[Federal Register Volume 60, Number 50 (Wednesday, March 15, 1995)]
[Proposed Rules]
[Pages 13945-13947]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6361]



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FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Parts 61 and 206

RIN 3067-AC35


National Flood Insurance Program; Group Flood Insurance Policy 
for Individual and Family Grant Program

AGENCY: Federal Emergency Management Agency (FEMA).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish a Group Flood Insurance 
Policy (GFIP) and the criteria for its implementation by the National 
Flood Insurance Program (NFIP) when Federal disaster assistance is 
provided under the Individual and Family Grant Program after the 
President makes a disaster declaration.

EFFECTIVE DATE: We invite your comments which will be accepted until 
May 1, 1995.

ADDRESSES: Please send 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.

FOR FURTHER INFORMATION CONTACT: Charles M. Plaxico, Jr., Federal 
Emergency Management Agency, Federal Insurance Administration, (202) 
646-3422, (facsimile) (202) 646-3445; or Laurence W. Zensinger in 
FEMA's Response and Recovery Directorate, (202) 646-3642, (facsimile) 
(202) 646-2730.

.SUPPLEMENTARY INFORMATION: Section 411, Individual and Family Grant 
(IFG) Programs the Stafford Act (42 U.S.C. Sec. 5178) authorizes the 
President to make grants to States for the purpose of making grants to 
individuals or families adversely affected by a major disaster. This 
disaster assistance is provided to eligible individuals or families who 
are unable to meet disaster-related necessary expenses or serious needs 
through insurance or other means of assistance. The maximum grant 
amount provided under the State-administered IFG program is $12,600 in 
Fiscal Year 1995, and is adjusted annually as the Consumer Price Index 
for All Urban Consumers changes.
    In past presidentially declared major disasters, IFG recipients 
were required to purchase and maintain ``adequate flood insurance'' if 
they had flood damage and were in a special flood hazard area of a 
community in which the sale of flood insurance was available under the 
NFIP. According to the regulations published to carry out the purposes 
of Sec. 411(a), ``adequate flood insurance'' is defined as a flood 
insurance policy that provides coverage at least for the grant award, 
for which the maximum in Fiscal Year 1995 is $12,600. A homeowner is 
able to apply that amount to building or contents damage, or to both 
kinds of damage, whereas a renter can apply up to $12,600 solely for 
damage to contents.
    Our experience has shown that many IFG recipients historically have 
not used the part of the grant award that was provided to them to 
purchase the required flood insurance for that intended purpose. These 
individuals [[Page 13946]] frequently have been unable to obtain 
adequate assistance from other means and have endured hardship as a 
result of the disaster. Often they have such low incomes that they 
cannot afford to repay a loan, even if the interest rate is as low as 
four percent and the repayment schedule is spread over a number of 
years. Therefore, FEMA developed an NFIP Group Flood Insurance Policy 
(GFIP) for IFG homeowners or renters who experience flood damage, in an 
effort to assist these individuals to protect themselves from future 
flood losses and to comply with the purchase and maintenance 
requirements of the IFG program. By using the GFIP concept, FEMA can 
achieve significant administrative savings and can offer a premium rate 
for the 3-year GFIP that is approximately $50 more than the 1-year 
premium for a conventional Standard Flood Insurance Policy for a 
property with the insurance-rating characteristics that most of the 
properties that are anticipated to be covered under the GFIP have.
    On September 23, 1994, while FEMA was in the process of preparing 
regulations to implement the GFIP, the President signed Public Law 103-
325, the Riegle Community Development and Regulatory Improvement Act of 
1994. Title V of Pub. L. 103-325 reformed major portions of the 
National Flood Insurance Act of 1968, and is cited as the National 
Flood Insurance Reform Act of 1994 (NFIRA). Section 582 of Pub. L. 103-
325 states:
    ``No Federal disaster relief assistance made available in a flood 
disaster area may be used to make a payment * * * to a person for 
repair, replacement, or restoration for damage to any personal, 
residential, or commercial property if that person at any time has 
received flood disaster assistance that was conditional on the person 
first having obtained flood insurance under applicable Federal law and 
subsequently having failed to obtain and maintain flood insurance as 
required under applicable Federal law on such property.''
    We interpret this section as a requirement in flood disasters for 
each grantee who receives Federal disaster assistance for flood damage 
to property located in a special flood hazard area and who is required 
to purchase flood insurance (or had insurance purchased for them) to 
maintain at least a minimum amount of flood insurance on the property 
forever, or until they move to another address. If flood insurance is 
not maintained, then no Stafford Act assistance may be provided for IFG 
under sec. 411(a) for real or personal property in any subsequent flood 
disasters. This maintenance provision also applies to individuals who 
bought, or otherwise had transferred to them, any real estate for which 
the flood insurance maintenance requirement was previously levied.
    To enable States to provide affordable policies to IFG recipients, 
FEMA proposes to limit IFG assistance to individuals and families with 
$200 or more of real or personal property damage or loss. Assisting 
individuals with damage of less than $200 is not cost-effective.
    For individuals who qualify for IFG assistance, FEMA proposes that 
a fixed premium amount, initially in the amount of $200, will be added 
to the IFG awards (subject to the current grant maximum) to cover the 
cost of the grantee's flood insurance coverage for the first 3 years. 
If the grantee has disaster needs that meet or exceed the maximum grant 
amount, this fixed premium amount shall be withheld from the grant and 
provided to the NFIP to pay the premium, thus ensuring the grantee is 
provided with a policy. The policy coverage will be equivalent to the 
maximum IFG grant amount each fiscal year. This amount is $12,600 in 
Fiscal Year 1995 as mentioned earlier.
    The State IFG program staff would provide the NFIP with records of 
the individuals to be insured. The records, which the State would 
provide NFIP on a weekly basis, would be accompanied by payments to 
cover the premium amounts for each grantee/policyholder for the 3-year 
policy term. The NFIP would then issue a Certificate of Flood Insurance 
to each insured. During the 3-year term of the coverage, the amount(s) 
of coverage listed in the Certificate of Flood Insurance would be 
adjusted annually on October 1 to reflect changes in the Consumer Price 
Index for All Urban Consumers.
    Approximately 60 days before the end of the 3-year term of the 
GFIP, the NFIP would notify the IFG grantee/policy- holder of the 
procedures to follow for applying for a new flood insurance policy and 
of the amount of coverage that the IFG grantee/policyholder must obtain 
in order to comply with the flood insurance maintenance requirements 
established under the NFIRA. For purposes of complying with the 
maintenance requirement, a ``minimal amount of flood insurance'' means 
an amount equal to the IFG program's maximum grant amount in effect at 
the time the new policy is obtained. Further, at the time of each 
subsequent renewal, the notification concerning the amount of coverage 
that must be maintained would be revised to reflect the IFG program's 
maximum grant amount then in effect.
    NFIP's Standard Flood Insurance Policy (which would be made 
available to grantees upon request) specifies a number of restrictions 
and limitations. While most exclusions pertain only to certain items in 
the building, some of the exclusions mean that there is no coverage at 
all for the building or the contents in the building. The coverage 
exclusions would be specified in the Addendum that would accompany the 
Certificate of Flood Insurance, which the NFIP would send to each IFG 
grantee/policyholder. If a Certificate of Flood Insurance is issued for 
a grantee whose property is ineligible for GFIP coverage, the NFIP, 
upon discovery of such ineligibility, would notify the grantee that the 
Certificate is rescinded and then refund the full premium costs to the 
President's Fund. The State's 25% share would then be forwarded to the 
State. The State would then return the $200 only to those grantees who 
received maximum grant awards and had their premium costs deducted from 
those awards.
    NFIRA requires a 30-day waiting period, with two specific 
exceptions, before flood insurance coverage becomes effective under the 
Standard Flood Insurance Policy. Neither exception applies to the GFIP. 
Therefore, to comply with the NFIRA, GFIP coverage would become 
effective on the 30th day following the date that the records and 
premium payment are received by the NFIP from the State.

National Environmental Policy Act

    This rule is categorically excluded from the requirements of 44 CFR 
Part 10, Environmental Consideration. No environmental impact 
assessment has been prepared.

Executive Order 12866, Regulatory Planning and Review

    This proposed 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, but attempts to adhere to the regulatory principles set forth in 
E.O. 12866. The rule has not been reviewed by the Office of Management 
and Budget under E.O. 12866.

Paperwork Reduction Act

    FEMA requests that commenters address their concerns about any 
additional paperwork or recordkeeping reporting burden this proposed 
rule may place upon them. Comments on paperwork or recordkeeping issues 
including burden estimates (i.e., the time it would take a State to 
research [[Page 13947]] and compile the information and send premium 
payments to the NFIP) may be addressed to the points of contact 
identified in the ``For Further Information Contact'' section of this 
proposed rule, and to Donald Arbuckle, Office of Management and Budget, 
Office of Information and Regulatory Affairs, 3255 New Executive Office 
Building, Washington, DC 20503.

Executive Order 12612, Federalism

    This rule involves no policies that have federalism implications 
under E.O. 12612, Federalism, dated October 26, 1987.

Executive Order 12778, Civil Justice Reform

    This rule meets the applicable standards of Sec. 2(b)(2) of E.O. 
12778.

List of Subjects in 44 CFR Parts 61 and 206

    Flood insurance; Disaster assistance.

    Accordingly, 44 CFR Parts 61 and 206 are proposed to be amended 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.

    2. Section 61.17 is added to read as follows:
Sec. 61.17  Group Flood Insurance Policy

    (a) A Group Flood Insurance Policy (GFIP) is a policy covering all 
individuals named by a State as recipients under Sec. 411 of the 
Stafford Act (42 U.S.C. 5178) of an Individual and Family Grant program 
award for flood damage as a result of a Presidential disaster 
declaration. The premium for the GFIP, initially, is a flat fee of $200 
per policyholder. The amount of coverage would be equivalent to the 
maximum grant amount established under Sec. 411. Coverage under the 
GFIP would become effective on the 30th day following the date the NFIP 
receives the records and premium payments from the State.
    (b) The GFIP is the Standard Flood Insurance Policy Dwelling Form 
(a copy of which is included in Appendix A(1) of this part), except 
that:
    (1) The GFIP provides coverage for losses caused by land 
subsidence, sewer backup, or seepage of water without regard to the 
requirement in paragraph B.3. of Article 3 that the structure be 
insured to 80 percent of its replacement cost or the maximum amount of 
insurance available under the National Flood Insurance Program.
    (2) Article 7--Deductibles does not apply to the GFIP. The 
deductible is $200 (applicable separately to any building loss and any 
contents loss) for insured flood damage losses sustained by the insured 
property in the course of any subsequent flooding event during the 
policy term. No deductible shall apply to Article 3 B.3.
    (3) Article 9 E., Cancellation of Policy By You, does not apply to 
the GFIP.
    (4) Article 9 G., Policy Renewal, does not apply to the GFIP.

PART 206--FEDERAL DISASTER ASSISTANCE FOR DISASTERS DECLARED ON OR 
AFTER NOVEMBER 23, 1988

    3. The authority citation for Part 206 is amended to read as 
follows:

    Authority: The Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, 42 U.S.C. 5121 et seq.; 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.

Subpart E--Individual and Family Grant Programs

    4. Section 206.131(d)(1)(iii)(C)(2) is revised to read as follows:


Sec. 206.131  Individual and Family Grant Programs.

* * * * *
    (d) * * *
    (1) * * *
    (iii) * * *
    (C) * * *
    (2) The National Flood Insurance Program (NFIP) regulations, at 44 
CFR 61.17, establish the Group Flood Insurance Policy (GFIP), which is 
a policy that covers eligible individuals named by a State as 
recipients under section 411 of the Stafford Act of an IFG program 
award for flood damage as a result of a Presidential disaster 
declaration.
    (i) IFG assistance will be provided to individuals or families with 
residential or personal property damage or losses of $200 or more. 
Individuals with damage of $199 or less will not be eligible for IFG 
assistance.
    (ii) The premium for the GFIP is a necessary expense within the 
meaning of this section. The State shall withhold this portion of the 
IFG award and provide it to the NFIP on behalf of individuals and 
families who are eligible for coverage. The coverage shall be 
equivalent to the maximum grant amount established under Sec. 411(f) of 
the Stafford Act.
    (iii) The State IFG program staff would provide the NFIP with 
records of individuals who received an IFG award and are, therefore, to 
be insured. Grantees would not be covered if they are determined to be 
ineligible for coverage based on a number of exclusions established by 
the NFIP. Records of IFG grantees to be insured shall be accompanied by 
payments to cover the premium amounts for each grantee for the 3-year 
policy term. The NFIP will then issue a Certificate of Flood Insurance 
to each grantee.
    (iv) Once the grantee/policyholder receives the Certificate of 
Flood Insurance, the grantee should review the list of the types of 
buildings that are ineligible for coverage. If the damaged building and 
its contents are ineligible, the grantee must notify the NFIP in 
writing. The NFIP will then reimburse the State IFG program for the 
premium, so the IFG program can issue a check for the premium amount to 
the grantee when a premium amount was withheld from a maximum grant 
award. (If the grantee wishes to refer to or review a Standard Flood 
Insurance Policy, it will be made available by the NFIP upon request.)
(Catalog of Federal Domestic Assistance No. 83.100, ``Flood 
Insurance''; No. 83.516, ``Disaster Assistance'').

    Dated: February 24, 1995.

Elaine A. McReynolds,

Administrator, Federal Insurance Administration.

Richard W. Krimm,

Associate Director, Response and Recovery.

[FR Doc. 95-6361 Filed 3-14-95; 8:45 am]

BILLING CODE 6718-02-P