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

FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Part 61

RIN 3067--AD00

National Flood Insurance Program (NFIP); Insurance Coverage and

Rates

AGENCY: Federal Emergency Management Agency (FEMA).

ACTION: Interim final rule; request for comments.

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SUMMARY: We (the Federal Insurance Administration) are adding an

endorsement to the Standard Flood Insurance Policy (SFIP) that will

establish a permanent procedure for honoring claims for buildings

damaged by continuous lake flooding from closed basin lakes or under

imminent threat of flood damage from those closed basin lakes.

DATES: This interim final rule is effective on August 2, 1999. Please

submit any comments in writing by October 1, 1999.

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

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

Street SW., room 840, Washington, DC 20472, (facsimile) 202-646-4536,

or (email) [email protected].

FOR FURTHER INFORMATION CONTACT: Charles M. Plaxico, Jr., Federal

Emergency Management Agency, Federal Insurance Administration, 500 C

Street SW., room 433, Washington, DC 20472, 202-646-3422, or (email)

[email protected].

SUPPLEMENTARY INFORMATION: Residents of the Devils Lake area in

northeastern North Dakota face extraordinary flood conditions. During

the last three years, the level of the lake has risen twelve feet,

negating property owners' short-term flood mitigation efforts, such as

temporary dikes, and flooding hundreds of properties and threatening

many more.

The conditions at Devils Lake Basin are unique because the lake is

part of a ``closed basin,'' that is, although it lies within the Red

River-Hudson Bay drainage system, no water has flowed from the Devils

Lake Basin in recorded history (since the 1830s). Instead, Devils Lake,

together with adjacent Stump Lake, collects the Basin's surface runoff

flowing through many small coulees and lakes. (Devils Lake collects

about 86% of the runoff; Stump Lake collects the remainder.) The runoff

remains in these two lakes until it evaporates or enters the

groundwater table.

Since April 1996, as Devils Lake has steadily risen from 1435.2

mean sea level (MSL) to 1447.2 MSL, we have worked with State and local

governments as well as Devils Lake property owners insured under the

National Flood Insurance Program to provide timely, longer term

solutions to this extraordinary problem. Exercising my authority under

the Standard Flood Insurance Policy, as Federal Insurance

Administrator, I have waived a policy requirement that was not

appropriate in light of the unique circumstances at Devils Lake. This

decision has permitted property owners along Devils Lake to use claim

proceeds to relocate their buildings out of harm's way. (Specifically,

I have waived the requirement that a building on Devils Lake be

continuously flooded for 90 days before declaring it a total loss, thus

honoring a claim that provides funds for the insured to take mitigation

action.) This decision has meant a cost savings for the National Flood

Insurance Program (NFIP).

We estimate that, by being proactive, rather than waiting for an

insured building to be inundated for 90 days by the rising lake levels,

we have saved the program on average 25% for each claim in the Devils

Lake area. Paying in advance for these inevitable flood losses

[[Page 41826]]

so that policyholders can use the claim proceeds to relocate their

homes so that we can recover salvage simply makes the best public

policy and insurance sense under the circumstances.

Since April 1996, we have communicated this waiver to the Write

Your Own companies-the private insurance companies that sell flood

insurance policies and adjust claims under the NFIP-through a series of

seven separate Policy Issuances to try to keep pace with revised

predictions of the crests on Devils Lake. We feel that a piecemeal

approach is inadequate and that a better remedy for the dynamic

conditions, such as those at Devils Lake, is to offer a permanent

solution--one that is comprehensive and uniform for other closed basin

lakes. This interim final rule does that.

This interim final rule adds an endorsement to the Standard Flood

Insurance Policy that would make buildings damaged by or imminently

threatened by continuous flooding from closed basin lakes eligible to

be declared a total loss without being continuously flooded for 90

days. It also establishes long-term floodplain management solutions for

the imperiled property to eliminate or hold to a minimum the need for

future flood insurance claims. For example, this interim final rule

requires local governments having jurisdiction over the imperiled

property to adopt and enforce permanent mitigation measures. Among

these measures are: (1) prohibiting new construction--with limited

exceptions--that may be subject to flooding by the rising lake; and (2)

restricting for open space--with limited exceptions--any affected

property the community may acquire an interest in.

National Environmental Policy Act

This interim final rule qualifies to be categorically excluded

according to 44 CFR 10.8 (d) (2) (ii). In addition, no extraordinary

circumstances have been found that would override this exclusion;

therefore, an environmental assessment is not required.

Executive Order 12866, Regulatory Planning and Review

This interim final rule is not a significant regulatory action

within the meaning of Sec. 2(f) of E.O. 12866 of September 30, 1993, 58

FR 51735, and has not been reviewed by the Office of Management and

Budget. Nevertheless, this rule adheres to the regulatory principles

set forth in E.O. 12866.

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

This interim final rule is not a ``major rule'' within the meaning

of section 804 of Pub. L. 104-121, Congressional Review of Agency

Rulemaking. We have submitted a report to Congress summarizing the

scope and effect of the rule, as required by section 801 of Pub. L.

104-121.

Paperwork Reduction Act

This interim final rule does not contain a collection of

information and is therefore not subject to the provisions of the

Paperwork Reduction Act.

Executive Order 12612, Federalism

This interim final rule involves no policies that have federalism

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

1987.

Executive Order 12778, Civil Justice Reform

This interim final rule meets the applicable standards of section

2(b)(2) of Executive Order 12778.

List of Subjects in 44 CFR Part 61

Flood Insurance, insurance coverage and rates.

Accordingly, we amend 44 CFR part 61, as follows:

PART 61--INSURANCE COVERAGE AND RATES

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

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

1978; 43 FR 41943, 3 CFR, 1978 Comp., p. 329; E.O. 12127 of Mar. 31,

1979, 44 FR 19367, 3 CFR, 1979 Comp., p. 376.

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

2. Amend Part 61 by adding ``Endorsement for Closed Basin Lakes''

after the last article of each of the following: Appendix A (1),

Standard Flood Insurance Policy, Dwelling Form; Appendix A (2),

Standard Flood Insurance Policy, General Property Form; and Appendix A

(3), Standard Flood Insurance Policy, Residential Condominium Building

Association Policy. The added endorsement, which is identical in each

appendix, reads as follows:

* * * * *

Endorsement for Closed Basin Lakes

Under 44 CFR 61.13 (d), we are establishing this endorsement for

closed basin lakes, which supplements Article 9.T of the Dwelling

Policy, Article 8.V of the General Property Policy, and Article 10.V

of the Residential Condominium Building Association Policy. (A

``closed basin lake'' is a natural lake from which water leaves

primarily through evaporation and whose surface area now exceeds or

has exceeded one square mile at any time in the recorded past. Most

of the nation's closed basin lakes are in the western half of the

United States where annual evaporation exceeds annual precipitation

and where lake levels and surface areas are subject to considerable

fluctuation due to wide variations in the climate. These lakes may

overtop their basins on rare occasions.) If your insured building is

subject to continuous lake flooding from a closed basin lake, we

will pay your claim as if the building is a total loss even though

it has not been continuously inundated for 90 days, subject to the

following conditions:

1. Lake flood waters must damage or imminently threaten to

damage your building.

2. Prior to approval of your claim, you must:

a. Agree to a claim payment that reflects your buying back the

salvage on a negotiated basis; and

b. Grant the conservation easement contained in the Federal

Emergency

Management Agency's (FEMA) ``Policy Guidance for Closed Basin

Lakes,'' to be recorded on the deed of the property. FEMA, in

consultation with the community in which the property is located,

will identify on a map an area or areas of special consideration

(ASC) in which there is a potential for flood damage from continuous

lake flooding. FEMA will give the community the agreed-upon map

showing the ASC. This easement will only apply to that portion of

the property in the ASC. It will allow certain agricultural and

recreational uses of the land. The only structures it will allow on

any portion of the property within the ASC are certain, simple

agricultural and recreational structures. If any of these allowable

structures are insurable buildings under the National Flood

Insurance Program (NFIP) and are insured under the NFIP, they will

not be eligible for the benefits of this endorsement. If a U.S. Army

Corps of Engineers (USACE) certified flood control project or

otherwise certified flood control project later protects the

property, FEMA will, upon request, amend the ASC to remove areas

protected by those projects. The restrictions of the easement will

then no longer apply to any portion of the property removed from the

ASC.

3. Within 90 days of approval of your claim, you must move your

building to a new location outside the ASC. FEMA will give you an

additional 30 days to move if there is sufficient reason to extend

the time.

4. Prior to the final payment of your claim, you must acquire an

elevation certificate and a floodplain management permit from the

local floodplain administrator for the new location of your

building.

5. Prior to the approval of your claim, the community having

jurisdiction over your building must:

a. Adopt a permanent land use ordinance, or a temporary

moratorium for a period not to exceed 6 months to be followed

immediately by a permanent land use

[[Page 41827]]

ordinance, that is consistent with the provisions specified in the

easement required in 2.b. above.

b. Agree to declare and report any violations of this ordinance

to FEMA so that under Sec. 1316 of the National Flood Insurance Act

of 1968, as amended, it can deny flood insurance to the building;

and

c. Agree to maintain as deed-restricted, for purposes compatible

with open space or agricultural or recreational use only, any

affected property the community acquires an interest in. These deed

restrictions must be consistent with the provisions of 2.b. above

except that even if a certified project protects the property, the

land use restrictions continue to apply if the property was acquired

under the Hazard Mitigation Grant Program or the Flood Mitigation

Assistance Program. If a non-profit land trust organization receives

the property as a donation, that organization must maintain the

property as deed-restricted, consistent with the provisions of 2.b.

above.

6. Prior to the approval of your claim, the affected State must

take all action set forth in FEMA's ``Policy Guidance for Closed

Basin Lakes.''

7. You must have NFIP flood insurance coverage continuously in

effect from a date established by FEMA until you file a claim under

this endorsement. If a subsequent owner buys NFIP insurance that

goes into effect within 60 days of the date of transfer of title,

any gap in coverage during that 60-day period will not be a

violation of this continuous coverage requirement.

8. This endorsement will be in effect for a community when the

FEMA

Regional Director for the affected region gives the community,

in writing, the following:

a. Confirmation that the community and the State are in

compliance with the conditions in numbers 5 and 6 above, and

b. The date by which you must have flood insurance in effect.

* * * * *

(Catalog of Federal Domestic Assistance No. 83.100,''Flood

Insurance'')

Dated: July 27, 1999.

Jo Ann Howard,

Administrator, Federal Insurance Administration.

[FR Doc. 99-19765 Filed 7-30-99; 8:45 am]

BILLING CODE 6718-03-P