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

SUMMARY: This final rule establishes a new flood insurance rate zone,

known as the flood control restoration zone or Zone AR, to delineate

special flood hazard areas on National Flood Insurance Program (NFIP)

Flood Insurance Rate Maps (FIRMs). The rule's underlying statute

stipulates that flood insurance be made available at premium rates

appropriate to the temporary nature of flood hazards during the period

when a flood protection system is being restored. The Zone AR

designation is a means to recognize that a flood protection system is

being restored to provide protection during the base flood event, and

to reduce the flood insurance costs and elevation requirements for

properties that will be exposed to an increased risk of flooding during

the restoration period. In return for the availability of flood

insurance this rule also establishes minimum flood plain management

requirements and provides regulatory guidance for implementing

statutory requirements.

EFFECTIVE DATE: This rule is effective November 26, 1997.

FOR FURTHER INFORMATION CONTACT: Michael Buckley, Hazard Identification

and Risk Assessment Division, Mitigation Directorate, Federal Emergency

Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646-

2756.

SUPPLEMENTARY INFORMATION:

Rulemaking Chronology

Directed under Sec. 928 of Pub. L. 102-550 to publish regulations

on the newly authorized flood control restoration zone, FEMA published

a proposed rule on April 1, 1994, 59 FR 15351. Based on comments on the

proposed rule we made changes for the interim final rule. In order to

meet the statutory 2-year deadline for publishing regulations, yet to

give the public and interested parties another opportunity to comment

on the changes we made, we published an interim final rule on October

25, 1994, 59 FR 53592, with a 45-day comment period. We extended that

comment period 13 days to December 23, 1994 in order to permit

additional comments and to hold a public meeting to receive oral

comments to supplement the record. On December 19, 1994 we held a

public meeting at FEMA headquarters in Washington, DC to hear from

diverse interest groups, including several of whom participated by

teleconference.

The interim final rule contains provisions to implement a new flood

insurance rate zone, Zone AR, for areas designated as a flood control

restoration zone on NFIP maps. It also establishes minimum flood plain

management requirements and provides regulatory guidance for

implementing statutory requirements of Sec. 928 of Public Law 102-550,

42 U.S.C. 4014(f), including procedures for delineating flood control

restoration zones on FIRMs.

We sent copies of the interim final rule to members of Congress and

to chief executive officers of communities affected by the rule

concurrently with our submission of the rule to the Federal Register.

We met with House Banking Committee staff (Senate Banking Committee

staff members were invited but were unable to attend) to discuss the

provisions in the interim final rule.

At the request of a Member of Congress representing several Los

Angeles County communities, FEMA and the U.S. Army Corps of Engineers

participated in an informational public meeting in Bellflower,

California on April 22, 1995 to discuss the restoration of the flood

protection system along the Rio Hondo and Los Angeles Rivers. No

substantive new issues or comments were raised at this meeting or

otherwise affected the substance of the rule published today.

Scope of Public Participation

During the comment period provided for the interim final rule, we

received 47 letters, each containing multiple comments about various

issues in the interim final rule. Most of the letters represented the

local interests of the Los Angeles and Sacramento area communities.

Those submitting formal comments on the interim final rule included:

one U.S. Senator, two members of the U.S. House of Representatives,

community officials and representatives of local governments and

community agencies, representatives of the local business community,

and private citizens from the Los Angeles and Sacramento metropolitan

areas, and state and national representatives of environmental and

flood plain management associations.

Twenty-five individuals participated in the December 19, 1994

public meeting, including a U.S. Representative, several Congressional

staff members, local government officials from Los Angeles, Sacramento,

and Stockton, representatives of national environmental and flood plain

management associations, staff of private lobbying firms representing

communities in the Los Angeles and Sacramento areas, one individual

representing a private citizen, and a private citizen/local activist.

Participation in the December 19, 1994, meeting was also available

through a telephone conferencing connection. Oral comments were

recorded and a written transcript was sent to each of the meeting

participants.

Overview of Comments

Comments on the interim final rule expressed support for the AR

Zone as a means to accommodate community participation in the NFIP

during the period required to restore an existing flood protection

system. Several comments approved creation of uniform criteria

applicable nationwide to communities affected by decertification of an

existing flood protection system, and not limited to communities in the

Sacramento and Los Angeles, California areas. Another noted that the

interim final rule established a reasonable procedure for such

communities, but recognized the potential damages to property and

threat to life, particularly where flood depths are significant.

A number of comments indicated some misunderstanding of the NFIP,

its statutory authority and how the Program is administered. Created by

Congress in the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et

seq., the NFIP is a voluntary program that was designed to reduce the

loss of life and property and rising Federal disaster relief costs

caused by flooding. The NFIP makes federally backed flood insurance

available for property owners located in participating communities.

Before the Congress created the NFIP, flood insurance coverage was

generally not available through private insurers among other things

because of adverse selection and the high cost to identify flood risks.

Under the NFIP the cost of flood losses is transferred from the general

taxpayer to the flood plain occupant by requiring owners of flood plain

properties to purchase flood insurance coverage when obtaining Federal

or federally related financial assistance for construction or

acquisition purposes. Today property owners in over 18,500

participating

[[Page 55707]]

communities may purchase flood insurance.

A number of comments asked that FEMA withhold issuance of revised

FIRMs identifying the increased flood hazard, or to issue maps showing

the community as non-floodprone. Some comments questioned FEMA's

mandate to identify flood hazards and questioned why FEMA needs to

identify flood hazard areas. Several comments asked that FEMA withhold

issuance of FIRMs for a community as long as progress is being made to

restore flood protection.

The National Flood Insurance Act of 1968, as amended by Pub. L.

102-550, does not give FEMA authority to withhold publication of maps

outright, or to withhold maps as long as communities are making

progress toward restoration of the flood protection system. The

legislation reduces flood insurance costs and elevation requirements,

recognizes the added flood risk during the restoration period, and

leaves intact the mapping requirements that have existed since 1968.

The maps are required to identify and delineate the flood hazards, as

well as to identify where flood insurance is or is not required.

Withholding the maps would not be in the best interests of the

residents of the community who need to be aware of the flood risk so

that they can make informed decisions that will protect them and their

property.

The 1968 Act requires that FEMA identify and map flood hazards

nationwide and disseminate the information to local communities so that

they and their residents can be aware of the flood risk and take steps

to protect against future flood losses. During the last 25 years, FEMA

has mapped over 165,000 square miles of floodprone areas nationwide.

In return for making flood insurance available, the community must

commit to adopt and enforce NFIP flood plain management regulations to

reduce the potential for future flood damages in the identified special

flood hazard areas (SFHAs). Development in these areas is regulated by

local flood plain ordinances that are designed to reduce future flood

damages by requiring that new and substantially improved structures be

protected to the base flood level at a minimum. Experience has proven

these measures effective in reducing flood losses.

The NFIP's flood insurance and flood plain management requirements

are based on flood insurance studies conducted under contract for FEMA

by other Federal agencies and by private engineering firms that have a

demonstrated expertise in hydrologic and hydraulic analyses of flood

plains. From these studies, FIRMs are prepared that identify the areas

of the community that will be inundated by the 1-percent annual chance

flood, that is, the flood that has a 1 percent chance of being equalled

or exceeded in any year. The 1-percent annual chance flood standard has

been widely adopted by Federal, State and local agencies for design and

regulatory purposes.

The 1-percent annual chance flood is sometimes called the 100-year

flood or, as used in this rule, the ``base flood''. ``Base flood''

describes a flood of a particular magnitude, the 1-percent annual

chance or 100-year flood. There is a 26-percent chance that a flood of

this magnitude will occur at some point during the life of a 30-year

mortgage.

A number of comments questioned the constitutionality of the flood

insurance purchase requirement, while other comments expressed that it

should be individual choice to buy flood insurance. Major flooding in

the early 1970s prompted the Congress in 1973 to enact certain

mandatory insurance purchase requirements that protect Federal

financial interests in the flood plain. The mandatory flood insurance

purchase requirements apply to mortgages and other financial assistance

obtained from a Federal or federally regulated lender where the

security for the loan is a building or manufactured housing located in

a designated SFHA. Flood insurance must also be purchased by recipients

of some types of flood-related disaster assistance under the Robert T.

Stafford Disaster Relief and Emergency Assistance Act.

Background on the Enactment of Zone AR Provisions

Several of those commenting indicated that they were not aware of

the background that led Congress to authorize flood insurance

availability for flood control restoration zones. FEMA contracts with

other Federal agencies and private contractors periodically to restudy

flood risks and revise flood maps when there is sufficient change in

the flooding conditions to warrant such action. When the U.S. Army

Corps of Engineers, for example, determines that a previously certified

flood protection system, such as a levee, no longer provides protection

during the base flood, under the National Flood Insurance Act FEMA must

identify and map the resulting floodprone areas. Within these

decertified areas, NFIP regulations require participating communities

to enforce local flood plain management ordinances for elevating new

construction and substantial improvements of existing buildings to the

level of the base flood at a minimum in order to reduce or eliminate

flood damages. These mandates are without regard to any actions being

taken to restore a flood protection system.

Flood insurance premiums are calculated on the actual flood risk to

the building or manufactured housing so that the cost of flood

insurance for new construction placed below the base flood level will

reflect the increased risk. In some cases, however, the community may

be taking specific actions to restore protection to the base flood

level so that the increased flood risk is considered to be a temporary

situation that will be remedied when the system is fully restored.

In the 1980s the U.S. Army Corps of Engineers determined that the

levee systems protecting certain parts of the Sacramento and Los

Angeles areas no longer provided protection from the base flood, and

decertified those systems. Under the National Flood Insurance Act FEMA

remapped the areas no longer protected to the base flood level. The

remapping showed large areas that would be subject to flooding from the

base flood, with depths from 1-15 feet in the Los Angeles area, and as

deep as 26 feet in parts of the Natomas area near Sacramento. Concern

for the costs of new construction or substantial improvements to

existing buildings, and concern for the cost of flood insurance

required by law in these areas, caused communities and various interest

groups to petition the Congress for relief while the levee systems were

being restored.

To bolster the position of affected communities in the Los Angeles

area, an economic study prepared at the University of Southern

California (USC) in 1992 predicted major adverse economic impacts in

the Los Angeles area if the NFIP flood insurance and flood plain

management requirements were enforced after decertification of the

levee systems on the Rio Hondo and Los Angeles Rivers. The findings of

the USC study apparently were important influences in persuading the

Congress to amend the National Flood Insurance Act of 1968 to assist

communities, such as those in the Los Angeles and Sacramento areas,

where an existing flood protection system no longer provides base flood

protection but is being restored.

In October 1992 Congress enacted the Housing and Community

Development Act of 1992, Public Law 102-550. Section 928 of Pub. L.

102-550, 42 U.S.C. 4014(f), created a Flood Control Restoration Zone

(Zone AR) designation to meet the communities' concerns. The

[[Page 55708]]

Zone AR designation is a carefully crafted and balanced mechanism to

recognize that a flood protection system is being restored to provide

protection during the base flood event, and to reduce the flood

insurance costs and elevation requirements while still providing some

level of protection for properties that will be exposed to an increased

risk of flooding during the restoration period. Within Zone AR,

Congress reduced elevation requirements for new construction,

eliminated elevation requirements for substantial improvements to

existing structures, and capped the flood insurance rate for insuring

such structures during the interim period when the flood protection

system is being restored. By enacting Sec. 928, Congress anticipated

that the Federal government would accept some additional costs in the

form of increased flood insurance liability and disaster assistance,

and that communities would accept and enforce reduced flood plain

management requirements in order to provide a minimal level of flood

protection for new structures built while the flood protection system

is being restored. In creating the Zone AR designation the Congress

fully and significantly addressed the economic concerns addressed in

the USC study, balancing those concerns against the national need to

reduce the cost of Federal disaster assistance and to have those whose

properties are at risk in the nation's flood plains bear a portion of

that risk.

Issues Raised

Major issues were raised in the public comments about the

definition of developed areas, the requirement to elevate or floodproof

structures outside of the ``developed'' area to the base flood

elevation, the federal funding requirement for the restoration project,

the requirement that construction in ``developed'' areas be elevated to

3 feet above the highest adjacent grade, adherence to a maximum

restoration period and the absence of a ``hold harmless'' provision for

delays in achieving restoration within that time frame, and the

requirement to submit information about the legal status of the project

as part of the application and submittal requirements for AR Zone

designation. These and other comments are addressed in the sections

that follow.

Definition of ``Developed Area''

Several comments were received in support of the definition of

``developed area'' in the interim final rule. There were also several

comments that expressed concerns about how the definition is to be

applied to vacant land and infill sites and on issues related to how

``basic infrastructure'' is defined and what public property and

facilities can be included in a ``developed area''. Comments also

recommended that the regulations be modified to include multiple

parcels, tracts, or lots of less than 20 acres in ``developed areas''

under subsection (b) of the definition rather than a single parcel,

tract, or lot.

Specific comments concerning the definition stated that the

``developed area'' is too restrictive if all vacant land and infill

sites had to have been previously developed and that redevelopment of

these sites has to be supported by the infrastructure in place. Related

comments stated that the supplementary information in the interim final

rule pertaining to the concepts of ``infill'' and ``redevelopment'' is

inconsistent with Pub. L. 102-550 and industry-recognized definitions

and practices related to ``infill'' and ``redevelopment''.

Concern was expressed that the terms, ``infill'' and

``redevelopment'', which are unrelated, are being used interchangeably

and that both terms require the site to have been previously developed

in order to qualify a property for inclusion in a ``developed area''.

The comment noted that the Real Estate Glossary, published by Kenneth

Leventhal & Company, Certified Public Accountants, defines ``infill

development'' as ``development of vacant, scattered sites in a

developed section of a city''. According to this definition, the

comment stated, ``infill'' should not presume the existence of prior

structural improvements to qualify the property to be included in a

``developed area''. It was recommended that the definition be clarified

to allow all vacant sites of a city to be included in the ``developed

area'', including sites in a natural and undisturbed state. It was also

recommended that the ``developed area'' include vacant land that has

been improperly subdivided and vacant land that consists of parcels and

lots of inadequate size and irregular form.

For simplification and ease of administration at the local level,

FEMA established a definition for ``developed area'' rather than

require communities to identify individually single parcels or lots

that meet a definition for ``infill sites'', ``rehabilitation of

existing structures'', or ``redevelopment of previously developed

areas'', terms used in Pub. L. 102-550. ``Developed area'', as defined

in the final rule at 44 CFR 59.1 (a)-(c) encompasses the larger

urbanized area as well as isolated developed subdivisions beyond the

urban area. ``Developed area'' further encompasses ``vested rights''

interests by recognizing land that is planned, permitted, and where

construction is underway. A community must adopt a map or legal

description designating the ``developed area'' and submit this

information as part of the Zone AR application process.

FEMA agrees that clarification is needed regarding the distinction

between ``infill sites'' and ``redevelopment'', and with regard to

whether vacant, undeveloped sites can be included in ``developed

areas'' as set forth in the supplementary information to the interim

final rule. We do not intend to imply that ``infill sites'' and

``redevelopment'' are synonymous nor that an ``infill site'' presumes

the existence of prior structural improvements or previous development.

``Infill sites'' can include: (1) land that is undeveloped (either in a

natural state or in agricultural production); (2) land that contains

buildings that are underused, unused, or dilapidated; or (3) land that

had been previously developed and is now in a nonbuilding use (e.g., a

parking lot). Redevelopment is generally associated with rebuilding a

site where a building or buildings are dilapidated or have been

previously torn down.

Infill sites, including vacant, undeveloped land, can be included

in a ``developed area'' as long as the site meets the criteria

established under paragraph (b) of the definition of ``developed

area''. The ``infill site'' must be contiguous on at least 3 or more

sides by a ``developed area'' meeting the criteria of paragraph (a) of

the definition. This is consistent with the supplementary information

contained in the proposed rule that states that subsection (b) of the

definition of the ``developed area'' addresses those urban fringe areas

that, because of their relationship to surrounding developed areas,

should be considered ``infill site'' areas. FEMA believes that with

this clarification it is unnecessary to alter the regulations.

Older subdivisions that remain undeveloped because they contain

lots that are considered nonconforming under local zoning, subdivision,

or planning regulations are considered ``infill sites'' and would

qualify for inclusion in a ``developed area'' in accordance with

paragraph (b) of the definition. This type of subdivision may also

qualify under paragraph (c) for ``vested rights'' if the subdivision

has been replatted and development is underway in accordance with this

paragraph.

[[Page 55709]]

A comment was made that the term ``basic infrastructure'' is not

sufficiently defined. Another comment asked FEMA to clarify whether

areas that require substantial upgrading of infrastructure are still

considered ``developed areas'' if all other conditions are met. In

order to sustain a primarily urbanized, built-up area in accordance

with paragraph (a) of the definition of ``developed area'', a certain

level of infrastructure would have to be in place. The term, ``basic

infrastructure'', is used because the level of infrastructure needed to

sustain any combination of industrial, residential, and commercial

activities will vary from community to community.

Subsection (a)(1) of the definition of ``developed area'' is

designed to have the community designate an area that is generally

recognized as ``urbanized'' as opposed to a land use pattern that is

undeveloped or is in agriculture. Subsections (a)(2) and (a)(3) address

those isolated areas beyond the urban core that are considered

urbanized or developed because the land is primarily built-up in

commercial, industrial, or residential uses. FEMA recognizes that

infrastructure in older, urbanized areas that is in substandard or poor

condition may need to be substantially upgraded in areas that are being

redeveloped. As long as an area meets one of the three criteria under

paragraph (a) it can be included in a ``developed area''.

Infrastructure would not have to be substantially in place within

the site under paragraph (b) of the definition of ``developed area''

since the land may be undeveloped or in agriculture, but public

utilities must be in place near the edge of the site and can be

extended into the site. For example, the community should be able to

extend sewer lines readily that are near the edge of the site. The

infrastructure would have to be substantially in place under paragraph

(c) of the definition in order to sustain the structures that are built

already or the construction that is underway under the criteria

established in this paragraph. FEMA believes that it is unnecessary to

alter the regulations to clarify this point.

In addition, a comment recommended that the regulations clarify

that all public property and facilities, existing and planned,

including publicly-owned open space, are included in ``developed

areas''.

Public facilities are included in the category of infrastructure

per paragraph (a) of the definition of ``developed area'' since public

facilities are needed to support and sustain a primarily urbanized,

built-up area and provide public services related to the health,

safety, and welfare of the population. As stated in the supplementary

information to the interim final rule, the term ``public facilities''

in paragraph (a) encompasses buildings and facilities, such as

municipal buildings (e.g., court houses, city halls), schools,

hospitals, and publicly-owned open space, such as public parks and

recreational facilities, and historic sites. The term ``public

facilities'' also encompasses quasi-public facilities and services,

such as museums, churches, and sports facilities. Public facilities can

include existing as well as planned facilities as long as the site for

the public facility meets one of the criteria established under the

definition of ``developed area''. FEMA believes that it is unnecessary

to alter the regulations to clarify this point further.

A comment said that it was unclear why the exception under

subsection (b) of the definition of ``developed area'' pertains to only

a single parcel, tract or lot and does not apply to multiple parcels,

tracts, or lots of less than 20 acres. FEMA agrees that it is not

necessary to require that subsection (b) of the definition of

``developed area'' be tied to a single parcel, tract or lot. We

modified subsection (b) of the definition of ``developed area'' to

apply to multiple parcels, tracts or lots, as long as the combined

parcels, tracts, or lots are less than 20 acres and are contiguous on

at least three sides to areas meeting the criteria of paragraph (a) of

the definition of ``developed area'' at the time the designation is

adopted.

Comments recommended that FEMA revise the regulations to recognize

areas as developed when they have final zoning land use approvals from

local government agencies; when they are entirely non-residential; when

funding for the restoration project is provided (local or shared with

the Federal Government); and when construction of the restoration

project is underway, and completion is imminent.

FEMA established criteria to address concerns for development that

has been planned, permitted, and construction is underway. The

definition of ``developed area'' addresses ``vested rights'' by

establishing criteria for determining a ``developed area'' that is

planned, permitted, and where construction is underway and

infrastructure and structures are being built. Paragraph (c) of the

definition of ``developed area'' would recognize areas as ``developed''

where the investment in the land and infrastructure is substantial and

development, residential or non-residential, is underway. FEMA believes

it is unnecessary to tie the criteria under subparagraph (c) of the

definition for addressing ``vested rights'' to the status of the

restoration of the flood protection system since the community is only

required to adopt the definition of ``developed area'' when it

qualifies for the Zone AR designation.

In order for FEMA to designate a flood control restoration zone,

Pub.L. 102-550 requires that the flood protection system must be deemed

restorable by a Federal agency, a minimum level of protection is

provided, and the restoration is scheduled to be completed within a

designated time period. FEMA believes that it is unnecessary to alter

the regulations to clarify this point further.

Flood Plain Management and Land Use Requirements in a Flood Control

Restoration Zone

We received comments concerning the elevation requirements in the

interim final rule. Comments supporting the elevation requirements

noted that those requirements comply with the statutory provisions and

strike a balance between development interests and the public interest

in protecting new development that will be exposed to increased flood

damage until the restoration is complete. Comments objecting to the

elevation requirements expressed concern that the increased costs

associated with elevating new construction would adversely affect

development in communities. Several of these comments recommended that

FEMA amend Sec. 60.3(f) to allow for elevations of less than 3 feet in

developed areas when circumstances warrant a lower elevation.

Several comments stated that according to the legislative history

and the requirements in Pub.L. 102-550, FEMA has the flexibility to

allow for less than the 3-foot elevation. The comments also stated the

opinion that the interim final rule ignores a Senate Committee report

that directed FEMA to establish flexible elevation requirements where

it is not practical or feasible to elevate above 2 feet citing several

examples when a lower elevation might be appropriate. These examples

involved considerations such as lot size, access, incremental cost

relative to flood risk exposure, and length of the restoration period.

Several comments recommended that the elevation requirement be lowered

to 2 feet because seismic design requirements that would apply when

elevating to 3 feet would increase costs significantly.

Comments were also made that the interim final rule effectively

precludes development in areas outside of the ``developed area'' due to

the practical limitations of elevating or floodproofing when flood

depths exceed 5 feet. These

[[Page 55710]]

comments recommended that FEMA amend the regulations to reduce the

elevation requirement for non-residential structures in areas outside

of ``developed areas'' because these structures are not subject to the

same risks as residential structures and can be designed to avoid

collapse or movement due to flooding. That recommendation also

suggested that a standard notice and waiver agreement could be executed

by the owner of a commercial building and flood insurance could be

required at appropriately higher rates.

The comments that cited the legislative history for flexible

elevation requirements of less than 3 feet refer to the report by the

Committee on Banking, Housing, and Urban Affairs United States Senate,

Report 102-332, for the National Affordable Housing Act Amendments of

1992, dated July 23, 1992. This report was for an earlier legislative

proposal to establish Zone AR. Subsequent to this earlier proposal, the

legislation underwent a considerable change to address Congressional

concern over increased risk within deep flood plains that are currently

less developed or undeveloped. The concern for deep flood plains was

expressed in the Congressional Record, dated October 8, 1992 (144 Cong.

Rec. S17910), on the final version of Pub.L. 102-550. Furthermore, the

October 8, 1992 record indicated that ``FEMA shall establish flood

plain management requirements for new construction and substantial

improvements for less developed areas of Los Angeles and Sacramento and

for other communities that may be eligible for the Zone AR''. There

were no comments in the Congressional Record of the Senate or the House

(144 Cong. Rec. H11471, dated October 5, 1992) on the final version of

the Pub.L. 102-550 that refer to flexible elevation requirements of

less than 3 feet.

In establishing the flood plain management requirements for

communities eligible for Zone AR designation, FEMA is consistent with

Pub.L. 102-550. Pub.L. 102-550 stipulates that the NFIP minimum

elevation requirements for new construction shall not exceed 3 feet in

Zone AR for ``in-fill sites'' and ``redevelopment of previously

developed areas'' no matter what the flood depth. Whether base flood

depths behind a decertified flood protection system are 5 feet, 15

feet, or 25 feet in a ``developed area'' of a community, the final rule

only requires that structures be elevated to 3 feet.

If base flood depths are less than 3 feet in either the ``developed

area'' or areas outside the ``developed area'', the property owner need

only elevate the structure to the base flood depth, (i.e., elevate the

structure only to 1 or 2 feet).

Congress did not intend the flood plain management requirements in

Zone AR to deter property improvements. Consistent with Pub.L. 102-550,

there are no elevation requirements for ``rehabilitations to existing

structures'', including substantial improvements.

FEMA believes Pub.L. 102-550 is clear in establishing flood plain

management criteria for areas outside of the ``developed area''. Pub.L.

102-550 establishes that ``flood plain management criteria shall not

exceed 3 feet above existing grade for new construction, provided the

base flood elevation based on the disaccredited flood control system

does not exceed 5 feet above existing grade, or the remaining new

construction is limited to in-fill sites, rehabilitation of existing

structures, or redevelopment of previously developed areas''. The final

rule is consistent with Pub.L. 102-550.

Pub.L. 102-550 and the final rule do not preclude development in

areas outside of the ``developed area'' as claimed in several comments.

Residential and non-residential structures can be built in areas

outside of the ``developed area'' as long as they are built in

accordance with the minimum NFIP flood plain management criteria. These

criteria address Congressional concern for deep flood plains. While the

NFIP flood plain management criteria require the elevation of

residential structures, nonresidential structures may be either

elevated or floodproofed. The floodproofing criteria in the NFIP

Regulations [44 CFR 60.3(c)(3) and (4)] require that walls below the

base flood elevation be substantially impermeable to the passage of

water and with the structural components capable of resisting

hydrostatic and hydrodynamic loads and effects of buoyancy. If

floodproofing is used in ``developed areas'' and in other areas where

flood depths are less than 5 feet, non-residential structures need only

be floodproofed to 3 feet.

The argument by respondents that non-residential structures in

flood plains do not pose the same risks to life-safety and to property

as residential structures understates the true impacts of flooding and

property loss. The flooding of non-residential structures does pose

life-safety risks when flood fighting takes place. When the flooding

has receded, damaged commercial or industrial areas have severe

economic impacts on the community not only due to damages to insured

and uninsured structures and their contents but also due to the

temporary or permanent loss of jobs. This economic impact can often go

beyond the community with flood losses being passed on to the taxpayer

in general through a variety of programs and mechanisms, such as

disaster assistance and reduction in Federal, State, and local tax

revenues, including casualty loss deductions on income taxes and

reductions in real property tax assessments. In addition to these

impacts, exposure of the NFIP will also be extensive considering that

FEMA provides insurance coverage of $500,000 for non-residential

structures and $500,000 for contents for a total coverage of up to $1

million per structure.

Pub.L. 102-550 accommodates the needs of communities within

``developed areas'' through reduced elevation requirements for new

construction while the flood protection system is being restored yet

recognizes that properties will be exposed to an increased flood risk

during the restoration period. Before this law was passed, all new

construction and substantial improvements in areas protected by a flood

protection system which no longer provides base flood protection were

required to be elevated to the base flood elevation. Therefore, in

``developed areas'' that have deep flood plains with flood depths of,

for example, 10, 15, or 20 feet, 3 feet represents a substantial

reduction in elevation over what would otherwise be required.

Given the increased flood risk to which properties will be exposed

during the restoration period, the 3-foot elevation requirement in

``developed areas'' and in other areas where flood depths are less than

5 feet will reduce damages to structures that would otherwise result if

there were no protection. If the flood protection system is not

restored, the 3-foot elevation offers protection to structures built

during the time the Zone AR was in effect. The 3-foot elevation may

only provide minimal protection in a total failure of the flood

protection system. However, 3 feet of elevation would afford protection

from flood events that may exceed the capacity of the decertified flood

protection system, which at a minimum must provide protection from a 3-

percent annual chance flood event. The 3-percent annual chance flood

has a 60 percent probability of occurring during the life of a 30-year

mortgage, and 26 percent probability in a 10-year period.

For example, where overtopping of the flood protection system

results in sheet flow, surface water runoff, and localized ponding

rather than deep flooding, the 3-foot elevation will

[[Page 55711]]

reduce damages. The elevation protection will also reduce damages from

levee seepage and boil problems, and from pump failures and stormwater

and sewer backups. If flood depths are higher than 3 feet, the 3-foot

elevation requirement will minimize the number of structures that are

substantially damaged by lowering the flood depth within the structure.

Furthermore, the impact of the 3-foot elevation on new construction

in Zone AR is not significant considering that this requirement may be

partially satisfied by building code requirements unrelated to the NFIP

that will result in new structures being built at least 6-28 inches

above grade.

For crawl space construction, all three national building codes

(Uniform Building Code, National Building Code, and Standard Building

Code) require a minimum clearance of 18 inches between the ground and

untreated wood floor joists. Allowing for a joist height of 8 to 10

inches and an average subflooring/flooring thickness of 5/8 to 1 inch

for common crawl space construction, the top of the lowest floor can be

as high as 27 to 29 inches above the adjacent exterior grade. Thus, a

new residential structure on a crawl space foundation in Zone AR would

need to be elevated by an additional 7-9 inches, not a full 36 inches,

to meet the 3-foot requirement. Additional building code requirements

are not triggered by this increase even in areas subject to seismic

hazards.

For slab-on-grade residential and non-residential structures, the

national building codes require the top of the slab to be at least 6

inches above adjacent exterior grade to provide protection from decay

due to moisture. Standard practice is to construct the slab so that its

top is at least 8 inches above the adjacent grade to provide protection

from insects. Therefore, a new slab-on-grade residential or

nonresidential structure would need to be elevated by a maximum of 28

to 30 inches to meet the 3-foot elevation requirement.

For floodproofing a non-residential structure in accordance with

the NFIP criteria (as an alternative to elevating the structure), the

increased level of protection needed is again 28-30 inches.

Local code requirements for site work for slab-on-grade

construction generally specify that positive drainage must be provided

away from residential and non-residential structures. These code

requirements, which are also unrelated to the NFIP requirements, can

result in the addition of several inches to the finished grade

elevation before the slab is constructed. As a result, the amount of

additional elevation required to meet the 3-foot requirement may be

further reduced.

We also note that where Zone AR flood depths are less than 3 feet,

new crawl space and slab-on-grade structures, both residential and non-

residential, may require little or no additional elevation.

The over 18,500 participating communities in the NFIP are required

under their flood plain management ordinances to regulate all flood

plain development. In doing so, these communities require that all new

construction of residential structures in flood plains be elevated to

or above the base flood elevation and that new non-residential

structures in flood plains be elevated or dry floodproofed to or above

the base flood elevation. The over 2 million structures built in flood

plains since 1975 and the over 800,000 post-FIRM flood insurance

policies for structures built following community adoption of NFIP

flood plain management requirements are evidence that development does

not halt when flood plains are designated and flood plain regulations

are adopted and enforced by communities. Much of this development has

occurred in flood plains that are subject to elevation requirements

higher than the 3-foot requirement in this Final Rule.

Experience under the NFIP indicates that protecting structures to

the base flood is achievable by builders, developers, architects, and

engineers. Elevation on earth fill or standard foundation systems, such

as solid concrete foundation walls, are typical elevation techniques

that have been used since the NFIP's inception. Experience also

indicates that elevation is cost-effective when the benefits of reduced

flood losses are compared to the additional cost of elevating to the

base flood elevation. In fact, structures elevated to or above the base

flood elevation are 77 percent less likely to suffer damage than those

constructed prior to community participation in the NFIP.

Federal Funding Requirement

A great number of those commenting objected to the certification

requirement in Sec. 65.14(e)(6) of the interim final rule that the

design and construction of the restoration project involve Federal

funds in order for the community to be eligible for the Zone AR

designation.

Comments offered a number of reasons why the Federal funding

requirement should be removed from the regulations and suggested

various alternatives to the Federal funding requirement as a means to

insure timely completion of the restoration. These include: (1) the

statute does not require eligibility to be contingent on Federal

funding; (2) there are adequate safeguards in the interim final rule to

assure timely completion of restoration projects without the

requirement of Federal funding; (3) the Federal funding requirement is

unnecessary as long as the restoration project is certified by a

Federal agency; (4) regardless of the project's source of funding, FEMA

has the authority to replace the Zone AR designation with a Zone AE

designation if the community does not meet the restoration schedule;

(5) Federal funding should not be required, but design and construction

standards by competent (including Federal) authorities need to be

followed; (6) FEMA should promote restoration of the system by the

local community because communities may be in a position to complete

restoration in a timely fashion; (7) FEMA should devise criteria that

would satisfy the Agency that the source of local funds was reliable,

committed, and secure, such as providing for a performance bond; and

(8) Federal funds for restoration projects may not be available to

communities.

FEMA has carefully considered the comments on the Federal funding

issue and finds merit in removing the requirement that the restoration

project involve Federal funding as a prerequisite for designating Zone

AR. Therefore, the final rule is revised at Sec. 65.14(b) to extend

Zone AR eligibility to communities where the restoration project does

not involve Federal funds. We remain concerned that failure to complete

the restoration for any reason will permanently expose structures to an

increased flood risk if built below the base flood elevation while the

Zone AR is in effect. However, we have balanced that concern with an

understanding that communities are increasingly committed to use local

funds to restore flood protection systems, particularly as Federal

funding sources are reduced.

FEMA has devised criteria to ensure that the source of local

funding is reliable, committed, and secure. Specifically,

Sec. 65.14(e)(2)(vi) provides that if a community does not receive

Federal funds for constructing the restoration project, then the

community must submit evidence that 100 percent of the total financial

project cost of the completed flood protection system has been

appropriated from other sources. This measure will give FEMA adequate

assurance that financial resources have been committed to assure

completion of the restoration project.

[[Page 55712]]

Note at Sec. 65.14(h)(3) that in the application requirements for

restoration projects not involving Federal funds the community must

submit a copy of a study, certified by a registered Professional

Engineer, that demonstrates that the restored system will meet all

applicable requirements of 44 CFR Part 65.

The final rule further stipulates at Sec. 65.14(b)(2) that a

community that does not receive Federal funds for the purpose of

constructing the restoration project must complete restoration of the

system within 5 years from the date the community submits its

application for designation of a flood control restoration zone. In

FEMA's experience, a 5-year period is adequate time for planning,

preliminary and final design, construction, and all review processes of

locally initiated projects that do not involve Federal funds. A

typical, locally funded project often takes no more than 3 years to

complete from project inception through final construction. We further

expect that limiting the duration of the Zone AR designation would

limit the number of structures that would be built and exposed to

permanent increased flood risk if, for any reason, the restoration were

not completed.

A community that does not receive Federal funds for restoration of

the flood protection system is not eligible for a finding of adequate

progress under 44 CFR Sec. 61.12, and is required to complete the

restoration project within the 5-year period.

The final regulations provide that the Zone AR designation will

apply only to the restoration of existing Federal flood protection

systems. A comment was made that the NFIP is a national program and

should apply in all of the country, not just in areas that have flood

control systems that were built by the Federal government. We

determined, however, that this provision is in the best interest of the

NFIP, is consistent with the existing regulatory provisions of

Sec. 61.12 that pertain to flood protection systems involving Federal

funds, and is consistent with the intent of Sec. 928 of Pub. L. 102-

550.

Maximum Restoration Period

Several comments expressed concern that the interim final rule

extended the maximum restoration period from 5 to 10 years. Other

comments objected to FEMA's inclusion of a specific maximum restoration

period such as the 10-year maximum restoration period incorporated in

the interim final rule. Others stated that a specific maximum

restoration period is contrary to the statutory language and the

legislative intent and that FEMA should permit the Zone AR designation

as long as progress is being made to restore protection.

Since insurance rates are subsidized and structures can be built

below the base flood elevation during the restoration period, a longer

restoration period further increases the potential flood losses if

flooding occurs before the flood protection system is restored. Some

comments suggested that FEMA strictly enforce a maximum restoration

period and that it aggressively negotiate as short a restoration period

as possible with the Federal agency and community project sponsors. A

comment noted that while the 10-year restoration period provides a more

reasonable time frame for completing a federally funded project, it

also increases the time that existing structures and future

construction are exposed to potential damage. They suggested that to

balance the increase in the maximum restoration period, FEMA should

restrict the definition and designation of ``developed'' areas and

require strict adherence to the Zone AR elevation requirements, or

impose stricter requirements so as to limit the potential for flood

damage during the restoration period.

FEMA is charged by the Congress to administer a sound and effective

flood insurance program within the bounds of the authority provided by

statute. Public Law 102-550 provides for the Zone AR designation when a

flood protection system can be restored in a ``designated'' period of

time. Since the Zone AR was intended as an interim or temporary flood

hazard designation, eligibility for the benefits that the designation

confers is contingent on completion of the project within a specific

time frame. We concluded that the statute authorizes FEMA to designate

a maximum restoration period. These regulations designate a 10-year

restoration period for federally funded projects and a 5-year

restoration period for non-federally funded projects.

Because it is in the Program's best interest to promote timely

completion of the restoration, FEMA will negotiate as short a

restoration period as possible, recognizing that there may be

legitimate needs for adjusting the schedule as the work progresses.

Such adjustments may not exceed the maximum applicable restoration

period.

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

Schedule

Many comments urged FEMA to include a ``hold harmless'' provision

whereby the Zone AR designation would be removed only if the community

failed to perform its assigned responsibilities to restore flood

protection.

The final rule does not incorporate a ``hold harmless'' provision

for delays that exceed the applicable restoration period. The final

rule retains the provision at Sec. 64.14(g) for minor adjustments in

the restoration schedule. Central to this position is FEMA's belief

that the flood control restoration zone was not meant to be a long-term

or permanent flood insurance zone designation. A provision to extend

the Zone AR designation or the inclusion of a ``hold harmless''

provision, in our opinion, would be contrary to the statute.

Requirement To Disclose Information About Litigation or

Administrative Actions

Several comments concerned the requirement at Sec. 65.14(e)(1) that

the community's application include a statement whether the flood

protection system is the subject of pending litigation or

administrative actions. Other comments suggested that if FEMA retained

the disclosure requirement then the final rule should include an

affirmative statement that such litigation would have no bearing on

FEMA's decision to approve a community's application for Zone AR

designation. Similar comments expressed the opinion that FEMA cannot

anticipate the outcome of litigation or evaluate the validity of legal

challenges. Some comments expressed concern that the section is

ambiguous with respect to FEMA's obligation when litigation exists and

the community would have no knowledge of the plaintiff's litigation

plan.

One environmental organization's comment supported FEMA's position

on the litigation issue. Another comment noted that the 10-year limit

on the Zone AR designation is sufficient to revoke the Zone AR

designation without adding the litigation issue as a decision-making

clause. The 10-year restoration period limits the duration of the Zone

AR designation after it has been granted, whereas the litigation issue

relates to FEMA's decision-making prior to granting the designation.

We continue to maintain that FEMA needs to be fully apprised of any

and all potential obstacles to the timely restoration of the flood

protection system prior to granting the Zone AR designation.

The Zone AR designation permits new construction and substantial

improvements to existing structures to be built below the base flood

elevation

[[Page 55713]]

despite knowledge that those structures will be exposed to an increased

risk of flood damage. FEMA must insure such structures at a subsidized

rate that does not reflect the actual flood risk to which the structure

is exposed.

In contrast, new structures and substantial improvements to

existing structures in SFHAs that are not designated as Zone AR are

required to be elevated to the base flood level. Flood insurance for

any structures that might be built below the level of the base flood

would be insured at actuarial rates that reflect the actual flood risk.

The Zone AR elevation and insurance provisions are justified only

if there is a clear expectation that the increased flood risk is of

short duration and that full protection will be restored in a timely

fashion. Protracted litigation could significantly impede a community's

progress in completing the restoration according to schedule and could

even cause the restoration never to be completed. As a result, those

structures built below the base flood level while the Zone AR was in

effect would be exposed permanently to a greater risk of flooding, with

the NFIP assuming a considerable potential liability when insuring

those structures.

The Zone AR designation increases the risk that the NFIP assumes by

insuring buildings and manufactured housing built or installed below

the base flood level. FEMA must carefully assess the projected

viability of the restoration project and weigh any obstacles to that

completion before granting a flood control restoration zone

designation. Notice of the litigation or administrative action would

alert FEMA to be cautious in evaluating the community's application.

The community may not be able to predict with full accuracy the

litigation or administrative action plan or their outcomes. Given that

the Zone AR designation is applicable for a fixed maximum time and can

be applied only once for a given restoration, community officials

should carefully consider litigation and administrative action times

before applying for the Zone AR designation.

The existence of litigation would not necessarily result in the

denial of the community's application. However, we are not prepared to

include within the regulation an affirmative statement that the

existence of litigation will have no bearing on FEMA's decision with

regard to a community's application. We do not consider the rule to be

ambiguous as to FEMA's obligation when it is determined that the

restoration project is the subject of litigation or administrative

action because there is no specific action mandated by such a finding.

The existence of litigation is one of several elements that FEMA will

consider in making the decision whether to grant Zone AR designation.

The final rule retains the litigation disclosure provision at

Sec. 65.14(e)(1)(i) as one of the several application requirements.

Limitations on Zone AR Designation

We received a number of comments that FEMA include regulatory

language to specify that communities will be eligible for the Zone AR

designation should the restored flood protection system be decertified

again. Although we clarified our position in the supplementary

information to the interim final rule, the comments expressed concern

that we did not change the regulatory text. Those commenting believed

that the regulatory text could be interpreted to exclude subsequent

Zone AR designations in the event that a fully restored system were to

be decertified again and that the clarification contained in the

supplementary text would not be binding upon the agency.

We made minor revisions to the rule at Sec. 65.14(b) to accommodate

the concerns. Communities will be eligible for the Zone AR designation

should the restored flood protection system be decertified again.

Issuance of FIRMs Delineating Zone AE Before Community Eligibility

for Zone AR Designation

We received comments objecting to FEMA's statement that communities

may be mapped as an AE Zone before becoming eligible for Zone AR

designation as being contrary to the intent of the legislation. The

interim final rule simply provided one scenario for potential Zone AR

eligibility. Some communities may require an extended period of time to

meet eligibility criteria. We anticipate that such communities will

receive maps delineating AE, A1-30, AO, AH and A Zones, which will be

revised when the statutory conditions for Zone AR eligibility are met.

Other communities, particularly those who are active in obtaining

federal financial support or in raising local funds for a restoration

project, may make sufficient progress to be designated Zone AR before

issuance of revised FIRMs that reflect the increased flood hazard.

One of these comments encouraged FEMA to develop a parallel process

in mapping communities where an existing flood protection system has

been decertified so that the community is going through the Federal

planning process for restoring protection while the revised FIRM is

being prepared. In response, we anticipate that most communities will

be aware of the potential decertification of an existing flood

protection system at some time during the restudy process. In fact, the

restudy may have been triggered by a flood event nearly causing a

failure or overtopping of the system. Therefore, the community may

begin to investigate a restoration project so that they can meet the

Zone AR eligibility requirements before or concurrent with the

preparation of revised flood hazard maps. In such cases, the revised

FIRM would show the increased flood hazard areas as a Zone AR rather

than another flood hazard zone.

Another comment proposed that the regulations incorporate a

provision that gives communities a reasonable period of time to meet

the Zone AR requirements, suggesting that FEMA withhold maps for

potentially eligible communities until the community is eligible for a

Zone AR designation. FEMA is statutorily required to identify and map

flood hazard areas. Therefore, if the community does not meet the

eligibility criteria when FEMA has completed the remapping process,

including the statutory appeal period and resolution of appeals, FEMA

will be required to delineate those areas as AE, A1-30, AO, AH and A

Zones on the revised FIRM. FEMA does not have the statutory authority

to withhold issuance of maps whether they delineate Zone AR or other

flood hazard zones. Furthermore, communities and their residents have

the right to be informed of the increased risk and such information

should not be withheld. A FEMA policy of withholding the issuance of

FIRMs would jeopardize individuals' ability to make informed decisions

about the flood hazard to which they are exposed.

Use of Terms

One comment stated that there is no definition of the term

``adequate progress'' as used in the regulation. The term refers

specifically to the provision in Sec. 61.12 that permits a federal

flood protection system to be certified as complete when it satisfies

certain specific ``adequate progress'' criteria that are set out in

that section of the regulations at Sec. 61.12(b). There is no need for

further definition.

Another comment stated that the regulation should define the terms

``satisfactory progress'' and ``reasonable certainty'' at 44 CFR

65.14(i). This section of the interim final rule describes the

conditions under which FEMA would take action to remove the

[[Page 55714]]

Zone AR designation for noncompliance with the restoration schedule.

FEMA disagrees because the terms or words used in this rule do not

have a specific meaning separate from the meaning they would have if

used in general discourse. Any attempt to define the terms used in the

law and the rule would merely expand the rule unnecessarily, fail to

accommodate all conditions that would be encountered, and limit

discretion under the NFIP in administering the law and the rule.

Another comment objected to the use of the term ``shall'' in 44 CFR

Sec. 64.14(i) when referring to revising maps and removing the Zone AR

designation for reasons of noncompliance. In response, FEMA states that

the use of the term ``shall'' directly relates to the agency's mandate

to identify and map flood hazards and to employ the statutory appeals

process, provided for in Sec. 110 of the Flood Disaster Protection Act

of 1973, 42 U.S.C. 4104(c); see also 44 CFR Part 67. The term ``shall''

is accurate.

Insurance Rating Procedures

Some comments expressed concern that flood insurance premiums are

too expensive. The NFIP applies actuarial rates to all new

construction. These rates are determined by the zone on the FIRM, and

by national loss experience and loss probabilities. The rates for

existing construction in SFHAs are subsidized. The basis for this

subsidy is the fact that the buildings were constructed in these areas

without full knowledge of the hazard. In deep flooding areas, the

actuarial rate would be greater than the subsidized rate that will be

charged under Zone AR. Congress has extended the benefit of this

subsidy to risks in Zone AR, even though the full extent of the hazard

is known. In the law that established Zone AR, Congress limited the

rate that could be charged to the equivalent of the pre-FIRM Zone A

rate that is subsidized, and placed limits on elevation requirements.

The NFIP pre-FIRM rate is subject to change. Any change will affect the

Zone AR rate.

Role of Insurance Companies

Several comments expressed the opinion that the NFIP's mandatory

purchase requirements were set up to benefit insurance companies and

were not being applied elsewhere in the country. Mandatory purchase

requirements were established by the Congress in 1973 in response to

escalating Federal costs of flooding disasters and low voluntary

participation by property owners in the NFIP. The NFIP mandatory

purchase requirements are enforced on a national basis, and apply to

all Federal and federally regulated lenders.

The National Flood Insurance Act, as amended, authorizes qualified

insurance companies to sell flood insurance under an arrangement with

FEMA. The companies are paid a fee to cover their costs for issuing and

servicing policies and for adjusting claims. The net premiums collected

from the sale of flood insurance are turned over to the Federal

government and are placed in the National Flood Insurance Fund in the

United States Treasury. This fund is used to pay future flood losses

and other NFIP related expenses.

Homeowner Protection

A comment stated that the NFIP mandatory purchase requirements were

not intended to protect the homeowner, but rather the mortgagee, and

this is why contents coverage is not available. We disagree for at

least two reasons. First, contents coverage is available; it can be

purchased as separate coverage or together with building coverage, and

may be required if the contents are part of the security for the loan.

Second, when a mortgaged home is destroyed by an uninsured peril, the

obligation to repay the mortgage still exists. Consequently, any

insurance that covers this peril benefits the policyholder and the

mortgagee.

Relation to Earthquake Insurance

Some comments stated that while mandatory purchase requirements

exist for flood insurance, there are none for earthquake insurance.

Congress mandated the flood insurance purchase requirements under the

provisions of the Flood Disaster Protection Act of 1973. As yet,

Congress has not enacted Federal legislation on earthquake insurance.

Several bills on the subject were introduced in the 103d Congress, in

the 104th Congress, and again in the first session of the 105th

Congress, but none have passed.

Community-Wide Flood Insurance Coverage

A comment suggested that we develop a flood insurance policy that

would cover an entire community, and be paid for by the community. This

suggestion is not workable under the National Flood Insurance Act. The

NFIP has a statutory limit on the amount of insurance that can be

written on an individual building and its contents. Consequently, the

specific risk information required to rate a flood insurance policy is

gathered on an individual basis, and separate policies are issued.

However, there is nothing to prevent a community from arranging with

one or more insurance agents or companies to write the required

policies for its citizens, and list the community as the payor.

National Environmental Policy Act

FEMA has determined, based on an Environmental Assessment, that

this final rule will not have a significant impact upon the quality of

the human environment. 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.

Comments received on the interim final rule urged FEMA to revise

the Environmental Assessment to reflect the changes that had been made

in the interim final rule and to address the regulatory impact on

minority and low-income populations in accordance with Executive Order

12898, Federal Actions to Address Environmental Justice in Minority

Populations and Low-Income Populations. Comments also disagreed with

FEMA's finding that the regulations would have no significant impact on

the environment. These issues are addressed in supplemental information

prepared and appended to the Environmental Assessment for this rule.

These revisions do not alter FEMA's Finding of No Significant Impact.

Regulatory Flexibility Act

The Director certifies that this 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 NFIP during the period needed to restore flood protection

systems to provide a minimum protection from the base flood required

for accreditation on FIRMs. A regulatory flexibility analysis has not

been prepared.

Paperwork Reduction Act

This 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 final rule involves no policies that have federalism

implications under Executive Order 12612, Federalism, dated October 26,

1987.

[[Page 55715]]

Executive Order 12778, Civil Justice Reform

This 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 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 rule adheres to the principles of regulation

set forth in Executive Order 12866. This rule was reviewed by the

Office of Management and Budget in accordance with Executive Order

12866.

Congressional Review of Agency Rulemaking

This final rule has been submitted to the Congress and to the

General Accounting Office under the Congressional Review of Agency

Rulemaking Act, Pub. L. 104-121. The rule is not a ``major rule''

within the meaning of that Act. It does not result in nor is it likely

to result in an annual effect on the economy of $100,000,000 or more;

it will not result in a major increase in costs or prices for

consumers, individual industries, Federal, State, or local government

agencies, or geographic regions; and it will not have ``significant

adverse effects'' on competition, employment, investment, productivity,

innovation, or on the ability of United States-based enterprises to

compete with foreign-based enterprises.

This final rule is exempt (1) from the requirements of the

Regulatory Flexibility Act, as certified previously, and (2) from the

Paperwork Reduction Act.

This rule is not an unfunded Federal mandate within the meaning of

the Unfunded Mandates Reform Act of 1995, Pub. L. 104-4. It does not

meet the $100,000,000 threshold of that Act, and any enforceable duties

are imposed as a condition of Federal assistance or a duty arising from

participation in a voluntary Federal program.

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, 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.

2. Section 59.1 is amended as follows: The definitions of Area of

shallow flooding, Area of special flood hazard, Developed area, and

Special hazard area are 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 1

percent or greater annual chance of flooding to an average depth of 1

to 3 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.

* * * * *

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

a community subject to a 1 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'' is synonymous in meaning with the phrase

``area of special flood hazard''.

* * * * *

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) Undeveloped parcels, tracts, or lots, the combination of which

is less than 20 acres and contiguous on at least 3 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).

* * * * *

Special hazard area means an area having special flood, mudslide

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

or FIRM 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.

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 flood plain 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 Administrator 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 Administrator 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 Administrator 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

Administrator, no later than 30 days before the expiration of the

original six month period the Administrator shall provide written

notice to the community and to the state

[[Page 55716]]

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

Administrator receive copies of adequate flood plain management

regulations within the notice period, the suspension notice shall be

rescinded by the Administrator. If the Administrator 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 Administrator. The community's

eligibility shall remain terminated after suspension until copies of

adequate flood plain management regulations have been received and

approved by the Administrator.

* * * * *

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, 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.

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 Administrator 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 Administrator 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 revised to read as follows:

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

* * * * *

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

flood elevations within Zones A1-30 or AE on the community's FIRM, and,

if appropriate, has designated AH zones, AO zones, A99 zones, and A

zones on the community's FIRM, 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 5 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) of this section.

(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) of this section.

(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

(a)(3) and (4) of this section;

(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 paragraphs (a)(5)(i) and (ii)

of this section require the standards of paragraphs (c)(1) through (14)

of this section.

(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 (14) of this section.

(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, 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.

8. Section 64.3 is amended by revising the ``AR'' entry in the

chart in paragraph (a)(1) 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 base flood

protection.

* * * *

* * *

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

* * * * *

(b) Notice of the issuance of new or revised FHBMs or FIRMs 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.

* * * * *

[[Page 55717]]

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, 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.

Sec. 65.14 [Redesignated as Sec. 65.15]

10. Part 65 is amended by revising Sec. 65.14 to read as follows:

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

no longer provide base 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 Administrator 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 base flood protection on the

community's effective FIRM; and

(iii) Decertified by a Federal agency responsible for flood

protection design or construction.

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

process of restoring its flood protection system to provide base flood

protection, a FIRM 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 FIRM 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 while restoring a flood protection system.

This limitation does not preclude future flood control restoration zone

designations should a fully restored, certified, and accredited system

become decertified for a second or subsequent time.

(1) A community that receives Federal funds for the purpose of

designing or constructing, or both, the restoration project must

complete restoration or meet the requirements of 44 CFR 61.12 within a

specified period, not to exceed a maximum of 10 years from the date of

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

control restoration zone.

(2) A community that does not receive Federal funds for the purpose

of constructing the restoration project must complete restoration

within a specified period, not to exceed a maximum of 5 years from the

date of submittal of the community's application for designation of a

flood control restoration zone. Such a community is not eligible for

the provisions of Sec. 61.12. The designated restoration period may not

be extended beyond the maximum allowable under this limitation.

(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 FIRM as providing base flood 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 FIRM showing Zone AR designations.

(e) Application and submittal requirements for designation of a

flood control restoration zone. A community must submit a written

request to the Administrator, 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 Administrator 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 Administrator 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.

(1) At a minimum, the request from a community that receives

Federal funds for the purpose of designing, constructing, or both, the

restoration project must include:

(i) 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;

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

determination with respect to the same subject matter from the

Administrator, and if so, a statement that details the disposition of

such previous request;

(iii) 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 FIRM was

originally built using Federal funds, that it no longer provides base

flood protection, but that it continues to provide protection from the

flood having at least a 3-percent chance of occurrence during any given

year;

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

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

flood plain management measures, which designates developed areas as

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

(v) A restoration plan to return the system to a level of base

flood protection. At a minimum, this plan must:

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

permits, approvals, and contracts and construction schedules of planned

features;

(B) Identify anticipated start and completion dates for each

element, as well as significant milestones and dates;

(C) 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 the

maximum allowable restoration period for the flood protection system,

or;

(D) 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 the maximum allowable restoration

period for the flood protection system;

(vi) A statement identifying the local project sponsor responsible

for restoration of the flood protection system;

(vii) 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 level of base flood protection.

(viii) 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

[[Page 55718]]

system will provide base flood protection;

(2) At a minimum, the request from a community that receives no

Federal funds for the purpose of constructing the restoration project

must:

(i) Meet the requirements of Sec. 65.14(e)(1)(i) through (iv);

(ii) Include a restoration plan to return the system to a level of

base flood protection. At a minimum, this plan must:

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

permits, approvals, and contracts and construction schedules of planned

features;

(B) Identify anticipated start and completion dates for each

element, as well as significant milestones and dates; and

(C) 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 the

maximum allowable restoration period for the flood protection system;

(iii) Include a statement identifying the local agency responsible

for restoration of the flood protection system;

(iv) Include a copy of a study, certified by registered

Professional Engineer, that demonstrates that the flood protection

system is restorable to provide protection from the base flood;

(v) Include a statement from the local agency responsible for

restoration of the flood protection system certifying that the restored

flood protection system will meet the applicable requirements of Part

65; and

(vi) Include a statement from the local agency responsible for

restoration of the flood protection system that identifies the source

of funds for the purpose of constructing the restoration project and a

percentage of the total funds contributed by each source. The statement

must demonstrate, at a minimum, that 100 percent of the total financial

project cost of the completed flood protection system has been

appropriated.

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

response by the Administrator 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, if any, 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 cost-

sharing Federal agency, if any, 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 Administrator. The FEMA Regional Office having jurisdiction will

make an annual assessment and recommendation to the Administrator 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:

(1) A community that receives Federal funds for the purpose of

designing, constructing, or both, the restoration project shall 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 protection from the base flood, or submit a request for a

finding of adequate progress that meets all requirements of Sec. 61.12.

If the Administrator determines that adequate progress has been made,

FEMA will revise the zone designation from a flood control restoration

zone designation to Zone A99.

(2) After the improvements have been completed, certified by a

Federal agency as providing base flood protection, and reviewed by

FEMA, FEMA will revise the FIRM to reflect the completed flood control

system.

(3) A community that receives no Federal funds for the purpose of

constructing the restoration project must provide written evidence that

the restored flood protection system meets the requirements of Part 65.

A community that receives no Federal funds for the purpose of

constructing the restoration project is not eligible for a finding of

adequate progress under Sec. 61.12.

(4) After the improvements have been completed and reviewed by

FEMA, FEMA will revise the FIRM to reflect the completed flood

protection 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 Administrator 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 Administrator

shall notify the community and the responsible Federal agency, in

writing, of the determination, the reasons for that determination, and

that the FIRM 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 allowable restoration period. On

the basis of this information the Administrator may suspend the

decision to revise the FIRM 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 Administrator shall revise the FIRM,

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

11. 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, 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.

12. 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 Administrator 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

[[Page 55719]]

difficulty of accurately delineating the curvilinear line on either an

FHBM or FIRM. These procedures shall not apply when there has been any

alteration of topography since the effective date of the first NFIP map

(i.e., FHBM or FIRM) 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.

13. 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 FHBM or a FIRM, may submit scientific or technical

information to the Administrator for the Administrator's review.

* * * * *

14. Paragraphs (a) and (b) of Sec. 70.4 are revised to read as

follows:

Sec. 70.4 Review by the Administrator.

* * * * *

(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 FHBM or FIRM will be modified accordingly;

or

* * * * *

15. 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

16. 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, 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.

17. 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 Administrator'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 Administrator

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).

18. 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

Administrator 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 Administrator to

equal or exceed the standards set forth in this subpart.

19. Paragraphs (a)(4), (a)(5), and (a)(7) of Sec. 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 Administrator 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 Administrator 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 Administrator 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.

* * * * *

20. Paragraph (c) of Sec. 75.13 is revised to read as follows:

Sec. 75.13 Review by the Administrator.

* * * * *

(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

Administrator 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

[[Page 55720]]

Administrator 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 Administrator 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 Administrator may revoke his certification.

* * * * *

Dated: October 22, 1997.

James L. Witt,

Director.

[FR Doc. 97-28385 Filed 10-24-97; 8:45 am]

BILLING CODE 6718-03-P