National Flood Insurance Program (NFIP); Insurance Coverage and Rates

[Federal Register Volume 64, Number 147 (Monday, August 2, 1999)]
[Rules and Regulations]
[Pages 41825-41827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19765]


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FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Part 61

RIN 3067--AD00


National Flood Insurance Program (NFIP); Insurance Coverage and 
Rates

AGENCY: Federal Emergency Management Agency (FEMA).

ACTION: Interim final rule; request for comments.

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SUMMARY: We (the Federal Insurance Administration) are adding an 
endorsement to the Standard Flood Insurance Policy (SFIP) that will 
establish a permanent procedure for honoring claims for buildings 
damaged by continuous lake flooding from closed basin lakes or under 
imminent threat of flood damage from those closed basin lakes.

DATES: This interim final rule is effective on August 2, 1999. Please 
submit any comments in writing by October 1, 1999.

ADDRESSES: Please send any comments to the Rules Docket Clerk, Office 
of the General Counsel, Federal Emergency Management Agency, 500 C 
Street SW., room 840, Washington, DC 20472, (facsimile) 202-646-4536, 
or (email) rules@fema.gov.

FOR FURTHER INFORMATION CONTACT: Charles M. Plaxico, Jr., Federal 
Emergency Management Agency, Federal Insurance Administration, 500 C 
Street SW., room 433, Washington, DC 20472, 202-646-3422, or (email) 
charles.plaxico@fema.gov.

SUPPLEMENTARY INFORMATION: Residents of the Devils Lake area in 
northeastern North Dakota face extraordinary flood conditions. During 
the last three years, the level of the lake has risen twelve feet, 
negating property owners' short-term flood mitigation efforts, such as 
temporary dikes, and flooding hundreds of properties and threatening 
many more.
    The conditions at Devils Lake Basin are unique because the lake is 
part of a ``closed basin,'' that is, although it lies within the Red 
River-Hudson Bay drainage system, no water has flowed from the Devils 
Lake Basin in recorded history (since the 1830s). Instead, Devils Lake, 
together with adjacent Stump Lake, collects the Basin's surface runoff 
flowing through many small coulees and lakes. (Devils Lake collects 
about 86% of the runoff; Stump Lake collects the remainder.) The runoff 
remains in these two lakes until it evaporates or enters the 
groundwater table.
    Since April 1996, as Devils Lake has steadily risen from 1435.2 
mean sea level (MSL) to 1447.2 MSL, we have worked with State and local 
governments as well as Devils Lake property owners insured under the 
National Flood Insurance Program to provide timely, longer term 
solutions to this extraordinary problem. Exercising my authority under 
the Standard Flood Insurance Policy, as Federal Insurance 
Administrator, I have waived a policy requirement that was not 
appropriate in light of the unique circumstances at Devils Lake. This 
decision has permitted property owners along Devils Lake to use claim 
proceeds to relocate their buildings out of harm's way. (Specifically, 
I have waived the requirement that a building on Devils Lake be 
continuously flooded for 90 days before declaring it a total loss, thus 
honoring a claim that provides funds for the insured to take mitigation 
action.) This decision has meant a cost savings for the National Flood 
Insurance Program (NFIP).
    We estimate that, by being proactive, rather than waiting for an 
insured building to be inundated for 90 days by the rising lake levels, 
we have saved the program on average 25% for each claim in the Devils 
Lake area. Paying in advance for these inevitable flood losses

[[Page 41826]]

so that policyholders can use the claim proceeds to relocate their 
homes so that we can recover salvage simply makes the best public 
policy and insurance sense under the circumstances.
    Since April 1996, we have communicated this waiver to the Write 
Your Own companies-the private insurance companies that sell flood 
insurance policies and adjust claims under the NFIP-through a series of 
seven separate Policy Issuances to try to keep pace with revised 
predictions of the crests on Devils Lake. We feel that a piecemeal 
approach is inadequate and that a better remedy for the dynamic 
conditions, such as those at Devils Lake, is to offer a permanent 
solution--one that is comprehensive and uniform for other closed basin 
lakes. This interim final rule does that.
    This interim final rule adds an endorsement to the Standard Flood 
Insurance Policy that would make buildings damaged by or imminently 
threatened by continuous flooding from closed basin lakes eligible to 
be declared a total loss without being continuously flooded for 90 
days. It also establishes long-term floodplain management solutions for 
the imperiled property to eliminate or hold to a minimum the need for 
future flood insurance claims. For example, this interim final rule 
requires local governments having jurisdiction over the imperiled 
property to adopt and enforce permanent mitigation measures. Among 
these measures are: (1) prohibiting new construction--with limited 
exceptions--that may be subject to flooding by the rising lake; and (2) 
restricting for open space--with limited exceptions--any affected 
property the community may acquire an interest in.

National Environmental Policy Act

    This interim final rule qualifies to be categorically excluded 
according to 44 CFR 10.8 (d) (2) (ii). In addition, no extraordinary 
circumstances have been found that would override this exclusion; 
therefore, an environmental assessment is not required.

Executive Order 12866, Regulatory Planning and Review

    This interim final rule is not a significant regulatory action 
within the meaning of Sec. 2(f) of E.O. 12866 of September 30, 1993, 58 
FR 51735, and has not been reviewed by the Office of Management and 
Budget. Nevertheless, this rule adheres to the regulatory principles 
set forth in E.O. 12866.

Pub. L. 104-121, Congressional Review of Agency Rulemaking

    This interim final rule is not a ``major rule'' within the meaning 
of section 804 of Pub. L. 104-121, Congressional Review of Agency 
Rulemaking. We have submitted a report to Congress summarizing the 
scope and effect of the rule, as required by section 801 of Pub. L. 
104-121.

Paperwork Reduction Act

    This interim final rule does not contain a collection of 
information and is therefore not subject to the provisions of the 
Paperwork Reduction Act.

Executive Order 12612, Federalism

    This interim final rule involves no policies that have federalism 
implications under Executive Order 12612, Federalism, dated October 26, 
1987.

Executive Order 12778, Civil Justice Reform

    This interim final rule meets the applicable standards of section 
2(b)(2) of Executive Order 12778.

List of Subjects in 44 CFR Part 61

    Flood Insurance, insurance coverage and rates.
    Accordingly, we amend 44 CFR part 61, as follows:

PART 61--INSURANCE COVERAGE AND RATES

    1. The authority citation for Part 61 continues to read as follows:

    Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of 
1978; 43 FR 41943, 3 CFR, 1978 Comp., p. 329; E.O. 12127 of Mar. 31, 
1979, 44 FR 19367, 3 CFR, 1979 Comp., p. 376.

Appendices A (1), A (2), A (3) [Amended]

    2. Amend Part 61 by adding ``Endorsement for Closed Basin Lakes'' 
after the last article of each of the following: Appendix A (1), 
Standard Flood Insurance Policy, Dwelling Form; Appendix A (2), 
Standard Flood Insurance Policy, General Property Form; and Appendix A 
(3), Standard Flood Insurance Policy, Residential Condominium Building 
Association Policy. The added endorsement, which is identical in each 
appendix, reads as follows:
* * * * *

Endorsement for Closed Basin Lakes

    Under 44 CFR 61.13 (d), we are establishing this endorsement for 
closed basin lakes, which supplements Article 9.T of the Dwelling 
Policy, Article 8.V of the General Property Policy, and Article 10.V 
of the Residential Condominium Building Association Policy. (A 
``closed basin lake'' is a natural lake from which water leaves 
primarily through evaporation and whose surface area now exceeds or 
has exceeded one square mile at any time in the recorded past. Most 
of the nation's closed basin lakes are in the western half of the 
United States where annual evaporation exceeds annual precipitation 
and where lake levels and surface areas are subject to considerable 
fluctuation due to wide variations in the climate. These lakes may 
overtop their basins on rare occasions.) If your insured building is 
subject to continuous lake flooding from a closed basin lake, we 
will pay your claim as if the building is a total loss even though 
it has not been continuously inundated for 90 days, subject to the 
following conditions:
    1. Lake flood waters must damage or imminently threaten to 
damage your building.
    2. Prior to approval of your claim, you must:
    a. Agree to a claim payment that reflects your buying back the 
salvage on a negotiated basis; and
    b. Grant the conservation easement contained in the Federal 
Emergency
    Management Agency's (FEMA) ``Policy Guidance for Closed Basin 
Lakes,'' to be recorded on the deed of the property. FEMA, in 
consultation with the community in which the property is located, 
will identify on a map an area or areas of special consideration 
(ASC) in which there is a potential for flood damage from continuous 
lake flooding. FEMA will give the community the agreed-upon map 
showing the ASC. This easement will only apply to that portion of 
the property in the ASC. It will allow certain agricultural and 
recreational uses of the land. The only structures it will allow on 
any portion of the property within the ASC are certain, simple 
agricultural and recreational structures. If any of these allowable 
structures are insurable buildings under the National Flood 
Insurance Program (NFIP) and are insured under the NFIP, they will 
not be eligible for the benefits of this endorsement. If a U.S. Army 
Corps of Engineers (USACE) certified flood control project or 
otherwise certified flood control project later protects the 
property, FEMA will, upon request, amend the ASC to remove areas 
protected by those projects. The restrictions of the easement will 
then no longer apply to any portion of the property removed from the 
ASC.
    3. Within 90 days of approval of your claim, you must move your 
building to a new location outside the ASC. FEMA will give you an 
additional 30 days to move if there is sufficient reason to extend 
the time.
    4. Prior to the final payment of your claim, you must acquire an 
elevation certificate and a floodplain management permit from the 
local floodplain administrator for the new location of your 
building.
    5. Prior to the approval of your claim, the community having 
jurisdiction over your building must:
    a. Adopt a permanent land use ordinance, or a temporary 
moratorium for a period not to exceed 6 months to be followed 
immediately by a permanent land use

[[Page 41827]]

ordinance, that is consistent with the provisions specified in the 
easement required in 2.b. above.
    b. Agree to declare and report any violations of this ordinance 
to FEMA so that under Sec. 1316 of the National Flood Insurance Act 
of 1968, as amended, it can deny flood insurance to the building; 
and
    c. Agree to maintain as deed-restricted, for purposes compatible 
with open space or agricultural or recreational use only, any 
affected property the community acquires an interest in. These deed 
restrictions must be consistent with the provisions of 2.b. above 
except that even if a certified project protects the property, the 
land use restrictions continue to apply if the property was acquired 
under the Hazard Mitigation Grant Program or the Flood Mitigation 
Assistance Program. If a non-profit land trust organization receives 
the property as a donation, that organization must maintain the 
property as deed-restricted, consistent with the provisions of 2.b. 
above.
    6. Prior to the approval of your claim, the affected State must 
take all action set forth in FEMA's ``Policy Guidance for Closed 
Basin Lakes.''
    7. You must have NFIP flood insurance coverage continuously in 
effect from a date established by FEMA until you file a claim under 
this endorsement. If a subsequent owner buys NFIP insurance that 
goes into effect within 60 days of the date of transfer of title, 
any gap in coverage during that 60-day period will not be a 
violation of this continuous coverage requirement.
    8. This endorsement will be in effect for a community when the 
FEMA
    Regional Director for the affected region gives the community, 
in writing, the following:
    a. Confirmation that the community and the State are in 
compliance with the conditions in numbers 5 and 6 above, and
    b. The date by which you must have flood insurance in effect.
* * * * *
(Catalog of Federal Domestic Assistance No. 83.100,''Flood 
Insurance'')

    Dated: July 27, 1999.
Jo Ann Howard,
Administrator, Federal Insurance Administration.
[FR Doc. 99-19765 Filed 7-30-99; 8:45 am]
BILLING CODE 6718-03-P