[Federal Register Volume 60, Number 115 (Thursday, June 15, 1995)]
[Proposed Rules]
[Pages 31442-31444]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14690]



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FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Part 65

RIN 3067-AC38


Review of Determinations for Required Purchase of Flood Insurance

AGENCY: Federal Emergency Management Agency (FEMA).

ACTION: Proposed rule.

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SUMMARY: FEMA proposes to establish the procedures and process for its 
review of determinations of whether a building or mobile home is 
located in an identified Special Flood Hazard Area. The review process 
will provide an opportunity for borrowers and lenders of loans secured 
by improved real estate to resolve disputes regarding contested 
determinations.

DATES: We invite your comments on this proposed rule, which should be 
submitted on or before August 14, 1995.

ADDRESSES: Please send written comments to the Rules Docket Clerk, 
Office of the General Counsel, Federal Emergency Management Agency, 500 
C Street SW., Washington, DC 20472, (facsimile) (202) 646-4536.

FOR FURTHER INFORMATION CONTACT: Michael K. Buckley, P.E., Chief, 
Hazard Identification Branch, Mitigation Directorate, 500 C Street SW., 
Washington, DC 20472, (202) 646-2756, (facsimile) (202) 646-4596 (not 
toll-free calls).

SUPPLEMENTARY INFORMATION: Section 102(e) of the Flood Disaster 
Protection Act of 1973, as amended by the National Flood Insurance 
Reform Act of 1994 (NFIRA) (42 U.S.C. 4012a(e)(3), states that the 
borrower and lender for a loan secured by improved real estate or a 
mobile home may jointly request FEMA to review a determination of 
whether the building or mobile home is located in an identified Special 
Flood Hazard Area (SFHA). Within 45 days after receiving the request, 
if all required supporting technical information is provided, FEMA 
would review the determination and provide to the borrower and the 
lender a letter stating, based on the information supplied, whether the 
building or mobile home is in an identified Special Flood Hazard Area. 
These procedures would be available to the borrower and the lender 
during the 45-day period after the borrower is notified that flood 
insurance is required. Only joint requests by both the lender and the 
borrower (requests accompanied by a letter signed by both parties) 
would be accepted under these procedures. Requests submitted more 
[[Page 31443]] than 45 days after borrower notification be not be 
reviewed and would be returned.

Background

    Section 102(b) of the Flood Disaster Protection Act of 1973, as 
amended by the National Flood Insurance Reform Act of 1994 (NFIRA), 42 
U.S.C. 4012a(b), requires that federally regulated lending institutions 
and federal agency lenders review the National Flood Insurance Program 
(NFIP) map for the community in which they are contemplating making, 
increasing, extending, or renewing any loan secured by improved real 
estate to determine whether the building or mobile home is located in 
an identified Special Flood Hazard Area, and if so, require the 
purchase of flood insurance for the building or mobile home. Section 
524(e)(3)(A) of the NFIRA provides for the borrower and lender jointly 
to request that FEMA review the determination. There may be cases in 
which there is a disagreement regarding the accuracy of a 
determination, and this procedure will confirm or disprove the accuracy 
of the original determination. In many cases, a third party performs 
these determinations for lenders. The NFIRA states that a lender may 
provide for the acquisition or determination of information regarding 
special flood hazards to be made by a person other than the lender only 
to the extent such person guarantees the accuracy of the information. 
Because lenders rely on information provided by these third parties to 
ensure compliance with mandatory flood insurance purchase requirements, 
lenders have ample incentives to ensure the quality of this 
information. Therefore, FEMA expects that these determinations would be 
done correctly and FEMA's review of these determinations will be 
necessary only in unusual cases. If additional information (such as a 
property survey) becomes available after the initial determination was 
performed, FEMA would expect that this additional information would be 
presented to the party making the determination for consideration 
before asking FEMA to review the determination.

Standard Hazard Determination Form

    As mandated by Section 528 of the NFIRA (42 U.S.C. 4104b), FEMA is 
developing a Standard Hazard Determination Form to be used by all 
regulated lenders and federal agency lenders making flood hazard 
determinations for improved property used to secure loans. The Standard 
Hazard Determination Form was published as a proposed rule in the 
Federal Register on April 7, 1995, 60 FR 17758. We propose that when 
the borrower and lender ask FEMA to make a flood hazard determination 
review, they would provide to FEMA the completed Standard Hazard 
Determination Form together with all other technical information used 
in making the flood hazard determination. After reviewing that 
technical information, FEMA would issue a written determination 
concurring with or disagreeing with the original determination, and 
stating whether the National Flood Insurance Program map indicates the 
subject building or mobile home is in the SFHA.

Fee for Review by FEMA

    FEMA would initiate cost recovery procedures for its review of 
determinations. This action would reduce expenses to the flood 
insurance policyholders and would contribute to maintaining the NFIP as 
self-supporting. We anticipate that a flat fee of $60 would cover a 
majority of the costs associated with reviewing, recording, processing, 
and dispatching FEMA determinations. This fee would also apply to a 
finding of insufficient information. This fee would be reviewed on an 
annual basis and would be changed, if necessary, by publishing a notice 
in the Federal Register.

Effect on Existing Letter of Map Amendment (LOMA)/Letter of Map 
Revision (LOMR) Procedures

    The procedures proposed under this part would not result in a 
revision to an NFIP map and are not intended to replace those 
procedures already provided in 44 CFR Parts 65 and 70. If additional 
technical data, such as elevation information about the building or 
mobile home, are provided with the request for review of a 
determination, FEMA would not automatically initiate the LOMA or LOMR 
process for the property. A request for a LOMA or LOMR may be submitted 
at any time and must be presented following the procedures established 
under 44 CFR parts 70 and 65 for those requests.
National Environmental Policy Act

    This proposed rule would be categorically excluded from the 
requirements of 44 CFR part 10, Environmental Consideration. No 
environmental impact assessment has been prepared.

Regulatory Flexibility Act

    The Deputy Director certifies that this rule would not have a 
significant economic impact on a substantial number of small entities 
in accordance with the Regulatory Flexibility Act, 5 U.S.C. 601 et 
seq., because it would not be expected (1) to have significant 
secondary or incidental effects on a substantial number of small 
entities, nor (2) to create any additional burden on small entities. 
Moreover, establishing a procedure for FEMA's review of determinations 
is required by the National Flood Insurance Reform Act of 1994, 42 
U.S.C. 4012a. A regulatory flexibility analysis has not been prepared.

Regulatory Planning and Review

    This proposed rule would not be a significant regulatory action 
under Executive Order 12866 of September 30, 1994, Regulatory Planning 
and Review, 58 FR 51735. To the extent possible this proposed rule 
adheres to the principles of regulation as set forth in Executive Order 
12866. This proposed rule has not been reviewed by the Office of 
Management and Budget under the provisions of Executive Order 12866.

Paperwork Reduction Act

    This proposed rule would not involve any collection of information 
for the purposes of the Paperwork Reduction Act.

Executive Order 12612, Federalism

    This proposed rule would involve no policies that have federalism 
implications under Executive Order 12612, Federalism, dated October 26, 
1987.

Executive Order 12778, Civil Justice Reform

    This proposed rule would meet the applicable standards of section 
2(b)(2) of Executive Order 12778.

List of Subjects in 44 CFR Part 65

    Flood insurance, Reporting and recordkeeping requirements.

    Accordingly, 44 CFR part 65 is proposed to be amended to read as 
follows:

PART 65--IDENTIFICATION AND MAPPING OF SPECIAL HAZARD AREAS

    1. The authority citation for part 65 is proposed to be 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 65.17 is proposed to be added to read as follows: 
[[Page 31444]] 


Sec. 65.17  Review of determinations.

    This section describes the procedures that shall be followed and 
the types of information required by FEMA to review a determination of 
whether a building or mobile home is located within an identified 
Special Flood Hazard Area (SFHA).
    (a) General Conditions. The borrower and lender of a loan secured 
by improved real estate or a mobile home may jointly request that FEMA 
review a determination that the building or mobile home is located in 
an identified SFHA. Such a request must be submitted within 45 days of 
the lender's notification to the borrower that the building or mobile 
home is in the SFHA and that flood insurance is required. Such a 
request must be submitted jointly by the lender and the borrower and 
shall include the required fee and technical information related to the 
building or mobile home.
    (b) Data and Other Requirements. Items required for FEMA's review 
of a determination shall include the following:
    (1) Payment of the required fee by credit card, check, or money 
order, payable in U.S. funds, to the National Flood Insurance Fund;
    (2) A request for FEMA's review of the determination, signed by 
both the borrower and the lender;
    (3) A copy of the lender's notification to the borrower that the 
building or mobile home is in an SFHA and that flood insurance is 
required (the request for review of the determination must be 
postmarked within 45 days of borrower notification);
    (4) A completed Standard Hazard Determination Form for the building 
or mobile home, together with a legible copy of all technical data used 
in making the determination; and
    (5) A copy of the effective Flood Hazard Boundary Map (FHBM) or 
Flood Insurance Rate Map (FIRM) panel for the community in which the 
building or mobile home is located, with the building or mobile home 
location indicated. Portions of the map panel may be submitted but 
shall include the area of the building or mobile home in question 
together with the map panel title block, including effective date, bar 
scale, and north arrow.
    (c) Review and Response by FEMA. Within 45 days after receipt of a 
request to review a determination, FEMA will notify the applicants in 
writing of one of the following:
    (1) Request submitted more than 45 days after borrower 
notification; no review will be performed and all materials are being 
returned;
    (2) Insufficient information was received to review the 
determination; therefore, the determination is upheld until a complete 
submittal is received; or
    (3) The results of FEMA's review of the determination, which shall 
include the following:
    (i) The name of the NFIP community in which the building or mobile 
home is located;
    (ii) The property address or other identification of the property 
and building or mobile home to which the determination applies;
    (iii) The NFIP map panel number and effective date upon which the 
determination is based;
    (iv) A statement indicating whether the building or mobile home is 
within the Special Flood Hazard Area;
    (v) The time frame during which the determination is effective 
(generally until the next map revision occurs for the map panel 
involved).

    Dated: June 9, 1995.
Harvey G. Ryland,
Deputy Director.
[FR Doc. 95-14690 Filed 6-14-95; 8:45 am]
BILLING CODE 6718-03-P