. Consistent failure of WYO Company to and problems.
receive authorization for special allocated c. Administrative review to verify compli-
loss adjustment expenses prior to incurring ance with company procedures.
them. d.Thorough examination of a random earn-
h. High submission of Special Allocated pie of underwriting files to measure the qual-
Loss Adjustment Expenses(SALAE). ity of work.The CPA firm is expected to pro-
1. Consistently high policyholder corn- vide a representative sample of its review to
plaint level. substantiate its opinion and findings. At a
j.Low/high count of salvage/subrogation. minimum, the files should be reviewed to
k. Biennial audit indicates significant verify the following:
problems. i.Policies are issued for eligible risks;
3. Financial Reporting/Accounting it Bates are correct and consistent with
a. Consistently high reconciliation vari- the amount of insurance requested on the ap-
ations and/or errors in statistical informs- plication;
tion. 111. Waiting period for new business is con-
b. Financial and/or statistical information sistent with government regulations;
not received in a timely fashion. iv. Elevation certification or difference is
c. Letter of Credit violations are found. correctly shown on application;
d. WYO Company is not depositing funds to v. The coverage does not include more than
the Restricted Account in a timely manner, one building and/or its contents per policy;
or funds are not being transferred through vi. No binder is effective unless issued with
the automated clearinghouse on a timely the authorization of FIA;
basis. vii. The FIRM zone shown on the applies-
e. Premium suspense is consistently sig- tion to the community in which the property
nificant, older than 60 days, and/or cannot be is located;
detailed sufficiently, or both. viii. Community shown on application is
f. Large/unusual balance in Cash-Other eligible to purchase insurance under the
(Receivables and/or Payable). NFIP;
g. Large, unexplained differences in cash ix. Information on type of building, etc., is
reconciliation. fully complete;
h. Large/unusual balances or variations be- x. Applicable deductibles are recorded;
tween months noted for key reported finan- xi. A new, fully completed application or a
cial data.. photocopy of the most recent application, or
1. Financial statement to statistical data similar documentation, with the appropriate
reconciliation sheets improperly completed updates to reflect current information is on
indicating proper review of information is file for each risk, including those formerly
not being performed prior to signing certifi- written by the NFIP Servicing Facility;
cation statement. xii. If any files to be audited are unavall-
j. Repeated failure to respond fully in a able, determine the reason for the absence.
timely manner to questions raised by FIA or e. Endorsement Processing.
the NFIP Bureau and Statistical Agent con- 1. Complete tasks as applicable.
cerning monthly financial reporting. 2. Review requests for additional coverage
k. Biennial audit indicates significant to ensure that they are subject to the wait-
problems. ing period rule.
3. Review controls established to ensure
C. Underwriting Audit that no risk is insured under endorsement
provisions that are not acceptable as a new
1. Samples of new business policies, renew-
business risk (i.e., a property located in a
els, endorsements and cancellations will be suspended community).
provided by the FIA with the biennial audit f. Cancellation Processing. Verify controls
instructions, including samples of the Mort- to ensure that one of the necessary reasons
gage Portfolio Protection business, where for cancellation exists and that the trans-
applicable. The audit is to be conducted in action is accompanied by proper documenta-
accordance with GAO yellow book require- Lion
ments. The CPA firm may supplement with g. Renewal Processing. Determine controls
its own sample of risks which were in force to ensure that all necessary information
during all or part of the Arrangement Year needed to complete the transaction is pro-
under audit for detail testing. vided.
2. Underwriting Audit Outline h. Expired Policies. Determine controls to
ensure that each step is carried out: at the
a. Review of the Underwriting Depart- proper time.
ment's responsibilities, authorities and com- i. Observance of Waiting Period. Establish
position. procedures to document, as a matter of WYO
b. Personal interviews with management Company business record and in each trans-
and key clerical personnel to determine cur- action involving a new application, renewal,
319
Pt. 62„ App. B 44 CFR Ch. 1 (10-1-98 Edition)
and endorsement., that any applicable effec- audit, the Administrative Review Checklist
tive date and yremium receipt rules have (Exhibit B)below should be utilized.
been observed (41 CFR 61.11). Documentation
reasonably suitable for the purpose includes EXHIBIT"B"—ADmINISTRATIVE REVIEW
retention of postmarked envelopes (for three CHECKLIST
(3) years) from date. date stamping and re- Policy#:
tention (via hard copy or microfilm process) Insured's Name:
of application, renewal and endorsement doc- state:
uments and checks received in payment of Date of loss:
premium; computer input of document and Date paid:
premium receipt transactions and retention Date reported:
of such records :in the computer system; and Amt. of loss: $
other reasonable"insurer methods of verify-
Bldg:o
ing transactions involving requests for cov- Contents:$
erage and receipts of premium.
Adjusting firm:
D. Claims Audit Outline Examiner's name:
Comments:
1. Review of the Claims Department's re-
sponsibilities,authorities,and composition. 1.Investigation and Adjustments
2. Personal interviews with management
and key clerical personnel to determine cur- Yes No N/A
rent processing activities, planned changes
and problems. A. Application of Cov-
3. Administrative review to verify compli- erage.
once with company procedures. (1)Insurable Interest? [ 3 [ ] [ 3
4. Torough examination of a random sam- (2)Is loss from the flood
pie of claims flies which may be provided by peril? [ ] [ ] [ ]
FIA tc meaeure the quality of work. At a (3)Did loss occur within
minimum, the files should be reviewed to the policy term: [ l [ 3 1 ]
verify the follovring: (4)Does location and de-
e. Verify controls to ensure that a file is scription of risk coin-
set up for each Notice of Loss Received. cide with policy infor-
b. Review adjuster reports to determine mation? I 3 1 3 [ ]
whether they contain adequate evidence to
(5)Were proper
substantiate t:ae payment or denial of deductibles applied? [ ] [ ] [ ]
claims, including amount of losses claimed, (6)Other insurance con-
any salvage proceeds, depreciation and po sidered? [ ] 1 ] [ ]
tential subrogation. (7)Other losses? I I [ ] [ ]
c. Ascertain that building and contents al- $ Application of Sound
locations are correct. Adjusting Practices:
d. Determine whether the file contains evi- (1)Was adjuster's report
deuce identifying subrogation possibilities. accurate/complete? [ l [ l [ ]
e. Verify that partial payments were prop (2) Was an attorney used
erly considered in processing the final draft
or check_ in the settlement? [ I [ ] [ 3
f. Verify that the loss payees are listed cor- (3)Was a technical ex-
rectly i consider insured and mortgagee). pert used in the settle-
g. Verify that the total amount of the ment? 1 3 1 3 1 3
drafts or checks is within the policy limits. C. Documentation:
h. Ascertain the relevance and validity of (1)Are damages clearly
the criteria used by the carrier to judge ef- identified? [ ] [ l [ ]
fectiveness of its claims servicing operation. (2) Are damages flood re-
i. Confirm that when information is re- lated? 1 3 [ ] [ ]
ceived from an independent adjuster, the ex- (3)Are damages clearly
aminer either acts promptly to give proper and completely
feedback with instructions or takes action to itemized and docu-
pay or deny the loss. mented by the ad-
j. Determine whether the Claims Depart- juster? [ ] [ ] I ]
ment is using an "impression of risk" pro- (4)Was depreciation con-
gram in reporting misrated policies, etc. sidered? I ] [ ] I ]
k. Where attempts at fraud occur, verify (5)Has subrogation been
that these instances are being reported to considered [ ] I ] [ ]
FIA for referra. to the FEMA Inspector Gen- (6)Has salvage been
eral's Dffire. properly handled? [ ] [ ] [ ]
i. If :;ny files to be audited are unavailable, (7)Was salvage timely? [ ] 1 1 [ ]
determine the reason for their absence. In 2. Supervision:
uncle_•taking 111S portion of the biennial a. Assignments:
320
Federal Emergency Management Agency Pt. 62, App. B
Yes No N/A Yes No N/A
(1)Me assignments (4)Me attorneys being
made promptly? [ ] [ ] [ ] advised as to handling
(2)Is insured contacted settlement or corn-
promptly? [ ] [ ] [ ] promise? ( 1 [ 1 [ ]
b. Reserves: (5)Me suite being prop-
(1)Are initial reserves erly controlled? [ ] ( ] I ]
indicated on the first (6)Are suits files prop-
report? [ ] [ ] L ] erly charted? [ 1 1 ] [ 1
(2)Me they adequate? ... [ ] [ ] [ ] (7H8) [Reserved].
g. Other:
(3)Does final settlement
(1)Was there other cov-
compare favorably
with last reserve estab- erage by the WYO
lished? [ ] [ ] [ 1 Company? [ ] [ ] [ ]
(2)Were damages cor-
n Diary Control: rattly apportioned? I 1 [ 1 .1 ]
(1)Automatic? I ] [ ] [ ] (3)Was a solo adjuster
(2)Timely? I ] [ ] [ ] used? I ] [ 1 [ )
(3)Is file reviewed at (4)Were there prior flood
diary date with exam- claims? I ] [ I [ ]
iner's comments? I ] [ ] [ 1 (5)Were prior damages
d. Examiner Evaluation repaired? [ 1 [ 1 [ ]
and Settlement Per- (6)Were prior claim files
formances: reviewed? [ ] [ 1 [ ]
(1)Is examiner directing (7)Was a Congressional
adjuster when needed? [ ] [ ] [ ] complaint letter in
(2)Are files documented? [ ] [ ] [ ] file? [ I [ ] [ ]
(3)Is adequate control (8)Was it responded to
maintained over in- promptly? [ ] [ ] [ ]
house adjuster? [ ] I I I 3 (9)Is the statistical re-
(4)Is adequate control porting correction file
maintained over out- being properly man-
side adjuster? [ ] [ I [ ] aged? [ ] [ l [ ]
e. Salvage and subroga- E. State Insurance Department Examination
tion:
(1)Is salvage evaluated L It is expected that audits of WYO comps-
by salvors? [ j [ ] [ ) vies by independent accountants and/or state
(2)Is salvage disposed of insurance departments, aside from those
promptly? [ ] 1 ] I ] conducted by the FIA or its designee, will in-
(3)Me salvage returns elude flood insurance activity. When such
[ 3 1 3 1 ] audits occur, a financial officer for the WYO
adequate?
(4)I poa subroga- Company will notify the FIA, identifying the
auditing entity and providing a brief state-
tion being promptly ment of the overall conclusions that relate
and properly roves- to flood insurance and the insurer's financial
tinted? [ I I ] I 1 condition, when available. In the case of an
(5)Me proper subroga- audit in progress, a brief statement on the
tion forms used? [ ] [ ] I l scope of the audit should be provided to the
(6)Are subrogat.on and FIA. A checklist will be utilized for this re-
salvage files properly porting and will be provided to WYO Comps-
opened, Marled, and re- nies by the Fa.
ferred(if appropriate)? [ ] [ ] [ ] 2. The WYO Companies will maintain on
(7)Me recovery funds file the reports resulting from audits, subject
for subrogation and to on-site inspection by the FIA or its des-
salvage being properly ignee. At the FIA's request, the WYO Com-
handled? [ ] I ] [ 3 pany will submit a copy of the auditor's
1. Suits: opinion, should one be available, summariz-
(1)Me suits properly ing the audit conclusion. "(Approved by the
identified? [ ] [ ] I 3 Office of Management and Budget under
(2)Are suits being prop- OMB control number 3067-0169)"
erly evaluated? [ ] [ ] [ ] a. Certification Statement for Monthly Fi-
(3)Me suits being re- nancial and Statistical Reconciliation Re-
ferred to attorneys ports.
promptly? I 1 [ ] [ ] I have reviewed the accompanying finan-
cial and statistical reconciliation reports of
321
Pt. 63 44 CFR Ch. 100-1-96 Edition)
XYZ Company as of . All informs- 63.16 Review of State application by the Ad-
tion included in these statements is the rep- ministrator.
resentation of the XYZ Company. 63.17 Procedures and data requirements for
Based on my review (with the exception of imminent collapse certifications by
the matter(s) described in the following States.
paragraphs, if applicable), I certify that I am 63.18 Review of State certification by the
not aware of any material modifications that Administrator.
should be made: to the accompanying reports. AnTsoarrr: 42 U.S.C. 4001 et seq.; 13eorga-
Signed nization Plan No. 3 of 1978;E.O. 12127.
(Responsible Financial Officer) SOURCE: 53 FR 36975, Sept. 23, 1988, unless
Date otherwise noted.
b. Certification Statement for Monthly
Statistical Transaction Report Subpart A—General
I have reviewed the accompanying statis-
tical transaction report control totals in §63.1 pe1�Be of part.
conjunction with appropriate statistical rec-
onciliation reports. All information included The purpose of this part is to imple-
in these reports is the representation of the ment section 1306(c) of the National
XYZ Company. "(Approved by the Office of Flood Insurance Act of 1968, as amend-
Management and Budget under OMB control ed (the Act). Section 544 of the Housing
number 3067-0169)." and Community Development Act of
Signed 1987 (Pub. L. 100-242) amended the Act
(Responsible Reporting Officer) by adding subsection (c) to section 1306
of the Act. Under this amendment, ef-
Date fective February 5, 1988, section 1306(c)
[61 FR 51221, Oct. 1, 1996] of the Act provides for benefit pay-
ments under the Standard Flood Insur-
PART 63--IMPLEMENTATION OF ance Policy (SFIP) for demolition or
SECTION 1306(c) OF THE NA- relocation of a structure insured under
TIONAL FLOOD INSURANCE ACT the Act that is located along the shore
OF 1968 of a lake or other body of water and
that is certified by an appropriate
Subpart A—General State or local land use authority to be
subject to imminent collapse or subsid-
Sec. once as a result of erosion or undermin-
63.1 Purpose of part. ing caused by waves or currents of
63.2 Condemnation in lieu of certification. water exceeding anticipated cyclical
63.3 Requirement to be covered by a con- levels. This part establishes criteria by
tract for flood insurance by June 1, 1988. which States can obtain the approval
63.4 Property not covered. of the Administrator to make these
63.5 Coverage for contents removal. certifications and sets forth the proce-
63.6 Reimbursable relocation costs. dures and data requirements to be used
63.7 Amount of coverage and deductible on
effective date of condemnation or certifi- by those States in making these cer-
cation. tifications. This part also contains pro-
63.8 Limitation on amount of benefits. visions regarding other aspects of sec-
63.9 Sale while claim pending. tion 1306(c) of the Act. For example,
63.10 Demolition or relocation contractor to there are provisions regarding section
be joint payee. 1306(c)(6)(B) of the Act (which provides
63.11 Requirement for a commitment before for condemnation in lieu of certifi-
October 1, 1989. cation), including clarification. as to
63.12 Setback and community flood plain
management requirements. the form of condemnation issued under
a State or local law that is required.
Subpart B—State Certification of Structures
Subject to Imminent Collapse §63.2 Condemnation in lieu of certifi-
cation.
63.13 Purpose of subpart. (a) The condemnation required by
63.14 Criteria. for State qualification to per- section 1306(c)(6)(B) of the Act in lieu
form imminent collapse certifications.
63.15 State application for eligibility to cer- of certification need not be rounded in
tify structures subject to imminent col- a finding that the structure is subject
lapse_ to imminent collapse or subsidence as
322
Federal Emergency Management Agency §63.8
a result of erosion, but may be issued "Direct Physical Loss by or from
for other reasons deemed sufficient by Flood" in the SFIP for the expense of
the State or local authority. removing contents, up to the minimum
(b) The condemnation may be in the deductible of 5500.00, to protect and
form of a court order or other instru- preserve them from flood or from the
ment authorized by State or local law, imminent danger of flood, applies if
e.g., a notification to the property contents coverage is in effect.
owner of an unsafe condition, or unsan-
itary condition, or other deficiency at §63.8 Reimbursable relocation costs.
the property address, coupled with a In addition to the coverage described
statement that the property owner in §63.5 .of this part, relocation costs
must vacate the property if the condi- for which benefits are payable under
tion giving rise to the condemnation section 1306(c) of the Act include the
notice is not cured by repair, removal, costs of:
or demolition of the building by a date (a) Removing the structure from the
certain. site,
(c) In addition to a condemnation in (b) Site cleanup,
accordance math paragraphs (a) and (b) (c)Debris removal,
of this section, a structure must be (d) Moving the structure to a new
found by the Administrator to be sub- site, and
ject to imminent collapse or subsid- (e) At the new site, a new foundation
ence as a result of erosion or undermin- and related grading, including elevat-
ing caused by waves or currents of ing the structure as required by local
water exceeding anticipated cyclical flood plain management ordinances,
levels to be eligible for benefits under and sewer, septic, electric, gas„ tele-
secticn 1306(c) of the Act. phone, and water connections at the
building.
*63.3 Requirement to be covered by a
contract for flood insurance by §63.7 Amount of coverage and deduct-
June 1, 1fs88. ible on effective date of condemna-
The requirement in section tion or certification.
1306(c)(4)(C)(i) of the Act that a strut- The amount of building coverage and
tore be "covered by a contract for flood the deductible applicable to a claim for
insurance under this title—(1) on or be- benefits under section 1306(c) of the Act
fore ,June 1, 1988" was met if presen- are what was in effect on the date of
taticn of the appropriate premium and condemnation or the date of applica-
a properly campleted flood insurance tion for certification.
application form was made to the Na- [53 FR 36975, Sept. 23, 1988, as amended at 53
tional Flood Insurance Program or a FR 44193, Nov.2, 1968]
Write Your Own (WYO) Company on or
before June 1,. 1988. §63.8 Limitation on amount of bene-
fits.
§83.4: Property not covered. (a) In section 1306(c)(3)(C) of the Act,
Benefits under section 1306(c) of the the phrase under the flood insurance
Act do not include compensation for contract issued pursuant to this title
items excluded under the provisions of means the value of the structure under
the Standard Flood Insurance Policy section 1306(c)(3)(C) of the Act is lim-
(SFLP'). ited to the amount of building coverage
§633 Coverage for contents removal provided by the insured's policy.
(b) Where the amount payable under
Whenever a, structure is subject to section 1306(c)(1)(A)(ii) of the Act for
imminent collapse or subsidence as a the cost of demolition, together with
result of erosion or undermining the amount payable under section
caused by waves or currents of water 1306(c)(1)(A) of the Act for the value of
exceeding anticipated cyclical levels the structure under the demolition op-
and otherwise meets the requirements tion, exceeds the amount of building
of section 1306(c) of the Act so that coverage provided by the insured's pol-
benefits are payable under those provi- icy, such amounts will be paid beyond
sions, the coverage in the definition of the amount of that building coverage,
323
§63.9 44 CFR Ch. I (10-1-98 Edition)
even if this payment exceeds the limits involved was located when the claim
of coverage otherwise authorized by under section 1306(c) of the Act arose.
section 1306(a) of the Act for the par- (b) In addition, any structures relo-
ticular class of property. cated under section 1306 of the Act
Sale while claim pending. must comply with the flood plain man-
§63.9agement criteria set forth in §60.3 of
If a claimant sells a structure prior this chapter.
to its demolition or relocation, no ben-
efits are payable to that claimant Subpart B—State Certification of
under sectio:a 1306(c) of the Act, and Structures Subject to imminent
any payments which may have been Cofiapse
made under those provisions shall be
reimbursed to the insurer making §6313 Purpose of subpart.
them.
The purpose of this subpart is to es-
§63.10 Demolition or relocation con- tablish criteria under the provisions of
tractor to be joint payee. section 1306(c) of the National Flood
If a demolition or relocation contrac- Insurance Act of 1968, as amended, by
tor is used, the instrument of payment which States can obtain approval from
for benefits under section 1306(c) of the the Administrator to certify that
Act for the fee of that contractor, shall structures are subject to imminent col-
include that contractor as a joint lapse or subsidence as a result of ero-
payee, unless that contractor has al- sion or undermining caused by waves
ready been paid when the instrument or currents of water exceeding antici-
of payment is issued. pated cyclical levels. The subpart also
sets forth the procedures and data re-
§63.11 Requirement for a commitment quirements to be utilized by those
before October 1, 1989. States in certifying structures as sub-
The requirement in section 1306(c)(7) ject to imminent collapse. The State
of the Act that a commitment be made certification procedure represents an
on or before September 30, 1989 as a option to the use of the procedure
necessary condition to making any whereby a structure is condemned by a
payments after September 30, 1989, is State or local authority as a pre-
met if before October 1, 1989, requisite to consideration for immi-
(a) There is either a condemnation in nent collapse insurance benefits.
accordance with §63.2 of this part or a
certification in accordance with sub- §63.14 Criteria for State qualification
part B of this part, and to perform imminent collapse cer-
(b) A policyholder's notice of claim tifications.
for benefits under section 1306(c) of the In order to qualify under this sub-
Act is received by the insurer. part, the State must be administering
a coastal zone management program
§63.12 Setback and community flood which includes the following compo-
plain management requirements. nents, as a minimum:
(a) Where benefits have been paid (a) A state-wide requirement that
under section 1306(c) of the Act, the prohibits new construction and the re-
setback requirements in section location of structures seaward of an
1306(c)(5) of ;he Act, which if not met adopted erosion setback. Such setback
result in a prohibition against subse- must be based in whole or in part on
quently providing flood insurance or some multiple of the local mean an-
assistance under the Disaster Relief nual erosion (recession) rate; and.
Act of 1974, shall apply: (b) An established, complete and
(1) To the structure involved wher- functional data base of mean annual
ever it is located, and erosion rates for all reaches of coastal
(2) To any other structure subse- shorelines subject to erosion in the
quently constructed on or moved to the State, which is used as the basis to en-
parcel of land on which the structure force these setback requirements.
324
Federal Emergency Management Agency 1'03.17
363-15 State application for eligibility trator shall approve the State as eligi-
to certify> structures subject to im- ble to certify structures subject to im-
mi collapse. minent collapse. Such approval, how-
(a)Application pursuant to this part ever, is in all cases provisional. The
shall be made by the Governor or other Administrator shall review the State
duly authorized official of the State. program and data base for continued
(b) The application must be submit- compliance with the criteria set forth
ted to the Federal Emergency Manage- in this part and may request updated
ment Agency, Federal Insurance Ad- documentation for the purpose of such
ministration, 500 C Street SW., Wash- review. If the program and/or data base
ington, DC 20472. is found to be inadequate and is not
(c) Documents to be included in the corrected within ninety days from the
application are as follows: date that such inadequacies were iden-
(1) Copies of all applicable State stet- tifled, the Administrator may revoke
utes and regulations verifying the ex- his approval.
istence of a coastal zone management
program including setback require- 083.17 Procedures and data require-
ments for new and relocated construe- ments for imminent collapse certifi-
tion which are based in whole or in cations b9 Ste°
part on mean annual erosion rates es- Any State that has been determined
tablished for the State's shorelines. to be eligible by the Administrator
(2) A copy of the State's mean annual may certify that a coastal structure is
erosion rate data base, if not already subject to imminent collapse. Such
provided, showing such rates for all certification requires that the State
reaches of coastal shorelines subject to collect scientific or technical informs-
erosion within the State. tion relative to the structure and its
(3) The title, address and phone num- site and provide such information to
ber of a contact person within the the insured to be filed with a claim for
State agency having authority for ad- insurance benefits under Section 1306
ministering the coastal zone manage- of the National Flood Insurance Act of
ment program. 1968, as amended. The information
(4) A statement that adequate re- which is provided to the insured Rho11
sources are available to carry out the include, but is not limited to, the fol-
certification services, and that certify- lowing:
cations will be performed in accord- (a) Certification from the State agen-
ance with the procedures described in cy that the structure is subject to im-
§63.j7, minent collapse. The certification shall
cite the property address, legal descrip-
§63.16 Review of State application by tion (e.g., lot, block), the date of appli-
the Administrator, cation for certification, and the date of
(a) The Administrator may return and basis for the certification, and
the application for eligibility upon (b) Supporting scientific and tech-
finding it incomplete or upon finding nical data to substantiate the certifi-
that additional information is required cation consisting of the following:
in order to make a determination as to (1) Photographs of the structure in
the adequacy of the coastal zone man- relation to the obvious peril. All :photo-
agement program and erosion rate data graphs should be labeled with the loca-
base. tion, direction, date and time from
(b) Upon determining that the which they were taken. The collection
State's program and/or data base does of photographs should adequately dis-
not meet the criteria set forth in play the following:
§63.14, the Administrator shall in writ- (i) Any evidence of existing damage.
ing reject the application for eligibility The damage can include loss or erosion
and indicate '.n what respects the State of soil near or around the foundation,
program and/or data base fails to corn- or structural damage to the foundation
ply with the criteria. components.
(c) Upon determining that the State (ii) Structure and waterbody. These
program and data base meets the cri- photographs shall show both the struc-
teria set forth in §63.14, the Adminis- ture and the waterbody that presents
325
§63.18 44 CFR Ch. I (10-1-98 Eidmon)
the peril. If the structure is on a high meats (i.e., reference feature and clos-
bluff or dune and not accessible from est structural member) shall be identi-
the water side, the top edge of the bluff fled on the appropriate photograph or
or dune will be sufficient. These will sketch of the site. If some or all of the
usually be taken from one or both sides reference features coincide, this shall
of the structure. also be noted and identified on the pho-
(iii) Physical reference features used tographs. Reference features landward
in the measurements discussed below, of the structure need not be measured,
The reference feature shall be in or but shall be noted on the photographs.
near the area affected by normal tides, (4) A determination of the average
• when applicable. If a reference is not annual erosion rate at the site and a
clearly distinguishable on the photo- copy of the pertinent section of the ref-
graph, it should be annotated to iden- erence document used to obtain the an-
tify the feature. If possible, all ref- nual erosion rate at the site.
erence features described below should (5) Copy of the effective Flood. Insur-
be photographed showing their rela- ante Rate Map panel annotated with
tionship to the site of the threatened the location of the threatened struc-
structure.
(2) Identification and selection of ref- ture.
erence features. The following ref- (6) In the event that a structure is
erence features are presented according not situated within a "zone of immi-
to priority. If the first feature is not nent collapse" using the criteria and
present, the next feature shall be lo- procedures in paragraphs (b) (1)
cated and photographed, and so forth. through (5) of this section, then the
(1) Top edge of bluff(cliff top). State may submit other scientific and
(ii) Top edge of escarpment on an technical data, in addition to the infor-
eroding dune (i.e., a nearly vertical mation described in paragraphs (b) (1)
erosional cut at the seaward face of the through (5) of this section, that; would
dune). The normal high tide should be reveal unusual erosive or stability con-
near the toe of the dune and there ditions at the site. Such data must in-
should be ir.dications that the dune is elude engineering analyses or reports
actively eroding. performed on the structure or site
(iii) The normal high tide limit may which evaluates local rates of erosion,
be indicated by one of the following: or the condition or stability of the
(A) Vegetation line (the seaward structure's foundation including sup-
most edge of permanent vegetation). porting soil.
(B) Bead. scarp (erosion line on (c) In the case of structures planned
beach, usually a sharp, nearly vertical to be relocated, a certification as to
drop of 0.5 to 3.0 feet at the upper limit whether the proposed relocation site is
of high tide), outside the 30-year setback for 1-4 fain-
(C) Debris line deposited by the nor- ily residential structures, or outside
mal high tide, not by a recent storm. the 60-year setback for all other strue-
(I)) Upper :limit of wet sand. tures, must also be submitted by the
(3) Distance measurements from the State.
threatened structure to the nearest
points on the reference features. These [53 FR 36975, Sept. 23, 1988, as amended at 53
measurements should be taken from all FR 44193, Nov. 2, 1988]
photographed reference features to the §63.18 Review of State certification by
closest point on the supporting founda- the Administrator.
tion. Forpurposes of making this
measurement, decks, stairs, and other The Administrator, after a claim has
exterior attachments that do not con- been filed by the property owner, will
tribute to the structural support of the review the certification and data pre-
building are not considered part of the pared by the State. Upon completion of
structure. The measurements shall be the review, the State will be notified
taken horizontally with a tape and re- that:
corded to tine nearest foot. The date (a) The structure has been deter-
and time of the measurement shall be mined to be subject to imminent col-
noted. The location of the measure- lapse, or
326
Federal Emergency Management Agency §64.3
(b) The structure has not been deter- 484.5 Definitions.
mined to be subject to imminent col- The definitions set forth in
lapse and the basis for such determine, t 59 of
this subchapter are applicable to this
tion, or
(c) Additional data are needed to ver-
ify that the procedures and criteria for [41 FR 46986, Oct. 26, 1976. Redesignated at 44
imminent collapse certification have FR 311717,May 31,1979]
been met. §64.3 Flood Insurance Maps.
PART 64-COMMUNITIES EUGIBLE (a) The following maps may be pre-
FOR TFIE !SALE OF INSURANCE pre-
pared i the
witAdministrator
sale of flood use in
Sec. (1) Flood Insurance Rate Map
64.1 Purpose or part. (FIRM): This map is prepared after the
64.2 Definitions. risk study for the community has been
64.3 Flood Insurance Maps. completed and the risk premium rates
64.4 Effect on community eligibility result- have been established. It indicates the
ing from boundary changes, govern- risk premium rate zones applicable in
mental reorganization, etc. the community and when those rates
64.5 Relationship of rates to zone designs- are effective. The symbols used to des-
tfona. ignate those zones are as follows:
64.6 List of eligible communities.
AUTHORITY: 42 U.S.C. 4001 et seq.; Reorga- Zone symbol
nization Plan :No. 3 of 1978, 43 FR 41943, 3
without
CFR, 1978 Comp., p. 329; E.O. 1212'1 of Mar. 31, A Area of special',ovflooations
beast: rood
water surface elevations determined
1979, 44 FR 19367, 3 CFR, 1979 Comp., p. 376. Al-3D,AE Area of special flood hazard with water
surface elevations determined
64.1 Purpose of part. AO Area of special flood hazards having
shallow water depths ands unpredid-
(a) 42 U.S.C. 4012(c), 4022 and 4102 re- awe tow paths between(1)and(3)fl
quire that flood insurance in the maxi- A99 Area of special flood hazard where
mum limits of coverage under the regu- enough protective(pare has been stl dik a
system. such as thorn,
lar program shall be offered in commu- dams, and levees, to consider n corn-
nities only after the Administrator plate for Insurance rating purposes
has: (1) Identified the areas of special AH Areas of special flood hazards having
shallow water depths and/o unpredict-
flood, mudslide (i.e., mudflow) or flood- awe flow paths between (1) and (3)
related erosion hazards within the feet,and with water surface elevations
community; and/or (2) completed a risk determined
study for the applicant community. AR Area mthse decertification
flood of previously
The priorities for conducting such risk accedited flood protection system that
studies are set forth in 159.23 and 60.25 is determined to be in the process of
of this subchapter. The purpose of this prtg 85tored to provide base flood
on
part is to define the types of zones v Area a special flood hazards without
which the Agency will use for identify- water surface elevations determined,
ing the hazard areas on maps. and with velocity, that is inundated by
tidal floods(coastal high hazard area)
(b) 42 U.S.C. 4056 authorizes an emer- v1-30,VE .._ Area of special flood hazards,with water
gency implementation of the National surface elevations determined and with
Flood Insurance Program whereby the velocity, that Is inundated by tidal
floods(coastal high hazard area)
Administrator may make subsidized vo Area of special flood hazards having
coverage available to eligible commu- shallow water depths and/or unpredict-
nities prior to the completion of de- able flow paths between (1) and (3) ft.
and
tailed. risk studies for such areas. Thiswith e avelocityr
B,X ._ Area of f moderate flood hazards
part also describes procedures under c.X Area of minimal hazards
the emergency program and lists com- D Area of undetermined but possible,flood
muni.ties which become eligible under az
the NFIP. M Area o of f s special mudslide (i.e., mudflow)
hazards
mud-
[48 FR 28278, June 21, 1963, as amended at 49 N Arse zmaderate mudslide (i.e..FR 4751, Feb. 8, 1984; 49 FR 33879, Aug. 7, flow)hazaea of s
1984] u6 p mudslide hazards undetermined, but poeable,
327
§644 44 CFR Ot 1 (10 -1-98 Edition)
Zone symbol gram. Until the effective date of par-
ticipation, existing flood insurance
E Area d special flood-related erosion haz-
ems. policies remain in effect until the pol-
icy's date of expiration, but shall not
Areas identified as subject to more be renewed.
than one hazard (flood, mudslide (i.e., (b) When a community participating
mudflow), flood-related erosion) will be in the Program acquires by means of
designated by use of the proper sym- annexation, incorporation, or other-
bols in combination. wise, another area which was pre-
(2) Flood Hazard Boundary Map viously located in a community either
(FBBM). This map is issued by the Ad- participating or not participating in
ministrator delineating Zones A, M, the Program, the community shall
and E within a community. have six months from the date of ac-
(b) Notice of the issuance of new or quisition to formally amend its flood
revised FHBMs or FIRMs is given in plain management regulations in order
Part 65 of this subchapter. The manda- to include all flood-prone areas within
tory purchase of insurance is required the newly acquired area. The amended
within designated Zones A, AI-30, AE, regulations shall satisfy the applicable
A99, AO, All, AR, AR/AI-30, AR/AE, requirements in §60.3 of this sub-
AR/AC), AR/AH, AR/A, V1-30, VE, V, chapter based on the data previously
VO, M, and E. provided by the Administrator. In the
(c) The FIIBM or FIRM shall be event that the newly acquired area was
maintained for public inspection at the previously located in a community par-
following locations: ticipating in the Program, the ;provi-
(1) The information office of the sions of this section shall only apply if
State agency or agencies designated by the community, upon acquisition, and
statute or the respective Governors to pending formal adoption of the amend-
cooperate with the Administrator in ment to its flood plain management
implementing the Program whenever a regulations, certifies in writing over
community becomes eligible for Pro- the signature of a community official
gram participation and the sale of in- that within the newly acquired area
surance pursuant to this section or is the flood plain management require-
identified as flood prone. ments previously applicable in the area
(2) One or more official locations remain in force. In the event that the
within the community in which flood newly-acquired area was previously lo-
insurance is offered. cated in a community not participat-
(3) [Reserved] ing in the Program, the provisions of
(4) The official record copy of each the section shall only apply if the corn-
official map shall be maintained in munity, upon acquisition, and pending
FEMA files in. Washington, DC. formal adoption of the amendments to
[41 FR 46986, Oct. 26, 1976. Redesignated at 44 its flood plain management regula-
FR 31177. May 31, 1979, as amended at 46 FR tions, certifies in writing over the sig-
1214, Jan. 6, 1981; 48 FR 28218, June 21, 1983: 48 nature of a community official that it
FR 44544 and 44552, Sept. 29, 1983; 49 FR 4751, shall enforce within the newly-month
Feb. 8, 1984; 50 FR 36028, Sept. 4, 1985; 59 FR
53599, Oct. 25, 1994; 62 FR 55716, Oct. 2'7, 1997) period, existing flood insurance poli-
cies shall remain in effect until their
*64.4 Effect on community eligibility date of expiration may be renewed, and
resulting from boundary changes, new policies may be issued. Failure to
governmental reorganization, etc. satisfy the applicable requirements in
(a) When a community not partici- §60.3 shall result in the community's
pating in the Program acquires by suspension from Program participation
means of annexation, incorporation, or pursuant to §59.24 of this subchapter.
otherwise, an area within another corn- (c) When an area previously a part of
munity participating in the Program, a community participating in the Pro-
no new flood insurance shall be made gram becomes autonomous or becomes
available as of the effective date of an- a portion of a newly autonomous com-
nexation until the newly acquiring munity resulting from boundary
community participates in the Pro- changes, governmental reorganization,
328
Federal Emergency Management Agency Pt. 65
changes in state statutes or constitu- under the emergency program, the Ad-
tion, or otherwise, such new comma- ministrator may authorize the sale of
nity shall be given six months from the such insurance without designating
date of its independence, to adopt flood any Zones A, M, or E within a cornmu-
plain management regulations within nity, provided the community has pre-
the special hazard areas subject to its viously adopted flood plain manage-
jurisdiction and to submit its applica- ment regulations meeting the require-
tion for participation as a separate ments of §60.3(a), §60.4(a) or §60.5(a) of
community in order to retain eligi- this subchapter. When the Adminis-
bility for the sale of flood insurance. trator has obtained sufficient technical
The regulations adopted by such new information to delineate Zones A, M,
community shall satisfy the applicable or E, he/she shall delineate the ten-
requirements in §60.3 of this sub- tative boundaries on a FHBM.
chapter based on the data previously (b) Upon the effective date of the
provided by the Administrator. The FIRM, flood insurance will continue to
provisions of this section shall only be available throughout the entire
apply where the new community upon community at chargeable rates (i.e.,
the date of its independence certifies in subsidized) for first layer coverage of
writing over the signature of a commu- existing structures, but will be only
nity official that, pending formal adop- available at risk premium rates for all
tion of flood plain management regula- new construction and substantial im-
tions, the flood plain management re- provements. Upon the effective date of
quirements previously applicable in a FIRM, second layer coverage is avail-
that area remain in effect. During the able only at risk premium rates for all
six month period, existing flood insur- structures.
ance policies shall remain in effect (c) Detailed insurance information
until their dates of expiration may be may be obtained from the servicing
renewed, and new policies may be companies. See part 62 of this sub-
issued. Failure to satisfy the applicable chapter.
requirements in §60.3 of this sub-
chapter shall result in the commu- [41 FR 46986, Oct. 26, 1976. Redesignated at 44
nity's suspension from Program par- FR 31177, Ma2y 31. 1979, as amended at 48 FR
ticipation pursuant to §59.24 of this 44552, Sept. 9, 19&3; 49 FR 4751, Feb. 8, 19847
subchapter. §64.6 List of eligible communities.
(d) Where any community or any The sale of flood insurance pursuant
area within a community had in effect
a FHBM or FIRM, but all or a portion to the National Flood Insurance Pro-
of that community has been acquired (42 U.S.C. 4001-4128) is authorized
by another community, or becomes au- for the communities set forth under
tonornous, that map shall remain in ef- this section. Previous listings under
fect until it is superseded by the Ad- this part continue in effect until re-
ministrator, 'whether by republication used.
as part of the map of the acquiring [41 FR 46986, Oct. 25, 1976]
community, or otherwise. EDITORIAL NOTE: For references to FR
(e) When a community described in
paragraph (a), (b), (c), or (d) of this sec- see thes sho List lists of eligible ctn communities,
eced
see of CFR Sections Affected ap-
tion has flood elevations in effect, no gearing in the Finding Aids section of this
new appeal period under parts 66, 67, volume.
and 68 of this subchapter will begin ex-
cept as new scientific and technical PART 65-IDENTIFICATION AND
data are available. MAPPING OF SPECIAL HAZARD
[41 FR 46986, Oct. 26, 1976. Redesignated at 44 AREAS
FR 31177, May 31, 1979, as amended at 48 FR
44552, Sept. 29, 1983; 49 FR 4751, Feb. 8, 1984] sec.
§64.5 Relationship of rates to zone 65.1 Purpose of part.
designations. 65.2 Definitions.
65.3 Requirement to submit new technical
(a) In order to expedite a commu- data.
nity's qualification for flood insurance 65.4 Right to submit new technical data.
329
§65.1 44 CFR Ch. 1 (10-1-98 Edition)
65.5 Revision to special flood hazard area see have been performed correctly and
boundaries with no change to base flood in accordance with sound engineering
elevation determinations. practices. Certification of structural
65.6 Revision of base flood elevation deter- works is a statement that the works
min .
65.7 Floodway revisions. are designed in accordance with sound
65.8 Review of proposed projects. engineering practices to provide pro-
65.9 Review and response by the Adminis- tection from the base flood. Certifl-
trator. cation of "as built" conditions is a
65.10 Mapping of areas protected by levee statement that the structure(s) has
systems. been built according to the plans being
65.11 Evaluation of sand dunes in mapping certified, is inplace, and is fully func-
coastal flood hazard areas.
65.12 Revision of flood insurance rate maps tioning.
to reflect base flood elevations caused by [51 FR 30313, Aug. 25, 1966]
proposed encroachments.
65.13 Mapping and map revisions for areas
subject to alluvial fan flooding. tec
§66.8 Requirement to submit new
65.14 Remappi:ng of areas for which locale data.
flood protection systems no longer pro- A community's base flood elevations
vide base flood protection. may increase or decrease resulting
65.15 List of communities submitting new from physical changes affecting flood-
technical da ing conditions. As soon as practicable,
65.16 Standard. Flood Hazard Determination but not later than six months after the
Form and instructions.
§65.17 Review of determinations. date such information becomes avail-
AWCHORrIT: 42 U.S.C. 4001 et seq.; Reorga- able, a community shall notify the Ad-
nlzatlon Plan No. 3 of 1978, 43 FR 41943, 3 ministrator of the changes by submit-
CFR, 1978 Comp., p. 329; E.O. 12127 of Mar. 31, ting technical or scientific data in ac-
1979,44 FR 19361, 3 CFR, 1979 Comp., p. 376. cordance with this part. Such a sub-
mission is necessary so that upon con-
§65.1 Purpose of part. firmatfon of those physical changes af-
42 U.S.C. 4104 authorizes the Director fecting flooding conditions, risk pre-
to identify and publish information mium rates and flood plain manage-
with respect to all areas within the ment requirements will be based upon
United States having special flood, current data.
mudslide (i.e., mudflow) and flood-re-
lated erosion hayards. The purpose of [51 FR 30313, Aug. 25, 1986]
this part is to outline the steps a com- §66,4 Right to submit new technical
munity needs to take in order to assist data.
the Agency's effort in providing up-to- (a) A community has a right to re-
date identification and publication, in (es A community has a right or a-
the form of the maps described in part tquest changes to any of the informa-
the
64, on special flood, mudslide (i.e., does shownimpact on fla effective map that
mudfl.ow) and flood-related erosion haz- li nott baseod plain elevations,r floodway
ards.
or base flood
such as community boundary changes,
[48 FR 26278, June 21, 1983] labeling, or planimetric details. Such a
§6b2 Jlofinifiona. submission shall include appropriate
supporting documentation in accord-
(a) Except as otherwise provided in ance with this part and may be submit-
this part, the definitions set forth in ted at any time.
part 59 of this subchapter are applica- (b) All requests for changes to effec-
ble to this part. tive maps, other than those initiated
(b) For the purpose of this part, a by FEMA, must be made in writing by
certification by a registered profes- the Chief Executive Officer of the con-
sional engineer or other party does not munity (CEO) or an official designated
constitute a warranty or guarantee of by the CEO. Should the CEO refuse to
performance, expressed or implied. Cer- submit such a request on behalf of an-
tification of data is a statement that other party, FEMA will agree to review
the data is accurate to the best of the it only if written evidence is provided
certifier's knowledge. Certification of indicating the CEO or designee has
analyses is a statement that the analy- been requested to do so.
330
Federal Emergency Management Agency §65.5
(c) Requests for changes to effective whether a legally defined parcel of land
Flood Insurance Rate Maps (FIRMS) is to be excluded from the area of spe-
and Flood Boundary and Floodway cial flood hazard shall be based upon a
Maps (FBFIsols) are subject to the cost comparison of the ground elevations of
recovery procedures described in 44 the parcel with the elevations of the
CFR part 72. As indicated in part 72, re- base flood. If the ground elevations of
visions requested to correct mapping the entire legally defined parcel of land
errors or errors in the Flood Insurance are at or above the elevations of the
Study analysis are not to be subject to base flood, the parcel may be excluded
the cost-recovery procedures, from the area of special flood hazard.
[51 FR 30313, Aug. 25, 1986, as amended at 57 (4) If a structure is involved, a topo-
FR 29038, June 30, 1992; 61 FR 46391, Aug. 30, graphic map indioati.ng structure loca-
1996;e2 FR 5736,Feb.6, 1997) tion and ground elevations including
(in-
normal, Nan: For references to FR the elevations of the lowest floor (in-
eluding basement) and the lowest adja-
pages showing lists of eligible communities,
see the List of CFR Sections Affected ap- cenb grade to the structure. FEMA's
pearing in the Finding Aids section of this determination as to whether a struc-
volume. ture is to be excluded from the area of
special flood harard shall be based upon
565.5 Revision to special flood hazard a comparison of the elevation of the
area boundaries with no change to lowest floor (including basement) and
base flood elevation determine- the elevation of the lowest adjacent
tions. grade with the elevation of the base
(a) Data requirements for topographic flood. If the entire structure and the
changes. In many areas of special flood lowest adjacent grade are at or above
barn rd (excluding V zones and the elevation of the base flood, the
floodways) it may be feasible to elevate structure may be excluded from the
areas with earth fill above the base area of special flood hazard.
flood elevation. Scientific and tech- (5) Data to substantiate the base
nical information to support a request flood elevation. If FEMA has corn-
to gain exclusion from an area of ape- pleted a Flood Insurance Study (PIS),
cial flood hazard of a structure or par- that data will be used to substantiate
cel of land that has been elevated by the base flood. Otherwise, data pro-
the placement of fill shall include the vided by an authoritative source, such
following: as the U.S. Army Corps of Engineers,
(1) A copy of the recorded deed indi- U.S. Geological Survey, U.S. Soil Con-
eating the legal description of the servation Service, state and local
property and. the official recordation water resource departments, or tech-
information (deed book volume and nical data prepared and certified by a
page number) and bearing the seal of registered professional engineer may
the appropriate recordation official be submitted. If base flood elevations
(e.g.., County Clerk or Recorder of have not previously been established,
Deeds). hydraulic calculations may also be re-
(2) If the property is recorded on a quested.
plat map, a copy of the recorded plat (6) Where fill has been placed to raise
indicating both the location of the the ground surface to or above the base
property and the official recordation flood elevation and the request to gain
information (plat book volume and exclusion from an area of special flood
page number) and bearing the seal of ha.rard includes more than a single
the appropriate recordation official. If structure or a single lot, it must be
the property is not recorded on a plat demonstrated that fill will not settle
map, copies of the tax map or other below the elevation of the base flood,
suitable maps are required to aid and that the fill is adequately pro-
FEMA in accurately locating the prop- tected from the forces of erosion,
erty. scour, or differential settlement as de-
(3) If a legally defined parcel of land scribed below:
is involved, a topographic map indicat- (i) Fill must be compacted to 95 per-
ing present ground elevations and date cent of the maximum density obtain-
of fill. FEM.'s determination as to able with the Standard Proctor Test
331
§65.6 44 CFR Ch. I (10-1-98 Eci ion)
method issued by the American Soci- DC, and shall be accompanied by the
ety for Testing and Materials (ASTM appropriate payment, in accordance
Standard D-698). This requirement ap- with 44 CFR part 72.
plies to fill pads prepared for residen-
tial or commercial structure founda- [51 FR 90313, Aug. 25, 1986; as amended at 61
tions and does not apply to filled areas FR 46331, Aug. 30, 1996; 62 FR 5736, Feb. 6,
intended for other uses. 1997]
(ii) Fill slopes for granular materials *65.6 Revision of base flood elevation
are not steeper than one vertical on determinations.
one-and-one-half horizontal unless sub-
stantiating (a) General conditions and data require-
slopes is submitted.data justifying steeper ments. (1) The supporting data must in-
(iii) Adequate protection is provided elude all the information FEMA needs
fill slopes exposed to flood waters with to review and evaluate the request.
expected velocities during the occur- This may involve the requestor's per-
rence of the base flood of five feet per forming new hydrologic and hydraulic
second or less by covering them with analysis and delineation of new flood
grass, vines, weeds, or similar vegeta- Plain boundaries and floodways, as nec-
tion undergrowth. essary.
(iv) Adequate protection is provided (2) To avoid discontinuities between
fill slopes exposed to flood waters with the revised and unrevised flood data,
velocities during the occurrence of the the necessary hydrologic and hydraulic
base flood of greater than five feet per analyses submitted by the map revi-
second by armoring them with stone or sion requestor must be extensive
rock slope protection, enough to ensure that a logical transi-
(7) A revision of flood plain delinea- tion can be shown between the revised
tions based on fill must demonstrate flood elevations, flood plain bound-
that any such fill has not resulted in a aries, and floodways and those devel-
floodway encroachment. oped previously for areas not affected
(b) New topographic data. The proce- by the revision. Unless it is dem-
dures described in paragraphs (a) (1) onstrated that it would not be appro-
through (5) of this section may be also priate, the revised and nnrevised base
followed to request a map revision flood elevations must match within
when no physical changes have oc- one-half foot where such transitions
curred in the area of special flood has- occur.
ard, when no fill has been placed, and (3) Revisions cannot be made based
when the natural ground elevations, as on the effects of proposed projects or
evidenced by new topographic maps, future conditions. Section 65.8 of this
more detailed or more accurate than subchapter contains provisions for ob-
those used to prepare the map to be re-
vised, are shown to be above the ele- Fining conditional approval of pro-
Posed projects that may effect map
vation of the base flood.
(c) Certification requirements. The
changes when they are completed.
items required in paragraphs (a) (3) and (4) The datum and date of releveling
(4) and (b) of this section shall be cer- of benchmarks, if any, to which the
tilled by a registered professional engi- elevations are referenced must be indi-
neer or licensed land surveyor. Items cated.
required in paragraph (a)(6) of this sec- (5) Maps will not be revised when dic-
tion shall be certified by the commu- charges change as a result of the use of
nity's NF1P permit official, a reg- an alternative methodology or data for
istered professional engineer, or an ac- computing flood discharges unless the
credited soils engineer. Such certifi- change is statistically significant as
cations are subject to the provisions of measured by a confidence limits analy-
§65.2 of this subchapter. sis of the new discharge estimates.
(d) Submission procedures. All requests (6) Any computer program used to
shall be submitted to the FEMA Re- perform hydrologic or hydraulic analy-
gional Office servicing the commu- ses in support of a flood insurance map
nity's geographic area or to the FEMA revision must meet all of the following
Headquarters Office in Washington, criteria:
332
Federal Emergency Management Agency §65.6
(i) It must have been reviewed and lished base flood elevations may be
accepted by a governmental agency re- performed for only the 100-year flood.
sponsible for the implementation of (10) A revision of flood plain delinea-
programs for flood control and/or the tions based on topographic changes
regulation of flood plain lands. For must demonstrate that any topo-
computer programs adopted by non- graphic changes have not resulted in a
Federal agencies, certification by a re- floodway encroachment.
sponsible agency official must be pro- (11) Delineations of flood plain
vided which states that the program boundaries for a flooding source with
has been reviewed, tested, and accepted established base flood elevations must
by that agency for purposes of design provide both the 100- and 600-year flood
of flood control structures or flood plain boundaries. For flooding sources
plain land use regulation. without established base flood ele-
(if) It must be well-documented in- vations, only 100-year flood plain
eluding source codes and user's manu- boundaries need be submitted. These
als. boundaries should be shown on a tope-
(iii) It must be available to FEMA graphic map of suitable scale and con-
and all present and future parties im- tour interval.
patted by flood insurance mapping de- (12) If a community or other party
veloped or amended through the use of seeks recognition from FEMA, on its
the program. For programs not gen- FFIBM or FIRM, that an altered or re-
erally available from a Federal agency, located portion of a watercourse pro-
the source code and user's manuals vides protection from, or mitigates po-
must be sent to FEMA free of charge, tential hazards of, the base flood, the
with fully-documented permission from Administrator may request specific
the owner that FEMA may release the documentation from the community
code and user's manuals to such im- certifying that, and describing how,
patted parties. the provisions of §60.3(b)(7) of this sub-
(7) A revised hydrologic analysis for chapter will be met for the particular
documenta-
flooding sources with established base twatercourse involved. This flood elevations must include evalua- written which may be in the form ofm a
tion of the same recurrence interval(s) statement t from the anmmu-
studied in the effective FIS, such as nity Chief Executive Officer, an ordi-
the 10-, 50-, 100-, and 500-year flood dis- nonce, or other legislative action, shall
describe the nature of the maintenancecharges.
(8) A revised hydraulic analysis for a quenactivities to be performed, the per-
flooding fre-
source with established base formed,ey with the titch they will be and title of the local corn-
flood elevations must include evalua- munity official who will be responsible
tion of the same recurrence interval(s) for assuring that the maintenance ac-
studied in the effective FIS, such as tivities are accomplished.
the 10-, 50-, 100-, and 500-year flood ele- (13) Notwithstanding any other provi-
vations, and of the floodway. Unless sions of §65.6, a community may sub-
the basis of the request is the use of an mit, in lieu of the documentation spec-
alternative hydraulic methodology or ified in §65.6(a)(12), certification by a
the requester can demonstrate that the registered professional engineer that
data of the original hydraulic com- the project has been designed to retain
puter model is unavailable or its use is its flood carrying capacity without
inappropriate, the analysis shall be periodic maintenance.
made using the same hydraulic com- (b) Data requirements for correcting
puter model used to develop the base map errors. To correct errors in the
flood elevations shown on the effective original flood analysis, technical data
Flood Insurance Rate Map and updated submissions shall include the follow-
to show present conditions in the flood ing:
plain. Copies of the input and output (1) Data identifying mathematical er-
data from the original and revised hy- rors.
draulic analyses shall be submitted. (2) Data identifying measurement er-
(9) A hydrologic or hydraulic analysis rors and providing correct measure-
for a flooding source without estab- ments.
333
§65.7 44 CFR Ch. I (10-1-98 Edition)
(c) Data requirements for changed (3) Explanation as to why the use of
physical conditions. Revisions based on the new data will improve the results
the effects of physical changes that of the original analysis.
have occurred in the flood plain shall (4) Revised hydrologic analysis where
include: hydrologic data are being incorporated.
(1) Changes affecting hydrologic condi- (5) Revised hydraulic analysis and
tions. The following data must be sub- flood elevation profiles where new hy-
mitted: drologic or hydraulic data are being in-
(i) General description of the changes corporated.
(e.g., dam, diversion channel, or deten- (6) Revised delineations of the flood
tion basin). plain boundaries and floodway where
(ii) Construction plans for as-built new hydrologic, hydraulic, or topo-
conditions, if applicable. graphic data are being incorporated.
(iii) New hydrologic analysis ac- (e) Data requirements for incorporating
counting for the effects of the changes. improved methods. Requests for revi-
(iv) New hydraulic analysis and pro- lions based on the use of improved hy-
files using the new flood discharge val- drologic or hydraulic methodology
ues resulting from the hydrologic anal- shall include the following data:
ysis. (1) New hydrologic analysis when an
(v) Revised delineations of the flood alternative hydrologic methodology is
plain boundaries and floodway. being proposed.
(2) Changes affecting hydraulic condi- (2) New hydraulic analysis and flood
tions. The following data shall be sub elevation profiles when an alternative
mitted: hyrologic or hydraulic methodology is
being proposed.
(i) General description of the changes
alter-
(e.g., channelization or new bridge, cul- (3) Explanation as to why
vert, or levee). native methodologies are superior to
the original e methodologies.
(ii) Construction plans for as-built
conditions. (4) Revised delineations of the flood
d plain boundaries and floodway based on
(iii) New hydraulic analysis and flood
elevation the new analysis(es).
profiles accounting for the (f) Certification requirements. All anal-
effects of the changes and using the ysis and data submitted by the re-
original flood discharge values upon quester shall be certified by a reg-
which the original map is based. istered professional engineer or 1i-
(iv) Revised delineations of the flood censed land surveyor, as appropriate,
plain boundaries and floodway. subject to the definition of '"certifi-
(3) Changes involving topographic con- cation" given at §65.2 of this sub-
ditions. The following data shall be sub- chapter.
mitted: (g) Submission procedures. All requests
(i) General description of the changes shall be submitted to the FEMA Re-
(e.g., grading or filling). gional Office servicing the commu-
(ii) New topographic information, nity's geographic area or to the FEMA
such as spot elevations, cross sections Headquarters Office in Washington,
grading plans or contour maps. DC, and shall be accompanied by the
(iii) Revised delineations of the flood appropriate payment, in accordance
plain boundaries and, if necessary, with 44 CFR part 72.
floodway.
(d) Data requirements for incorporating [51 FR 3O314, Aug. 25, 1986, as amended at 53
FR 16279, May 6, 1988; 54 FR 33550, Aug. 15,
improved data.. Requests for revisions 1989; 61 FR 46331, Aug. 30, 1996; 62 FR 5736,
based on the use of improved hydro- Feb. 6, 1997]
logic, hydraulic, or topographic data
shall include the following data: *65.7 Floodway revisions.
(1) Data that are believed to be better (a) General. Floodway data is devel-
than those used in the original analysis oped as part of FEMA Flood Insurance
(such as additional years of stream Studies and is utilized by communities
gage data). to select and adopt floodways as part of
(2) Documentation of the source of the flood plain management program
the data. required by §60.3 of this subchapter.
334
Federal Emergency Management Agency ?§65.8
When it has been determined by a corn- (2) Engineering analysis for the re-
munity that no practicable alter- vised floodway, as described below:
natives exist to revising the boundaries (i) The original hydraulic computer
of its previously adopted floodway, the model used to develop the established
procedures below shall be followed. base flood elevations must be modified
(b) Data requirements when base flood to include all encroachments that have
elevation changes are requested. When a occurred in the flood plain since the ex-
floodway revision is requested in assn- fisting floodway was developed. If the
ciation with a. change to base flood ele- original hydraulic computer model is
vations, the data requirements of §65.6 not available, an alternate hydraulic
shall also be applicable. In addition, computer model may be used provided
the following documentation shall be the alternate model has been cali-
submitted: brated so as to reproduce the original
(1) Copy of B.public notice distributed water surface profile of the original hy-
by the community stating the comma- draulic computer model. The alternate
nity's intent to revise the floodway or model must be then modified to in-
s statement by the community that it
curred since the existing floodway was
elude all encroachments that have oc-
curred notified all affected property own-
ers and affected adjacent jurisdictions. developed.
(ii) The floodway analysis must be
(2) Copy of a letter notifying the ap-
propriate State agency of the floodway performed with the modified computer
model
revision when the State has jurisdic- using the desired floodway lim-
revision
tion over the floodway or its adoption
by communities participating in the (iii) The combined effectsoodway limits ofthe past be en-
NF1P. so that the en-
croachments and the new floodway
(3) Documentation of the approval of limits do not increase the effective
the revised floodway by the appro- base flood elevations by more than the
priate State agency (for communities amount specified in §60.3(d)(2). Copies
where the State has jurisdiction over of the input and output data from the
the floodway or its adoption by con- original and modified computer models
munities participating in the NFIP). must be submitted.
(4) Engineering analysis for the re- (3) Delineation of the revised
wised. floodway, as described below: floodway on a copy of the effective
(i) The floodway analysis must be NFIP map and a suitable topographic
performed using the hydraulic com- map.
puter model used to determine the pro- (d) Certification requirements. All anal-
posed base flood elevations. yses submitted shall be certified. by a
(ii) The floodway limits must be set registered professional engineer. All
so that neither the effective base flood topographic data shall be certified by a
elevations nor the proposed base flood registered professional engineer or li-
elevations if less than the effective censed land surveyor. Certifications
base flood elevations, are increased by are subject to the definition given at
more than the amount specified under §65.2 of this subchapter.
§60.3 (d)(2). Copies of the input and out- (e) Submission procedures. All requests
put data from the original and modi- that involve changes to floodways shall
fled computer models must be submit- be submitted to the appropriate FEMA
ted. Regional Office servicing the commu-
(5) Delineation of the revised nity's geographic area.
floodway on the same topographic map [51 FR 30315, Aug. 25, 19861
used for the delineation of the revised
flood boundaries. §65.8 Review of proposed projects.
(c) Data requirements for changes not A community, or an individual
associated with base flood elevation through the community, may request
changes. The following data shall be FEMA's comments on whether a pro-
submitted: posed project, if built as proposed,
(1) Items described in paragraphs (b) would justify a map revision. FEMA's
(1) through (3) of this section must be comments will be issued in the form of
submitted. a letter, termed a Conditional Letter of
335
§65.9 44 CFR Ch. 1 (10-198 Edition)
Map Revision, in accordance with 44 ducted and no determination will be
CFR part 72. The data required to sup- issued until payment is received.
port such requests are the same as [51 FR 30315, Aug. 25, 1996; 61 FR 4633a, Aug.
those required for final revisions under 30 1996, as amended at 62 FR 5736, Feb. 6,
§§65.5, 65.6, and 65.7, except as-built cer- 1997]
tification is not required. All such re-
quests shall be submitted to the FEMA §65.10 Mapping of areas protected by
Headquarters Office in Washington, levee systems.
DC, and shall be accompanied by the (a) General. For purposes of the NFIP,
appropriate payment, in accordance FEMA will only recognize in its flood
with 44 CFR part 72. — hazard and risk mapping effort those
[62 FR 5736, Feb. 6. 1997] levee systems that meet, and continue
to meet, minimum design, operation,
*65.9 Review and response by the Ad- and maintenance standards that are
ministrator. consistent with the level of protection
If any questions or problems arise sought through the comprehensive
estab-
during review, FEMA will consult the flood plain management criteria Ac-
Chief Executive Officer of the commu- coshed lyy §6 this3 of section this subchapter. the
nity (CEO), the community official des- types tope of describes the
ignated by the CEO, and/or the re- ecog iz information FEMA needs to
recognize, on NFIP maps, that a levee
quester for resolution. Upon receipt of system provides protection from the
a revision request, the Administrator base flood. This information must be
shall mail an acknowledgment of re- supplied to FEMA by the community
ceipt of such request to the CEO. With- or other party seeking recognition of
in 90 days of receiving the request with such a levee system at the time a flood
all necessary information, the Admin- risk study or restudy is conducted,
istrator shall notify the CEO of one or when a map revision under the provi-
more of the following: sions of part 65 of this subchapter is
(a) The effective map(s) shall not be sought based on a levee system, and
modified; upon request by the Administrator dur-
(b) The base flood elevations on the ing the review of previously recognized
effective FIRM shall be modified and structures. The FEMA review will be
new base flood elevations shall be es- for the sole purpose of establishing ap-
tablished under the provisions of part propriate risk zone determinations for
67 of this subchapter; NFIP maps and shall not constitute a
(c) The changes requested are ap- by FEMA as to how a
proved and the map(s) amended by Let- structure or system will perform 1n a
ter of Map Revision (LOMR); flood event.
(d) The changes requested are ap- Design criteria. For levees to be
proved and a revised map(s) will be recognized by FEMA, evidence that
adequate design and operation and
printed and distributed;
maintenance systems are in place to
(e) The changes requested are not of
pro-
such a significant nature as to warrant provide reasonable assurance that
tection from the base flood oodexists must
a reissuance or revision of the flood in- be provided. The following require-
surance study or maps and will be de- ments must be met:
ferred until such time as a significant (1) Freeboard. (f) Riverine levees must
change occurs; provide a minimum freeboard of three
(f) An additional 90 days is required feet above the water-surface level of
to evaluate the scientific or technical the base flood. An additional one foot
data submitted; or above the minimum is required within
(g) Additional data are required to 100 feet in either side of structures
support the revision request. (such as bridges) riverward of the levee
(h) The required payment has not or wherever the flow is constricted. An
been submitted in accordance with 44 additional one-half foot above the min-
CFR part 72, no review will be con- imum at the upstream end of the levee,
tapering to not less than the minimum
336
Federal Emergency Management Agency §65.10
at the downstream end of the levee, is expected during the base flood, as a re-
also required. suit of either currents or waves, and
(ii) Occasionally, exceptions to the that anticipated erosion will not result
minimum riverine freeboard require- in failure of the levee embankment or
meat described in paragraph (b)(1)(1) of foundation directly or indirectly
this section, may be approved. Appro- through reduction of the seepage path
priate engineering analyses dem- and subsequent instability. The factors
onstrating adequate protection with a to be addressed in such analyses in-
lesser freeboard must be submitted to dude, but are not limited to: Expected
support a request for such an excep- flow velocities (especially in con-
tion. The material presented must stricted areas); expected wind and wave
evaluate the uncertainty in the esti- action; ice loading; impact of debris;
mated base flood elevation profile and slope protection techniques; duration
include, but not necessarily be limited of flooding at various stages and ve-
to an assessment of statistical con- locities; embankment and foundation
fidence limits of the 100-year discharge; materials; levee alignment, bends, and
changes in stage-discharge relation-
ships; and the sources, potential, and transitions; and levee side slopes.
magnitude of debris, sediment, and ice (4) Embankment and foundation stabfl-
accumulation. It must be also shown =� Engineering analyses that evaluate
that the levee will remain structurally levee embankment stability must be
stable during the base flood when such submitted. The analyses provided shall
additional loading considerations are evaluate expected seepage during load-
imposed. Under no circumstances will ing conditions associated with the base
freeboard of less than two feet be ac- flood and shall demonstrate that seep-
cepted. age into or through the levee founda-
(iii) For coastal levees, the freeboard tion and embankment will not jeopard-
must be established at one foot above ize embankment or foundation stabil-
the height of the one percent wave or ity. An alternative analysis dem-
the maximum wave runup (whichever onstrating that the levee is designed
is greater) associated with the 100-year and constructed for stability against
sti.11water5.urge elevation at the site. loading conditions for Case IV as de-
(iv) Occasionally, exceptions to the fined in the U.S. Army Corps of Engi-
minimum coastal levee freeboard re- neers (COE) manual, "Design and Con-
quirement described in paragraph struction of Levees" (EM 1a1�2 1913,
(b)(1)(iii) of this section, may be ap- Chapter 6, Section II), may be used.
proved. Appropriate engineering analy- The factors that shall be addressed in
sea demonstrating adequate protection the analyses include: Depth of flooding,
with a lesser freeboard must be submit- duration of flooding, embankment ge-
ted to support a request for such an ex- ometry and length of seepage path at
ception. The material presented must critical locations, embankment and
evaluate the uncertainty in the esti- foundation materials, embankment
mated base flood loading conditions. compaction, penetrations, other design
Particular emphasis must be placed on factors affecting seepage (such as
the effects of wave attack and overtop- drainage layers), and other design fac-
ping on t:ae stability of the levee. tors affecting embankment and founda-
Under no circumstances, however, will tion stability (such as berms),.
a freeboard of less than two feet above (5) Settlement. Engineering analyses
the 100-year stillwater surge elevation must be submitted that assess the po-
be accepted. tential and magnitude of future losses
(2) Closures. All openings must be pro- of freeboard as a result of levee settle-
vided with closure devices that are ment and demonstrate that freeboard
structural parts of the system during will be maintained within the mini-
operation and design according to mum standards set forth in paragraph
sound engineering practice. (b)(1) of this section. This analysis
(3) Embankment protection. Engineer- must address embankment loads, com-
ing analyses must be submitted that pressibility of embankment soils, corn-
demonstrate that no appreciable ero- pressibility of foundation soils, age of
sion of the levee embankment can be the levee system, and construction
337
§65.10 44 CFR Ch. I (10-1-98 Edition)
compaction methods. In addition, de- sealing, before floodwaters reach the
tailed settlement analysis using proce- base of the closure.
dures such as those described in the (ii) A formal plan of operation in-
COE manual, "Soil Mechanics Design— eluding specific actions and assign-
Settlement Analysis" (EM 1100-2-1904) ments of responsibility by individual
must be submitted. name or title.
(6) Interior drainage. An analysis must (iii) Provisions for periodic oper-
be submitted that identifies the ation, at not less than one-year inter-
source(s) of such flooding, the extent of vela, of the closure structure for test-
the flooded area, and, if the average ing and training purposes.
depth is greater than one foot, the (2) Interior drainage systems. Interior
water-surface elevation(s) of the base drainage systems associated with levee
flood. This analysis must be based on systems usually include storage areas,
the joint probability of interior and ex- gravity outlets, pumping stations, or a
terior flooding and the capacity of fa- combination thereof. These drainage
cilities (such as drainage lines and systems will be recognized by FEMA on
pumps) for evacuating interior flood- NFIP maps for flood protection pur-
waters. poses only if the following minimum
(7) Other design criteria. In unique sit- criteria are included in the operation
uations, such as those where the levee plan:
system has relatively high vulner- (i) Documentation of the flood warn-
ability, FEMA may require that other ing system, under the jurisdiction of
design criteria and analyses be submit- Federal, State, or community officials,
ted to show that the levees provide that will be used to trigger emergency
adequate protection. In such situa- operation activities and demonstration
tiona, sound engineering practice will that sufficient flood warning time ex-
be the standard on which FEMA will ists to permit activation of mechanized
base its determinations. FEMA will portions of the drainage system.
also provide the rationale for requiring (ii) A formal plan of operation in-
this additional information. eluding specific actions and assign-
ments of responsibility by individual
(c) Operation plans and criteria. For a name or title.
levee system to be recognized, the (iii) Provision for manual backup for
operational criteria must be as de- the activation of automatic systems.
scribed below. All closure devices or (iv) Provisions for periodic inspection
mechanical systems for internal drain-
age, whether manual or automatic, of interior drainage systems mecha and peri-
must be operated in accordance with odic operation orte of any training purposes.
ses.
tions for testing and training purposes.
an officially adopted operation manual, No more than one year shall elapse be-
a copy of which must be provided to tween either the ins
op-
FEMA by the operator when levee or inspections or the op
erations.
drainage system recog
nition is being (3) Other operation plans and criteria.
sought or when the manual for a pre- Other operating plans and criteria may
viously recognized system is revised in be required by FEMA to ensure that
any manner. All operations must be adequate protection is provided in spe-
-under the jurisdiction of a Federal or cific situations. In such cases, sound
State agency, an agency created by emergency management practice will
Federal or State law, or an agency of a be the standard upon which FEMA de-
community participating in the NFIP. terminations will be based.
(1) Closures. Operation plans for clo- (d) Maintenance plans and criteria. For
sures must include the following: levee systems to be recognized as pro-
(i) Documentation of the flood warn- viding protection from the base flood,
ing system, under the jurisdiction of the maintenance criteria must be as
Federal, State, or community officials, described herein. Levee systems must
that will be used to trigger emergency be maintained in accordance with an
operation activities and demonstration officially adopted maintenance plan,
that sufficient flood warning time ex- and a copy of this plan must be pro-
ists for the completed operation of all vided to FEMA by the owner of the
closure structures, including necessary levee system when recognition is being
338
Federal Emergency Management Agency '§65.12
sought or when the plan for a pre- the 100-year stillwater flood elevation
viously recognized system is revised in and seaward of the dune crest, is equal
any manner. All maintenance activi- to, or less than, 540 square feet.
ties must be under the jurisdiction of a (c)Exceptions. Exceptions to the eval-
Federal or State agency, an agency uation criterion may be granted where
created by Federal or State law, or an it can be demonstrated through au-
agency of a community participating thoritative historical documentation
in the NFIP that must assume ulti- that the primary frontal dunes at a
mate responsibility for maintenance. specific site withstood previous base
This plan must document the formal flood storm surges and associated wave
procedure that ensures that the stabil- action.
ity, height, and overall integrity of the
levee and its associated structures and [53 FR 16279,May 6,19681
systems are maintained. At a mini-
mum, maintenance plans shall specify §85.12 Revision of flood insurance
the mainterance activities to be per- rate maps to reflect base flood ele-
formed, the frequency of their perform- undone caused by proposed en-
ance, and the person by name or title croachments
responsible for their performance. (a) When a community proposes to
(e) Certification requirements. Data permit encroachments upon the flood
submitted to support that a given levee plain when a regulatory floodway has
system complies with the structural not been adopted or to permit en-
requirements set forth in paragraphs croachments upon an adopted regu-
(b)(1) through (7) of this section must latory floodway which will cause base
be certified by a registered professional flood elevation increases in excess of
engineer. Also, certified as-built plans those permitted under paragraphs
of the levee must be submitted. Certifi- (c)(10) or (d)(3) of §60.3 of this sub-
cations are subject to the definition chapter, the community shall apply to
given at §63.2 of this subchapter. In the Administrator for conditional ap-
lieu of these structural requirements, a
permit-
Federal agency with responsibility for proved of such action prior to permit
ting the encroachments to occur and
levee design may certify that the levee shall submit the following as part of its
has been adequately designed and con- application:
structed to provide protection against
the base flood. (1) A request for conditional approval
of map change and the appropriate ini-
[51 FR 30316, Aug. 25, 1966] tial fee as specified by §72.3 of this sub-
chapter§65.1.1 Evaluation of sand dunes in or a request for exemption
mapping coastal flood hazard areas. from fees as specified by §72.5 of this
subchapter, whichever is appropriate;
(a) General conditions. For purposes of
the NFIP, FEMA will consider storm- (2) An evaluation of result in a al base flood
alternatives
which would not
induced dune erosion potential in its
per-
determination of coastal flood ba7ardamitt elevation increase above that and risk mapping efforts. The criterion (d)(3) under paragraphs (c)(10) or
dem-
to be used :.n the evaluation of dune (d)(3) of §60.3 of this subchapter erosion will apply to primary frontal notf onstrating why these alternatives are
dunes as defined in §59.1, but does not not feasible;
apply to artificially designed and con- (3) Documentation of individual legal
structed dunes that are not well-estab-
lished with long-standing vegetative within and outside of the community,
cover, such as the placement of sand explaining the impact of the proposed
materials in a dune-like formation. action on their property.
(b) Evaluation criterion. Primary fron- (4) Concurrence of the Chief Execu-
tal dunes will not be considered as ef- tive Officer of any other communities
fectve barriers to base flood storm impacted by the proposed actions;
surges and associated wave action (5) Certification that no structures
where the cross-sectional area of the are located in areas which would be im-
primary frontal dune, as measured per- patted by the increased base flood ele-
pendicular tD the shoreline and above vation;
339
§65.13 44 CFR Ch. I (10-1-98 Edition)
(6) A request for revision of base visions of part 70 of this chapter shall
flood elevation determination accord- not apply to FIRM revisions involving
ing to the provisions of §65.6 of this alluvial fan flooding. In general, ele-
part; vations of a parcel of land or a struc-
(7) A request for floodway revision in ture by fill or other means, will not
accordance with the provisions of §65.7 serve as a basis for removing areas sub-
of this part; ject to alluvial fan flooding from an
(b) Upon receipt of the Administra- area of special food hazards.
tor's conditional approval of map (c) FEMA will credit on NFIP maps
change and prior to approving the pro- only major structural flood control
posed encroachments, a community measures whose design and construe-
shall provide evidence to the Adminis- tion are supported by sound engineer-
trator of the adoption of flood plain ing analyses which demonstrate that
management ordinances incorporating the measures will effectively eliminate
the increased base flood elevations and/ alluvial fan flood ha,"rds from the area
or revised floodway reflecting the post- protected by such measures. The pro-
project condition. vided analyses must include, but are
(c) Upon completion of the proposed not necessarily limited to, the follow-
encroachments, a community shall ing:
provide as-built certifications in ac- (1) Engineering analyses that quan-
cordance with the provisions of §65.3 of tify the discharges and volumes of
this part. The Administrator will initi- water, debris, and sediment movement
ate a final map revision upon receipt of associated with the flood that has a
such certifications in accordance with one-percent probability of being ex-
pert 67 of this subchapter. ceeded in any year at the apex under
[53 FR 16279, May 6, 1966) current watershed conditions and
under potential adverse conditions
§65.13 Mapping and map revisions for (e.g., deforestation of the watershed by
areas subject to alluvial fan flood- fire). The potential for debris flow and
mg. sediment movement must be assessed
This section describes the procedures using an engineering method accept-
to be followed and the types of infor- able to FEMA. The assessment should
mation FEMA needs to recognize on a consider the characteristics and avail-
NFIP map that a structural flood con- ability of sediment in the drainage
trol measure provides protection from basin above the apex and on the allu-
the base flood in an area subject to al- vial fan.
luvial fan flooding. This information (2) Engineering analyses showing
must be supplied to FEMA by the com- that the measures will accommodate
nullity or other party seeking recogni- the estimated peak discharges and vol-
tion of such a flood control measure at umes of water, debris, and sediment, as
the time a flood risk study or restudy determined in accordance with para-
is conducted, when a map revision graph (c)(1) of this section, and will
under the provisions of part 65 of this withstand the associated hydro-
subchapter is sought, and upon request dynamic and hydrostatic forces.
by the Administrator during the review (3) Engineering analyses showing
of previously recognized flood control that the measures have been designed
measures. The FEMA review will be for to withstand the potential erosion and
the sole purpose of establishing appro- scour associated with estimated dis-
priate risk zone determinations for charges.
NFIP maps and shall not constitute a (4) Engineering analyses or evidence
determination by FEMA as to how the showing that the measures will provide
flood control measure will perform in a protection from ha'Ards associated
flood event. with the possible relocation of flow
(a) The applicable provisions of paths from other parts of the fan.
§§65.2, 65.3, 65.9:, 65.6, 65.8 and 65.10 shall (5) Engineering analyses that assess
also apply to FIRM revisions involving the effect of the project on flood haz-
alluvial fan flooding. ards, including depth and velocity of
(b) The provisions of §65.5 regarding floodwaters and scour and sediment
map revisions based on fill and the pro- deposition, on other areas of the fan.
340
Federal Emergency Management Agency §65.14
(6) Engineering analyses demonstrat- (iii) Decertified by a Federal agency
ing that flooding from scources other responsible for flood protection design
than the fan apex, including local run- or construction.
off, is either insignificant or has been (2) Where the Administrator deter-
accounted for in the design. mines that a community is in the proc-
(d) Coordination. FEMA will recognize ess of restoring its flood protection
measures that are adequately designed system to provide base flood protec-
and constructed, provided that: evi- tion, a FIRM will be prepared that des-
dence is submitted to show that the ignates the temporary flood hazard
impact of the measures on flood haz- areas as a flood control restoration
ards in all areas of the fan (including zone (Zone AR). Existing special flood
those not protected by the flood con- hazard areas shown on the commu-
trol measures), and the design and nity's effective FIRM that are further
maintenance requirements of the inundated by Zone AR flooding shall be
measures, were reviewed and approved designated as a "dual" flood insurance
by the impacted communities, and also rate zone, Zone AR/AE or AR'AH with
by State and local agencies that have Zone AR base flood elevations, and AE
jurisdiction over flood control activi- or AA with base flood elevations and
ties. Zone ARAO with Zone AR base flood
(e) Operation and maintenance plans elevations and Zone AO with flood
and criteria. The requirements for oper- depths, or Zone AR/A with Zone AR
ation and maintenance of flood control base flood elevations and Zone A with-
measures on areas subject to alluvial out base flood elevations.
fan flooding shall be those specified (b) Limitations. A community may
under §65.10, paragraphs (c) and (d), have a flood control restoration zone
when applicable. designation only once while restoring a
(f) Certification requirements. Data flood protection system. This Anita-
submitted to support that a given flood tion does not preclude future flood con-
control measure complies with the re- trol restoration zone designations
quirements set forth in paragraphs (c) should a fully restored, certified, and
(1) through (6) of this section must be accredited system become decertified
certified by a registered professional for a second or subsequent time.
engineer. Also, certified as-built plans (1) A community that receives Fed-
of the flood control measures must be eral funds for the purpose of designing
submitted. C''ertifications are subject to or constructing, or both, the restora-
the definition given at §65.2. tion project must complete restoration
(Approved by the Office of Management and or meet the requirements of 44 CFR
Budget under control number 306'1-0147.) 61.12 within a specified period, not to
exceed a maximum of 10 years from the
[54 FR 33551, Aug. 15, 1989] date of submittal of the community's
application for designation of a flood
§65.14 Remapping of areas for which control restoration zone.
local flood protection systems no (2) A community that does not re-
longer provide base flood proeec- ceive Federal funds for the purpose of
tion. constructing the restoration project
(a) General. (1) This section describes must complete restoration within a
the procedures to follow and the types specified period, not to exceed a maxi-
of information FEMA requires to des- mum of 5 years from the date of sub-
ignate flood control restoration zones. mittal of the community's application
A community may be eligible to apply for designation of a flood control res-
for this zone designation if the Admin- toration zone. Such a community is
istrator determines that it is engaged not eligible for the provisions of §61.12.
in the process of restoring a flood pro- The designated restoration period may
tection system that was: not be extended beyond the maximum
(i) Constructed using Federal funds; allowable under this limitation.
(ii) Recognized as providing base (c) Exclusions. The provisions of these
flood protection on the community's regulations do not apply in a coastal
effective FIRM; and high inward area as defined in 44 CFR
341
§65.14 44 CFR Ch. I (10-1-98 Edition)
59.1, including areas that would be sub- using Federal funds, that it no longer
ject to coastal high hazards as a result provides base flood protection, but that
of the decertification of a flood protec- it continues to provide protection from
tion system shown on the community's the flood having at least a 3-percent
effective FIRM as providing base flood chance of occurrence during any given
protection. year;
(d) Effective date for risk premium (iv) An official map of the commu-
rates. The effective date for any risk pity or legal description, with support-
premium rates established for Zone AR ing documentation, that the comma-
shall be the effective date of the re- pity will adopt as part of its flood plain
vised FIRM showing Zone AR designa- management measures, which des-
tions. ignates developed areas as defined in
(e) Application and submittal require- §59.1 and as further defined in§60.3(f).
meets for designation of a flood control (v) A restoration plan to return the
restoration zone. A community must system to a level of base flood protec-
submit a written request to the Admin- tion. At a minimum, this plan must:
istrator, signed by the community's (A) List all important project ale-
Chief Executive Officer, for a flood ments, such as acquisition of permits,
plain designation as a flood control res- approvals, and contracts and construc-
torati.on zone. The request must in- tion schedules of planned features;
elude a legislative action by the corn- (B) Identify anticipated start and
munity requesting the designation. completion dates for each element, as
The Administrator will not initiate well as significant milestones and
any action to designate flood control dates;
restoration zones without receipt of (C) Identify the date on which "as
the formal request from the commu- built" drawings and certification for
nity that complies with all require- the completed restoration project will
ments of this section. The Adminis- be submitted. This date must provide
trator reserves the right to request ad- for a restoration period not to exceed
ditional information from the commu- the maximum allowable restoration pe-
nity to support or further document rood for the flood protection system,
the community's formal request for or;
designation of a flood control restora- (D) Identify the date on which the
tion zone, if deemed necessary. community will submit a request for a
(1) At a minimum, the request from a finding of adequate progress that; meets
community that receives Federal funds all requirements of §61.12. This date
for the purpose of designing, construct- may not exceed the maximum allow-
ing, or both, the restoration project able restoration period for the flood
must include: protection system;
(i) A statement whether, to the best (vi) A statement identifying the local
of the knowledge of the community's project sponsor responsible for restora-
Chief Executive Officer, the flood pro- tion of the flood protection system;
tection system is currently the subject (vii) A copy of a study, performed by
matter of litigation before any Fed- a Federal agency responsible for flood
eral, State or local court or adminis- protection design or construction in
trative agency, and if so, the purpose of consultation with the local project
that litigation; sponsor, which demonstrates a Federal
(ii) A statement whether the commu- interest in restoration of the system
nity has previously requested a deter- and which deems that the flood protec-
mination with respect to the same sub- tion system is restorable to a level of
ject matter from the Administrator, base flood protection.
and if so, a statement that details the (viii) A joint statement from the
disposition of such previous request; Federal agency responsible for flood
(ill) A statement from the commu- protection design or construction in-
nity and certification by a Federal volved in restoration of the flood pro-
agency responsible for flood protection tection system and the local project
design or construction that the exist- sponsor certifying that the design and
ing flood control system shown on the construction of the flood control sys-
effective FIRM was originally built tem involves Federal funds, and. that
342
Federal Emergency Management Agency §65.14
the restoration of the flood protection (g) Requirements for maintaining des-
system will provide base flood protec- ignation of a flood control restoration
tion; zone. During the restoration period, the
(2) At a minimum, the request from a community and the cost-sharing Fed-
community that receives no Federal eral agency, if any, must certify annu-
funds for the purpose of constructing ally to the FEMA Regional Office hay-
the restoration project must: ing jurisdiction that the restoration
(i) Meet the requirements of will be completed in accordance with
§65.14(e)(1)(i) through (iv); the restoration plan within the time
(ii) Include a restoration plan to re- period specified by the plan. In addl.-
turn the system to a leveLof base flood tion, the community and the cost-shar-
protection. At a minimum, this plan ing Federal agency, if any, will update
must: the restoration plan and will identify
(A) List all important project ele- any permitting or construction prob-
ments, such as acquisition of permits, lams that will delay the project corn-
approvals, and contracts and construe- pletion from the restoration plan pre-
tion schedules of planned features; viously submitted to the Adminis-
(B) Identify anticipated start and trator. The FEMA Regional Office hav-
completion dates for each element, as ing jurisdiction will make an annual
well as significant milestones and assessment and recommendation to the
dates; and Administrator as to the viability of the
(C) Identify the date on which "as restoration plan and will conduct peri-
built" drawings and certification for odic on-site inspections of the flood
the completed restoration project will protection system under restoration.
be submitted. This date must provide
for a restoration period not to exceed (h) Procedures for removing flood con-
the maximum allowable restoration pe- trol restoration zone designation due to
riod for the flood protection system; adequate progress or complete restoration
(iii.) Include a statement identifying of the flood protection system. At any
time during the restoration period:
the local agency responsible for res-
toration of the flood protection sys- (1) A community that receives Fed-
tern; eras funds for the purpose of designing,
(iv) Include a copy of a study, cer- constructing, or both, the restoration
tifled by registered Professional Engi- project shall provide written evidence
neer, that demonstrates that the flood of certification from a Federal agency
protection system is restorable to pro- having flood protection design or con-
vide protection from the base flood; struction responsibility that the nec-
(v) Include a statement from the essary improvements have been com-
local agency responsible for restore- pleted and that the system has been re-
tion of the flood protection system cer- stored to provide protection from the
tifying that the restored flood protec- base flood, or submit a request for a
tion system will meet the applicable finding of adequate progress that meets
requirements of Part 65; and all requirements of §61.12. If the Ad-
(vi) Include a statement from the ministrator determines that adequate
local agency responsible for restora- progress has been made, FEMA will re-
tion of the flood protection system vise the zone designation from a flood
that identifies the source of funds for control restoration zone designation to
the purpose of constructing the res- Zone A99.
toration project and a percentage of (2) After the improvements have been
the total funds contributed by each completed, certified by a Federal agen-
source. The statement must dem- cy as providing base flood protection,
onstrate, at a minimum, that 100 per- and reviewed by FEMA, FEMA will re-
cent of the total financial project cost vise the FIRM to reflect the completed
of the completed flood protection sys- flood control system.
tem has been appropriated. (3) A community that receives no
(f) Review and response by the Adminis- Federal funds for the purpose of con-
trator. The review and response by the strutting the restoration project must
Administrator shall be in accordance provide written evidence that the re-
with procedures specified in §65.9. stored flood protection system meets
343
177-172 O-98-I2
§65.15 44 CFR Ch. 1O0-1-98 Edition)
the requirements of Part 65. A noniron- agnate those areas as Zone A1-30, AE,
nity that receives no Federal funds for AR, AO, or A.
the purpose of constructing the res-
[ea FR 55717, Oct. 21, 1997]
toration project is not eligible for a
finding of adequate progress under §65.15 List of communities submitting
§61.12. new technical data.
(4) After the improvements have been This section provides a cumulative
completed and reviewed by FEMA, list of communities where modifica-
FEMA will revise the FIRM to reflect tions of the base flood elevation deter-
the completed flood protection system. minations have been made because of
(1) Procedures for removing flood con- submission of new scientific or tech-
trol restoration zone designation due to nical data. Due to the need for expedit-
non-compliance with the restoration ing the modifications, the revised map
schedule or as a result of a finding that is already in effect and the appeal pe-
satisfactory progress is not being made to riod commences on or about the effec-
complete the restoration. At any time tive date of the modified map. An in-
during the restoration period, should terim rule, followed by a final rule,
the Administrator determine that the will list the revised map effective date,
restoration will not be completed in local repository and the name and ad-
accordance with the time frame speci- dress of the Chief Executive Officer of
fled i.n the restoration plan, or that the community. The map(s) is (are) ef-
satisfactory progress is not being made fective for both flood plain manage-
to restore the flood protection system ment and insurance purposes.
to provide complete flood protection in [51 FR 30317, Aug. 25, 1986. Redesignated at 53
accordance with the restoration plan, FR 16279, May 6, 1988, and further redesig-
the Administrator shall notify the nated at 54 FR 33551, Aug. 15, 1989. Redesig-
community and the responsible Fed- nated at 59 FR 53599, Oct. 25, 1994]
eral agency, '.n writing, of the deter-
mination, the reasons for that deter- EDrroavu. NOTE: For references to FR
urination, ant. that the FIRM will be pages showing lists of eligible communities,
see the List of CFR Sections Affected ap-
revised to remove the flood control res- peering in the Finding Aids section of this
toration zone designation. Within thir- volume.
ty (30) days of such notice, the commu-
nity may submit written information §65.16 Standard Flood Hazard Deter -
that provides assurance that the res- mination Form and Instructions.
toration will be completed in accord- (a) Section 528 of the National Flood
ance with the time frame specified in Insurance Reform Act of 1994 (42 U.S.C.
the restoration plan, or that satisfac- 1365(a)) directs FEMA to develop a
tory progress is being made to restore standard form for determining, in the
complete protection in accordance case of a loan secured by improved real
with the restoration plan, or that, with estate or a mobile home, whether the
reasonable certainty, the restoration building or mobile home is located in
will be completed within the maximum an area identified by the Director as an
allowable restoration period. On the area having special flood hazards and
basis of this information the Adminis- in which flood insurance under this
trator may suspend the decision to re- title is available. The purpose of the
vise the FIRM to remove the flood con- form is to determine whether a build-
trol restoration zone designation. If ing or mobile home is located within
the community does not submit any in- an identified Special Flood Hazard
formation, or if, based on a review of Area (SFHA), whether flood insurance
the information submitted, there is is required, and whether federal flood
sufficient cause to find that the res- insurance is available. Use of this form
toration will not be completed as pro- will ensure that required flood insur-
vided for in the restoration plan, the ance coverage is purchased for stnic-
Administrator shall revise the FIRM, tures located in an SFIIA, and will as-
in accordance with 44 CFR Part 67, and sist federal entities for lending regula-
shall remove the flood control restora- tion in assuring compliance with these
tion zone designations and shall redes- purchase requirements.
344
Federal Emergency Management Agency Pt. 66
(b) The form is available by written nical data used in making the deter-
request to Federal Emergency Manage- urination; and
ment Agency, PO Box 2012, Jessup, MD (5) A copy of the effective NFIP map
20794; ask for the Standard Flood Haz- (Flood Hazard Boundary Map (FHBM)
and Determination form. It is also or Flood Insurance Rate Map (FIRM))
available by fax-on-demand; call (202) panel for the community in which the
646-3362, form # 23103. Finally, the form building or manufactured home is lo-
is available through the Internet at sated, with the building or manufac-
http://www.fema.gov/nflp/mpurfl.htm. tured home location indicated. Por-
[63 FR 27857, May 21,1998] tions of the map panel may be submit-
ted but shall include the area of the
§65.17 Review of determinations. building or manufactured home in
This section describes the procedures question together with the map panel
that shall be followed and the types of title block, including effective date,
information required by FEMA to re bar scale, and north arrow.
view a determination of whether a (c) Review and response by FEMA.
building or manufactured home is lo- Within 45 days after receipt of a re-
cated within an identified Special quest to review a determination,
Flood Hazard Area (SFHA). FEMA will notify the applicants in
(a) Genera.! conditions. The borrower writing of one of the following:
and lender of a loan secured by im- (1) Request submitted more than 45
proved real estate or a manufactured days after borrower notification; no re-
home may jointly request that FEMA view will be performed and all mate-
review a determination that the build- rials are being returned;
ing or manufactured home is located in (2) Insufficient information was re-
an identified SFHA. Such a request ceived to review the determination;
must be submitted within 45 days of therefore, the determination stands
the lender's notification to the bor- until a complete submittal is received;
rower that the building or manufac- or
tured home is in the SFHA and that (3) The results of FEMA's review of
flood insurance is required. Such a re- the determination, which shall include
quest must be submitted jointly by the the following:
lender and the borrower and shall in- (i) The name of the NFIP community
elude the required fee and technical in- in which the building or manufactured
formation related to the building or home is located;
manufactured home. Elevation data (ii) The property address or other
will not be considered under the proce- identification of the building or manu-
dures described in this section. factured home to which the determine-
(b) Data and other requirements. Items tion applies;
required for FEMA's review of a deter- (iii) The NFIP map panel number and
mination shall include the following: effective date upon which the deter-
(1) Payment of the required fee by mination is based;
check or money order, in U.S. funds, (iv) A statement indicating whether
payable to the National Flood Insur- the building or manufactured home is
ante Program; within the Special Flood Hazard. Area;
(2) A request for FEMA's review of (v) The time frame during which the
the determination, signed by both the determination is effective.
borrower and the lender; [60 FR 62218,Dec. 5, 1995]
(3) A copy of the lender's notification
to the borrower that the building or PART 66-CONSULTATION WITH
manufactured home is in an SFHA and LOCAL OFFICIALS
that flood insurance is required (the re-
quest for review of the determination
must be postmarked within 45 days of Sec.
borrower not[fication); 66.1 Purpose of part.
66.2 Definitions.
(4) A completed Standard Flood Haz-
66.3 Establishment of community case file
and Determination Form for the build- and flood elevation study docket.
ing or manufactured home, together 66.4 Appointment of consultation coordina-
with a legible hard copy of all tech- tion officer.
345
566.1 44 CFR Ch. I (10-1-98 Edition)
96.5 Responsibilities for consultation and as Establishment of community
coordination. case file and flood elevation study
Arraosrrt: 42 U.S.C. 4001 et seq.; Reorga- docketnisation Plan No. s of 1978;E.O. 12127. (a) A file sball be established for each
community at the time initial consid-
1 68.1 Purpose of part. eration is given to studying that corn-
(a) The purpose of this part is to munity in order to establish whether
comply with section 206 of the Flood or not it contains flood-prone areas.
Disaster Protection Act of 1973 (42 Thereafter, the flle shall include copies
U.S.C. 4107) by establishing procedures of all correspondence with officials in
determinations of that community. As the community is
for flood
V1-30, tentatively identifigd, provided with
Zones A1-30,elevation AIL and V1
and VE within the community so that rase flood elevations, or
reinstated, documentation of of such
h ac-
adequate consultation with the corn- tions by the Administrator shall be
munity officials shall be assured. placed in the community file. Even if a
(b) The procedures in this part shall map is administratively rescinded or
apply when base flood elevations are to withdrawn after notice under part 65 of
be determined or modified. this subchapter or the community suc-
(c) The Administrator or his delegate cessfully rebuts its flood-prone des-
shall: ignatfon, the file will be maintained in-
(1) Specifically request that the corn- definitely.
munity submit pertinent data concern- (b) A portion of the community file
ing flood hazards, flooding experience, shall be designated a flood elevation
plans to avoid potential hazards, esti- study consultation docket and shall be
mate of historical and prospective eco- established for each community at the
time the contract is awarded for a
nomcc impact on the community, and
such other appropriate data (paatic d flood elevation study. The docket shall
include copies of (1) all correspondence
larly if such iata will necessitate a
between the Administrator and the
modification of a base flood elevation),
community concerning the study, re-
(2) Notify local officials of the ports of any meetings among the Agen-
progress of surveys, studies, investiga- cy representatives, property owners of
tions, and of prospective findings, the community, the state coordinating
along with data and methods employed agency, study contractors or other in-
in reaching such conclusions; and terested persons, (2) relevant publica-
(3) Encourage local dissemination of tions, (3) a copy of the completed flood
surveys, studies, and investigations so elevation study, and (4) a copy of the
that interested persons will have an op- Administrator's final determination.
portunity to bring relevant data to the (c) A flood elevation determination
attention of the community and to the docket shall be established and main-
Administrator. tamed in accordance with part, 67 of
(4) Carry out the responsibilities for this subchapter.
consultation and coordination set forth [4]. FR 46988, Oct. 26, 1976. Redesignated at 44
in §66.5 of this part. FR 31177, May 31, 1979, as amended at 48 FR
44544 and 44553, Sept. 29, 1983; 49 FR 4751, Feb.
[41 FR 46988, Oct. 26, 1976. Redesignated at 44 8, 1984]
FR 31177, May 31, 1979, as amended at 47 FR
771, Jan. 7, 1982; 48 FR 44553, Sept. 29, 1983;49 §88.4 Appointment of consultation co-
FR 4751, Feb. 8, 1984; 50 FR 36028, Sept. 4, ordination officer.
1985] The Administrator may appoint an
§66 2 Definitions employee of the Federal Emergency
Management Agency, or other des-
The definitions set forth in part 59 of ignated Federal employee, as the Con-
this subchapter are applicable to this sultation Coordination Officer, for each
part. community when an analysis is under-
taken to establish or to modify flood
[41 FR 46988, Oct. 26, 1976. Redesignated at 44
FR 311'77, May 31 1979] elevations pursuant to a new study or a
restudy. When a CCO is appointed by
346
Federal Emergency Management Agency §67.2
the Administrator, the responsibilities (f) The community shall be informed
for consultation and coordination as in writing of any intended modification
set forth in §66.5 shall be carried out by to the community's final flood ele-
the CCO. The Administrator shall ad- vation determinations or the develop-
vise the community and the state co- ment of new elevations in additional
ordinating agency, in writing, of this areas of the community as a result of a
appointment. new study or restudy. Such informa-
[47 FR 771, Jan. 7, 1982, as amended at 49 FR tion to the community will include the
4751,Feb.8, 1984] data set forth in paragraph (e) of this
section. At the discretion of the Chief
§66.6 Responsibilities for consultation of the Natural and Technologipal Has-
and coordination. ards Division in each FEMA Regional
(a) Contact shall be made with appro- Office, a meeting may be held to ac-
priate officials of a community in complish this requirement.
which a pro:posed investigation is un- [47 FR 771, Jan. 7, 1982, as amended at 49 FR
dertaken, and with the state coordinat- 4751, Feb.8, 1984]
ing agency.
(b) Local dissemination of the intent PART 67-APPEALS FROM PRO-
and nature of the investigation shall be POSED FLOOD ELEVATION DETER-
encouraged so that interested parties
will have an opportunity to bring rel- MINATIONS
event data to the attention of the com-
munity and to the Administrator. Sec.
(c) Submission of information from 67.1 Purpose of part.
the community concerning the study 67.2 Definitions.
shall be encouraged. 67.3 Establishment and maintenance of a
(d) Appropriate officials of the com- flood elevation determination docket
munity shall be fully informed of (1) (Flropo
The responsibilities placed on them by 67.4 Proposed flood elevation determine-
The Program, (2) the administrative lion.
67.5 Right of appeal.
procedures followed by the Federal 67_g Basis of appeal.
Emergency Management Agency, (3) 67.7 Collection of appeal data.
the community's role in establishing 67S Appeal procedure.
elevations, and (4) the responsibilities 67.9 Final determination in the absence of
of the community if it participates or an appeal by the community.
continues tc participate in the Pro- 67.10 Rates during pendency of final deter-
gram. minatlon.
(e) Before the commencement of an 67.11 Notice of final determination.
initial Flood Insurance Study, the CCO 67.12 Appeal to District Court.
or other F:EMA representative, to- AuraoarrY: 42 U.S.C. 4001 et seq.; Reorga-
gether with a representative of the or- nization Plan No. 3 of 1978, 3 CFR, 1978
ganization undertaking the study, Comp., p. 329; E.O. 12127, 44 FR 19367, 3 CFR,
shall meet wiith officials of the commu- 1979 Comp.,p. 376.
nity. The state coordinating agency SouRCE: 41 FR 46989, Oct. 26, 1976, unless
shall be notified of this meeting and otherwise noted.Redesignated at 44 FR 31177,
may attend. At this meeting, the local May 31, 1979.
officials shall be informed of (1) The
date when the study will commence, (2) §67.1 Purpose of part.
the nature and purpose of the study, (3)
areas involved, (4) the manner in which The purpose of this part is to estab
the study shall be undertaken, (5) the lish procedures implementing the pro-
general principles to be applied, and (6) visions of section 110 of Flood Disaster
the intended use of the data obtained. Protection Act of 1973.
The community shall be informed in
writing if any of the six preceding §67.2 Definitions
items are or will be changed after this The definitions set forth in part 59 of
initial meeting and during the course this subchapter are applicable to this
of the ongoing study. part.
347
§67.3 44 CFR Ch. 100-1-98 Edition)
§67S Establishment and maintenance (c) Publication of the proposed flood
of a flood elevation determination elevation determination in a promi-
docket(FEDD). nent local newspaper at least twice
The Administrator shall establish a during the ten day period immediately
docket of all matters pertaining to following the notification of the CEO.
flood elevation determinations. The [41 FR 46989, Oct. 26, 1976. Redesignated.at 44
docket files shall contain the following FR 31177, May 31, 1979, as amended at 48 FR
information: 44553, Sept. 29, 1983; 49 FR 4751, Feb. 8„ 1984]
(a) The name of the community sub- EDITORIAL NOTE: For references to FR
ject to the flood elevation determine- pages showing lists of flood elevation deter-
tion; minations, see the List of CFR Sections Af-
(b) A copy of the notice of the pro- fected appearing in the Finding Aids section
posed flood elevation determination to of this volume.
the Chief Executive Officer (CEO) of §67b Right of appeal
the Community;
(c) A copy of the notice of the pro- (a) Any owner or lessee of real prop-
posed flood elevation determination erty, within a community where a pro-
published in a prominent local news- posed flood elevation determination
paper of the community; has been made pursuant to section 1363
(d) A copy of the notice of the pro- of the National Flood Insurance Act of
posed flood elevation determination 1968, as amended, who believes his
published in the FEDERAL REGISTER; property rights to be adversely affected
(e) Copies of all appeals by private by the Administrator's proposed deter-
persons received by the Administrator rndetermination may
file a with the CEO, or
ten appeal of
from the CEO; such
(f) Copies of all comments received such agency as he shall publicly des-
by the Administrator on the notice of ignate, within ninety days of the sec-
the proposed flood elevation deter- and newspaper publication of the Ad-
mination published in the FEDERAL ministrator's proposed determination.
REGISTER. (b)[Reserved]
(g) A copy of the community's appeal [41 FR 46989, Oct. 26, 1976. Redesignated at 44
or a copy of 'its decision not to appeal FR 31177, May 31, 1979, as amended at 48 FR
the proposed flood elevation deter- 44553, Sept. 29, 1983; 49 FR 4751, Feb. 8, 1984]
mina.tion;
(h) A copy of the flood insurance §67.6 Basis of appeal.
study for the community; (a) The sole basis of appeal under this
(i) A copy of the FIRM for the corn- part shall be the possession of knowl-
munity; edge or information indicating that the
(j) Copies of all materials maintained elevations proposed by FEMA are sci-
in the flood elevation study consulta- entifically or technically incorrect. Be-
tion docket; and cause scientific and technical correct-
(k) A copy of the final determination ness is often a matter of degree rather
with supporting documents. than absolute (except where mathe-
[41 FR.46989, Oct. 26, 1976. Redesignated at 44 matical or measurement error or
FR 31:177, May 31, 1979, as amended at 48 FR changed physical conditions can be
44553., Sept. 29, 1983; 49 FR 4751, Feb. 8, 1984] demonstrated), appellants are required
to demonstrate that alternative meth-
§67.4 Proposed flood elevation deter- ods or applications result in more cor-
mination. rect estimates of base flood elevations,
The Administrator shall propose thus demonstrating that FEMA's esti-
flood elevation determinations in the mates are incorrect.
following manner: (b) Data requirements. (1) If an appel-
(a) Publication of the proposed flood lant believes the proposed base flood
elevation determination for comment elevations are technically incorrect
in the FEDERAL REGISTER; due to a mathematical or measurement
(b) Notification by certified mail, re- error or changed physical conditions,
turn receipt requested, of the proposed then the specific source of the error
flood elevation determination to the must be identified. Supporting data
CEO; and must be furnished to FEMA including
348
Federal Emergency Management Agency §67.8
certifications by a registered profes- paper publication of the Administra-
sional engineer or licensed land sur- tor's proposed flood elevation deter-
veyor, of the new data necessary for urination to the CEO or to such agency
FEMA to conduct a reanalysis. as he may publicly designate and shall
(2) If an appellant believes that the set forth scientific or technical data
proposed base flood elevations are that tend to negate or contradict the
technically incorrect due to error in Administrator's findings.
application of hydrologic, hydraulic or (b) Copies of all individual appeals re-
other methods or use of inferior data in ceived by the CEO shall be forwarded,
applying such methods, the appeal as soon as they are received, to the Ad-
must demonstrate technical incorrect- ministrator for information and place-
ness ify: ment in the Flood Elevation Deter-
(i) Identifying the purported error in mination Docket.
the application or the inferior data. (c) The CEO shall review and consoli-
(11) Supporting why the application is date all appeals by private persons and
incorrect or data is inferior. issue a written opinion stating whether
(iii) Providing an application of the the evidence presented is sufficient to
same basic methods utilized by FEMA justify an appeal on behalf of such per-
but with the changes itemized. sons by the community in its own
(iv) Providing background technical name.
support for the changes indicating why (d) The decision issued by the CEO on
the appellant's application should be the basis of his review, on whether an
accepted as more correct. appeal by the community in :its own
(v) Providing certification of correct- name shall be made, shall be flied with
nese of any alternate data utilized or the Administrator not later than nine-
measurements made (such as topo- ty days after the date of the second
graphic information) by a registered newspaper publication of the Adrninis-
professibnal engineer or licensed land trator's proposed flood elevation deter-
surveyor, and mination and shall be placed in the
(vi) Providing documentation of all FEDD.
locations where the appellant's base
flood elevations are different from [41 FR 46989, Oct.. 26, 1976. Redesignated at 44
FEMA's. FR 31177, May 31, 1979, as amended at 48 FR
(3) If any appellant believes the44553 Sept. 29, 1983; 49 FR 4751, Feb. 0, 1984]
pro-
posed base flood elevations are scientif- §67.8 Appeal procedure
ically incorrect, the appeal must dem- (a) If a community appeals the
onstrate scientific incorrectness by: on,
(i) Identifying the methods, or as- posed flood elevation determination,
sumptions purported to be scientif- the Administrator shall review and
ically incorrect. take fully into account any technical
(11) Supporting why the methods, or or scientific data submitted by the
assumptions are scientifically incor- c that tend to negate or con-
rect. tradict dict t thee information upon which his/
(iii) Providing an alternative analy- her proposed determination is based.
sis utilizing methods, or assumptions (b) The Administrator shall resolve
purported to '11ne correct. such appeal by consultation with offi-
(iv) Providing technical support indi- cials of the local government, or by ad-
eating why the appellant's methods dares tse tive hearings under the proce-
should be accepted as more correct and dares set forth in part 68 of this sub
(v) Providing documentation of all chapter, or by submission of the con-
locations where the appellant's base flitting data to an independent sci-
flood elevations are different from entitle body or appropriate Federal
FEMA's. agency for advice.
(c) The final determination by the
[48 FR 31644, July 1,1983] Administrator where an appeal is filed
I shall be made within a reasonable
67.7 Collection of appeal data
time.
(a) Appeals by private persons to the (d) Nothing in this section shall be
CEO shall be submitted within ninety considered to compromise an appel-
(90) days following the second news- lant's rights granted under §67.12.
349
§67.9 44 CFR Ch. I (10-1-98 Ed1UOn)
(e) The Administrator shn-11 make CEO, all individual appellants and the
available for public inspection the re- State Coordinating Agency.
ports and other information used in [41 FR.46989, Oct. 26, 1976. Redesignated at 44
making the final determination. This FR 31177, May 31, 1919, as amended at 48 FR
material shall be admissible in a court 44553 Sept. 29, 1983; 49 FR 4751, Feb. 8, 1984]
of law in the event the community
seeks judicial review in accordance EDITORIAL NOTE: For the list of commu-
with§67.12. nities issued under this section, and not car-
ried in the CFR, see the List of CFR Sections
(41 FR 46989, Oct. 26, 1976. Redesignated at 44 Affected appearing in the Finding Aids sec-
FR 31177, May 31, 1979, as amended at 48 FR tion of this volume.
44553, Sept. 29, 1983; 49 FR 4751, Feb. 8, 1984)
§67.9 Final determination in the ab- §67.12 Appeal to District Count.
sence of an appeal by the commu- (a) An appellant aggrieved by the
nity. final determination of the Adlminis-
(a) If the Administrator does not re- trator may appeal such determination
ceive an appeal from the community only to the United States District
within the ninety days provided, he Court for the District within which the
shall consolidate and review on their community 1s located within sixty
own merits the individual appeals days after receipt of notice of deter-
which, in accordance with §67.7 are mination
filed within the community and for- (b) During the pendency of any such
warded by the CEO. litigation, all final determinations of
(b) The filial determination shall be the Administrator shall be effective for
made pursuant to the procedures in the purposes of this title unless stayed
§67.8 and, used a.tions shall be made by the court for good cause shown.
of his proposed determination as may
be appropriate, taking into account the (c) The scope of review of the appel-
written opinion, if any, issued by the late court shall be in accordance with
community in not supporting such ap- the provisions of 5 U.S.C. 706, as modi-
peals. fled by 42 U.S.C. 4104(b).
[41 FR 46989, Oct. 26, 1976. Redesignated at 44 [41 FR 46989, Oct. 26, 1976. Redesignated at 44
FR 31177, May 31, 1979, as amended at 48 FR FR 31177, May 31, 1979, as amended at 48 FR
44553, Sept. ff', 1983; 49 FR 4751, Feb. 8, 1984) 44544 and 44553, Sept. 29, 1983; 49 FR 4751, Feb.
8, 1984; 49 FR 33879, Aug. 27, 1984]
*67.10 Rates during pendency of final
determination. PART 68-ADMINISTRATIVE
(a) Until such time as a final deter- HEARING PROCEDURES
mination is made and proper notice is
given, no person within a participating
community shall be denied the right to Sec.
purchase flood insurance at the sub- 68.1 Purpose of part.
68.2 Definitions.
sidized rate.
(b) After the final determination and 68.3 Right to administrative hearings.
upon the effective date of a FIRM, risk 68.4 Hearing board.
68.5 Establishment of a docket.
premium rates will be charged for new 68.6 Time and place of hearing.
construction and substantial improve- gg q Conduct of hearings.
ments. The effective date of a FIRM 68.8 Scope of review.
shall begin not later than six months 68.9 Admissible evidence.
after the f'.nal flood elevation deter- 68.10 Burden of proof.
mination. 68.11 Determination.
§67.11 Notice of final determination. 68.12 Relief.
The Administrator's notice of the AUTHORrrY: 42 U.S.C. 4001 et seq.; Reorga-
final flood elevation determination for nization Plan No. 3 of 1978;E.O. 121.27.
a community shall be in written form Souacs: 47 FR 23449, May 29, 1982, unless
and published in the FEDERAL REG- otherwise noted.
ISTER, and copies shall be sent to the
350
Federal Emergency Management Agency §68.7
§68.1 Purpose of part. its of the hearing shall be made by a
The purpose of this part is to estab- majority of the board. A dissenting
lish procedures for appeals of the Ad- member may submit a separate opinion
ministrator's base flood elevation de- for the record.
terminations, whether proposed pursu- (c) A technically qualified alternate
ant to section 1363(e) of the Act (42 will be appointed by the Judge as a
U.S.C. 4104) or modified because of member of the board when a tech-
changed conditions or newly acquired nically qualified appointed member be-
scientific and.technical information. comes unavailable. The Director will
appoint an alternate Judge if the ap-
[47 FR 23449, lay 29, 1982, as amended at 49 pointed Judge becomes unavailable.
FR 33879,Aug.27, 1984]
§68.2 Definitions. 4684 Establishment of a docket
The definitions set forth in part 59 of The General Counsel shall establish a
this subchapter are applicable to this docket for appeals referred to him/her
part, by the Administrator for administra-
tive hearings. This docket shall in-
[47 FR 23449, May 29, 1982, as amended at 49 elude, for each appeal, copies of all ma-
FR 33879, Aug.1:7, 1964] terials contained in the flood elevation
§68.3 Right to administrative hear determination docket (FEDD) file on
ings. the matter, copies of all correspond-
If a community appeals the Adminis ence in connection with the appeal, all
trator's flood. elevation determination motions, orders, statements, and other
established pursuant to §67.8 of this legal documents, a transcript of the
subchapter, and the Administrator has hearing, and the board's final deter-
determined that such appeal cannot be urination.
resolved by consultation with officials [47 FR 23449, May 29, 1962, as amended at 49
of the community or by submitting the FR 33879, Aug. 27, 1984)
conflicting data to an independent sci-
entific body or appropriate Federal §68.6 Time and place of hearing.
agency for advice, the Administrator (a) The time and place of each hear-
shall hold an administrative hearing to ing shall be designated by the Judge
resolve the appeal. for that hearing. The Administrator
[47 FR 23449, May 29, 1982, as amended at 49 and the General Counsel shall be
FR 33879, Aug. 27, 1984] promptly advised of such designations.
468.4 Hearing board (b) The board's notice of the time and
place of hearing shall be sent by the
(a) Each hearing shall be conducted Flood Insurance Docket Clerk by reg-
by a three member hearing board (here- istered or certified mail, return receipt
inafter "board"). The board shall con- requested, to all appellants. Such no-
sist of a hearing officer (hereinafter tice shall include a statement indicat-
"Judge") appointed by the Director ing the nature of the proceedings and
based upon a recommendation by the their purpose and all appellants' enti-
Office of Personnel Management and tlement to counsel. Notice of the hear-
two members selected by the Judge ing shall be sent no later than 30 days
who are qualified in the technical field before the date of hearing unless such
of flood elevation determinations. The period is waived by all appellants.
Judge shall consult with anyone he
deems appropriate to determine the FR 33879, A FR 23449, y1 ]1962, as amended at 49
technical qualifications of individualsug. 27.
being considered for appointment to
the board. The board members shall §68.7 Conduct of hearings.
not be FEMA employees. (a) The Judge shall be responsible for
(b) The Judge shall be responsible for the fair and expeditious conduct of pro-
conducting the hearing, and shall make ceedings.
all procedural rulings during the (b) The Administrator shall be rep-
course of the hearing. Any formal or- resented by the General Counsel or his/
ders and the final decision on the mer- her designee.
351
§68.8 44 CFR Ch. 1O0-1-98 Edition)
(c) One administrative hearing shall or hearing board regarding the base
be held for any one community unless flood elevations of any other comlmu-
the Administrator for good cause nity, such determination, decision, or
shown grants a separate hearing or finding of fact shall not be binding on
hearings. the board and may only be admissible
(d) The Chief Executive Officer (CEO) into evidence if relevant.
of the community or his/her designee
shall represent all appellants from that §68.10 Burden of proof.
community; Provided, That any appal- The burden shall be on appellant(s)
lant may petition the board to allow to prove that the flood elevation deter-
such appellant to make an appearance initiation is not scientifically or tech-
on his/her own behalf. Such a petition nicall9 correct.
shall be granted only upon a showing of
good cause. *68.11 Determination.
(e)Hearings shall be open to the pub-
lic The board shall render its written de-
(f) A verbaTdm transcript will be cision within 45 days after the conclu-
made of the hearing. An appellant may sion of the hearing. The entire record
order copies of the transcribed ver- of the hearing including the board's de-
batim record directly from the reporter cision will be sent to the Director for
and will be responsible for payments. review and approval. The Director shall
[47 FR 23449, May 29, 1982, as amended at 49 make the final base flood elevation de-
FR 33879, Aug.27, 1984] termination by accepting in whole or
in part or by rejecting the board's deci-
§68.8 Scope of review. Sion.
Review at administrative hearings § 12 Relief.
shall be limited to: An examination of
any information presented by each ap- The final determination may be ap-
pellant within the 90 day appeal period pealed by the appellant(s) to the
indicating that elevations proposed by United States district court as pro-
the Administrator are scientifically or vided in section 1363(f) of the Act (42
technically incorrect; the FIRM; the U.S.C. 4104).
flood insurance study; its backup data
and the references used in development PART 69 [RESERVED]
of the flood insurance study; and re-
sponses by FEMA to the issues raised PART 70-PROCEDURE FOR MAP
by the appellant(s). CORRECTION
[47 FR 23449, May 29, 1982, as amended at 49
FR 33879, Aug. 27, 1984]
MAPPING DEFICIENCIES UNRELATED TO COM-
§68.9 Admissible evidence. MUNrrY-WIDE ELEVATION DETERMINATIONS
(a) Legal rules of evidence shall not sec.
be in effect at adminstrative hearings. 70.1 Purpose of part.
However, only evidence relevant to 70.2 Definitions.
issues within the scope of review under 70.3 Right to submit technical information.
§68.8 shall be admissible. 70.4 Review by the Director.
(b) Documentary and oral evidence 70.5 Letter of Map Amendment.
shall 'be admissible. 70.6 Distribution of Letter of Map Amend-
(c) Admissibility of non-expert testi- ment.
mony shall be within the discretion of 70.7 Notice of Letter of Map Amendment.
the board. 70.8 Premium refund after Letter of Map
(d) All testimony shall be under oath. Amendment.
(e) Res judicator/ collateral estoppel. 70.9 Review of proposed projects.
Where there has been a previous deter- AUTHORITY: 42 U.S.C. 4001 et seq.; Iteorga-
mination, decision or finding of fact by nization Plan No. 3 of 1978, 43 FR 41943, 3
the Director, one of his delegees, an ad- CFR, 1978 Comp., p. 329; E.O. 12127 of Mar. 31,
ministrative law judge, hearing officer, 1979, 44 FR 19367, 3 CFR, 1979 Comp., p. 378-
352
Federal Emergency Management Agency §70.4
MAPPING DirricrzwmEs UNRELATED To Clerk, or Recorder of Deeds) indicating
COMMUNITY-WIDE FILEVATION DETER- the official recordation and proper ci-
MINATIONS tation (Deed or Plat Book Volume and
¢70.1 Purpose of pars Page Numbers), or an equivalent iden-
tification where annotation of the deed
The purpose of this part is to provide or plat book is not the practice.
an administrative procedure whereby (2) A topographical map showing (i)
the Administrator will review the sci- ground elevation contours in relation
entific or technical submissions of an to the National Geodetic Vertical
owner or lessee of property who be- Datum (NVGD) of 1929, (ii) the total
Neves his property has been inadvert- area of the property in question, (iii)
ently included in designated A, AO, Al- the location ff the structure or struc-
30, AE, AH, A99, AR, AR/Al-3D, AR/AE, tures located on the property in ques-
AR/AO, AR/AH, AR/A, VO, V1-30, VE, tion, (iv) the elevation of the lowest
and V Zones, as a result of the trans- adjacent grade to a structure or struc-
position of the curvilinear line to ei- tures and (v) an indication of the cur-
ther street or to other readily identifi- vilinear line which represents the area
able features. The necessity for this subject to inundation by a base flood.
part is due in part to the technical dif- The curvilinear line should be based
ficulty of accurately delineating the upon information provided by any ap-
curvilinear line on either an FHBM or propriate authoritative source, such as
FIRM. These procedures shall not a Federal Agency, the appropriate
apply when there has been any alter- state agency (e.g. Department of Water
ation. of topography since the effective Resources), a County Water Control
date of the first NFIP map (i.e., FHBM District, a County or City Engineer, a
or FIRM) showing the property within Federal Emergency Management Agen-
an area of special flood hazard. Appeals cy Flood insurance Study, or a deter-
. in such circumstances are subject to mination by a Registered Professional
the provisions of part 65 of this sub- Engineer;
chapter. (3) A copy of the FHBM or FIRM in-
[62 FR.55718,Oct. 27, 1997] dicating the location of the property in
question;
§70.2 Definitions.
(4) A certification by a Registered
The definitions set forth in part 59 of Professional Engineer or Licensed
this subchapter are applicable to this Land Surveyor that the lowest grade
part. adjacent to the structure is above the
[41 FR 46991, Oct. 26, 1976. Redesignated at 44 base flood elevation.
FR 311.77, May 31, 1979] [41 FR 46991, Oct. 26, 1976. Redesignated at 44
¢703 Right to submit technical infer- FR 31177, May 31, 1979, as amended at 48 FR
oration. 44544 and 44553, Sept. 29, 1983; 49 FR 4751, Feb.
8, 1984; 50 FR 36028, Sept. 4, 1985; 51 FR 30317,
(a) Any owner or lessee of property Aug. 25, 1986; 53 FR 16280, May 6, 1988; 59 FR
(applicant) who believes his property 53601, Oct. 25, 1994; 62 FR 55719, Oct. 27, 1997)
has been inadvertently included in a §70.4 Review by the Director.
designated A., AO, A1-30, AE, AH, A99,
AR, AR/A1-30, AR/AE, AR/AO, ARJAH, The Administrator, after reviewing
ARIA„ VO, V1-30, VE, and V Zones on a the scientific or technical information
FHBM or a FIRM, may submit sci- submitted under the provisions of§70.3,
entific or technical information to the shall notify the applicant in writing of
Administrator for the Administrator's his/her determination within 60 days
review. from the date of receipt of the appli-
(b) Scientific and technical informa- cant's scientific or technical informa-
tion for the purpose of this part may tion that either the ground elevations
include, but is not limited to the fol- of an entire legally defined parcel of
lowing: land or the elevation of the lowest ad-
(1) An actual copy of the recorded jacent grade to a structure have been
plat map bearing the seal of the appro- compared with the elevation o1' the
priate recordation official (e.g. County base flood and that:
353
§70.5 44 CFR Ch. 1 (10-1-98 Edt$on)
(a) The property is within a des- tions that it be attached to the map
ignated A, AO, A1-30, AE, AH, A99, AR, which it is amending.
AR/A1-30, AR/AE, AR/AO, AR/AH, AR/ (d) A copy of the Letter of Map
A, VO, V1-30, VE, or V Zone, and shall Amendment will be sent to any corn-
set forth the 'basis of such determine- munity or governmental unit that re-
tion; or quests such Letter of Map Amendment.
(b) The property should not be in- (e) [Reserved]
eluded within a designated A, AO, Al- (f) A copy of the Letter of Map
30, AE, AH, A99, AR, AR/A1-30, AR/AE, Amendment will be maintained by the
AR/AO, AR/All. AR/A, VO, V1-30, VE, Agency in its community case file.
or V Zone and that the FHBM or FIRM [41 FR 46991, Oct. 26, 1976. Redesignated.at 44
will be modified accordingly; or FR 31177, May 31, 1979, as amended at 48 FR
(c) An additional 60 days is required 44544 and 44553, Sept. 29, 1983; 49 FR 4751, Feb.
to make a determination. 8, 1984]
[41 FR 46991, Oct. 26, 1976. Redesignated at 44 §70.7 Notice of Letter of Map Amend-
FR 31177, May 31, 1979, as amended at 48 FR meat.
44553, Sept. 29, 1983; 49 FR 4751, Feb. 8. 1984; (a) The Administrator, shall not pub-
50 FR 36028, Sept.4, 1985; 51 FR 30317, Aug. 25,1986 lish a notice in the FEDERAL REGISTER
Oct.27,59 FR 53601, Oct. 25, 1994; 62 FR 55719, that the FIRM for a particular commu-
nity Oct.27, 199'!]
has been amended by letter deter-
§703 Letter of Map Amendment urination pursuant to this part unless
Upon such amendment includes alteration or
determining from available aci-
estab-
entific or technical information that a change of base flood elevations FHBM or a FIELM requires modification lashed pursuant to part 67. Where no
under the provisions of§70.4(b), the Ad- change of base flood er MaAm has opt
ministrator shall issue a Letter of Map provprorid, the Letter .5of Map Amendment
to
Amendment which shall state: inform
et under §§7a5 and . serves to
inform the parties affected.
(a) The name of the Community to
which the map to be amended was Enrroaa NOTE: For a list of communities
issued; issued under this section and not canted in
iss
(ued; number of the map; the CFR see the List of CFR Sections Af-
fected appearing in the Finding Aide Section
(c) The identification of the property of this volume.
to be excluded from a designated A,
AO, A:1-30, AE, AH, A99, AR, AR/A1-30, §70.8 Premium refund after Letter of
AR/AE, AR/AO, AR/AH, AR/A, VO, Vl- Map Amendment.
30, VE, or V Zone. A Standard Flood Insurance :Policy-
[41 FR. 46991, Oc'.. 26, 1976. Redesignated at 44 holder whose property has become the
FR 31177, May 31, 1979, as amended at 48 FR subject of a Letter of Map Amendment
44553, Sept. 29, 1983; 49 FR 4751, Feb. 8, 1984; under this part may cancel the policy
50 FR 36028, Sept. 4. 1905; 59 FR 53601, Oct. 25, within the current policy year and re-
1994; 62 FR 55719, Oct. 27, 1997] ceive a premium refund under the con-
ditions set forth in §62.5 of this sub-
§70.6 Distribution of Letter of Map chapter.
Amendment.
[41 FR 46991, Oct. 26, 1976. Redesignated at 44
(a) A copy of the Letter of Map FR 31177, May 31, 1979]
Amendment shall be sent to the appli-
cant who submitted scientific or tech- §70.9 Review of proposed projects.
nical data to the Administrator. An individual who proposes to build
(b) A copy of the Letter of Map one or more structures on a portion of
Amendment shall be sent to the local property that may be included inad-
map repository with instructions that vertently in a Special Flood Hazard
it be attached to the map which the Area (SFHA) may request FEMA's
Letter of Map Amendment is amend- comments on whether the proposed
ing. structure(s), if built as proposed, will
(c) A copy of the Letter of Map be in the SFHA. FEMA's comments
Amendment shall be sent to the map will be issued in the form of a letter,
repository in the state with instruc- termed a Conditional Letter of Map
354
Federal EmeigenCy Management Agency §71.2
Amendment. The data required to sup- tained for the construction of such
port such requests are the same as structure prior to October 18, 1982; and
those required for final Letters of Map (11) The start of construction (see
Amendment in accordance with §70.3, part 59) took place prior to October 18,
except as-built certification is not re- 1982; or
quired and the requests shall be accom- (2)(1) A legally valid building permit
panted by the appropriate payment, in or equivalent documentation was ob-
accordance with 44 CFR part 72. All tamed for the construction of such
such requests for CLOMAs shall be sub- structure prior to October 1, 1983; and
matted to tie FEMA Regional Office (ii) The structure constituted an in-
servicing the community's geographic curable building, having walls and a
area or.to the FEMA Headquarters Of- roof permanently in place no later than
flee in Washington, DC. October 1, 1983.
[62 FR 5736,Feb.6, 1997) (c) For the purpose of this part, a
structure located in an area newly
PART 71—IMPLEMENTATION OF identified as being in the CBRS as of
COASTAL BARRIER LEGISLATION November 16, 1990, is "new construc-
tion" unless it meets the following cri-
teria:
Ste' (1) A legally valid building permit or
71.1 Purpose of wt. equivalent documentation was ob-
71.2 Definitions. tamed for the construction of such
71.3 Denial of flood insurance. prior rior to November 16, 1990;
71.4 Documentation.
71.5 Violations. and
(2) The start of construction (see 44
Atrmoarrr: 42 U.S.C. 4001, et seq.; Reorga- CFR part 59) took place prior to No-
nization Plan No. 3 of 1978, 3 CFR, 1978 vember 16, 1990.
Comp., p. 329; I .O. 12127, 44 FR 19367, 3 CFR,
1979 Comp., p. 376; 42 U.S.O. 4028; secs. 9 and (d) For the purpose of this part, a
14,Pub.L. 101-891,42 U.S.C.4028(b). structure located in an "otherwise pro-
tected area" is "new construction" un-
Soirxcli: 48 FR 37039, Aug. 16, 1983, unless less it meets the following criteria:
otherwise noted.
(1)(i) A legally valid building permit
§71.1 Purpose of park or equivalent documentation was ob-
tained This part Implements section 11 of for the construction of such
and
structure prior to November :L6, 1990;
the Coastal Barrier Resources Act
(Pub. L. 97-148) and section 9 of the
Coastal Barrier Improvement Act of (if) The start of construction took
place prior to November 16, 1990; or
1990 (Pub. L. 101-591), as those Acts
amend the National Flood Insurance (2)(i) A legally valid building permit
Act of 1968 (42 U.S.C. 4001 et seq.). or equivalent documentation was ob-
tained for the construction of such
[48 FR 37039, Aug. 16, 1983, as amended at 57 structure prior to November 16, 1991;
FR 22861, May 29,1992) and
§71.2 Definil3ona (ii) The structure constituted an in-
surable building, having walls and a
(a) Except as otherwise provided in roof permanently in place, no later
this part, the definitions set forth in than November 16, 1991.
part 59 of this subchapter are applica- (e) For the purpose of this part, a
ble to this part. structure located in an area identified
(b) For the purpose of this part, a as being in the CBRS both as of Octo-
structure located in an area identified ber 18, 1982, and as of November 16, 1990,
as being in the Coastal Barrier Re- is a "substantial improvement" if the
sources System (CBRS) both as of Oc- substantial improvement (see 44 CFR
tober 18, 1982, and as of November 16, part 59) of such structure took place on
1990, is "new construction" unless it or after October 1, 1983.
meets the following criteria: (f) For the purpose of this pert, a
(1)(i) A legally valid building permit structure located in an area newly
or equivalent documentation was ob- identified as being in the CBRS as of
355
§71.3 44 CFR Ch. 100-1-98 EdMon)
November 16, 1990, is a "substantial im- the CBRS both as of October 18., 1982,
provement" if the substantial improve- and as of November 16, 1990.
ment of such structure took place on (b) No new flood insurance coverage
or after November 16, 1990. may be provided on or after November
(g) For the purpose of this part, a 16, 1990, for any new construction or
structure located in an "otherwise pro- substantial improvement of a structure
tected area" :Is a "substantial improve- located in any area newly identified as
ment" if the substantial improvement being in the CBRS as of November 16,
of such structure took place after No- 1990.
vember 16, 1991. (c) No new flood insurance coverage
(h) For the purpose of this part, a may be provided after November 16,
policy of flood: insurance means a policy 1991, for any new construction or sub-
issued pursuant to the National Flood stantial improvement of a structure
Insurance Act of 1968, as amended. This which is located in an "otherwise pro-
includes a policy issued directly by the tected area."
Federal Government as well as by a (d) Notwithstanding paragraph (c) of
private sector insurance company this section, new flood insurance cov-
under the Write Your Own Program as erage may be provided for a structure
authorized by 44 CFR part 62. which is newly constructed or substan-
(i) For the purpose of this part, new tially improved in an "otherwise pro-
policy of flood insurance means a policy tected area" if the building is used in a
of flood insurance other than one manner consistent with the purpose for
issued by an insurer (Write Your Own which the area is protected.
insurer or the Federal Government as [57 FR 2266'2, May 29, 1992]
the direct insurer) effective upon the
expiration of a prior policy of flood in- §71.4 Documentation
surance issued by the same insurer
without any lapse in coverage between (a) In order to obtain a new policy of
these two policies. flood insurance for a structure which is
(j) For the purpose of this part, new located in an area identified as being in
flood insurance coverage means a new or the CBRS as of November 16, 1990, or in
renewed policy of flood insurance. order to obtain a new policy of flood in-
k) For the purpose of this part, oth- surance after November 16, 1991, for a
erwise protected area means an uncle- structure located in an "otherwise Dro-
veloped coastal barrier within the tected area," the owner of the struc-
boundaries of an area established under ture must submit the documentation
Federal, State, or local law, or held by described in this section in order to
a qualified organization, primarily for show that such structure is eligible to
wildlife refuge, sanctuary, rec- receive flood insurance. However, if the
rational, or natural resource con- new policy of flood insurance is being
servation purposes and identified and obtained from an insurer (Write Your
depicted on the maps referred to in sec- Own or the Federal Government as di-
tion 4(a) of the Coastal Barrier Re- rect insurer) that has previously ob-
sources Act, as amended by the Coastal tarred the documentation described in
Barrier Improvement Act of 1990, as an this section, the property owner need
area that is: only submit a signed written certifi-
cation n the and that the structure has not been
(1) Not withisubstantially improved since the date
(2) In an "utherwise CBRSprotected area."
of the previous documentation.
[48 FR 37039, Aug. 16, 1983, as amended at 49 (b) The documentation must be sub-
FR 33879, Aug. 27, 1984: 57 FR 22661, May 29, mitted along with the application for
1992] the flood insurance policy.
§71.3 Denial of flood insurance. (c) For a structure located in an area
identified as being in the CBRS both as
(a) No new flood insurance coverage of October 18, 1982, and as of November
may be provided on or after October 1, 16, 1990, where the start of construction
1983, for any new construction or sub- of the structure took place prior to Oc-
stantial improvement of a structure lo- tober 18, 1982, the documentation shall
cated in an area identified as being in consist of:
356
Federal Emergency Management Agency §71.4
(1) A legally valid building permit or ture was not in compliance with the
its equivalent for the construction of building code at the time it was built;
the structure dated prior to October 18, and
1982; (2)A written statement signed by the
(1) If the community did not have a community official responsible for
building permit system at the time the building permits, attesting to the fact
structure was built, a written state- that he or she knows of his/her own
ment to this effect signed by the re- knowledge or from official community
sponsible community official will be records, that:
accepted in lieu of the building permit; (1) The structure constituted an in-
(ii) If the building permit was lost or surable building, having wails and a
destroyed, a 'written statement to this roof permanently in place no later than
effect signed by the responsible corn- October 1, 1983; and
munity official will be accepted in lieu (11) The structure has not been sub-
of the building permit. This statment stantially improved since September
must also include a certification that 30, 1983; and
the official has inspected the structure (3) A community issued final certifi-
and found no evidence that the struc- cate of occupancy or other use permit
ture was not in compliance with the or equivalent proof certifying the the
building code at the time it was built; building was completed (walled and
and roofed) by October 1, 1983.
(2) A written statement signed by the (e) For a structure located in an area
community official responsible for newly identified as being in the CBRS
building permits, attesting to the fact as of November 16, 1990, where the start
that he or she knows of his/her own of construction of the structure took
knowledge or from official community place prior to November 16, 1990, the
records, that: documentation shall consist of:
(1) The start of construction took (1) A legally valid building permit or
place prior to October 18, 1982; and its equivalent for the construction of
(ii) The structure has not been sub- the structure, dated prior to November
stantially improved since September 16, 1990.
30, 1983. (1) If the community did not have a
(d) For a structure located in an area building permit system at the time the
identified as being in the CBRS both as structure was built, a written state-
of October 18, 1982, and as of November ment to this effect signed by the re-
16, 1990, where the start of construction sponsible community official will be
of the structure took place on or after accepted in lieu of the building permit;
October 18, 1982, but the structure was (ii) If the building permit was lost or
completed (walls and roof permanently destroyed, a written statement to this
in place) prior to October 1, 1983, the effect signed by the responsible nom-
documentation shall consist of: munity official will be accepted in lieu
(1) A legally valid building permit or of the building permit. This statement
its equivalent for the construction of must also include a certification that
the structure dated prior to October 1, the official has inspected the structure
1983; and found no evidence that the struc-
(1) If the community did not have a tore was not in compliance with the
building permit system at the time the building code at the time it was built;
structure was built, a written state- and
ment to this effect signed by the re- (2) A written statement signed by the
sponsible community official will be community official responsible for
accepted in lieu of the building permit; building permits, attesting to the fact
(11) If the building permit was lost or that he or she knows of his or her own
destroyed, a written statement to this knowledge or from official community
effect signed by the responsible corn- records, that:
munity official will be accepted in lieu (f) The start of construction took
of the building permit. This statement place prior to November 16, 1990; and
must also include a certification that (if) The structure has not been sub-
the official has inspected the structure stantially improved since November 15,
and found no evidence that the state 1990.
357
§71.5 44 CFR Ch. 1 (10-1--98 Edition)
(f) For a structure located in an area effect signed by the responsible corn-
identified as an "otherwise protected munity official will be accepted in lieu
area" where the start of construction of the building permit. This statement
of the structure took place prior to No- must also include a certification that
vember 16, 1990, the documentation the official has inspected the structure
shall consist of: and found no evidence that the struc-
(1) A legally valid building permit or ture was not in compliance with the
its equivalent for the construction of building code at the time it was built;
the structure, dated prior to November and
16, 1990. (2) A statement signed by the com-
(1) U the community did not have a inanity official responsible for building
building permit system at the time the permits, attesting to the fact that he
structure was built, a written state- or she knows of his or her own knowl-
ment to this effect signed by the re- edge or from official community
sponsible community official will be records that:
accepted in lieu of the building permit; (i) The structure constituted an in-
(ii) If the building permit was lost or surable building, having walls and a
destroyed, a written statement to this roof permanently in place, no later
effect signed by the responsible corn- than November 16, 1991; and
munity official will be accepted in lieu (ii) The structure has not been sub-
of the building permit. This statement stantially improved since November 16,
must also include a certification that 1991; and
the official has inspected the structure (3) A community issued final certifi-
and found no evidence that the strut- cote of occupancy or other use permit
ture was not in compliance with the or equivalent proof certifying that the
building code at the time it was built; building was completed (walled and
and roofed) by November 16, 1991.
(2) A written statement signed by the (h) For a structure located in an area
community official responsible for identified as an "otherwise protected
building permits, attesting to the fact area" for which the documentation re-
that he or she knows of his or her own quirements of neither paragraph (f) nor
knowledge or from official community paragraph (g) of this section have been
records, that: met, the documentation shall consist
U) The start of construction took of a written statement from the gov-
place prior to November 16, 1990; and ernmental body or qualified organiza-
(ii) The structure has not been sub- tion overseeing the otherwise pro-
stantially improved since November 16, tected area" certifying that the build-
1991. ing is used in a manner consistent with
(g) For a structure located in an area the purpose for which the area is pro-
identified as an "otherwise protected tected.
area" where the start of construction (Approved by the Office of Management and
of the structure took place after No- Budget under control number 3067-0120)
vernber 15, 1990, but construction was
completed with the walls and a roof [48 FR 37039, Aug. 16, 1983, as amended at 57
permanently in place no later than No- FR 22662, May 29, 1992]
vember 16, 1991, the documentation
shall consist of: 571.5 Violations.
(1) A legally valid building permit or (a) Any flood insurance policy which
its equivalent for the construction of has been issued where the terms of this
the structure, dated prior to November section have not been complied with or
16, 1991. is otherwise inconsistent with the pro-
(i) If the community did not have a visions of this section, is void a6 initio
building permit system at the time the and without effect.
structure was built, a written state- (b) Any false statements or false rep-
ment to this effect signed by the re- resentations of any kind made in con-
sponsible community official will be nection with the requirements of this
accepted in lieu of the building permit; part may be punishable by fine or im-
(ii) If the building permit was lost or prisonment under 18 U.S. Code section
destroyed, a written statement to this 1001.
358
Federal Emergency Management Agency §72.3
PART 72—PROCEDURES AND FEES logic or hydraulic characteristics of a
FOR PROCESSING MAP CHANGES flooding source and thus result in the
modification of the existing regulatory
geC, floodway, the effective base flood e1e-
72.1 Purpose of part. vations, or the Special Flood Hazard
72.2 Definitions. Area (SFHA).
72.3 Fee schedule. CLOMR—F. A CLOMR-F is F:EMA's
72.4 Submittal/payment procedures and comment on a proposed project that
FEMA response. would, upon construction, result in a
72.5 Exemptions. modification of the SFHA through the
72.6 Unfavoraale response. placement of fill outside the existing
72.7 Resubmittals.
regulatory floodway.
AUTHORITY: 42 U.S.C. 4001 et seq.; Reorga- LOMR. A LOMB is FEMA's modifica-
nization Plan No. 3 of 1978, 43 FR 41943. 3 tion to an effective Flood Insurance
CFR, 1978 Corap., p. 329; E.O. 12127, 44 FRRate Map (FIRM), or Flood Boundary
19367, 3 CFR, 1979 Comp.. p. 376. and Floodway Map (FBFM), or both.
§72.1 Purpose of part. LOMRs are generally based on the im-
plementation of physical measures
This part provides administrative that affect the hydrologic or hydraulic
and cost-recovery procedures for the characteristics of a flooding source and
engineering :review and administrative thus result in the modification of the
processing associated with FEMA's re- existing regulatory floodway, the effec-
sponse to requests for Conditional Let- tive base flood elevations, or the
ters of Map Amendment (CLOMAs), SFHA. The LOMB officially revises the
Conditional Letters of Map Revision FIRM or FBFM, and sometimes the
(CLOMRs), Conditional Letters of Map Flood Insurance Study (FIS) report,
Revision Based on Fill (CLOMR-Fs), and, when appropriate, includes a de-
Letters of Map Revision Based on Fill scription of the modifications. The
(LOMR-Fs), Letters of Map Revision LOMB is generally accompanied by an
(LOMRs), and Physical Map Revisions annotated copy of the affected portions
(PMRs). Such requests are based on of the FIRM, FBFM, or FIS report.
proposed or actual manmade alter- LOMR-F. A LOMB-F is FEMA's
atioos withi:a the floodplain, such as modification of the SFHA shown on the
the placement of fill; modification of a FIRM based on the placement of fill
channel; construction or modification outside the existing regulatory
of a bridge, culvert, levee, or similar floodway.
measure; or construction of single or PMR. A PMR is FEMA's physical re-
multiple residential or commercial vision and republication of an effective
structures on single or multiple lots. FIRM, FBFM, or FIS report. PMRs are
[62 FR 5736, Feb. 6, 199'1] generally based on physical measures
that affect the hydrologic or hydraulic
§72.2 Definitions. characteristics of a flooding source and
Except as otherwise provided in this thus result in the modification of the
part, the definitions in 44 CFR part 59 existing regulatory floodway, the effec-
are applicable to this part. For the pur- tive base flood elevations, or the
poses of this part, the products are de- SFHA.
fined as follows: [62 FR 5737, Feb.6, 199'7]
CLOMA. A CLOMA is FEMA's com-
ment on a proposed structure or group §72.3 Fee schedule.
of structures that would, upon con- (a) For requests for CLOMRs,
struction, be located on existing natu- LOMR5, and PMRs based on structural
ral ground above the base (1-percent- measures on alluvial fans, an initial fee
annual-chance) flood elevation on a of $5,000, subject to the provisions of
portion of a legally defined parcel of §72.4, shall be paid to FEMA. before
land that is partially inundated by the FEMA begins its review of the request.
base flood. The initial fee represents the minimum
CLOMR. A CLOMR is FEMA's corn- cost for reviewing these requests and is
ment on a proposed project that would, based on the prevailing private-sector
upon construction, affect the hydro- labor rate. A revision to this initial
359
§72A 44 CFR Ch. I (10-1-98 Edition)
fee, if necessary, will be published as a (d) If a request involves more than
notice in the FEDERAL REGISTER. one of the categories listed above, the
(b) For requests for CLOMRs, highest applicable flat user fee must be
LOMRs, and F'MRs based on structural submitted.
measures on alluvial fans, the total fee (e) The flat user fees for conditional
will be calculated based on the total and final map amendments and map re-
hours by FEMA to review and process visions are based on the actual costs
the request multiplied by an hourly for reviewing and processing the re-
rate based on the prevailing private- quests. The fees for requests for
sector labor rate. The hourly rate is LOMR-Fs, LOMRs, and PMRs also in-
published as a notice in the FEDERAL elude a fee of S35 to cover FEMA"s costs
REGISTER. A revision to the hourly for physically revising affected FIRM
rate, if necessary, shall be published as and FBFM panels to reflect the map
a notice in the FEDERAL REGISTER. changes.
(c) For conditional and final map re- (f) Revisions to the fees, if necessary,
vision requests for the following cat- shall be published as a notice in the
egories, flat user fees, subject to the FEDERAL REGISTER.
provisions of §72.4, shall be paid to [62 FR 5737, Feb.6. 1997]
FEMA before FEMA begins its review
of the request: §72.4 Submittal/payment procedures
(1) Requests for CLOMAs, CLOMR- and FEMA response.
Fs, and LOMB-Fs for single structures (a) The initial fee shall be submitted
or single lots; with a request for FEMA review and
(2) Requests for CLOMAs for multiple processing of CLOMRs, LOMRs, and
structures or multiple lots; PMRs based on structural measures on
(3) Requests for GLOWER-Fs and alluvial fans; the appropriate flat user
LOMR-Fs for multiple structures or fee shall be submitted with all other
multiple lots; requests for FEMA review and process-
(4) Requests LOMR-Fs for single ing,
structures or single lots based on as- (b) FEMA must receive initial or flat
built information for projects for which user fees before it will begin any re-
FEMA. issued CLOMR-Fs previously; view. The fee is non-refundable once
(5) Requests for LOMB-Fs for mul- FEMA begins its review.
tiple structures or multiple lots based (c) Following completion of FEMA's
on as-built information for projects for review for any CLOMR, LOMR, or PMR
which FEMA issued CLOMR-Fs pre- based on structural measures on allu-
viously; vial fans, FEMA shall invoice the re-
(6) Requests for LOMRs and PMRs quester at the established hourly rate
based on projects involving bridges, for any actual costs exceeding the ini-
culverts, or channels, or combinations tial fee incurred for review and process-
thereof; ing. FEMA shall not issue a deterrnina-
(7) Requests for LOMRs and PMRs tion letter or revised map panells)
based on projects involving levees, until it receives the invoiced amount.
berms, or other structural measures; (d) For all map revision requests,
(8) Requests for LOMRs and PMRs FEMA shall bear the cost of reprinting
based. on as-built information for and distributing the revised FIRM
projects for which FEMA issued panel(s), FBFM panel(s), or combina-
CLOMRs prev:,ously, except those based tion.
on structural measures on alluvial (e) The entity that applies to FEMA
fans; through the local community for re-
(9) Requests for LOMRs and PMRs view is responsible for the cost of the
based solely on more detailed data; review. The local community incurs no
(10) Requests for CLOMRs based on financial obligation under the reim-
projects involving new hydrologic in- bursement procedures of this part when
formation, bridges, culverts, or chan- another party sends the application to
nels, or combinations thereof; and FEMA.
(11) Requests for CLOMRs based on (f) Requesters shall submit payments
projects involving levees, berms, or by check or money order or by credit
other structural measures. card. Checks or money orders, in U.S.
360
Federal Emergency Management Agency Pt. 73
funds, shall be made payable to the Na- concerns, or conditions, or if the re-
tional Flood Insurance Program. quests are denied. Requesters are not
(g) For CLOMA, CLOMR-F, LOMA, entitled to any refund of fees paid if
and LOMB-F requests, FEMA shall: the requesters are unable to provide
(1) Notify the requester and commu- the appropriate scientific or technical
nity within 30 days as to the adequacy documentation or to obtain required
of the submittal, and authorizations, permits, financing,
(2) Provide to the requester and the etc., for which requesters seek the
community, within 60 days of receipt of CLOMAs, CLOMRs, or CLOMR-Fs.
adequate information and fee, a deter- (b) Requests for LOMRs, LOMB-Fs,
mination letter or other written corn- or PMRs may be denied or the revi-
ment in response to the request. lions to the FIRM, FBFM, or both,
(h) For CLDMR, LOMB, and PMR re- may not be in the manner or to the ex-
quests, FEMA shall: tent desired by the requesters. Re-
(1) Notify the requester and commu- questers are not entitled to any refund
nity within 60 days as to the adequacy of fees paid if the revision requests are
of the submittal; and denied or if the LOMRs, LOMB.--Fs, or
(2) Provide to the requester and the PMRs do not revise the map specifi-
community, within 90 days of receipt of tally as requested.
adequate information and fee, a [62 FR 5738, Feb. 6, 1997]
CLOMR, a LOMR, other written com-
ment in response to the request, or pre- §72.7 Resubmittals.
liminary copies of the revised FIRM (a) Resubmittals of CLOMA, CLOMR,
panels, FBFM panels, and/or affected CLOMR-F, LOMB, LOMB-F, or PMR
portions of the FIS report for review requests more than 90 days after FEMA
and comment. notification that the requests were de-
[62 FR 5737, Feb. 6, 1997] nied or after FEMA ended its review
because the requester provided. insuffi-
§72.6 Exemptions. cient information will be treated as
(a) Requests for map changes based original submissions and subject to all
on mapping or study analysis errors or submittal/payment procedures de-
the effects of natural changes within scribed in §72.4. The procedure in §72.4
SFFIAs shall be exempt from fees. also applies to a resubmitted request
(b) Requests for LOMAs shall be ex- (regardless of when submitted) if the
empt from fees. project on which the request is based
(c) Map change requests based on the has been altered significantly in design
following shall be exempt from fees: or scope other than as necessary to re-
(1) Federally sponsored flood-control spond to comments, concerns, or other
projects where 50 percent or more of findings made by FEMA regarding the
the project's costs are federally funded; original submission.
and (b) When LOMB, LOMB-F, or PMR
(2) Detailed hydrologic and hydraulic requests are made after FEMA issues
studies conducted by Federal, State, or CLOMRs or CLOMRr-Fs, the procedures
local agencies to replace approximate in §72.4 and the appropriate fee apply,
studies conducted by FEMA and shown as referenced in §72.3(c). When the as-
on the effective FIRM. built conditions differ from the pro-
[62 FR 5736, Feb. s, 19971 posed conditions on which FEMA
issued the CLOMRs or CLOMR—Fs, the
72.6 Unfavorable response. reduced fee for as-built requests will
not apply.
(a) Requests for CLOMAs, CLOMRs,
or CLOMR-Fs may be denied or the de- [62 FR 5738, Feb. 6, 1997]
terminations may contain specific
comments, concerns, or conditions re- PART 73-IMPLEMENTATION OF
garding proposed projects or designs SECTION 1316 OF THE NATIONAL
and their impacts on flood hazards in a FLOOD INSURANCE ACT OF 1968
community. Requesters are not enti-
tled to any refund of fees paid if the de- sec.
terminations contain such comments, 73d Purpose of part.
361
§73.1 44 CFR Ch. I (10-1-98 Edition)
73.2 Definitions.. tion to the Administrator for the de-
'73.3 Denial of flood insurance coverage. nial of insurance.
'73.4 Restoration of flood insurance coo- (d) A valid declaration shall consist
erage.
of:
AUTHORITY: 42 U.S.C. 4001 et seq.; Reorga- (1) The name(s) of the property
nization Plan No. 3 of 1978;E.O. 1212'7. owner(s) and address or legal descrip-
SOURCE: 51 FR. 30318, Aug. 25, 1986, unless tion of the property sufficient to con-
otherwise noted. firm its identity and location;
§73.1 Purpose of part. (2) A clear and unequivocal declara-
tion that the property is in violation of
This part implements section 1316 of a cited State or local law, regulation or
the National Flood Insurance Act of ordinance;
1968. (3) A clear statement that the public
§73 2 Definitions. body making the declaration has au-
thority to do so and a citation to that
(a) Except as otherwise provided in authority;
this part, the definitions set forth in (4) Evidence that the property owner
part 59 of this subchapter are applica- has been provided notice of the viola-
ble to this part. tion and the prospective denial of in-
(b) For the purpose of this part a duly surance; and
constituted Stale or local zoning authority (5) A clear statement that the dec-
or other authorized public body means an laration is being submitted pursuant to
official or body authorized under State section 1316 of the National Flood In-
or local law to declare a structure to be surance Act of 1968, as amended.
in violation of a law, regulation or or-
dinance. §73.4 Restoration of flood insurance
(c) For the purpose of this part, State coverage.
or local laws, regulations or ordinances
intended to discourage or restrict develop- (a) Insurance availability shall be re-
ment or occupancy of flood-prone areas stored to a property upon a finding by
are measures ;such as those defined as the Administrator of a valid rescission
Flood plain management regulations in of a declaration of a violation.
§59.1 of this subchapter. Such measures (b) A valid rescission shall be submit-
are referred to in this part as State or ted to the Administrator and shall con-
local flood plain management regula- sist of:
tions. (1) The name of the property owner(s)
and an address or legal description of
§73.3 Denial of flood insurance cov- the property sufficient to identify the
erage. property and to enable FEMA to iden-
(a) No new flood insurance shall be tify the previous declaration;
provided for any property which the (2) A clear and unequivocal state-
Administrator finds has been declared ment by an authorized public body re-
by a duly constituted State or local scinding the declaration and giving the
zoning authority or other authorized reason(s) for the rescission;
public body, to be in violation of State (3) A description of and supporting
or local laws, regulations or ordinances documentation for the measures taken
which are intended to discourage or in lieu of denial of insurance in order
otherwise restrict land development or to bring the structure into compliance
occupancy in flood-prone areas. with the local flood plain management
(b) New and renewal flood insurance regulations; and
shall be denied to a structure upon a
finding by the Administrator of a valid (4) A clear statement that the public
declaration of.a violation. body rescinding the declaration has the
(c) States and communities shall de- authority to do so and a citation to
termine whether to submit a declara- that authority.
362
Federal Emergency Management Agency §75.11
PART 74 [RESERVED] of its self-insurance plan, the burden of
proof shall rest upon the State making
PART 75—EXEMPTION OF STATE- application to establish that its policy
OWNED PROPERTIES UNDER SELF- of self-insurance is adequate and equals
INSURANCE PLAN or exceeds the standards provided in
this part.
Subpad A—Geniro1 Subpart B—Standards for
Sec. Exemption
75.1 Purpose of part.
75.2 Definitions. §75.10 Applicability.
75.3 Burden of proof. A State shall be exempt from the re-
Subpart B—•Standards for Exemption quirement to purchase flood insurance
in respect to State-owned structures
75.10 Applicability. and, where applicable, their contents
75.11 Standards. located or to be located in areas identi-
75.12 Applicati.on by a State for exemption. fled by the Administrator as A., AO,
75.13 Review by the Director. Al!, A1-30, AE, AR, AR/A1-30, AR/AE,
75.14 States exempt under this part. AR'AO, ARAH, AR/A, A99, M, V, VO,
AUTHORITY: 42 U.S.C. 4001 et seq.; Reorga- V1-30, VE, and E Zones, and in which
nization Plan No. 3 of 1978, 43 FR 41943, 3 the sale of flood insurance has been
CFR, 1978 Comp., p. 329; E.O. 12127 of Mar. 31, made available under the National
1979,44 FR 19367,3 CFR, 1979 Comp., p. 376. Flood Insurance Act of 1968, as amend-
SOURCE: 41 FR 46991, Oct. 26, 1976, unless ed, provided that the State has estab-
otherwise noted.Redesignated at 44 FR 31177, lashed a plan of self-insurance deter-
May 31, 1979. mined by the Administrator to equal or
Subpart A—General exceed the standards set forth in this
f subpart.
§75.1. Purpose of part. [62 FR 55719, Oct. 27, 1997]
Th.e purpose of this part is to esta.b- §75.11 Standards.
lish standards with respect to the Ad-
ministrator's determinations that a (a) In order to be exempt under this
State's plan of self-insurance is ade- part, the State's self-insurance plan
quate and satisfactory for the purposes shall, as a minimum:
of exempting such State, under the (1) Constitute a formal policy or plan
provisions of section 102(c) of the Act, of self-insurance created by statute or
from the requirement of purchasing regulation authorized pursuant to stat-
flood insurance coverage for State- ute.
owned structures and their contents in (2) Specify that the hazards covered
areas identified by the Administrator by the self-insurance plan expressly in-
as A, AO, AH, Al-30, AE, AR, AR/A1-30, elude the flood and flood-related haz-
AR/AE, AR/A.O, ARJAH, AR/A, A99, M, ards which are covered under the
V, VO, V1-30, VE, and E Zones, in Standard Flood Insurance Policy.
which the sale of insurance has been (3) Provide coverage to state-owned
made available, and to establish the structures and their contents equal to
procedures by which a State may re- that which would otherwise be avail-
quest exemption under section 102(c). able under a Standard Flood Insurance
Policy.
[62 FR 55719, Oct. 27, 1997] (4) Consist of a self-insurance fund, or
§75l Definitions. a commercial policy of insurance, or re-
insurance, for which provision is made
The definitions set forth in part 59 of in statute or regulation and that is
this subchapter are applicable to this funded by periodic premiums or
part. charges allocated for state-owned
¢7b.3 Burden of proof. structures and their contents in. areas
identified by the Administrator as A,
In any application made by a State AO, AH, Al-30, AE, AR, AR/A1-30, AR/
to the Administrator for certification AE, AR/AO, AR/AH, AR/A, A99, M, V,
363
§75.12 44 CFR Ch. I (10-1-98 Edition)
VO, V1-30, VE, and E Zones. The person (iii) Include an estimate of the an-
or persons responsible for such self-in- ticipated annual loss due to flood dam-
surance fund shall report on its status age.
to the chief executive authority of the (6) Provide the flood loss experience
State, or to the legislature, or both, for State-owned structures and their
not less frequently than annually. The contents based upon incurred losses for
loss experience shall be shown for each a period of not less than the 5 years im-
calendar or fiscal year from inception mediately preceding application for ex-
to current date based upon loss and emption, and certify that such histori-
loss adjustment expense incurred dur- cal information shall be maintained
inr each separate calendar or fiscal and updated.
year compared to the premiums or (7) Include, pursuant to §60.12 of this
charges for each of the respective cal- subchapter, a certified copy of the
ender or fiscal years. Such incurred flood plain management regulations
losses shall be reported in aggregate by setting forth standards for State-owned
cause of loss under a loss coding sys- properties within A, AO, All, Al-30,
tern adequate, as a minimum, to iden- AE, AR, AR/A1-30, AR/AE, ARJAO, AR/
tify and isolate loss caused by flood, AH, ARIA, A99, M, V, VO, V1-30, VE,
mudslide (i.e., mudflow) or flood-relat- and E Zones.
ed erosion. The Administrator may, (b) The Administrator shall deter-
subject to the requirements of para- mine the adequacy of the insurance
graph (a)(5) of this section, accept and provisions whether they be based on
approve in lieu of, and as the reason- available funds, an enforceable coin-
able equivalent of the self-insurance mitment of funds, commercial insur-
fund, an enforceable commitment of ance, or some combination thereof, but
funds by the State, the enforceability has discretion to waive specific re-
of which shat:'. be certified to by the quirements under this part.
State's Attorney General, or other
principal legal. officer. Such funds, or [41 FR 46991, Oct. 26, 1976. Redesignated at 44
enforceable commitment of funds in FR 31177, May 31, 1979, as amended at 48 FR
amounts not less than the limits of 44544, Sept. 29, 1983; 49 FR 4751, Feb. 8, 1984;
49 FR 5621, Feb. 14, 1984; 50 FR 36029, Sept. 4,
coverage that would be applicable 1985; 59 FR 53601, Oct. 25, 1994; 62 FR 55719,
under Standard Flood Insurance Poli- Oct. 27, 1997]
ties, shall be used by the State for the
repair or restoration of State-owned §75.12 Application by a State for ex-
structures and their contents damaged emption.
as a result of flood-related losses oc- Application for exemption made pur-
curring in areas identified by the Ad- suant to this part shall be made by the
ministrator as A, AO, AH, A1-30, AE, Governor or other duly authorized offi-
AR, ARJAl-30, ARJAE, AR/AO, AR/AH, cial of the State accompanied by suffi-
AR/A, A99, M, V, VO, V1-30, VE, and E cient supporting documentation which
Zones. certifies that the plan of self-insurance
(5) Provide 1'or the maintaining and upon which the application for exemp-
updating by a designated State official tion is based meets or exceeds the
or agency not less frequently than an- standards set forth in §75.11.
nually of an inventory of all State-
owned structures and their contents §75.13 Review by the Director.
within A, AO, AH, A1-30, AE, AR, ARJ (a) The Administrator may return
Al-30, AR/AE, ARJAO, AR/AH, AR/A, the application for exemption upon
A99, M, V, VO, V1-30, VE, and E zones. finding it incomplete or upon finding
The inventory shall: that additional information is required
(i) Include the location of individual in order to make a determination as to
structures; the adequacy of the self-insurance
(ii) Include an estimate of the cur- plan.
rent replacement costs of such struc- (b) Upon determining that the
tures and the:ir contents, or of their State's plan of self-insurance is mnad-
current economic value; and equate, the Administrator shall in
364
Federal Emergency Management Agency 577.1
writing reject the application for ex- PART 76 [RESERVED]
emption and shall state in what re-
spects the plan fails to comply with the PART 77—ACQUISITION OF FLOOD
standards set forth in§75.11 of this sub- DAMAGED STRUCTURES
part.
(c) Upon determining that the State's General Provisions
plan of self-insurance equals or exceeds
the standards set forth in §75.11 of this Sec.
subpart, the Administrator shall cer- 77,1 Definitions.
tify that the State is exempt from the 77.2 Criteria for acquisition.
requirement for the purchase of flood AVTaoarrv: 42 U.S.C. 4001 et seq.; Fsorga-
insurance for State-owned structures nization Plan No. 3 of 1978;E.O. 12148.
and their contents located or to be lo-
cated in areas identified by the Adman- GENERAL PROVISIONS
istrator as A, AO, AR, A1-30, AE, AR,
AR/A1-30, AR/AE, AR/AO, AR/AH, AR/ §77.1 Definitions.
A, A99, M, V, VO, V1-30, VE, and E (a) Definitions found in §59.1 of this
Zones. Such exemption, however, is in subchapter are applicable to this rec-
all cases provisional. The Adminis- tion.
trator shall review the plan for contin- (b) Furthermore, the following defi-
ued compliance with the criteria set nations are established:
forth in this part and may request up- Damaged substantially beyond repair
dated documentation for the purpose of means where (a) damages to the im-
such review. If the plan is found to be proved real property are such that as a
inadequate and is not corrected within condition of repair as imposed by a
ninety days from the date that such in- state or local government, the struc-
adequacies were identified, the Admin- ture must be elevated or floodproofed
Istrator may revoke his certification. to or above the 100-yeas flood ele-
(d) Documentation which cannot rea- vation, or (b) damages to the improved
sonably be provided at the time of ap- real property equals or exceed 50 per-
plication for exemption shall be sub- cent of the structure's fair market or
mitted within six months of the appli- actual cash value, whichever is less, or
cation date. The Administrator may (c) where damages to the improved real
revoke his certification for a State's property are such that repair is phys-
failure to submit adequate documenta- ically impossible or infeasible.
tion after the six month period. Flood risk area See definition for Spe-
[41 FR 46991, Oct. 26, 1976. Redesignated at 44 cial Hazard Area in §59.1, or other area
FR 31177, May 31, 1979, as amended at 48 FR subject to flooding as determined by
44544, Sept. 29, 1983; 49 FR 4751, Feb. 8, 1984; the Administrator.
49 FR 5621, Feb. 14, 1984; 50 FR 36029, Sept. 4, Significantly increased construction
1985; 59 FR 53601, Oct. 25, 1994; 62 FR 55719, cost occurs when a specific State or
Oct. 27, 1997] local statute, ordinance, or code re-
quires 75.14 States exempt under this park quires that improvements be made to a
structure as a condition of the repair of
The following States have submitted damages sustained, such that the ac-
applications and adequate supporting tual cost of repair would be greater by
documentation and have been deter- 25 percent than the cost which would
mined by the Administrator to be ex- be required for repair of the damages
empt from tb.e requirement of flood in- only
surance on State-owned structures and Sound land management and use The
their contents because they have in ef- process wherein the governmental body
fect adequate State plans of self-insur- responsible for land use regulation in a
ance: Florida, Georgia, Iowa, Ken- political jurisdiction plans and regu-
tucky, Maine, New Jersey, New York, lates the use of land within its jurisdic-
North Carolina, Oregon, Pennsylvania, tion in order to promote the reduction
South Carolina, Tennessee, and Ver- of property exposure to flood hazard
mont. and the protection of environmental
(48 FR 44544, Sept. 29, 1983, as amended at 57 values of flood plains. Sound use of
FR 19542, May 7, 1992] land acquired by FEMA and transferred
365
§77.2 44 CFR Ch. I (10-1-98 Edlllon)
to local governments pursuant to sec- (3) The building, while covered by
tion 1362 of Pu'olic Law 95-128 is use for flood insurance under the National
primarily open space and recreational Flood Insurance program, must have
purposes to minimize potential for any been damaged substantially beyond re-
future flood damage, with a general pair or must have been damaged not
prohibition of enclosed structures un- less than three previous times during
less functionally dependent for some the preceding five year period, each
recreational or open space use. The cr1- time the cost of repair equalling 25 per-
teria set forth in paragraphs (d)(1) cent or more of the structure's value,
through (4), of §77.2 and restrictions to or must have been damaged from a sin-
be placed in deeds used to convey title gle casualty of any nature so that a
to real property from the Federal Gov- statute, ordinance or regulation pre-
ernment to local governments will set eludes its repair or restoration or per-
forth more specific requirements to be mite repair or restoration only at sig-
used in determining what constitutes nificantly increased cost.
sound Land Management and Use for (4) A State or local community must
individual land parcels. enter into an agreement authorized by
[45 FR 50282, July 28, 1980, as amended at 48 ordinance or legally binding resolution
FR 44553, Sept. 129, 1983; 49 FR 4751, Feb. 8, to take title to and manage the prop-
19B9] erty in a manner consistent with sound
land managment use as determined by
77.2 Criteria for acquisition the Administrator.
(5) The community must agree to re-
(a) The objectives of the Flooded move without cost to the Federal
Property Purchase Program under the
National Flood. Insurance Program are: Emergency Management Agency
To reduce future flood insurance (FEMA), by demolition, relocation, do-
(1)and disaster assistance costs by remov- nation ho sale any damaged structures
le
ing repetitively and/or substantially to which the community the Ads title
damaged structures from flood risk from FEMA, en it provided Adminis-
damaged may, when it is in the public in-
areas; terest to do so, agree to assume a part
(2) 'To provide an opportunity for or all of the cost of such removal.
owners of repetitively and substan- (c) Title to the real property acquired
tially damaged. structures to be Derma- by FEMA shall be conveyed to :local
nently removed from flood risk areas, communities subject to specific re-
and to reduce risk to life from flooding; strictive covenants, conditions and
and agreements which will run with the
(3) To complement Federal, State and land and be binding on subsequent sue-
local efforts to restore flood plain val- censors, grantees and assigns. These re-
ues, protect the environment and pro- strictive covenants, conditions and
vide recreational and open space re- agreements will be recited in the deed
sources. a community receives from FEMA. and
(b) The Administrator will, when he the community shall join in the execu-
or she deems it to be in the public in- tion of the deed.
terest, enter into negotiation with (d) The general criteria from which
property owners whose improved real specific deed restrictions will be devel-
property has been damaged by flooding oped may include, among other things,
for the purpose of purchasing such that:
buildings and associated land or lot for (1) The land must be dedicated in per-
transfer by sale, lease, or donation to a petuity for open space purposes, or
community when the following condi- such other purposes as the Adminis-
tions are met: trator may agree are consistent with
(1) The property must be located in a the objectives set forth in paragraphs
flood risk area as determined by the (a)(1) through (3) of this section; that
Administrator; the community shall faithfully manage
(2) The property must have been cov- the land for its dedicated purposes;
ered by a flood insurance policy under that the community shall not erect or
the National Flood Insurance Program permit to be erected and structures or
at the time damage took place. other improvements on the land unless
366
Federal Emergency Management Agency !;78.1
such structures are, except for rest- Land Acquisition Conference,. GPO
rooms, open on all sides and function- (1973). Appraisals will reflect the ad-
ally related to a designated open space justed (for time) pre-damage fair mar-
use without the prior approval in writ- ket value (FMV) of the structure and
ing of the Administrator; and that the land to the extent that this FMV may
community shall not permit any use have been reduced or depressed in the
which will create a threat to human open market as a result of flooding. Ac-
life from flooding. tual compensation of FMV will be in-
(2) In general, allowable open space elusive of any flood insurance claim
uses include parks for outdoor rec- payments made or to be made as a re-
reational activities, nature reserves, stilt of the most recent flood event to
cultivation, grazing, camping (except the extent that repairs have not yet
where adequate warning time is not been made.
available to allow evacuation), tern- (g) Agreement to sell real property
porary storage in the open of wheeled on the part of owners will be corn-
vehicles which are easily movable (ex- pletely voluntary. No property owners
cept mobile homes), unimproved park- will be required to sell their properties
ing lots, buffer zones, or open space under section 1362.
areas that are part of Planned Unit De- (h) Relocation assistance under the
velopments (PUD's). Structures func- Uniform Relocation Assistance and
tionally related to these uses are open- Real Property Acquisition Policies Act
sided picnic and camping facilities, ki- (42 U.S.C. 4601 et seq.) is not available
osks and refreshment stands or non- to property owners who sell their prop-
habitable, elevated or floodproofed erties under section 1362.
service structures associated with a [45 FR 50282, July 28, 1980, as amended at 48
marina. FR 44553, Sept. 29, 1983; 49 FR 4751, Feb. 8,
(3) The rights to enforce the restric- 1984;49 FR 33879, Aug. 27, 1984]
tive covenants shall be assigned to the
Administrator as assignee, together PART 78-FLOOD MITIGATION
with a declaration that any future vio- ASSISTANCE
lation of the restrictive covenants or
agreements, delivered in writing to the Sec.
Chief Executive Officer within thirty 48.1 Purpose.
(30) days from the date the Adminis- 78,2 Definitions.
trator receives actual notice of the vio- 78.3 Responsibilities.
lation, shall be deemed at the Adminis- 78.4 Applicant eligibility.
trator's option to cause a reversion of 78.5 Flood Mitigation Plan development.
title to FEMA. 78.6 Flood Mitigation Plan approval. proc-
(4) The property shall be transferred ess.
subject to zoning and building laws and 76.7 Grant application procedures.
78.8 Grant funding limitations.
ordinances; easements, agreements, 78.9 Planning grant approval process.
reservations, covenants and restriction 78.10 Project grant approval process.
of record; any state of facts an accu- 78.11 Minimum project eligibility criteria.
rate survey might show; encroach- 78.12 Eligible types of projects.
ments and variations from the record 78.13 Grant administration.
lines of hedges, retaining walls, side- 78.14 Alternative procedures.
walks and fences; Acrrnoro n: 42 U.S.C. 4001 et seq.; 42 U.S.C.
(e) Any structures, as described at 4104c, 4104d; Reorganization Plan No. 3 of
paragraph (d)(2) of this section, and 1978, 43 FR 41943, 3 CFR, 1978 Comp., p. 329;
built in accordance with the deed re- E.O. 12127 of Mar. 31, 1979, 44 FR 19367, 3 CFR,
strictions shell be floodproofed or ele- 1979 Comp., p. 376.
vated to wit:astand the effects of the SOURCE: 62 FR 13347, Mar. 20, 1997, unless
500 year or .02 percent chance flood. otherwise noted.
(f) Appraisals for the determination
of compensation for flood damaged real 478.1 Purpose.
property will be undertaken in con- (a) The purpose of this part is to pre-
formance with the "Uniform Appraisal scribe actions, procedures. and require-
Standards for Federal Land Acquisi- ments for administration of the Flood
tions" published by the Inter-agency Mitigation Assistance (FMA) program,
367
§78.2 44 CFR Ch. I (10-1-98 Ed»Ion)
authorized by Sections 1366 and 1367 of compliance with applicable Federal
the National Flood Insurance Act of laws.
1968, 42 U.S.C. 4104c and 4104d. (b) State. The State will serve as
(b) The purpose of FMA is to assist grantee through the State Point of
State and local governments in funding Contact (POC) designated by the Gov-
cost-effective actions that reduce or ernor. The POC must have working
eliminate the long-term risk of flood knowledge of NFIP goals and processes
damage to buildings, manufactured and will ensure that FMA is coordi-
homes, and other insurable structures, nated with other mitigation activities
The long-tert goal of FMA is to reduce at the State level. If a Governor choos-
or eliminate claims under the National
Flood Insurance Program (NFIP) es not to identify a POC to coordinate
through mitigation activities. The pro- the FMA, communities may follow al-
gram provides cost-shared grants for ternative procedures as described in
three purposes: Planning Grants to §78.14. States will:
States and communities to assess the (1) Provide technical assistance to
flood risk and identify actions to re- communities to assist them in develop-
duce that risk; Project Grants to exe- ing applications and implementing ap-
cute measures to reduce flood losses; proved applications;
and Technical Assistance Grants that (2) Award planning grants;
States may use to assist communities (3) Submit plans to the FEMA Re-
to develop viable FMA applications and gional Director for approval;
implement FMA projects. FMA also (4) Evaluate project applications, se-
outlines a process for development and lecting projects to forward to the
approval of Flood Mitigation Plans. FEMA Regional Director for final ap-
§78.2 Definitions. proval; and
(a) Except as otherwise provided in (5) Submit performance and financial
reports to FEMA in compliance with 44
this part, the definitions set forth in CFR 13.40 and 13.41.
• part 59 of this subchapter are applica-
ble to this part. (c) Community. The community will:
(b) Community means: (1) Complete and submit applications
(1) A political subdivision, including to the State POC for the Planning and
any Indian tribe or authorized tribal Projects Grants;
organization or Alaskan native village (2) Prepare and submit the Flood
or authorized native organization, that Mitigation Plan;
has zoning and building code jurisdic- (3) Implement all approved projects;
tion over a particular area having spe- (4) Comply with FMA requirements,
cial flood hazards, and is participating 44 CFR parts 13 and 14, the grant agree-
in the NFIP; or ment, applicable Federal. State and
(2) A political subdivision of a State, local laws and regulations (as applica-
or other authority, that is designated ble); and
to develop and administer a mitigation (5) Account for the appropriate use of
plan by political subdivisions, all of grant funds to the State POC.
which meet the requirements of para-
graph (b)(1) of this section. §78.4 Applicant eligibility.
§78.3 Responsibilities. (a) The State is eligible to apply for
(a) Federal. The Director will allocate grants for Technical Assistance.
available funds to each FEMA Region. (b) State agencies and communities
The FEMA Regional Director will: are eligible to apply for Planning and
(1) Allocate Technical Assistance and Project Grants and to act as sub-
Planning Grants to each State through grantee. Communities on probation or
the annual Cooperative Agreements; suspended under 44 CFR part 60 of the
(2) Approve Flood Mitigation Plans NFIP are not eligible. To be eligible for
in accordance with §78.6; and Project Grants, an eligible applicant
(3) Award all FMA project grants, will develop, and have approved by the
after evaluating applications for mini- FEMA Regional Director, a Flood Miti-
mum eligibility criteria and ensuring gation Plan in accordance with §78.5.
368
Federal Emergency Management Agency §78.10
I 78.5 Flood Mitigation Plan develop- project applications to FEMA for re-
ment. view at any time.
A Flood Mitigation Plan will articu- �4&B Grant funding limitations.
late a comprehensive strategy for im-
plementing technically feasible flood (a) The Director will allocate the
mitigation activities for the area al- available funds for FMA each fiscal
fected by the plan. At a minimum, year. Each State will receive a base
plans will include the following ele- amount of $10,000 for Planning Grants
meats: and $100,000 for Project Grants, with
(a) Description of the planning proc- the remaining funds distributed based
ess and public involvement. Public in- on the number of NFIP policies, repet-
volvement may include workshops, itive loss structures, and other such
public meetings, or public hearings. criteria as the Director may determine
(b) Description of the existing flood in furtherance of the disaster resistant
hazard and. identification of the flood community concept.
risk, including estimates of the number (b) A maximum of $1,500,000 may be
and type of structures at risk, repel allocated for Planning Grants nation-
itive loss properties, and the extent of ally each fiscal year. A Planning Grant
flood depth and damage potential. will not be awarded to a State or corn-
(c) The applicant's floodplain man- munity more than once every 5 years,
and an individual Planning Grant will
agement goals for the area covered by not exceed 5150,000 to any State agency
the plan. applicant, or $50,000 to any community
(d) Identification and evaluation of applicant. The total Planning Grant
cost-effective and technically feasible
mitigation actions considered. made in any fiscal year to any State,
(e) Presentation of the strategy for the including all communities 0, 00.located in
the State, will not exceed 5300,000.
reducing flood risks and continued (c) A maximum of ten percent of the
compliance: with the NFIP, and proce- funds available for Project Grants will
dares for ensuring implementation, re- be allocated to Technical Assistance
viewing progress, and recommending grants each fiscal year.
revisions to the plan. (d) The total amount of FMA. Project
(f) Documentation of formal plan Grant funds provided during any 5-year
adoption by the legal entity submit- period will not exceed $10,000,000 to any
ting the plan (e.g., Governor, Mayor, State or $3,300,000 to any community.
County Executive). The total amount of Project Grant
§78.6 Flood Mitigation Plan approval funds provided to any State, including
all communities located in the State
process
will not exceed S20,000,000 during any 5-
The State POC will forward all Flood year period.
Mitigation Plans to the FEMA Re-
gional Director for approval. The Re- §78.8 Planing grant approval proc-
gional Director will notify the State .
POC of the approval or disapproval of The State POC will evaluate and ap-
the plan within 120 days after submis- prove applications for Planning Grants.
sion. If the Regional Director does not Funds will be provided only for the
approve a mitigation plan, the Re- flood portion of any mitigation plan,
gional Director will notify the State and Planning Grants will not be award-
POC of the reasons for non-approval ed to develop new or improved flood-
and offer suggestions for improvement. plain maps. The performance period for
eg 78.7 Grant application procedures. ach Planning Grant will not exceed 3
years.
States will apply for Technical As-
sistance and Planning Grants through $7810 Project grant approval process.
the annual Cooperative Agreement be- The State POC will solicit applica-
tween FEIV.LA and the State. The State tions from eligible applicants, review
POC will be notified regarding their projects for eligibility, and select ap-
available funds for project grants each plications for funding. Those project
fiscal year. The State may forward applications will then be forwarded to
369
• §78.11 44 CFR Ch. I (10-1-98 Edition)
FEMA for final approval. FEMA will (c) Demolition and removal of in-
provide funding on a project by project sured structures on acquired or re-
basis through a supplement to the an- stricted real property.
nual Cooperative Agreement. The (d) Elevation of insured residential
FEMA Regional Director will notify structures in accordance with 44 CFR
States regarding the program schedule 60.3.
at the beginning of each fiscal year. (e) Elevation or dry floodproofing of
insured non-residential structures in
§78.11 Minimum project eligibility cri- accordance with 44 CFR 60.3.
teria. (f) Other activities that bring an in-
The identification of a project or ac- sured structure into compliance with
tivity in an approved Flood Mitigation the floodplain management require-
Plan does not mean it meets FMA eli- ments at 44 CFR 60.3.
gibility criteria. Projects must: (g) Minor physical flood mitigation
(a) Be cost-effective, not costing projects that reduce localized flooding
more than the anticipated value of the and activitiesdo ot duplicate the flood
reduction in both direct damages and prevention g of other Federal
subsequent negative impacts to the agencies.
area if future floods were to occur. (h) Beach nourishment activities.
Both costs and benefits are computed *78.13 Grant administration.
on a net present value basis. (a) FEMA may contribute up to 75
(b) Be in conformance with 44 CFR percent of the total eligible costs of
part 9, Floodplain Management and each grant. At least 25 percent of the
Protection of Wetlands; Executive total eligible costs will be provided
Order 12699, Seismic Safety of Federal from a nonFederal source. O1' this
and Federally Assisted or Regulated amount, not more than one half will be
New Building Construction; 44 CFR provided from in-kind contributions.
part 10, Environmental Considerations; Allowable costs will be governed by
and any applicable environmental laws OMB Circular A-87 and 44 CFR part 13.
and regulations. (b) The grantee must submit per-
(c) Be technically feasible. formance and financial reports to
(d) Be in conformance with the mini- FEMA and must ensure that all sub-
mum standards of the NFIP Floodplain grantees are aware of their responsibil-
Management Regulations at 44 CFR ities under 44 CFR parts 13 and 14..
part 60. (c) FEMA will recapture any funds
(e) Be in conformance with the Flood provided to a State or a community
Mitigation Plan; the type of project under FMA and deposit the amounts in
being proposed. must be identified in the National Flood Mitigation Fund if
the plan. the applicant has not provided the ap-
(f) Be located physically in a partici- propriate matching funds, the approved
pating NFIP community that is not on project has not been completed within
probation or must benefit such commu-
the timeframes specified in the grant
laity directly by reducing future flood agreement, or the completed project
does not meet the criteria specified in
damages. the regulations in this part.
§78.12 Eligible types of projects. f 78.14 Alternative procedures.
The following types of projects are For the purposes of this part, alter-
eligible for funding through FMA, pro- native procedures are available which
viding they meet all other eligibility allow the community to coordinate di-
criteria. rectly with FEMA in implementing the
(a) Acquisition of insured structures program. These alternative procedures
and underlying real property in fee are available in the following cir-
simple and easements restricting real cumstances. Native American tribes or
property to open space uses. authorized tribal organizations may
(b) Relocation of insured structures submit plans and applications to the
from acquired or restricted real prop- State POC or directly to the FEMA Re-
erty to non hazard-prone sites. gional Director. If a Governor chooses
370
Feder i Emergency Management Agency
not to identify a POC to coordinate the
FMA, communities may also submit
plans and applications to the FEMA
Regional Director.
371
PART II
Federal Register/Vol. 64, No. 51/Wednesday, March 17, 1999/Rules and Regulations 13115
§355.40 Emergency release notitleadon. charles.plaxicoPfema.gov. 202-646- agency's repetitive for dealing with
(a) * * * 4536, or(email) n1eVfema.gov. properties with multiple flood losses.
(2) * * * SUPPLEMENTARY INFORMATION:We The Amite River Basin Drainage and
(vi) ' * * proposed a rule at 64 FR 3909.January Water Conservation District agreed with
(B) Naturally from land disturbance 26, 1999,that would increase the our overall objective of minimizing
activities, including farming, premium rates that we charge under the losses,but disagreed with the rule as
construction,and land disturbance National Flood Insurance Program for proposed saying that"we do not agree
incidental to extraction during mining pre-FIRM,V-zone properties.We on the proposed rules to increase the
activities, except that which occurs at received comments from: the subsidized rates for pre-FIRM properties
uranium,phosphate, tin, zircon, Association of State Floodplain in A and V zones."The District went on
hafnium,vanadium,monazite, and rare Managers,Inc.,the Amite River Basin to say that any "increase in subsidized
earth mines. Land disturbance Drainage and Water Conservation insurance rates should be considered in
incidental to extraction includes: land District,and the Coast Alliance. the context re an overall strategy and
clearing; overburden removal and The Association of State Floodplain program to reduce flood losses at
e,this
stockpiling; excavating, handling, Managers, Inc. raised three issues.The time,which FEMA has not done.The
overa
transporting, and storing ores and other first issue deals with the subsidy.The
inclu l strategy and program should
raw (not beneficiated or processed) Association said that"we believe that nclude a very gram
t and important
materials: and replacing in mined-out any rate increase, however justified, 'phase-out' program that will lead us
areas coal ash, earthen materials from needs to be made in the context from a 'high loss' status to a'low loss'
farming or construction,or overburden established by Congress—that owners of status.This will deq..uire time (years) and
or other raw materials generated from buildings constructed before the funding at the federal, state, and local
level."
the exempted mining activit:es. communities joined the NFIP are
There are several misunderstandings
• * * District.intended to be subsidized."This rule by the District. First,the rule does not
[FR Doc.99-6512 Filed 3-16-99;8:45 am) does not eliminate the subsidy for pre- affect pre-FIRM,A-zone properties.The
BILLING CODE 6660.66-P FIRM,V-zone structures.It only reduces rule affects only the rates for pre-FIRM,
the subsidy.The change in rates for the V-zone properties.The affected
pre-FIRM,V-zone policyholders, properties currently constitute a little
currently paying an average annual more than one percent of the National
FEDERAL EMERGENCY premium of$440,will result in an Flood Insurance Program's policies in
MANAGEMENT AGENCY average increase of about seven percent. force. Second,our action complements
44 CFR Part 61 The rule remains consistent with the rather than stands apart from other
National Flood Insurance Program's initiatives that FEMA has undertaken or
RIN 3067-AC96 enabling legislation and the is currently developing, particularly
discretionary authority granted to FEMA with regard to structures with multiple
National Flood Insurance Program to administer the program. flood losses.The agency is currently
(NFIP); Insurance Coverage and Rates The second issue the Association looking at permanent solutions,
raised is that the National Flood including funding, technical assistance,
AGENCY: Federal Emergency Insurance Reform Act of 1994 requires and insurance approaches, to the
Management Agency (FEMA). FEMA to conduct a study"of the impact recurring problems of multiple-flood-
ACTION: Final rule. of reducing the subsidy of pre-FIRM loss structures.Taking this action now
SUMMARY: We (the Federal Insurance policies."The Association pointed out in no way diminishes any of those other
s are increasing the correctly that FEMA has not yet finished initiatives.Third,we have phased in
amountAdministration)io premium you (the flood that study. However, the Association's rate increases for pre-FIRM properties
amount ofe policyholder)remimopay for flood comment incorrectly characterizes the over time.The last time we increased
ins coverage for pre-FIRM" nature of the study, which involves subsidized premium rates was in 1996.
insurance n in subject to examining economic impacts of So we believe we are consistent with the
buildn waters, areasa sumo high eliminating the subsidy by charging full District's recommendation for a phased-
velocity vecit waters,
such storm surges.
actuarial premiums to pre-FIRM in approach.
and
wind-driven
buildings waves whose structures. Our current regulatory action The Coast Alliance agreed with the
("Pre-FIRM"ction was started ng areb those os January calls for a modest rate increase for pre- proposed rule saying, "We support the
constr FIRM,V-zone properties and does not Federal Emergency Management
1, 1975,or the effective date of a need to await completion of the study. Agency's proposed rule to increase the
community's Flood Insurance Rate Map The Association's third issue is that amount of premium paid by the
(FIRM),whichever is later. R:e-FIRM "any rate increase must be part of an policyholder for flood insurance for
buildings and their contents are eligible overall effort to evaluate all measures to 'pre-FRM'buildings in coastal areas
for subsidized rates.)We are increasing reduce flood losses,and such measures subject to high velocity waters and
rates for pre-FIRM, V-zone properties to must not be based solely on increasing wind-driven waves ('V' zones)."The
recognize the inherently greater flood income by increasing the cost of Coast Alliance,however,expressed
risk of these properties. insurance, but needs to focus on concern about any availability of
EFFECTIVE DATE:This rule is effective on mitigation measures to reduce claims subsidized or non-actuarial premium
May 1, 1999. against the NFIP." We have not forsaken rates in coastal areas and recommended
FOR FURTHER INFORMATION CONTACT: nor do we intend to forsake mitigation that "FEMA must take the next logical
Charles M.Plaxico,Jr.,Federal efforts in favor of merely raising step to deny new flood policies in high
Emergency Management Agency, premiums for a small group of risk areas." We believe that this
Federal Insurance Administration, 500 policyholders. Experience shows us that recommendation should be dealt with
C Street. SW., room 840, Washington, we can make small improvements to the legislatively,as were the two precedents
DC 20472, 202-646-3422, (facsimile) program without jeopardizing or for denying flood insurance coverage in
202-646-4327. or (email) delaying larger initiatives such as the certain geographical areas at 42 U.S.C.
13116 Federal Register/Vol. 64, No. 51/Wednesday, March 17, 1999/Rules and Regulations
4028-4029. As required by the National human environment as a result of the Executive Order 12778, Civil Justice
Flood Insurance Reform Act of 1994,we issuance of this final rule, and no Reform
are evaluating the impact of erosion Environmental Impact Statement will be This rule th
meetse applicable
hazards on the NFIP. Part of that study prepared. Copies of the environmental standards of§ ) of E.O. 12778.
will explore the economic impact of assessment are on file for inspection
denying insurance in areas subject to through the Rules Docket Clerk,Federal List of Subjects in 44 CFR Part 61
coastal erosion. It is premature for us to Emergency Management Agency, room
comment on the Alliance's 840, 500 C Street SW.,Washington, DC Flood insurance.
recommendation before we complete 20472. Accordingly,we amend 44 CFR Part
that study and report to Congress. Executive Order 12866,Regulatory 61 as follows:
In summary.we believe that targeting planning and Review PART 61—INSURANCE COVERAGE
a particularly risky class of properties This rule is not a significant AND RATES
with higher premium rates supports regulatory action within the meaning of
FEMA's overall program of loss §2(f) of E.O. 12866 of September 30, 1.The authority citation for Part 61
reduction. It more accurately reflects the 1993, 58 FR 51735,but attempts to continues to read as follows:
loss exposure of pre-FIRM,V-zone adhere to the regulatory principles set
properties,which are at a greater Bu he p Authority:42 U.S.C.4001 et seq.:
forth in E.O. 12866.The rule has not Reorganization Plan No.3 of 1978,43 FR
exposure to flood loss than pre-FIRM, been reviewed by the Office of 41943,3 CFR, 1978 Comp.,p.329;E.O.
A-zone properties. Also,it helps make Management and Budget under E.O. 12127 of Mar.31. 1979, 44 FR 19367, 3 CFR,
policyholders aware of the danger of 12866. 1979 Comp.,P 376.
their V-zone properties.
Paperwork Reduction Act 2.We are revising Section 61.9 to read
National Environmental Policy Act
This rule does not contain a collection as follows:
Under section 102(2)(C) of the of information and therefore is not
§61.9 Establishment of chargeable rates.
National Environmental Policy Act of subject to the provisions of the
1969. 42 U.S.C. 4371 et seq.,and the Paperwork Reduction Act of 1995. (a) Under section 1308 of the Act,we
implementing regulations of the Council Executive Order 12612,Federalism are establishing annual chargeable rates
on Environmental Quality, 40 CFR parts for each$100 of flood insurance
1500-1508,we conducted an This rule involves no policies that coverage as follows for pre-FIRM, A
environmental assessment of this rule. have federalism implications under E.O. zone properties, pre-FIRM, V zone
The assessment concludes that.there 12612, Federalism,dated October 26, properties.and emergency program
will be no significant impact on the 1987. properties.
A zone rates' per year per V zone rates 5 per year per
$100 coverage on: $100 coverage on:
Type of structure
Structure Contents Struc:ture Contents
1. Residential:
No Basement or Enclosure .68 .79 .82 .95
With Basement or Enclosure .73 .79 .88 .95
2. All other including hotels and motels with normal occupancy of less than
6 months duration:
No Basement or Enclosure .79 1.58 .95 1.90
With Basement or Enclosure .84 1.58 1.01 1.90
1 A zones are zones A1—A30,AE.,AO, All, and unnumbered A zones.
2 V zones are zones V1—V30,VE, and unnumbered V zones.
(b) We will charge rates for contents DEPARTMENT OF THE INTERIOR amended (Act). Catesbaea melanocarpa
in pre-FIRM buildings according to the is known from Puerto Rico, St. Croix in
use of the building. Fish and Wildlife Service the U.S. Virgin Islands, Barbuda,
Antigua.and Guadeloupe. In Puerto
(c) A-zone rates for buildings without 50 CFR Part 17
Rico, it is currently known from only
basements or enclosures apply
uniformly to all buildings throughout RIN 1018-AE46 one location in Cabo Rojo; in the U.S.
Virgin Islands, it is known from one
emergency program communities. Endangered and Threatened Wildlife location near Christiansted. St. Croix.
(Catalog of Federal Domestic Assistance No. and Plants; Determination of Both populations are located on
83.100, "Flood Insurance":No.83.516, Endangered Status for Catesbaea privately-owned land subject to intense
"Disaster Assistance") Melanocarpa pressure for development for
Dated:March 11, 1999. residential, tourist, and industrial
AGENCY: Fish and Wildlife Service, purposes.This final rule implements
Jo Ann Howard Interior. the Federal protection and recovery
Administrator, ACTION: Final rule. provisions afforded ty the Act for C.
Federal Insurance Administration. melanocarpa.
[FR Doc.99-6466 Filed 3-16-99:3:45 aml SUMMARY: We, the U.S. Fish and
Wildlife Service,determine Catesbaea EFFECTIVE DATE: April 16, 1999.
aa.uNG CODE ff718-03-P melanocarpa (no common name) to be ADDRESSES:The complete file for this
an endangered species under the rule is available for inspection, by
Endangered Species Act of 1973, as appointment,during normal business
Federal Register/Vol. 64, No. 98/Friday, May 21, 1999/Rules and Regulations 27705
EPA-APPROVED GEORGIA SOURCE-SPECIFIC REQUIREMENTS—Continued
Name of source Permit No. State effective EPA ap- Comments
date proval date
Plant Atkinson 4911-033-1322-0 conditions 8 11/15/94 03/18/99
through 13. 64 FR 13348
Plant Atkinson 4911-033-6949 conditions 5 11/15/94 03/18/99
through 10. 64 FR 13348
Plant Atkinson 4911-033-1320-0 conditions 8 11/15/94 03/18/99
through 13. 64 FR 13348
Plant Atkinson . 4911-033-1319-0 conditions 8 11/15/94 03/18/99
through 13. j 64 FR 13348
Plant McDonough .. 4911-033-6951 conditions 5 11/15/94 03118/99
through 10. 64 FR 13348
Atlanta Gas Light Company • 4922-028-10902 conditions 20 and 11/15/94 03/18/99
21 64 FR 13348
Atlanta Gas Light Company 4922-031-10912 conditions 27 and 11/15/94 03/18/99
28. 64 FR 13348
Austell Box Board Corporation . 2631-033-11436. conditions 1 11/15/94 03/18/99
through 5. 64 FR 13348
Emory University 8922-044-10094 conditions 19 11/15/94 03/18/99
through 26. 64 FR 13348
General Motors Corporation 3711-044-11453 conditions 1 thor- 11/15/94 03/18/99
ough 6 and Attachment A. 64 FR 13348
Georgia Proteins Company 2077-058-11226 conditions 16 j 11/15/94 03/18/99
through 23 and Attachment A. 64 FR 13348
Owens-Brockway Glass Container, 3221-060-10576 conditions 26 11/15/94 03/18/99
Inc. through 28 and Attachment A. 64 FR 13348
Owens-Corning Fiberglas Corpora- 3296-060-10079 conditions 25 11/15/94 03/18/99
tion. through 29. 64 FR 13348
William L. Bonnell Co 3354-038-6686-0 conditions 17 11/15/94 03/18/99
through 30. 64 FR 13348
Transcontinental Gas Pipe Line 4922-075-10217 conditions 21 11/15/94 03/18/99
Corporation. through 24. 64 FR 13348
Lockheed-Georgia Company 9711-033-11456 conditions 1 11/15/94 03/18/99
through 11. 64 FR 13348
Blue Circle Incorporated Permit 3241-060-8670 conditions 48 11/15/94 03/18/99
through 54. 64 FR 13348
(e) Reserved. allowance. However, during would use direct, as opposed to net,
[FR Doc. 99-12488 Filed 5--20-99; 8:45 am] arrangement year 1999-2000 only we premium'and expense information for
BILLING CODE 6560-50-P will set the expense allowance at the the property and casualty industry. It
mid-point between the expense would have the effect of lowering the
allowance calculated using direct as expense allowance to participating
FEDERAL EMERGENCY opposed to net premium and expense companies.
MANAGEMENT AGENCY information. On Tuesday, February 9, 1999, we
EFFECTIVE DATE: This rule is effective on held a public meeting to discuss the
44 CFR Part 62 October 1, 1999. proposed rule and other changes to the
FOR FURTHER INFORMATION CONTACT. WYO expense allowance that were
RIN 3067—AC92 published in an advance notice of
Edward T. Pasterick, Federal Emergency proposed rulernaking at 63 FR 63431,
National Flood Insurance Program Management Agency, Federal Insurance November 13, 1998. Nineteen people
(NFIP); Determining the Write-Your- Administration, 500 C Street SW.. room representing fourteen WYO companies
Own Expense Allowance 429, Washington, DC 20472, 202-646- and vendors attended this meeting.
AGENCY: Federal Emer enc 3443, (facsimile) 202-646-3445, or
g y (email) edward.pasterick@fema.gov.We Most of the comments made at the
Management Agency (FEMA). will post at www.fema.gov/nfip the text public meeting duplicated the written
ACTION: Final rule. comments submitted in response to the
of the 1999-2000 Arrangement by June notice of proposed rulemaking. This
SUMMARY: We (FEMA) are than m our 1, 1999.
g g Supplementary Information also
method for establishing the V/rite-Your- SUPPLEMENTARY INFORMATION On discusses new comments made at that
Own (WYO) expense allowance November 13, 1998, we proposed a rule meeting.
percentage for years beginning on or at 63 FR 63432 that would change the
after October 1, 1999. We will use a new method for establishing the Write Your General Comments
formula to derive the expense ratios in Own (WYO) expense allowance Concerns about reduced WYO
determining the operating po lion of the percentage for arrangement years company compensation. During the
expense allowance. This formula will beginning on or after October 1, 1999. comment period, we received comments
use direct, as opposed to net, premium We proposed using a new formula to from ten WYO companies that opposed
and expense information for the derive the expense ratios used in reducing the WYO expense allowance.
property/casualty industry and will determining the operating portion of the The companies agreed that it is
have the effect of lowering the expense expense allowance. This new formula reasonable to use direct rather than net
27706 Federal Register/Vol. 64, No. 98/Friday, May 21, 1999/Rules and Regulations
data in order to establish the expense premiums written plus reinsurance Specific Comments
allowance percentage, but the assumed,less reinsurance ceded. During the comment period, a number
overarching concern of the companies Reinsurance is not, however, a part of of Write-Your-Own companies
was that such a change would reduce the WYO company's flood business submitted comments for consideration.
company compensation. In every case because the Federal Government We believe that we have addressed
where a commenter cited the differences assumes liability for all losses. many of the underlying concerns of the
or complexities of writing flood Therefore, the expense allowance commenters in the light of the
insurance, the underlying concern was should not include reinsurance in the accommodation we are making with this
not that we are creating a further calculation of the expense ratio. Using final rule. Since these comments
complexity with this rule but that net premium has the effect of including comprise the public record on this
reducing the expense allowance will non-applicable reinsurance costs and rulemaking action, we state our position
reduce profits. None of the companies, on these comments.
however, provided any data to support has had the effect of providing a WYO
the assertion that their operating costs company with a level of compensation No "Built-In" Profits,
have increased durin the fifteen ears that is too high, one that we can no
g Y longer justify.This rule appropriately Five companies expressed concerns
of operation of the WYO progra-tn. Nor that the proposed change in the expense
has the WYO program ever guaranteed changes the basis for compensating allowance has no "built-in" profit
any setprofit margin for participating companies and is adequate to
g P 1 g margin for flood business and that
companies. compensate companies for doing companies may not accrue and retain
We want to continue the same basic business under the NFIP. interest on investment income--a
approach that we have used for more Final Decision on Compensation for potential source of profit. During the
than 15 years.That is, we will continue Arrangement Year 1999-2000 fifteen years of the WYO program, the
to use published property/casualty expense allowance has never included a
industry expense information to derive At the February 9, 1999 public specific profit component in the
flood insurance expense allowances. meeting,several companies asked us not expense allowance for participating
But we base our new formula on to implement a change in the companies. There is. however, an
statistical data that were not available compensation formula from October 1, implicit profit margin because the
fifteen years ago when we established 1999 to October 1, 2000 before we study program draws insurers whose costs are
the compensation formula, that is, direct the change in more detail. We do not below the expense allowance. Hence,
versus net premium. believe such a study is necessary. The they earn a profit.
Direct versus net premium. Our use of WYO companies agreed that using Also, private WYO participants,
direct rather than net premium more direct as opposed to net data published appropriately, may or;retain interest on
accurately than before reflects the by A.M. Best is reasonable. We their flood premium income. WYO
unique nature of the flood insurance recognize that any decrease in companies participate in the program
partnership between the Government compensation will require adjustments `without risk, that is. the Arrangement
and industry where we assume liability by the WYO companies. Therefore,we guarantees reimbursement for all loss
for flood losses, and companies do not have decided to provide a transition payments. The ability to earn a return
have to incur costs for reinsurance. A phase before the change we proposed on on invested premiums to pay for losses
number of companies that commented November 13, 1998 becomes effective. in other lines of insurance is not a
on the proposed change agreed that this consideration in flood insurance. The
is a logical approach. At issue are the As an accommodation, we will set the
g� PP proposed change in the expense
specifics of the formula we use to set WYO expense allowance for FY 2000, allowance does not affect that long-
compensation for participating which begins on October 1, 1999, at the standing and appropriate restriction.
companies. mid-point between the expense
We believe that continuing tc use net allowance calculated using direct Commissions
rather than direct premium for the premium and expense information and One company believed that company
property/casualty industry as basis for the expense allowance calculated using profits decrease as companies compete
compensation would neglect mare net premium and expense information. for business by offering higher
refined data now available to us and This will give the companies a one-year commissions as an incentive to attract
would also include components that do adjustment period before they agents. We have always maintained that
not apply to the NFIP. Fifteen years ago, implement the new method for what a company chooses to compensate
the Insurance Expense Exhibit for the calculating the expense allowance. agents is a matter between the company
property and casualty insurers did not and the agent. We believe that fifteen
directpremium and expense For the 1999-2000 arrangement year,
provide p the midpoint is 31.7 percent,which percent is a reasonable compensation
information comparable to what is figure for agent commissions, which we
available today in Aggregates and compares with the base allowance for account for in the expense allowance;
the current arrangement year of 31.6
Averages.The result was that we however, if a company chooses to
percent.
calculated an expense allowance that all For FY 2001, beginning October increase its commission as a business
found in the early day's of the program 1, 2000, we will calculate the WYO incentive, then that is the company's
expense allowance using direct
to be reasonable and acceptable. prerogative.
Information on direct premiums, premium and expense information.
however, provides a superior indicator We are working with the WYO Reduced Expense Allowance May
for computing the expense ratio. Direct companies to develop new incentives Reduce the Number of Participants
premiums written represent the for rewarding companies' marketing Five companies expressed concern
aggregate amount of recorded, efforts. These incentives will be in that a reduction in the expense
originated premiums--other than addition to the basic WYO expense allowance will hurt the WYO program—
reinsurance—written during a year after allowance described above. We intend marginal companies will withdraw and
deducting all return premiums. Net to put these new incentives in place on new companies will balk at joining the
premiums written include direct October 1, 1999. program. The result. these companies
Federal Register/Vol. 64, No. 98/Friday. May 21, 1999/Rules and Regulations 27707
• believe,will be more business on the these costs are not reimbursable under special training and certification to
direct side and less growth in policies. the program. While we do not reimburse adjust flood claims.Reducing the
One of our goals is to encourage insurers companies specifically for outsourcing expense allowance does not affect this
to participate and at the sane time to flood work, the method of determining aspect of a company's participation in
hold the line on program costs which the expense allowance by this rule is the WYO program. Training adjusters is
policyholders and taxpayers bear.But as adequate to cover these costs. a cost necessary to do business under
with any industry,when competition the flood insurance program, a cost that
increases, marginal participants may Agent Training and Education we have taken into consideration in
withdraw and new entrants can expect Several companies also expressed setting the expense allowance.
less profit. We do not believe that this concern that agents find the flood Higher Company Costs
is necessarily a negative consequence. insurance program complicated,which
We are also confident in our cost data, complexity creates a demand for Two companies commented that we
and we do not believe that the reduction training. Training of company agents is used to provide forms, the flood
in the expense allowance will cause the primary responsibility of the insurance policy, manuals, and
withdrawals from the program by company, and the expense allowance seminars free of charge to WYO
successful companies. accounts for the expenses of a WYO companies. Companies must now cover
company to train its agents. Still,we the nominal costs'to produce these
Reduced Expense Allowance May
Result in Poor Customer and Agent have made a commitment to help WYO materials and conduct training at their
Service companies with their agent training in own expense.We recognize that
the past, and we will continue to do so companies are now paying for some
Two companies believed that the in the future. By the end of the current products that were free; however, the
proposed reduction in the expense arrangement year, we will have general expense category of the WYO
allowance could lead to a deterioration conducted 150 workshops for insurance expense allowance compensates
of services to policyholders and agents. agents interested in selling flood companies for these and other costs of
We strongly disagree with this position. insurance. The workshops are open not selling and servicing flood insurance.
The expense allowance accounts for the only to independent agents but also the Providing companies with free materials
costs needed to provide and maintain agents of our WYO partners.We plan to was for companies a further enrichment
adequate services to NFIP policyholders hold the same number of workshops for that we can no longer justify.
and a profit for efficient companies. agents next year as well. We have also Acceptable Error and Reject Rates
Inherent Differences Between Flood helped participating companies develop Two companies expressed concern
Insurance and Other Lines training delivery systems of their own that maintaining acceptable error and
companies said that the "flood by conducting, upon request, train-the-
Eight
p trainer sessions on the NFIP for reject levels is costly. Company systems,
product" is essentially different from company trainers. To give agents they claimed, for standard property and
other property/casualty insurance casualty processing, do not lend
immediate access to underwriting and
products because of the complexity in rating information about the NFIP, we themselves to handling flood business.
writing flood insurance.The companies provide on our web site (www.fema.gov/ Therefore, many companies either
claim that these complexities, for n fip) outsource this part of their flood
example, identifying risks ineligible for ' business or develop stand-alone
•flood insurance under the Coastal The flood insurance manual, systems. This is accurate. But again
• Underwriting information,
Barrier Resources Act, increase costs. • A list of WYO companies, outsourcing or operating stand-alone
There are clearly differences between • Dates and locations of agents systems is no different today than it has
flood insurance and other lines of workshops, and been for fifteen years since the start of
property and casualty insurance. • Other program information. the WYO program. Outsourcing or
Therefore, we believe that the five lines developing stand-alone systems is a cost
of property/casualty insurance that we Statistical Reporting of doing business under the program, a
have been using are still the best proxy Four companies expressed concern cost that participating companies
for compensating WYO companies. But that the WYO program requires monthly willingly assume when they choose to
we also believe that using direct rather statistical reporting whereas other lines join the program.
than net premium data will provide of property and casualty insurance only Audits
WYO companies with adequate require statistical reporting on a
compensation for their costs. quarterly basis. This point is accurate. Two companies expressed concern
Flood Insurance Rating Most other lines require statistical that the WYO program requires an
reporting on a quarterly basis. Even so, independent audit at the expense of the
Five companies also high lighted the the WYO program has been requiring company. First, we always have
difference in rating methodology for statistical reporting on a monthly basis required such an independent audit at
flood and for other lines of property and for fifteen years, and the method of the company's expense under this
casualty insurance. The companies cited setting the expense allowance under program. It is nothing new. In addition,
as an example flood maps, which they this rule is adequate to cover reporting independent audits of companies'
called "antiquated."The companies costs as well. financial statements are not a unique
also expressed concern over the use of requirement of the flood insurance
"non-standard" forms such as the Unique Adjuster Skills program. Any publicly traded company
elevation certificate in the underwriting Four companies also pointed out that requires accountability to its
process. Because of these complexities, handling flood claims requires unique shareholders in the form of financial
several of these companies have adjuster skills with the adjusters statements that are subject to
obtained the services of third parties to certified by the Federal Government. independent audits. Annual statements
determine the flood zone on FEMA's This is also accurate. Adjusters handling by insurance companies to the National
maps for rating flood insurance policies. flood claims under the Write Your Own Association of Insurance Commissioners
The companies expressed concern that program have, for fifteen years, needed are also subject to an independent audit.
27708 Federal Register/Vol. 64, No. 98/Friday, May 21, 1999/Rules and Regulations
Program Changes WYO expense allowance every three in the compensation scheme with the
years. WYO companies.
Four companies expressed concern
that frequent program changes require We have always favored using Use of Data Published by A.M. Best
additional computer programming, new published average industry expense Three companies commented that
printing and publications, more training ratios for other acquisition, general since 1994 we have not based the
and mailings, as well as more rewriting expenses and taxes because neither we expense allowance solely on data
of policies. These companies offered no nor the WYO companies can affect those published in A.M. s Aggregates
specific data to indicate the relationship ratios. A disadvantage to the alternative and Averages. As an incentive for
between the program changes and cost approach to the proposed compensation companies to increase the number of
increases to implement those changes. formula is that it would impose an flood insurance pol ici.es, we set the
We believe our data, which justify a additional reporting requirement on the expense allowance below the amount
lower expense allowance, take into companies and require the NAIC to
p h e the Insurance Expense Exhibit. indicated by Best's data, and companies
tan
consideration systems and other ghad the chance to earn additional
program changes that participating We believe that for 15 years the formula expense allowance. The companies
companies must make each year. for compensating the companies has noted that they believed this was not a
been fair and that we should continue true bonus but a penalty if a company
Reducing Expenses to use it in its current form based on the
an suggested that.we best available data. did not meet the marketing goal.
One company y gg Granted, since 1994,we have not
should conduct an analysis of ways to Adverse Impact on Industry Ratios based the expense allowance strictly on
reduce expenses while improving Best's data. We did this because Best's
service to policyholders before One company said that the adverse was simply too high as a basis for
proposing to adjust the expense impact on industry ratios and ratings, as company compensation. Beginning in
allowance formula. They contended that a result of an insurer's decision to join arrangement year 1994-1995, we
our proposal to reduce the expense the WYO program, should be a factor in determined that the exact amount that a
allowance failed to consider how to determining the expense allowance company may retain would be the
reduce or eliminate operating iosts.The level. We recognize that companies extent to which the company met its
responsibility to hold program costs to must report flood insurance activities on marketing goal for the arrangement year
a minimum and to provide the highest their financial statements that are used and this amount could exceed the
service exists apart from the issue of the to derive industry ratios and ratings. calculated amount. For arrangement
expense allowance. We agree that we However, we believe that a company year 1996-1997. a company could
must provide improved service at should evaluate the impacts that withhold 32.6 percent of written
reduced costs, but our purpose in reporting flood business will have on premium. If a company failed to meet its
proposing the new expense allowance their industry ratios and ratings before marketing goal. the percent of retained
formula was to take advantage of data deciding to participate in the WYO expense allowance decreased in
that were not available when we program.The effect of reporting this proportion to the unmet goal but would
established the current formula. These information will vary significantly not fall below 30.6 percent. If a
new industry expense data support the among the WYO companies and is not company met its marketing goal, it
proposed reduction in the expense easily measured. We do not believe the would retain the entire 32.6 percent. If
allowance that,we believe, is adequate impact on industry ratios and ratings a company exceeded the goal, the exact
to cover companies' operating costs. should be a factor in our compensation amount of compensation depended on
Alternative Formula to companies, nor should it be a the extent to which the company
deterrent to companies participating in exceeded its marketing goal, and the
One company proposed an alternative the program. size of the company's flood business in
formula for calculating the expense The Expense Allowance and Marketing relation to the total number of WYO
allowance. They suggested that we only Incentives policies. We are discussing alternative
use cost data for participating WYO marketing incentives with the
companies rather than data for five One company said that the expense companies and plan to address this and
property insurance lines and that we allowance should recognize the other concerns in the next arrangement
replace the fixed 15 percent commission marketing goals of the program, that is, year.
allowance in the current formula with to increase the policy base of the
Company Investments in Flood
the "Commission & Brokerage" expense program. Part of that recognition, the
published in A.M. Best. Under their company claimed, should include Business
proposal, the "Commission & geographic distribution and retention of Four companies commented that they
Brokerage". "Other Acq.", "General policyholders. In general, the marketing had made investments to simplify
Exp." and "Taxes" would be combined guidelines,which we have and will writing flood insurance,which they
and the expense allowance would be set continue to develop in close believed they could recover based on
at the mean of this amount plus one coordination with the companies, the current expense allowance. The
standard deviation which,would cover address the overall issue of rewarding a companies claimed that a reduced
the operating costs of approximately company's growth. We have not expense allowance would jeopardize
two-thirds of the companies.The included incentives designed to reward this recovery.We have always
commenter recognized that companies companies for selling and retaining encouraged company investments in
would have to report their expenses policies in specific areas of the country their flood insurance business, and we
associated with the NFIP and suggested because we do not have the data or believe that the expense allowance,
that this be done on a mandatory indicators needed to target areas of the which this rule implements, is adequate
separate statement line on the NAIC country for flood insurance marketing. to cover start-up costs and other
Insurance Expense Exhibit. This When we have this capability, we will operational improvements. Such
company also proposed reporting this discuss whether and how to include investments,when made wisely, result
information annually and updating the geographic based marketing incentives in improvements in.productivity that
Federal Register/Vol. 64, No. 98/Friday, May 21, 1999/Rules and Regulations 27709
reduce the cost of doing business for a Congressional Review of Agency Article III—Loss Costs,Expenses.Expense
company and ultimately increase its Rulemaking Reimbursement,and Premium Refunds
profits. * * * * *
Summa We have sent this final rule to the B.The Company may withhold as
iy Congress and to the General Accounting operating and administrative expenses,other
We believe basing the amount of Office under the Congressional Review than agents'or brokers'commissions,an
e that companies of Agency Rulemaking Act, Pub. L. 104— amount from the Company's written
compensation enso forn c WY°companies
program a 121.The rule is not a "major rule" premium on the policies covered by this
participating
formula i ti using direct rather net premium monwithin the meaning of that Act.It is an Arrangement in reimbursement of all of the
simply takes advantage of statistical e administrative action in support of Company's marketing,operating and
normal day-to-day activities. It does not administrative expenses,except for allocated
data unavailable fifteen years ago when result in nor is it likely to result in an and unallocated loss adjustment expenses
we first established the compensation annual effect on the economy of described in C.of this article.This amount
formula.This also better reflects the $100,000,000 or more; it will not result will equal the sum of the average of industry
nature of the liability for companies in a major increase in costs or prices for expense ratios for"Other Acq.". "Gen.Exp."
because companies do not have to pay consumers, individual industries, and"Taxes"calculated by aggregating
for reinsurance for their flood business Federal, State, or localgovernment premiums and expense amounts for each of
since the Federal Government assumes five opposed to tn net,coverages and ee as
the liability for flood losses.We believe age ot are "significant phic regions;and it information
o premium and expense
a
however in the light of both the written e not haveesin, ploy expensetrati to d For
this weighted rps average
comments and the comments we heard effects"on competition, employment, Federal n ura. nistratio ) (the
will
investment, productivity, Irmovatton, or Federal Insurance Administration) use
at the February 9, 1999 public hearing on the ability of United States-based data for the property/casualty industry
that a one-year transition will serve the enterprises to compete with foreign- published,as of March 15 of the prior
interests of the program better. This Arrangement year.in Part III of the Insurance
transition will give the NFIP's industry based enterprises. This final rule is Expense Exhibit in.A..M.Best Company's
partners time to adJust to the change in exempt(1) from the requirements of the Aggregates and Averages for the following
how we calculate the level of Regulatory Flexibility Act, and (2) from five property coverages: Fire,Allied Lines,
for thelevel
in the the Paperwork Reduction Act. The rule Farmowners Multiple Peril,Homeowners
WYO compensation This participatingrule reflects i e is not an unfunded Federal mandate Multiple Peril,and Commercial Multiple
WYO pron and adjusts.This the effective date of within the meaning of the Unfunded Peril (non-liability portion). During the first
Mandates Reform Act of 1995, Pub. L. year of this change—arrangement year 1999-
the arrangement to coincide with the 104-4. It does not meet the 2000—which begins October 1, 1999,the
start of Arrangement Year 1999-2000. $100,000,000 threshold of that Act, and expense allowance is set at the mid-point
National Environmental Policy Act any enforceable duties are imposed as a between the expense allowance calculated
condition of Federal assistance or a dui using direct premium and the expense
This rule is categorically excluded Y allowance calculated using net premium.
g Y arising from participation in a voluntary The Company may retain 15 percent of the
from the requirements of 44-CFR Part Federal program. Company's written premium on the policies
10, Environmental Consideration. We covered by this Arrangement as the
have not prepared an environmental List of Subjects in 44 CFR Part 62 commission allowance to meet commissions
assessment. Claims, Flood insurance. or salaries of their insurance agents,brokers,
Executive Order ].2866, Regulatory Accordingly,we amend 44 CFR part or other entities producing qualified flood
Planning and Review insurance applications and other related
62, Appendix A, as follows: expenses.
This rule is not a significant The amount of expense allowance retained
8ni PART 62—SALE OF INSURANCE AND by the company may increase a maximum of
regulatory action within the meaning of ADJUSTMENT OF CLAIMS 2 percent,depending on the extent to which
sec. 2(f) of E.O. 12866 of September 30, the company meets the marketing goals for
1993, 58 FR 51735, and the Office of 1.The authority citation for part 62 the Arrangement year contained in marketing
Management and Budget has not continues to read as follows: guidelines established pursuant to Article
reviewed it. Nevertheless,this rule Authority:42 U.S.C. 4001 et seq.; 11 G.We will pay the company the amount
adheres to the regulatory pr2nciples set Reorganization Plan No.3 of 1978; 43 FR of any increase after the end of the
forth in E.O. 12866. 41943,3 CFR, 1978 Comp., 329;E.O. Arta year.
p The Comp with the consent of the
12127 of Mar.31, 1979,44 FR 19367,3 CFR,
Paperwork Reduction Act 1979 Comp.,p.376. Administrator as to terms and costs,may use
the services of a national rating organization,
This rule does not contain a collection 2.We revise the Effective Date of licensed under state law,to help us
of information and is therefore not Appendix A to part 62 to read as undertake and carry out such studies and
subject to the provisions of the follows: investigations on a community or individual
Paperwork Reduction Act. risk basis,and to determine equitable and
Appendix A to Part 62—Federal accurate estimates of flood insurance risk
Executive Order 12612,Federalism Emergency Management Agency, premium rates as authorized under the
Federal Insurance Administration, National Flood Insurance Act of 1968,as
This rule involves no policies that Financial Assistance/Subsidy amended.We will reimburse the Company
have federalism implications under Arran amens for the charges or fees for such services under
Executive Order 12612, Federalism, g the provisions of the VVYO Accounting
dated October 26, 1987. * * * * * Procedures Manual
Effective Date:October 1, 1999. * * *
Executive Order 12778, Civil Justice * * * * * Dated:May 20, l9t
Reform 3. We revise the Article III.B of Jo Ann Howard,
This rule meets the applicable Appendix A to part 62, to read as Federal Insurance Administrator.
standards of section 2(b)(2)of Executive follows: [FR Doc.99- 12930 Filed 5-20-99;8:45 ami
Order 12778. * * * * * BILLING CODE swe-o}e
*U.S,GOVERNMENT PRINTING OFFICE-720-931/94265
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