National Flood Insurance Program; Insurance Coverage and Rates, Criteria for Land Management, Use, Identification, and Mapping of Flood Control Restoration Zones

FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Parts 59, 60, 64, 65, 70, and 75

RIN 3067-AC17

National Flood Insurance Program; Insurance Coverage and Rates,

Criteria for Land Management, Use, Identification, and Mapping of Flood

Control Restoration Zones

AGENCY: Federal Insurance Administration, FEMA.

ACTION: Interim final rule.

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SUMMARY: This interim final rule establishes a new flood insurance rate

zone for areas designated as flood control restoration zones on

National Flood Insurance Program maps. It also establishes minimum

floodplain management requirements and provides regulatory guidance for

implementing statutory requirements, including procedures to identify

and map areas as flood control restoration zones.

The intent of the interim final rule is to permit communities to

regulate development through minimum floodplain management requirements

and to use flood insurance rates appropriate to the temporary nature of

flood hazards during the period when a flood protection system no

longer provides 100-year flood protection until it is restored.

DATES: This interim final rule is effective October 25, 1994. We invite

your comments on this interim final rule. Comments must be submitted in

writing on or before December 9, 1994.

ADDRESSES: Please submit any comments to the Rules Docket Clerk, Office

of the General Counsel, Federal Emergency Management Agency, 500 C

Street SW., Washington, DC 20472 (facsimile) 202-646-4536.

FOR FURTHER INFORMATION CONTACT: William R. Locke, Division Director,

Hazard Identification and Risk Assessment Division, Mitigation

Directorate, Federal Emergency Management Agency, 500 C Street SW.,

Washington, DC 20472, (202) 646-2717.

SUPPLEMENTARY INFORMATION: On April 1, 1994, FEMA published for comment

in the Federal Register, 59 FR 15351, a proposed rule. The proposed

rule contained provisions that would establish a new flood insurance

rate zone, Zone AR, for areas designated as flood control restoration

zones on National Flood Insurance Program (NFIP) maps. It would also

establish minimum floodplain management requirements and would provide

regulatory guidance for implementing statutory requirements of Sec. 928

of Public Law 102-550, 42 USC 4014(f), including procedures to identify

and map areas as flood control restoration zones. Public Law 102-550

also requires FEMA to promulgate regulations no later than October 28,

1994.

Following publication of the proposed rule in the Federal Register,

copies were mailed to approximately 60 individuals and organizations

that had previously expressed an interest in the issues that the rule

addresses. In addition, copies of the proposed rule were sent to

communities in the Los Angeles and Sacramento areas of California that

had applied for designation as having flood control restoration zones

and were sent to the Congressional delegations representing those

areas.

During the 45-day public comment period provided for the proposed

rule, FEMA received a total of twelve letters. All but one of the

letters contained multiple comments about different issues addressed in

the proposed rule. Two letters were submitted by members of the U. S.

House of Representatives who represent areas of Sacramento and Los

Angeles, California. One of the letters, submitted by three sponsors of

the legislation, was received after the close of the formal comment

period, but the issues raised are addressed in the supplementary

language to these final regulations. Other letters were submitted by

representatives of seven local government agencies, legal

representatives of two local property owners associations, and one

private citizen. In addition, comments received from the U. S. Army

Corps of Engineers immediately after the close of the formal comment

period have been considered as well.

With one exception, the letters received were from those who

support the concept of the flood control restoration zone. One letter

urged FEMA to include a requirement in the regulations that prohibits

the restoration from causing an increase in flood hazards elsewhere.

All letters were submitted from the Los Angeles and Sacramento,

California areas, including three Congressional representatives of

those areas.

Major issues raised in the public comments included the maximum

five year restoration period, the provision requiring new construction

in developed areas to be elevated to three feet above the highest

adjacent grade, the absence of a ``hold harmless'' provision for delays

in meeting the restoration schedule, and the definition of

``developed'' areas. Several comments suggested that the proposed

regulations pertaining to these provisions be rewritten based on

concern that the regulations do not comply with Congressional intent as

reflected in the legislative history.

Changes have been made since the proposed rules were published in

April 1994. We decided that because of the changes, and because of the

technical nature of the issues that these regulations address, the

public and all affected parties should have another opportunity to

review and comment on the rule before FEMA publishes a final rule. This

interim final rule will permit FEMA to meet the statutorily mandated

date of October 28, 1994 for promulgation of regulations, and it will

give the public and all affected parties 45 days in which to review and

comment on the interim final rule. When the 45-day comment period ends,

FEMA will review and evaluate all written comments received during that

period, and will publish a final rule in the Federal Register.

Definition of Developed Area

Several comments were received on the definition of ``developed

area''. One comment requested clarification on whether open space is to

be included within the definition of ``developed area''. A related

comment requested that the definition be expanded to include existing

publicly-owned property that is critical to the well-being of the

community. FEMA recognizes that there may be some confusion over

whether publicly-owned open space is included within the definition of

``developed area''. These areas are meant to be included in the

definition of ``developed area'' since they generally support the

residential, commercial, and industrial well-being of the community.

The term ``public facilities'' in paragraph (a) encompasses publicly-

owned open space, buildings, and facilities, such as schools,

hospitals, public parks and open space, and historic sites. FEMA

believes that it is unnecessary to alter the regulations to clarify

this point.

One comment expressed concern that the 75% figure in the definition

in which an area must be improved with residential, industrial, and

commercial structures is an arbitrary threshold. FEMA believes that the

75% figure in paragraph (a)(1) is a reasonable threshold for

determining a ``developed area'' which is considered or is generally

recognized as a city, town, or suburban area that consists of

residential, commercial, and industrial buildings, structures, and

streetscape and public areas that form a distinct neighborhood or

section of a city or urban place with the basic urban infrastructure in

place.

A related comment concerned areas within a city in which there are

vacant lots and parcels. Vacant land that contains no structures or

buildings may be included within a ``developed area'' if the land had

been previously developed and redevelopment of the site can be

generally supported by the infrastructure in place. This vacant land is

considered ``infill''. Land that is in a natural or undisturbed state

or in agricultural production at the time the designation is adopted is

not considered ``vacant'' land or an ``infill site'' within a

``developed area''.

One comment requested that non-residential subdivisions be given

the same consideration as residential subdivisions at 44 CFR 59.1(c) of

the definition which addresses ``vested rights''. The intent of this

paragraph is to recognize areas as ``developed areas'' where the

investment in the land and infrastructure is substantial and

development is underway and infrastructure and structures are being

built on an ongoing basis. FEMA agrees that the interim final rule

should recognize and include nonresidential structures and has made

changes to paragraph (c) to include nonresidential subdivisions. In

addition, FEMA includes single lot-type developments, such as planned

unit developments, that are a minimum of 20 contiguous acres.

Concerns were raised that the proposed rule precludes all

development in areas outside of the ``developed area''. The suggestion

was made that the regulations allow nonresidential construction in

these areas because of the importance of economic development to the

community and because many local communities currently impose adopted

floodproofing criteria in order to minimize flood damage. The

suggestion was also made that the regulations should restrict

residential construction in areas outside of the ``developed area''.

The interim final rule does not preclude development in areas

outside of the ``developed area''. The term, ``developed area'' is a

means to determine which elevation or floodproofing requirement must be

applied for new construction within Zone AR. The definition also does

not classify or establish the location of residential and non-

residential construction or other land uses. The establishment of

regulations governing the use of land is a decision that resides within

the state and local land use authority. Nonresidential and residential

construction can be built in areas outside of the ``developed area'' as

long as they are built in accordance with the minimum NFIP floodplain

management criteria and at the elevation established at the site. While

the NFIP floodplain management criteria require the elevation of

residential structures, nonresidential construction has the option of

elevating or floodproofing. Criteria for floodproofing are established

in the NFIP Regulations that the NFIP community must apply, at a

minimum, if this option is chosen.

Another comment asked FEMA how the boundaries of an area will be

determined to classify it as a ``developed area''. The responsibility

for designating and adopting an official map or legal description of

those areas within Zones AR, AR/A1-30, AR/AE, AR/AH, AR/A, or AR/AO

that are designated ``developed areas'' is established in the

floodplain management criteria for flood-prone areas at Sec. 60.3(f)(2)

and the eligibility procedures at Sec. 65.14. In accordance with these

sections, it is the community's responsibility to submit, as part of

the community's application for designation of flood control

restoration zones, its proposed designation of ``developed areas'' in

accordance with the definition at Sec. 59.1 to FEMA for approval. FEMA

must determine that the community designations are consistent with the

definition of ``developed area'' at Sec. 59.1. The community may use

whatever method it deems appropriate to determine whether a particular

parcel, tract, or lot, or subdivision is within a ``developed area'' as

defined in Sec. 59.1 or outside of a ``developed area''. However, FEMA

encourages communities to coordinate with the FEMA Regional Offices on

designation of ``developed areas'' before the community adopts an

official map or legal description of ``developed areas'' within the

designated flood control restoration zone.

Five Year Maximum Restoration Period

The majority of the letters received objected to the maximum five

year restoration period contained in the proposed rule as being

inadequate. The proposed rule limits the duration of a flood control

restoration zone designation to a maximum five year period by providing

that for a community to be eligible for and to maintain such a

designation, the flood protection system must be fully restored or must

have achieved ``adequate progress'' as defined in NFIP regulations at

Section 61.12 within a period not to exceed five years. Comments

specifically cited experience with the ongoing restoration of flood

protection systems for both Los Angeles and Sacramento, California,

which have already been in progress for more than five years without

achieving ``adequate progress''. Most comments favored a ten-year

restoration period for AR Zone designation as being a more reasonable

time frame for restoring a flood protection system, particularly

because the restoration involves Federal funding. Comments also cited

that the statute's legislative history supported a ten year period for

restoration.

When establishing a time limit for the restoration of 100-year

protection, FEMA recognizes the need to assess what would be necessary

to provide a reasonable time frame for restoring a flood protection

system involving Federal funds or for achieving ``adequate progress''

to satisfy the criteria in Sec. 61.12. The U.S. Army Corps of Engineers

submitted comments on the proposed rule that stated that a five-year

time frame may not be adequate to ensure that satisfactory progress is

made on the project restoration to meet the adequate progress

requirements of Sec. 61.12 of existing NFIP regulations. Those comments

went on to indicate that ten years may be a more realistic expectation

for projects that require Congressional authorization and appropriation

of funds.

The regulations apply specifically to communities where the

existing flood protection system is a Federal project and the

restoration involves Federal funds. Because the U.S. Army Corps of

Engineers is the Federal agency most frequently involved in design and

construction of Federal flood protection systems, FEMA believes that it

is appropriate to give considerable weight to the guidance they have

provided with respect to establishing a limit on the restoration

period. Therefore, the interim final rule provides a maximum ten-year

restoration period, rather than the five years contained in the

proposed regulations. This revision is cited at the appropriate

locations in Sec. 65.14 of the interim final rule.

Comments were received that expressed the opinion that Congress

intended that the restoration period be negotiated on a community-by-

community basis and implied that Congress did not intend for a specific

cap or limit to be applied to the length of the restoration period.

We respond to this latter comment by stating that, according to the

statute, a community is to be considered to be in the process of

restoration as long as the restoration of the flood protection system

``* * * is scheduled to occur within a designated time period * * *''.

The term, ``designated time period'' indicates the establishment of a

specific, or definite period of time for restoration in order to confer

AR Zone eligibility upon a community. Therefore, we believe that the

proposed rule is consistent with the statute by specifying a maximum

time frame for restoring the flood protection system that can be

uniformly applied to eligible communities.

Within that maximum time frame, the regulations anticipate that the

community and FEMA will negotiate a specific restoration plan for a

given flood protection system that will be based on the individual

requirements for restoring that system. The plan must identify when the

project will be completed or when the community will submit a request

for a finding of adequate progress that satisfies the requirements of

Sec. 61.12. These dates will be dependent upon the project which may

not require the full ten-year maximum restoration period provided by

these regulations.

``Hold Harmless'' Provision for Delays in Complying With

Restoration Schedule

Several comments objected to the absence of a ``hold harmless''

provision in the regulations to address delays in meeting the

restoration schedule for any reason. It was felt that the lack of such

a provision essentially holds the community responsible for actions

that may be beyond its control. For example, the community may not be

the local project sponsor of the restoration project and, as a result,

may have limited influence as to whether the project's local and

federal sponsors meet the restoration schedule agreed upon by the

community and FEMA as part of the community's application for AR Zone

designations. In addition, several comments cited that potential delays

in Congressional authorization and appropriation of funds could affect

a community's ability to comply with the restoration schedule, as could

disasters and acts of nature, such as earthquakes or other natural

hazards. These comments cite the legislative history as supporting the

position that the regulations provide maximum flexibility for the

community to meet the restoration schedule.

In addition, one comment suggested that Sec. 65.14(g) of the

proposed regulations recognized the potential for such delays in that

it requires the community and the Federal sponsor to update the

restoration plan and identify any ``* * * problems that will delay the

project completion from the restoration plan previously submitted * *

*''. The provisions in Sec. 64.14(g) provide for relatively minor

modifications to the scheduled restoration plan, including modifying

the time frames negotiated under an existing restoration plan. However,

it does not imply that the maximum restoration period provided for in

the regulations can be exceeded as a result of any modification.

It is our position that the regulations should not include ``hold

harmless'' provisions or provisions to extend, for any reason, the AR

Zone designation beyond the maximum ten-year restoration period

specified in the regulations. Central to this position is FEMA's belief

that the flood control restoration zone is not a long-term or permanent

flood insurance zone designation. A provision to extend the AR Zone

designation or the inclusion of a ``hold harmless'' provision would, in

FEMA's opinion, be contrary to the statute.

Delineation of ``Dual'' Zones

Two comments expressed the concern that the ``dual'' zone provision

contained in the proposed regulations is confusing and should be

eliminated if it does not benefit property owners. This provision is

specifically intended to benefit current and future owners of

structures located in areas that, because of flooding from other

sources that the flood protection system does not contain, will

continue to be subject to flooding after the flood protection system is

completely restored. The provision is retained in these regulations.

Limitations on AR Zone Designation

Comments were raised concerning the requirement in Sec. 64.14(b) of

the proposed rule, which states that ``a community may have a flood

control restoration zone designation only once for the purposes of

restoring a given flood protection system''. The requirement does not

limit a community's future eligibility for the AR Zone designation in

the event that a fully restored, certified and accredited flood

protection system were to be decertified again. The provision prevents

a community from seeking a second flood control restoration zone

designation if the initial designation has been removed due to

noncompliance with the restoration schedule or due to a finding that

satisfactory progress is not being made to complete the restoration.

FEMA believes that it is unnecessary to alter the regulations to

clarify this point.

Application and Submittal Requirements

Several comments were made pertaining to the application and

submittal requirements contained in Sec. 65.14(e) of the proposed

regulations.

One comment suggested that the regulations be revised to state that

the local project sponsor, not the community applicant be responsible

for submitting the documentation requirements at Sec. 65.14(e) (1),

(3), (5), (6), and (7).

We believe that it is appropriate that the community be responsible

for submitting documentation referenced above. In doing so, the

community does not assume financial or administrative responsibility

for restoration of the flood protection system. For certain submittal

requirements, such as the restoration plan referenced at

Sec. 65.14(e)(7), the community would be expected to work with the

local and federal project sponsors to complete this requirement. Other

requirements, such as a statement required of the community to

accompany the Federal agency certification required at

Sec. 65.14(e)(3), would be to assure FEMA that the community is aware

of the certification being made by the Federal agency, but it does not

imply any specific technical input or expertise on the part of the

community.

One comment suggested that the documentation required in

Sec. 65.14(e) include a statement that the flood protection system

under restoration will not increase flood hazards in surrounding areas.

Such a provision relates directly to the design requirements for

constructing a restoration project that is not within the scope of the

statute or these regulations. It is appropriate that concerns about

induced flooding be addressed by the local and Federal sponsors of the

restoration project. Therefore, such a provision has not been included

in these regulations.

One comment objected to the requirement in Sec. 65.14(e)(1) that

the community submit, as part of its application for designation of AR

Zones, a statement whether the flood protection system is the subject

of pending litigation or administrative actions. FEMA believes that the

information is pertinent to FEMA's determination whether the

restoration project is viable and likely to be completed in accordance

with the restoration plan required in Sec. 65.14(e)(7). An affirmative

response would not necessarily result in FEMA's denial of the

community's application. It is imperative that FEMA be aware of any and

all existing and potential obstacles to the timely restoration of a

flood protection system so that the Director can accurately evaluate a

community's application for designation of AR Zones.

Comments were raised regarding the application requirement in

Sec. 65.14(e)(5) that the community applicant submit a feasibility

study performed by a Federal agency that deems that the flood

protection system is restorable. Several comments observed that the

term ``feasibility study'' as used by the U.S. Army Corps of Engineers

is a specific document within the framework of the project planning

process, and depending on the type of restoration project, a

feasibility study may not always be performed. Other comments were

concerned about the length of time that may be required to prepare a

U.S. Army Corps of Engineers feasibility study and the associated delay

in the community's eligibility for AR Zone designation. At least one

comment suggested that for projects sponsored by the U.S. Army Corps of

Engineers, a ``reconnaissance'' level study would provide the

assurances that FEMA requires by demonstrating a Federal interest in

the project that would restore a minimum 100-year level protection and

which would identify a local sponsor for the restoration project.

The interim final rule has been revised to delete the reference to

``feasibility study'' at Sec. 65.14(e)(5) and instead to refer to a

study performed by a federal agency that would demonstrate that there

is a federal interest in the restoration of the system and that it is

deemed to be feasible to restore the system to provide at least 100-

year protection.

One comment suggested that the application requirement to submit a

feasibility study would delay the community's eligibility for AR Zone

designation which would be contrary to legislative intent. This comment

implies that community eligibility for an AR Zone designation should

follow immediately after the decertification of the existing flood

protection system.

The eligibility requirements contained in the statute refer to a

level of activity that would not likely be in place as soon as the

system was decertified. Therefore, FEMA anticipates that communities

would be mapped as special flood hazard areas with flood elevations (AE

Zones), until such time as the progress on the restoration of the flood

protection system reached a point that would meet the eligibility

requirements for AR Zone designation. This process is similar to the

process used to designate A99 Zones under provisions in the NFIP

regulations at 44 CFR 61.12.

Several comments objected to the certification requirement in

Sec. 65.14(e)(6) that the design and construction of the restoration

project involve Federal funds in order for the community to be eligible

for AR Zone designation. One specific comment noted that the statute

does not specify a Federal flood protection system. As stated in the

supplementary information of the proposed rule, the existing FEMA

regulations, 44 CFR 61.12, limit A99 Zone designation to communities

that have made adequate progress on the construction of a flood

protection system involving Federal funds. Requiring that the

restoration project involve Federal funds is consistent with the

existing regulatory provisions of Sec. 61.12.

Furthermore, the statute provided for floodplain management

provisions that permit development in flood control restoration zones

to take place at elevations below the base flood elevation (BFE) that

would apply in the absence of a flood protection system. Not only will

new structures be exposed to increased flood risk until the flood

protection system is fully restored, but those same new structures can

be insured at less than actuarial rates. The insurance subsidy

established in the National Flood Insurance Program (NFIP) was

originally intended for the benefit of those who built without

knowledge of the risk. In contrast, the subsidy for AR Zone

designations is extended to those who are aware, or ought to be aware,

of the increased risk. This special consideration is granted on the

specific assumption that the increased risk is temporary and will be

mitigated in the near term. Therefore, in extending the subsidy in the

AR Zones, there has to be a high degree of assurance that the

restoration project will be completed.

FEMA recognizes that there are local jurisdictions that may have

the resources to build and to restore flood protection systems without

Federal financial support. On the other hand, the subsidy and the less

restrictive flood plain management criteria could reduce a community's

incentive to press for timely completion of its restoration project.

FEMA cannot compel the completion of a restoration project. Without

Federal participation in a restoration project, the Federal government

cannot insure that the anticipated flood protection will be achieved

within the time allowed by the rule. FEMA concludes that a lack of

Federal involvement in the restoration process would introduce too

great an uncertainty that the restoration projects will be completed in

a timely manner.

The public policy concern is that, if restoration of the flood

protection system is never completed, or is completed only after a

lengthy delay, the owners and occupants of structures built during the

restoration period at elevations below the actual 100-year flood level

will permanently be at a greater risk of flooding than they would

otherwise have been, and this regulation would have contributed

directly to that greater risk. This is contrary to the basic purpose of

the NFIP. (See 42 USC Sec. 4001(c)). Therefore, the interim final rule

retains the requirement that a Federal agency be involved in the

funding of the restoration in order to establish an essential assurance

that the restoration will be completed.

One comment requested that the regulations at Sec. 65.14(e)(8)

allow changes to the community's adopted map or legal description that

designates the ``developed areas'' to accommodate minor errors and

omissions. FEMA recognizes that errors or omissions may occur in the

drafting of a map or legal description of the designated ``developed

areas'' that the community then officially adopts. In such cases, FEMA

would allow the community to submit a revised map or legal description

that identifies the error or omission. Communities would be required to

submit evidence to FEMA that the specific land areas to be designated

as ``developed areas'' satisfy the requirements of the definition of

``developed areas'' at the time the initial designation was adopted.

Communities would not be allowed to modify the map or legal description

to redesignate ``developed areas'' at their discretion while the flood

control restoration zone designation remains in effect.

One comment suggested that the regulations provide for

reconsideration when the Director determines that a community is

ineligible for a flood control restoration zone designation under the

provisions contained in the proposed rule at Sec. 65.14(f). The interim

final rule provides for processing a community's application according

to procedures specified in existing NFIP regulations at 44 CFR 65.9.

FEMA believes that these procedures are adequate. Furthermore, there is

no prohibition against resubmitting an application for AR Zone

designation.

Another comment suggested that the procedures cited in the proposed

regulations at Sec. 65.14(i) for removing the flood control restoration

zone designation provide for a prior written notice to the community

and an opportunity to remedy the situation.

FEMA agrees that the community should be given prior written notice

of the Director's determination and an opportunity to submit

information to support retaining the AR designation. The interim final

rule at Sec. 65.14(i) was revised accordingly. However, the time frame

specified in the restoration plan shall not exceed the ten year maximum

restoration period. In addition, the interim final rule states that the

revision of the Flood Insurance Rate Map to remove the flood control

restoration zone designation will be accomplished in accordance with

the existing regulations at 44 CFR Part 67. Finally, the term

``procedures'' has been substituted for the term ``criteria'' in the

description of Sec. 65.14 (h) and (i) since this term better describes

the content of these sections.

Floodplain Management and Land Use Requirements in a Flood Control

Restoration Zone

There were several comments concerning the elevation requirements

in the proposed rule. One comment suggested that the local community

should be the responsible entity for determining which structures

should be elevated and also for determining the level at which these

structures should be elevated. There were several comments requesting

that FEMA apply the two-foot elevation that was supported in the

legislative history instead of the three-foot requirement as

established in the proposed rule for ``developed areas''. Two comments

requested that structures be allowed to be constructed at grade in deep

flood areas because elevating to three feet will not significantly

reduce flood damages. Concern was also expressed that the elevation

requirement was unreasonable because of the costs associated with the

three foot elevation requirement and that this elevation would not

aesthetically fit in with existing structures not built at this

elevation.

Congress, under Section 928 of Public Law 102-550, 42 U.S.C.

4014(f), directed FEMA to ``develop and promulgate regulations to

implement this subsection, including minimum floodplain management

criteria, within 24 months after the date of enactment of this

subsection''. The law is specific in stipulating that the NFIP minimum

elevation requirements for new construction in impacted areas subject

to flood depths less than five feet and for infill, redevelopment and

rehabilitation, regardless of flood depth, could not exceed three feet.

FEMA believes the law is clear in establishing the floodplain

management criteria in a flood control restoration zone. FEMA also

believes that it is in the best interest of the NFIP to require

structures to be elevated to the lower of either the AR BFE or the

three-foot elevation permitted by the statute because of the increased

flood risk to which properties will be exposed during the restoration

period. Furthermore, the three-foot elevation of structures would

afford additional protection from flood events that may exceed the

capacity of the decertified flood protection system, which at a minimum

must provide at least a 35-year level of protection in order to be

eligible for a flood control restoration zone. The floodplain

management criteria established for a flood control restoration zone

also recognize that there is a chance that the project will not be

restored. Consequently, the elevation requirement of three feet limits

the exposure to the National Flood Insurance Fund if the project is not

restored.

The floodplain management criteria established are the minimum

standards for the adoption of floodplain management regulations within

those areas designated as a flood control restoration zone (Zone AR,

AR/A1-30, AR/AE, AR/AH, AR/AO, or AR/A). Any community may exceed the

minimum standards by adopting more restrictive requirements.

Those seeking variances would use procedures that communities have

established to deal with hardship and other unusual conditions.

Communities administer the variances according to 44 CFR 60.6(a). We

emphasize that while variances may reduce floodplain management

requirements, they do not reduce flood insurance rates. By law, flood

insurance rates must be charged commensurate with the risk to which a

building is exposed. Any person seeking a variance to reduce floodplain

management requirements should investigate the impact of the variance

on the cost of flood insurance.

Furthermore, the widely accepted protection techniques available

for new construction of residential structures and non-residential

structures provide practical and affordable alternatives that can be

designed to be compatible with existing construction in a flood control

restoration zone. For non-residential construction, the NFIP provides

the option of elevation or floodproofing to resist the effects of

flooding. Rather than specify an elevation or floodproofing method, the

regulations give the property owner or builder the flexibility to

choose the most appropriate technique. Similarly, there are several

common, affordable methods of elevating residential structures,

including elevation on earth fill, foundation walls, posts, piles, and

piers. In some cases, it may be advantageous to use a combination of

elevation methods.

One comment requested that the regulations clarify the use of the

term ``highest adjacent grade'' compared to the term ``existing grade''

that is used in the statute. The term ``highest adjacent grade'' is

used in the interim final rule at paragraph 60.3(f)(3)(i). This

paragraph establishes the elevation that must be used for applying the

floodplain management requirements in areas within Zone AR designated

as a ``developed area'' for new construction and in other areas in Zone

AR where the AR flood depth is five feet or less. In these areas, the

requirement is to apply the lower of either the AR base flood elevation

or the elevation that is three feet above highest adjacent grade. FEMA

used the term ``highest adjacent grade'' since it is already defined in

the regulations. ``Highest adjacent grade'' in the NFIP regulations is

defined as ``the highest natural elevation of the ground surface prior

to construction next to the proposed walls of a structure''. The

definition in the regulations provides guidance on the reference point

from which to measure the elevation of three feet when a proposed site

is sloped. Also, by applying a single reference point, communities can

consistently apply the elevation requirements to structures. Therefore,

FEMA does not believe the term ``highest adjacent grade'' is

inconsistent with the Act.

National Environmental Policy Act

FEMA has determined, based upon an environmental assessment, that

this interim final rule will not have a significant impact upon the

quality of the human environment. As a result, an Environmental Impact

Statement will not be prepared. A finding of no significant impact is

included in the formal docket file and is available for public

inspection and copying at the Rules Docket Clerk, Office of the General

Counsel, Federal Emergency Management Agency, 500 C Street, SW.,

Washington, DC 20472.

Regulatory Flexibility Act

The Director certifies that this interim final rule is exempt from

the requirements of the Regulatory Flexibility Act because the proposed

flood control restoration zone is required by statute, 42 U.S.C.

4014(f), and is required to enhance and maintain community eligibility

in the National Flood Insurance Program during the period needed to

restore flood protection systems to provide a minimum 100-year level of

protection required for accreditation on National Flood Insurance

Program maps. A regulatory flexibility analysis has not been prepared.

Paperwork Reduction Act

This interim final rule contains collections of information as

described the Paperwork Reduction Act that are covered by the following

OMB Control Numbers: 3067-0020; 3067-0022; 3067-0127; and 3067-0147.

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.

Executive Order 12866, Regulatory Planning and Review

Promulgation of this interim final rule is required by statute, 42

U.S.C. 4014(f), which also specifies the regulatory approach taken in

the proposed rule. To the extent possible under the statutory

requirements of 42 U.S.C. 4014(f), this proposed rule adheres to the

principles of regulation as set forth in Executive Order 12866.

List of Subjects in 44 CFR Parts 59, 60, 64, 65, 70, and 75

Administrative practice and procedure, Flood insurance, Flood

plains, Reporting and recordkeeping requirements.

Accordingly, 44 CFR Parts 59, 60, 64, 65, 70, and 75 are amended as

follows:

PART 59--GENERAL PROVISIONS

1. The authority citation for Part 59 is revised to read as

follows:

Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of

1978, 3 CFR, 1978 Comp., p. 329, 43 FR 41943; E.O. 12127, 3 CFR,

1979 Comp., p. 376.

Sec. 59.1 [Amended]

2. Section 59.1 is amended to read as follows:

A. The definition of Area of shallow flooding is revised to read as

follows:

Sec. 59.1 Definitions.

* * * * *

Area of shallow flooding means a designated AO, AH, AR/AO, AR/AH,

or VO zone on a community's Flood Insurance Rate Map (FIRM) with a one

percent or greater annual chance of flooding to an average depth of one

to three feet where a clearly defined channel does not exist, where the

path of flooding is unpredictable, and where velocity flow may be

evident. Such flooding is characterized by ponding or sheet flow.

* * * * *

B. The definition of ``Area of special flood hazard'' is revised to

read as follows:

Sec. 59.1 Definitions.

* * * * *

Area of special flood hazard is the land in the flood plain within

a community subject to a one percent or greater chance of flooding in

any given year. The area may be designated as Zone A on the FHBM. After

detailed ratemaking has been completed in preparation for publication

of the flood insurance rate map, Zone A usually is refined into Zones

A, AO, AH, A1-30, AE, A99, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, VO,

or V1-30, VE, or V. For purposes of these regulations, the term

``special flood hazard area (SFHA)'' is synonymous in meaning with the

phrase ``area of special flood hazard''.

* * * * *

C. The definition of ``Special hazard area'' is revised to read as

follows:

Sec. 59.1 Definitions.

* * * * *

Special hazard area means an area having special flood, mudslide

(i.e., mudflow), or flood-related erosion hazards, and shown on a Flood

Hazard Boundary Map or Flood Insurance Rate Map as Zone A, AO, A1-30,

AE, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, A99, AH, VO, V1-30, VE, V,

M, or E.

* * * * *

D. A new definition, ``developed area,'' is added after

``Deductible'' and before ``Development'' to read as follows:

Sec. 59.1 Definitions.

* * * * *

Developed area means an area of a community that is:

(a) A primarily urbanized, built-up area that is a minimum of 20

contiguous acres, has basic urban infrastructure, including roads,

utilities, communications, and public facilities, to sustain

industrial, residential, and commercial activities, and

(1) Within which 75 percent or more of the parcels, tracts, or lots

contain commercial, industrial, or residential structures or uses; or

(2) Is a single parcel, tract, or lot in which 75 percent of the

area contains existing commercial or industrial structures or uses; or

(3) Is a subdivision developed at a density of at least two

residential structures per acre within which 75 percent or more of the

lots contain existing residential structures at the time the

designation is adopted.

(b) An undeveloped single parcel, tract, or lot of less than 20

acres that is contiguous on at least three sides to areas meeting the

criteria of paragraph (a) at the time the designation is adopted.

(c) A subdivision that is a minimum of 20 contiguous acres that has

obtained all necessary government approvals, provided that the actual

``start of construction'' of structures has occurred on at least 10

percent of the lots or remaining lots of a subdivision or 10 percent of

the maximum building coverage or remaining building coverage allowed

for a single lot subdivision at the time the designation is adopted and

construction of structures is underway. Residential subdivisions must

meet the density criteria in paragraph (a)(3).

* * * * *

3. Section 59.24(a) is revised to read as follows:

Sec. 59.24 Suspension of community eligibility.

(a) A community eligible for the sale of flood insurance shall be

subject to suspension from the Program for failing to submit copies of

adequate floodplain management regulations meeting the minimum

requirements of paragraphs (b), (c), (d), (e) or (f) of Sec. 60.3 or

paragraph (b) of Sec. 60.4 or Sec. 60.5, within six months from the

date the Director provides the data upon which the flood plain

regulations for the applicable paragraph shall be based. Where there

has not been any submission by the community, the Director shall notify

the community that 90 days remain in the six month period in order to

submit adequate flood plain management regulations. Where there has

been an inadequate submission, the Director shall notify the community

of the specific deficiencies in its submitted flood plain management

regulations and inform the community of the amount of time remaining

within the six month period. If, subsequently, copies of adequate flood

plain management regulations are not received by the Director, he

shall, no later than 30 days before the expiration of the original six

month period, provide written notice to the community and to the state

and assure publication in the Federal Register under part 64 of this

subchapter, of the community's loss of eligibility for the sale of

flood insurance, such suspension to become effective upon the

expiration of the six month period. Should the community remedy the

defect and the Director receive copies of adequate flood plain

management regulations within the notice period, the suspension notice

shall be rescinded by the Director. If the Director receives notice

from the State that it has enacted adequate flood plain management

regulations for the community within the notice period, the suspension

notice shall be rescinded by the Director. The community's eligibility

shall remain terminated after suspension until copies of adequate flood

plain management regulations have been received and approved by the

Director.

* * * * *

PART 60--CRITERIA FOR LAND MANAGEMENT AND USE

4. The authority citation for Part 60 is revised to read as

follows:

Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of

1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 3 CFR, 1979 Comp., p.

376.

5. Section 60.2(a) is revised to read as follows:

Sec. 60.2 Minimum compliance with flood plain management criteria.

(a) A flood-prone community applying for flood insurance

eligibility shall meet the standards of Sec. 60.3(a) in order to become

eligible if a FHBM has not been issued for the community at the time of

application. Thereafter, the community will be given a period of six

months from the date the Director provides the data set forth in

Sec. 60.3(b), (c), (d), (e) or (f), in which to meet the requirements

of the applicable paragraph. If a community has received a FHBM, but

has not yet applied for Program eligibility, the community shall apply

for eligibility directly under the standards set forth in Sec. 60.3(b).

Thereafter, the community will be given a period of six months from the

date the Director provides the data set forth in Sec. 60.3 (c), (d),

(e) or (f) in which to meet the requirements of the applicable

paragraph.

* * * * *

6. Section 60.3(f) is added to read as follows:

Sec. 60.3 Flood plain management criteria for flood-prone areas.

* * * * *

(f) When the Director has provided a notice of final base flood

elevations within Zones A1-30 or AE on the community's Flood Insurance

Rate Map, and, if appropriate, has designated AH zones, AO zones, A99

zones, and A zones on the community's Flood Insurance Rate Map, and has

identified flood protection restoration areas by designating Zones AR,

AR/A1-30, AR/AE, AR/AH, AR/AO, or AR/A, the community shall:

(1) Meet the requirements of paragraphs (c) (1) through (14) and

(d) (1) through (4) of this section.

(2) Adopt the official map or legal description of those areas

within Zones AR, AR/A1-30, AR/AE, AR/AH, AR/A, or AR/AO that are

designated developed areas as defined in Sec. 59.1 in accordance with

the eligibility procedures under Sec. 65.14.

(3) For all new construction of structures in areas within Zone AR

that are designated as developed areas and in other areas within Zone

AR where the AR flood depth is five feet or less:

(i) Determine the lower of either the AR base flood elevation or

the elevation that is 3 feet above highest adjacent grade; and

(ii) Using this elevation, require the standards of paragraphs (c)

(1) through (14).

(4) For all new construction of structures in those areas within

Zone AR that are not designated as developed areas where the AR flood

depth is greater than 5 feet:

(i) Determine the AR base flood elevation; and

(ii) Using that elevation require the standards of paragraphs (c)

(1) through (14).

(5) For all new construction of structures in areas within Zone AR/

A1-30, AR/AE, AR/AH, AR/AO, and AR/A:

(i) Determine the applicable elevation for Zone AR from paragraphs

(3) and (4);

(ii) Determine the base flood elevation or flood depth for the

underlying A1-30, AE, AH, AO and A Zone; and

(iii) Using the higher elevation from (i) and (ii) require the

standards of paragraphs (c) (1) through (14).

(6) For all substantial improvements to existing construction

within Zones AR/A1-30, AR/AE, AR/AH, AR/AO, and AR/A:

(i) Determine the A1-30 or AE, AH, AO, or A Zone base flood

elevation; and

(ii) Using this elevation apply the requirements of paragraphs

(c)(1) through (c)(14).

(7) Notify the permit applicant that the area has been designated

as an AR, AR/A1-30, AR/AE, AR/AH, AR/AO, or AR/A Zone and whether the

structure will be elevated or protected to or above the AR base flood

elevation.

PART 64--COMMUNITIES ELIGIBLE FOR THE SALE OF INSURANCE

7. The authority citation for Part 64 is revised to read as

follows:

Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of

1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 3 CFR, 1979 Comp., p.

376.

8. Section 64.3 is amended by adding an ``AR'' entry in the chart

in paragraph (a)(1) after the ``AH'' entry and revising paragraph (b)

to read as follows:

Sec. 64.3 Flood Insurance Maps.

(a) * * *

(1) * * *

----------------------------------------------------------------------------------------------------------------

Zone symbol

----------------------------------------------------------------------------------------------------------------

* * * * * * *

AR............................... Area of special flood hazard that results from the decertification of a

previously accredited flood protection system that is determined to be in

the process of being restored to provide a 100-year or greater level of

flood protection.

* * * * * * *

----------------------------------------------------------------------------------------------------------------

* * * * *

(b) Notice of the issuance of new or revised FHBMs or Flood

Insurance Rate Maps is given in part 65 of this subchapter. The

mandatory purchase of insurance is required within designated Zones A,

A1-30, AE, A99, AO, AH, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, V1-30,

VE, V, VO, M, and E.

* * * * *

PART 65--IDENTIFICATION AND MAPPING OF SPECIAL HAZARD AREAS

9. The authority citation for Part 65 is revised to read as

follows:

Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of

1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 3 CFR, 1979 Comp., p.

376.

Sec. 65.14 [Redesignated as Sec. 65.15]

10. Part 65 is amended by redesignating Sec. 65.14 as Sec. 65.15.

11. Part 65 is amended by adding a new Sec. 65.14 to read as

follows:

Sec. 65.14 Remapping of areas for which local flood protection systems

no longer provide 100-year flood protection.

(a) General. (1) This section describes the procedures to follow

and the types of information FEMA requires to designate flood control

restoration zones. A community may be eligible to apply for this zone

designation if the Director determines that it is engaged in the

process of restoring a flood protection system that was:

(i) Constructed using Federal funds;

(ii) Recognized as providing 100-year flood protection on the

community's effective Flood Insurance Rate Map; and

(iii) Decertified by a Federal agency responsible for flood

protection design or construction.

(2) Where the Director determines that a community is in the

process of restoring its flood protection system to provide 100-year

minimum flood protection, a Flood Insurance Rate Map will be prepared

that designates the temporary flood hazard areas as a flood control

restoration zone (Zone AR). Existing Special Flood Hazard Areas shown

on the community's effective Flood Insurance Rate Map that are further

inundated by Zone AR flooding shall be designated as a ``dual'' flood

insurance rate zone, Zone AR/AE or AR/AH with Zone AR base flood

elevations, and AE or AH with base flood elevations and Zone AR/AO with

Zone AR base flood elevations and Zone AO with flood depths, or Zone

AR/A with Zone AR base flood elevations and Zone A without base flood

elevations.

(b) Limitations. A community may have a flood control restoration

zone designation only once for the purposes of restoring a given flood

protection system and must complete restoration of the system or meet

the requirements of 44 CFR 61.12 within a specified period, not to

exceed ten (10) years from the date of submittal of the community's

application for designation of a flood control restoration zone. The

community may not extend this period. The information specified in this

section must be supplied to FEMA by the community as part of its

request for designation of a flood control restoration zone.

(c) Exclusions. The provisions of these regulations do not apply in

a coastal high hazard area as defined in 44 CFR 59.1, including areas

that would be subject to coastal high hazards as a result of the

decertification of a flood protection system shown on the community's

effective Flood Insurance Rate Map (FIRM) as providing 100-year

protection.

(d) Effective date for risk premium rates. The effective date for

any risk premium rates established for Zone AR shall be the effective

date of the revised Flood Insurance Rate Map showing AR Zone

designations.

(e) Application and submittal requirements for designation of a

flood control restoration zone. A community must submit a written

request to the Director, signed by the community's Chief Executive

Officer, for a flood plain designation as a flood control restoration

zone. The request must include a legislative action by the community

requesting the designation. The Director will not initiate any action

to designate flood control restoration zones without receipt of the

formal request from the community that complies with all requirements

of this section. The Director reserves the right to request additional

information from the community to support or further document the

community's formal request for designation of a flood control

restoration zone, if deemed necessary. At a minimum, each request must

include the following:

(1) A statement whether, to the best of the knowledge of the

community's Chief Executive Officer, the flood protection system is

currently the subject matter of litigation before any Federal, State or

local court or administrative agency, and if so, the purpose of that

litigation;

(2) A statement whether the community has previously requested a

determination with respect to the same subject matter from the

Director, and if so, a statement that details the disposition of such

previous request;

(3) A statement from the community and certification by a Federal

agency responsible for flood protection design or construction that the

existing flood control system shown on the effective Flood Insurance

Rate Map was built using Federal funds, that it no longer provides 100-

year flood protection, but that it continues to provide at least a 35-

year level of protection;

(4) A statement identifying the local project sponsor responsible

for restoration of the flood protection system to the 100-year or

greater level of flood protection;

(5) a copy of a study, performed by a Federal agency responsible

for flood protection design or construction in consultation with the

local project sponsor, which demonstrates a Federal interest in

restoration of the system and which deems that the flood protection

system is restorable to a 100-year or greater level of flood

protection.

(6) A joint statement from the Federal agency responsible for flood

protection design or construction involved in restoration of the flood

protection system and the local project sponsor certifying that the

design and construction of the flood control system involves Federal

funds, and that the restoration of the flood protection system will

provide 100-year or greater flood protection;

(7) A restoration plan to return the system to a 100-year or

greater level of protection. At a minimum, this plan must:

(i) List all important project elements, such as acquisition of

permits, approvals, and contracts and construction schedules of planned

features;

(ii) Identify anticipated start and completion dates for each

element, as well as significant milestones and dates;

(iii) Identify the date on which ``as built'' drawings and

certification for the completed restoration project will be submitted.

This date must provide for a restoration period not to exceed, ten (10)

years from the date of submittal of the community's application for

designation as a flood control restoration zone, or;

(iv) Identify the date on which the community will submit a request

for a finding of adequate progress that meets all requirements of

Sec. 61.12. This date may not exceed ten (10) years from the date of

submittal of the community's application for designation as a flood

control restoration zone;

(8) An official map of the community or legal description, with

supporting documentation, that the community will adopt as part of its

floodplain management measures, which designates developed areas as

defined in Sec. 59.1 and as further defined in Sec. 60.3(f).

(f) Review and response by the Director. The review and response by

the Director shall be in accordance with procedures specified in

Sec. 65.9.

(g) Requirements for maintaining designation of a flood control

restoration zone. During the restoration period, the community and the

cost-sharing Federal agency must certify annually to the FEMA Regional

Office having jurisdiction that the restoration will be completed in

accordance with the restoration plan within the time period specified

by the plan. In addition, the community and the Federal agency will

update the restoration plan and will identify any permitting or

construction problems that will delay the project completion from the

restoration plan previously submitted to the Director. The FEMA

Regional Office having jurisdiction will make an annual assessment and

recommendation to the Director as to the viability of the restoration

plan and will conduct periodic on-site inspections of the flood

protection system under restoration.

(h) Procedures for removing flood control restoration zone

designation due to adequate progress or complete restoration of the

flood protection system. At any time during the restoration period, the

community may provide written evidence of certification from a Federal

agency having flood protection design or construction responsibility

that the necessary improvements have been completed and that the system

has been restored to provide a minimum 100-year level of protection, or

may submit a request for a finding of adequate progress that meets all

requirements of section 61.12. If the Director determines that adequate

progress has been made, FEMA will revise the zone designation from a

flood control restoration zone designation to Zone A99. After the

improvements have been completed and certified by a Federal agency as

providing a minimum 100-year level of protection, FEMA will revise the

Flood Insurance Rate Map to reflect the completed flood control system.

(i) Procedures for removing flood control restoration zone

designation due to non-compliance with the restoration schedule or as a

result of a finding that satisfactory progress is not being made to

complete the restoration. At any time during the restoration period,

should the Director determine that the restoration will not be

completed in accordance with the time frame specified in the

restoration plan, or that satisfactory progress is not being made to

restore the flood protection system to provide complete flood

protection in accordance with the restoration plan, the Director shall

notify the community and the responsible Federal agency, in writing, of

the determination, the reasons for that determination, and that the

Flood Insurance Rate Map will be revised to remove the flood control

restoration zone designation. Within thirty (30) days of such notice,

the community may submit written information that provides assurance

that the restoration will be completed in accordance with the time

frame specified in the restoration plan, or that satisfactory progress

is being made to restore complete protection in accordance with the

restoration plan, or that, with reasonable certainty, the restoration

will be completed within the maximum restoration period, which may not

exceed ten (10) years from the date of submittal of the community's

application for designation of a flood control restoration zone. On the

basis of this information the Director may suspend the decision to

revise the Flood Insurance Rate Map to remove the flood control

restoration zone designation. If the community does not submit any

information, or if, based on a review of the information submitted,

there is sufficient cause to find that the restoration will not be

completed as provided for in the restoration plan, the Director shall

revise the Flood Insurance Rate Map, in accordance with 44 CFR Part 67,

and shall remove the flood control restoration zone designations and

shall redesignate those areas as Zone A1-30, AE, AH, AO, or A.

PART 70--PROCEDURE FOR MAP CORRECTION

12. The authority citation for Part 70 is revised to read as

follows:

Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of

1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 3 CFR, 1979 Comp., p.

376.

13. Section 70.1 is revised to read as follows:

Sec. 70.1 Purpose of part.

The purpose of this part is to provide an administrative procedure

whereby the Director will review the scientific or technical

submissions of an owner or lessee of property who believes his property

has been inadvertently included in designated A, AO, A1-30, AE, AH,

A99, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, VO, V1-30, VE, and V

Zones, as a result of the transposition of the curvilinear line to

either street or to other readily identifiable features. The necessity

for this part is due in part to the technical difficulty of accurately

delineating the curvilinear line on either a Flood Hazard Boundary Map

or Flood Insurance Rate Map. These procedures shall not apply when

there has been any alteration of topography since the effective date of

the first National Flood Insurance Program map (i.e., Flood Hazard

Boundary Map or Flood Insurance Rate Map) showing the property within

an area of special flood hazard. Appeals in such circumstances are

subject to the provisions of part 65 of this subchapter.

14. Section 70.3(a) is revised to read as follows:

Sec. 70.3 Right to submit technical information.

(a) Any owner or lessee of property (applicant) who believes his

property has been inadvertently included in a designated A, AO, A1-30,

AE, AH, A99, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, VO, V1-30, VE,

and V Zones on a Flood Hazard Boundary Map or a Flood Insurance Rate

Map, may submit scientific or technical information to the Director for

the Director's review.

* * * * *

15. The heading and paragraphs (a) and (b) of Sec. 70.4 are revised

to read as follows:

Sec. 70.4 Review by the Director.

* * * * *

(a) The property is within a designated A, AO, A1-30, AE, AH, A99,

AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, VO, V1-30, VE, or V Zone, and

shall set forth the basis of such determination; or

(b) The property should not be included within a designated A, AO,

A1-30, AE, AH, A99, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, VO, V1-30,

VE, or V Zone and that the Flood Hazard Boundary Map or Flood Insurance

Rate Map will be modified accordingly; or

* * * * *

16. Paragraph (c) of section 70.5 is revised to read as follows:

Sec. 70.5 Letter of Map Amendment.

* * * * *

(c) The identification of the property to be excluded from a

designated A, AO, A1-30, AE, AH, A99, AR, AR/A1-30, AR/AE, AR/AO, AR/

AH, AR/A, VO, V1-30, VE, or V Zone.

PART 75--EXEMPTION OF STATE-OWNED PROPERTIES UNDER SELF-INSURANCE

PLAN

17. The authority citation for Part 75 is revised to read as

follows:

Authority: 42 U.S.C. 4001 et seq.; Reorganization Plan No. 3 of

1978, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 3 CFR, 1979 Comp., p.

376.

18. Section 75.1 is revised to read as follows:

Sec. 75.1 Purpose of part.

The purpose of this part is to establish standards with respect to

the Director's determinations that a State's plan of self-insurance is

adequate and satisfactory for the purposes of exempting such State,

under the provisions of section 102(c) of the Act, from the requirement

of purchasing flood insurance coverage for State-owned structures and

their contents in areas identified by the Director as A, AO, AH, A1-30,

AE, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, A99, M, V, VO, V1-30, VE,

and E Zones, in which the sale of insurance has been made available,

and to establish the procedures by which a State may request exemption

under section 102(c).

19. Section 75.10 is revised to read as follows:

Sec. 75.10 Applicability.

A State shall be exempt from the requirement to purchase flood

insurance in respect to State-owned structures and, where applicable,

their contents located or to be located in areas identified by the

Director as A, AO, AH, A1-30, AE, AR, AR/A1-30, AR/AE, AR/AO, AR/AH,

AR/A, A99, M, V, VO, V1-30, VE, and E Zones, and in which the sale of

flood insurance has been made available under the National Flood

Insurance Act of 1968, as amended, provided that the State has

established a plan of self-insurance determined by the Director to

equal or exceed the standards set forth in this subpart.

20. Paragraphs (a)(4), (a)(5), and (a)(7) of section 75.11 are

revised to read as follows:

Sec. 75.11 Standards.

(a) * * *

(4) Consist of a self-insurance fund, or a commercial policy of

insurance or reinsurance, for which provision is made in statute or

regulation and that is funded by periodic premiums or charges allocated

for state-owned structures and their contents in areas identified by

the Director as A, AO, AH, A1-30, AE, AR, AR/A1-30, AR/AE, AR/AO, AR/

AH, AR/A, A99, M, V, VO, V1-30, VE, and E Zones. The person or persons

responsible for such self-insurance fund shall report on its status to

the chief executive authority of the State, or to the legislature, or

both, not less frequently than annually. The loss experience shall be

shown for each calendar or fiscal year from inception to current date

based upon loss and loss adjustment expense incurred during each

separate calendar or fiscal year compared to the premiums or charges

for each of the respective calendar or fiscal years. Such incurred

losses shall be reported in aggregate by cause of loss under a loss

coding system adequate, as a minimum, to identify and isolate loss

caused by flood, mudslide (i.e., mudflow) or flood-related erosion. The

Director may, subject to the requirements of paragraph (a)(5) of this

section, accept and approve in lieu of, and as the reasonable

equivalent of the self-insurance fund, an enforceable commitment of

funds by the State, the enforceability of which shall be certified to

by the State's Attorney General, or other principal legal officer. Such

funds, or enforceable commitment of funds in amounts not less than the

limits of coverage that would be applicable under Standard Flood

Insurance Policies, shall be used by the State for the repair or

restoration of State-owned structures and their contents damaged as a

result of flood-related losses occurring in areas identified by the

Director as A, AO, AH, A1-30, AE, AR, AR/A1-30, AR/AE, AR/AO, AR/AH,

AR/A, A99, M, V, VO, V1-30, VE, and E Zones.

(5) Provide for the maintaining and updating by a designated State

official or agency not less frequently than annually of an inventory of

all State-owned structures and their contents within A, AO, AH, A1-30,

AE, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, A99, M, V, VO, V1-30, VE,

and E zones. The inventory shall:

(i) Include the location of individual structures;

(ii) Include an estimate of the current replacement costs of such

structures and their contents, or of their current economic value; and

(iii) Include an estimate of the anticipated annual loss due to

flood damage.

* * * * *

(7) Include, pursuant to Sec. 60.12 of this subchapter, a certified

copy of the flood plain management regulations setting forth standards

for State-owned properties within A, AO, AH, A1-30, AE, AR, AR/A1-30,

AR/AE, AR/AO, AR/AH, AR/A, A99, M, V, VO, V1-30, VE, and E Zones.

* * * * *

21. The heading and paragraph (c) of section 75.13 are revised to

read as follows:

Sec. 75.13 Review by the Director.

* * * * *

(c) Upon determining that the State's plan of self-insurance equals

or exceeds the standards set forth in Sec. 75.11 of this subpart, the

Director shall certify that the State is exempt from the requirement

for the purchase of flood insurance for State-owned structures and

their contents located or to be located in areas identified by the

Director as A, AO, AH, A1-30, AE, AR, AR/A1-30, AR/AE, AR/AO, AR/AH,

AR/A, A99, M, V, VO, V1-30, VE, and E Zones. Such exemption, however,

is in all cases provisional. The Director shall review the plan for

continued compliance with the criteria set forth in this part and may

request updated documentation for the purpose of such review. If the

plan is found to be inadequate and is not corrected within ninety days

from the date that such inadequacies were identified, the Director may

revoke his certification.

Dated: October 17, 1994.

Harvey G. Ryland,

Deputy Director.

[FR Doc. 94-26159 Filed 10-24-94; 8:45 am]

BILLING CODE 6718-03-P