[Federal Register Volume 60, Number 129 (Thursday, July 6, 1995)]
[Rules and Regulations]
[Pages 35286-35289]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16199]





[[Page 35285]]


  

_______________________________________________________________________

Part V

Department of the Treasury
Office of the Comptroller of the Currency



12 CFR Part 22

Federal Reserve System



12 CFR Part 208

Federal Deposit Insurance Corporation



12 CFR Part 339

Department of the Treasury
Office of Thrift Supervision



12 CFR Part 563

Farm Credit Administration



12 CFR Part 614

National Credit Union Administration



12 CFR Part 760



_______________________________________________________________________



Loans in Areas Having Special Flood Hazards; Final Rule

  Federal Register / Vol. 60, No. 129 / Thursday, July 6, 1995 / Rules 
and Regulations  

[[Page 35286]]


DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 22

[Docket No. 95-12]
RIN 1557-AB47

FEDERAL RESERVE SYSTEM

12 CFR Part 208

[Regulation H, Docket No. R-0882]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 339

RIN 3064-AB62

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 563

[No. 95-124]

RIN 1550-AA82

FARM CREDIT ADMINISTRATION

12 CFR Part 614

RIN 3052-AB57

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 760


Loans in Areas Having Special Flood Hazards

AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC); 
Board of Governors of the Federal Reserve System (Board); Federal 
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, 
Treasury (OTS); Farm Credit Administration (FCA); and National Credit 
Union Administration (NCUA) (collectively, the Federal entities for 
lending regulation or the agencies).

ACTION: Joint final rule.

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SUMMARY: The OCC, Board, FDIC, OTS, and NCUA are amending their 
regulations concerning loans in areas having special flood hazards to 
require depository institutions to use the Standard Flood Hazard 
Determination Form (the standard form) in determining whether real 
property offered as collateral for a loan is located in a special flood 
hazard area. The FCA is adopting this same requirement in new 
regulations. The standard form has been developed by the Federal 
Emergency Management Agency (the FEMA), in consultation with the 
Federal entities for lending regulation and other agencies. Use of the 
standard form will help ensure that borrowers obtain the required flood 
insurance for improved real property and mobile homes located in 
special flood hazard areas.

EFFECTIVE DATE: January 2, 1996.

FOR FURTHER INFORMATION CONTACT: OCC: Carol Workman, Compliance 
Specialist, Compliance Management (202) 874-4858, Margaret Hesse, 
Attorney, Community and Consumer Law Division, (202) 874-5750, or 
Jacqueline L. Lussier, Senior Attorney, Legislative and Regulatory 
Activities Division, Office of Chief Counsel, (202) 874-5090, Office of 
the Comptroller of the Currency, 250 E Street, SW, Washington, D.C. 
20219.
    BOARD: Diane Jackins, Senior Review Examiner, or Jennifer Lowe, 
Review Examiner, Division of Consumer and Community Affairs, (202) 452-
3946, or Lawranne Stewart, Senior Attorney, (202) 452-3513, or Rick 
Heyke, Attorney, (202) 452-3688, Legal Division, Board of Governors of 
the Federal Reserve System, 20th Street and Constitution Avenue, NW, 
Washington, D.C. 20551.
    FDIC: Mark Mellon, Senior Attorney, Regulation and Legislation 
Section, Legal Division, (202) 898-3854, or Ken Baebel, Senior Review 
Examiner, (202) 942-3086, or Barbara L. Boehm, Consumer Affairs 
Specialist, (202) 942-3631, Division of Compliance and Consumer 
Affairs, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, D.C. 20429.
    OTS: Larry Clark, Program Manager, Compliance Policy, (202) 906-
5628, or Catherine Shepard, Senior Attorney, Regulation and Legislation 
Division, Office of the Chief Counsel, (202) 906-7275, Office of Thrift 
Supervision, 1700 G Street, NW, Washington, D.C. 20552.
    FCA: Robert G. Magnuson, Policy Analyst, Regulation Development, 
Office of Examination, (703) 883-4498, or William L. Larsen, Senior 
Attorney, Office of General Counsel, (703) 883-4020, Farm Credit 
Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090.
    NCUA: Kimberly Iverson, Program Officer, (703) 518-6375, or Jeffrey 
S. Mooney, Staff Attorney, (703) 518-6563, 1775 Duke Street, 
Alexandria, VA 22314-3428.

SUPPLEMENTARY INFORMATION:

I. Background

Federal Flood Insurance Legislation

    Congress enacted the National Flood Insurance Act of 1968 (the 68 
Act) (Pub. L. 90-448, 82 Stat. 476) and the Flood Disaster Protection 
Act of 1973 (the 73 Act) (Pub. L. 93-234, 87 Stat. 975) to provide, 
through the authorization of a Federal flood insurance program, an 
opportunity for property owners to purchase protection for property 
subject to flooding. The 68 Act and the 73 Act are codified at 42 
U.S.C. 4001 et seq.

The Reform Act

    Amendments to the 68 Act and the 73 Act are set forth in the 
National Flood Insurance Reform Act of 1994 (the Reform Act), Title V 
of the Riegle Community Development and Regulatory Improvement Act of 
1994 (Pub. L. 103-325, 108 Stat. 2160). Several of these amendments 
require implementing regulations by the Federal entities for lending 
regulation.\1\

    \1\ One change effected by the Reform Act is to make Farm Credit 
System institutions subject for the first time to the requirements 
of the 68 Act and the 73 Act. See sections 1370(a)(13) of the 68 Act 
(42 U.S.C. 4121(a)); and 3(a)(10) of the 73 Act (42 U.S.C. 
4003(a)(10)). As a result, the FCA, the Federal entity responsible 
for the supervision of such institutions, must promulgate 
regulations to implement the requirements of these statutes. This 
final rule is part of that project.
---------------------------------------------------------------------------

    As amended by the Reform Act, the 73 Act directs the Federal 
entities for lending regulation (a term defined by section 3(a)(5) of 
the 73 Act (42 U.S.C. 4003(a)(5)) to include the OCC, Board, FDIC, OTS, 
FCA, and the NCUA) to issue regulations which direct regulated lending 
institutions (a term defined by section 3(a)(10) of the 73 Act (42 
U.S.C. 4003(a)(10)) to include any bank, savings and loan association, 
Farm Credit System institution, and credit union) which are subject to 
their supervision to ensure that any loan secured by improved real 
estate or a mobile home (real property) located or to be located in a 
special flood hazard area is covered for the term of the loan by flood 
insurance. Section 102(b) of the 73 Act (42 U.S.C. 4012a(b)).

Standard Flood Hazard Determination Form

    Section 528 of the Reform Act amends the 68 Act by adding a new 
section 1365 (42 U.S.C. 4104b). Section 1365(a) of the 68 Act requires 
the Director of the FEMA, in consultation with the Federal entities for 
lending regulation (among others), to develop a Standard Flood Hazard 
Determination Form for use in determining whether real property offered 
as collateral on a loan is located in a special flood hazard area. 
Section 1365(a) states that the standard form shall be established by 
FEMA regulations issued not later than 270 days after the date of 
enactment of the Reform Act. The Reform Act was signed 

[[Page 35287]]
into law on September 23, 1994. The standard form must therefore be 
established by the FEMA by no later than June 20, 1995.
    A proposed rulemaking to establish the standard form was approved 
for release for notice and comment by the FEMA on March 30, 1995. See 
60 FR 17758 (April 7, 1995). The public comment period on the proposed 
rule ended on May 8, 1995. The proposed rule was adopted by the FEMA in 
final form on June 20, 1995, and is published elsewhere in today's 
Federal Register.
    Section 1365(c) of the 68 Act states that the Federal entities for 
lending regulation must promulgate regulations which require the use of 
the standard form by regulated lending institutions when determining 
whether real property offered as collateral for a loan is located in a 
special flood hazard area. Section 1365(c) further states that a lender 
or other person may comply with this requirement by using the standard 
form in a printed, computerized, or electronic manner.
    Section 1365(f) of the 68 Act states that the regulations requiring 
use of the standard form must be issued together with the FEMA 
regulation which establishes the standard form and that the form will 
have an effective date of 180 days after the date of issuance of the 
regulations. To satisfy this requirement, this final rule requiring the 
use of the standard form is published in the same issue of the Federal 
Register as the final rule of the FEMA which establishes the standard 
form.

II. The Final Rule

    Notice and comment on the final rule requiring the use of the 
standard form are unnecessary since the rulemaking merely implements 
the statutory requirement that the standard form be used by regulated 
lending institutions. The rulemaking is therefore technical in nature. 
The required use of the standard form is not in need of definition or 
interpretation. Moreover, the public has already had the opportunity to 
comment on the substantive content and format of the standard form, 
thus fulfilling the public interest in notice and comment. The final 
format and content of the standard form have been determined through 
the related FEMA rulemaking described above.
    The Federal entities for lending regulation therefore find good 
cause, in accordance with section 553(b)(B) of the Administrative 
Procedure Act (5 U.S.C. 553(b)(B)), to omit notice and comment on the 
rules as unnecessary and to instead issue final rules which impose the 
requirement that the standard form be used by regulated lending 
institutions.

III. Effective Date

    The final rule will become effective January 2, 1996.

IV. Paperwork Reduction Act

    As noted previously, it is the responsibility of the FEMA to 
establish the standard form by regulation. The FEMA has determined that 
the standard form constitutes a ``collection of information'' as that 
term is defined in section 3502(4) of the Paperwork Reduction Act (the 
PRA) (44 U.S.C. 3501 et seq.). See 60 FR 17760. The FEMA has submitted 
information on the standard form to the Office of Management and Budget 
for review as required by section 3507 of the PRA (44 U.S.C. 3507). The 
Director of OMB has approved the proposed information collection 
request of the FEMA, as required by section 3507.

V. Regulatory Burden

    Section 302 of the Riegle Community Development and Regulatory 
Improvement Act (12 U.S.C. 4802) provides that each Federal banking 
agency must consider the administrative burdens and benefits of any new 
regulations that impose additional requirements on insured depository 
institutions. Section 302 also requires that any regulations which 
impose additional reporting, disclosure, or other requirements on 
insured depository institutions shall take effect on the first day of a 
calendar quarter which begins on or after the date on which the 
regulations are published in final form. This requirement need not be 
observed, however, if a Federal statute requires that the regulation 
take effect on a different date from the one mandated by section 302. 
See section 302(b)(1)(C) (12 U.S.C. 4802(b)(1)(C)).
    Requiring the use of the standard form will be an additional 
requirement for depository institutions. Section 528 of the Reform Act 
provides, however, that the standard form be used and the agencies must 
implement this statutory requirement.
    Moreover, as noted previously, the new section 1365(f) of the 68 
Act, as added by section 528 of the Reform Act, provides that the 
regulations requiring the use of the standard form shall be effective 
upon the expiration of the 180-day period beginning on the date of the 
regulations' issuance. Since the 68 Act requires that the regulations 
requiring the use of the standard form take effect on a different date 
from the one mandated by section 302, the exception in section 302 is 
operative.
VI. Executive Order 12866

    The OCC and the OTS have determined that this rule is not a 
significant regulatory action as defined in Executive Order 12866.

VII. Unfunded Mandates Act of 1995

    The OCC and the OTS have determined that the requirements of this 
final rule will not result in expenditures by State, local, and tribal 
governments, or by the private sector, of more than $100 million in any 
one year. Accordingly, a budgetary impact statement is not required 
under section 202 of the Unfunded Mandates Act of 1995.

VIII. NCUA Executive Order 12612 Statement

    This rule, like the current part 760 it is replacing, will apply to 
all Federally insured credit unions. The NCUA Board, pursuant to 
Executive Order 12612, has determined, however, that this rule will not 
have a substantial direct effect on the states, on the relationship 
between the national government and the states, or on the distribution 
of power and responsibilities among various levels of government. 
Further, this rule will not preempt provisions of state law or 
regulations.

List of Subjects

12 CFR Part 22

    Flood insurance, Mortgages, National banks, Reporting and 
recordkeeping requirements.

12 CFR Part 208

    Accounting, Agriculture, Banks, banking, Confidential business 
information, Crime, Currency, Federal Reserve System, Flood insurance, 
Mortgages, Reporting and recordkeeping requirements.

12 CFR Part 339

    Flood insurance, Reporting and recordkeeping requirements.

12 CFR Part 563

    Accounting, Advertising, Crime, Currency, Flood insurance, 
Investments, Reporting and recordkeeping requirements, Savings 
associations, Securities, Surety bonds.

12 CFR Part 614

    Agriculture, Banks, banking, Flood insurance, Foreign trade, 
Reporting and recordkeeping requirements, Rural areas. 

[[Page 35288]]


12 CFR Part 760

    Credit unions, Mortgages, Flood insurance, Reporting and 
recordkeeping requirements.
Office of the Comptroller of the Currency

12 CFR CHAPTER I

Authority and Issuance

    For the reasons set forth in the joint preamble, part 22 of chapter 
I of title 12 of the Code of Federal Regulations is amended as set 
forth below:

PART 22--LOANS IN AREAS HAVING SPECIAL FLOOD HAZARDS

    1. The authority citation for part 22 is revised to read as 
follows:

    Authority: 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.

    2. A new Sec. 22.6 is added to read as follows:


Sec. 22.6  Required use of Standard Flood Hazard Determination Form.

    A bank shall use the standard flood hazard determination form 
developed by the Director of the Federal Emergency Management Agency 
(the FEMA) (as set forth in appendix A of 44 CFR part 65) when 
determining whether improved real estate or a mobile home offered as 
collateral security for a loan is located in an area identified by the 
Director of the FEMA as having special flood hazards and in which flood 
insurance has been made available under the National Flood Insurance 
Act of 1968 (12 U.S.C. 4001 et seq.). The standard flood hazard 
determination form may be used in a printed, computerized, or 
electronic manner.

    Dated: June 20, 1995.
Eugene A. Ludwig,
Comptroller of the Currency.

FEDERAL RESERVE SYSTEM

12 CFR CHAPTER II

    For the reasons set forth in the joint preamble, the Board amends 
12 CFR Part 208 as set forth below:

PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL 
RESERVE SYSTEM (REGULATION H)

    1. The authority citation for part 208 is revised to read as 
follows:

    Authority: 12 U.S.C. 36, 248(a), 248(c), 321-338a, 371d, 461, 
481-486, 601, 611, 1814, 1823(j), 1828(o), 1831o, 1831p-1, 3105, 
3310, 3331-3351, and 3906-3909; 15 U.S.C. 78b, 781(b), 781(g), 
781(j), 78o-4(c)(5), 78q, 78q-1, and 78w; 31 U.S.C. 5318; 42 U.S.C. 
4012a, 4104a, 4104b, 4106, and 4128.

    2. Section 208.8 is amended by adding a new paragraph (e)(4) to 
read as follows:


Sec. 208.8  Banking practices.

* * * * *
    (e) * * *
    (4) Required use of Standard Flood Hazard Determination Form. A 
state member bank shall use the standard flood hazard determination 
form developed by the Director of the Federal Emergency Management 
Agency (the FEMA) (as set forth in Appendix A of 44 CFR Part 65) when 
determining whether improved real estate or a mobile home offered as 
collateral security for a loan is located in an area identified by the 
Director of the FEMA as having special flood hazards and in which flood 
insurance has been made available under the National Flood Insurance 
Act of 1968. The standard flood hazard determination form may be used 
in a printed, computerized, or electronic manner.
* * * * *
    By order of the Board of Governors of the Federal Reserve 
System, June 20, 1995.
William W. Wiles,
Secretary of the Board.

Federal Deposit Insurance Corporation

12 CFR CHAPTER III

Authority and Issuance

    For the reasons set forth in the joint preamble, the Board of 
Directors of the FDIC amends Part 339 of Chapter III of title 12 of the 
Code of Federal Regulations as follows:

PART 339--LOANS IN AREAS HAVING SPECIAL FLOOD HAZARDS

    1. The authority citation for part 339 is revised to read as 
follows:

    Authority: 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.

    2. Section 339.7 is added to read as follows:


Sec. 339.7  Required use of Standard Flood Hazard Determination Form.

    A bank shall use the standard flood hazard determination form 
developed by the Director of the Federal Emergency Management Agency 
(the FEMA) (as set forth in Appendix A of 44 CFR Part 65) when 
determining whether improved real estate or a mobile home offered as 
collateral security for a loan (as that term is defined in 
Sec. 339.2(b)) is located in an area identified by the Director of the 
FEMA as having special flood hazards and in which flood insurance has 
been made available under the National Flood Insurance Act of 1968. The 
standard flood hazard determination form may be used in a printed, 
computerized, or electronic manner.

    By order of the Board of Directors.

    Dated at Washington, D.C., this 19th day of June, 1995.

Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
Office of Thrift Supervision

12 CFR CHAPTER V

Authority and Issuance

    Accordingly, for the reasons set forth in the joint preamble, the 
Office of Thrift Supervision hereby amends chapter V, title 12 of the 
Code of Federal Regulations, as set forth below:

SUBCHAPTER D--REGULATIONS APPLICABLE TO ALL SAVINGS ASSOCIATIONS

PART 563--OPERATIONS

    1. The authority citation for part 563 is revised to read as 
follows:


    Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468, 
1817, 1828, 3806; 42 U.S.C. 4012a, 4104a, 4104b, 4106, 4128.


    2. Section 563.48 is amended by adding a new paragraph (f) to read 
as follows:


Sec. 563.48  Flood disaster protection.

* * * * *
    (f) Required use of Standard Flood Hazard Determination Form. A 
savings association shall use the standard flood hazard determination 
form developed by the Director of the Federal Emergency Management 
Agency (the FEMA) (as set forth in Appendix A of 44 CFR Part 65) when 
determining whether improved real estate or a mobile home offered as 
collateral security for a loan is located in an area identified by the 
Director of the FEMA as having special flood hazards and in which flood 
insurance has been made available under the National Flood Insurance 
Act of 1968. The standard flood hazard determination form may be used 
in a printed, computerized, or electronic manner.


    Dated: June 16, 1995.

    By the Office of Thrift Supervision.
John F. Downey,
Director, Supervision.
Farm Credit Administration

12 CFR Chapter VI

Authority and Issuance

    For the reasons stated in the joint preamble, part 614 of chapter 
VI, title 12 of the Code of Federal Regulations is amended as follows: 

[[Page 35289]]


PART 614--LOAN POLICIES AND OPERATIONS

    1. The authority citation for part 614 is revised to read as 
follows:

    Authority: 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128; 1.3, 
1.5, 1.6, 1.7, 1.9, 1.10, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12, 2.13, 
2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28, 4.12, 4.12A, 4.13, 
4.13B, 4.14, 4.14A, 4.14C, 4.14D, 4.14E, 4.18, 4.19, 4.36, 4.37, 
5.9, 5.10, 5.17, 7.0, 7.2, 7.6, 7.7, 7.8, 7.12, 7.13, 8.0, 8.5 of 
the Farm Credit Act (12 U.S.C. 2011, 2013, 2014, 2015, 2017, 2018, 
2071, 2073, 2074, 2075, 2091, 2093, 2094, 2096, 2121, 2122, 2124, 
2128, 2129, 2131, 2141, 2149, 2183, 2184, 2199, 2201, 2202, 2202a, 
2202c, 2202d, 2202e, 2206, 2207, 2219a, 2219b, 2243, 2244, 2252, 
2279a, 2279a-2, 2279b, 2279b-1, 2279b-2, 2279f, 2279f-1, 2279aa, 
2279aa-5); sec. 413 of Pub. L. 100-233, 101 Stat. 1568, 1639.

    2. Part 614 is amended by adding a new subpart S to read as 
follows:

Subpart S--Flood Insurance Requirements

Sec.
614.4940  Required use of Standard Flood Hazard Determination Form

Subpart S--Flood Insurance Requirements


Sec. 614.4940  Required use of Standard Flood Hazard Determination 
Form.

    An institution of the Farm Credit System shall use the standard 
flood hazard determination form developed by the Director of the 
Federal Emergency Management Agency (the FEMA) (as set forth in 
Appendix A of 44 CFR part 65) when determining whether improved real 
estate or a mobile home offered as collateral security for a loan is 
located in an area identified by the Director of the FEMA as having 
special flood hazards and in which flood insurance has been made 
available under the National Flood Insurance Act of 1968. The standard 
flood hazard determination form may be used in a printed, computerized, 
or electronic manner.

    Dated: June 16, 1995.
Floyd Fithian,
Secretary, Farm Credit Administration Board.
NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Chapter VII

Authority and Issuance

    For the reasons set forth in the joint preamble, the NCUA amends 12 
CFR Part 760 as follows:

PART 760--FLOOD INSURANCE

    1. The authority citation for part 760 is revised to read as 
follows:


    Authority: 12 U.S.C. 1757, 1789; 42 U.S.C. 4012a, 4104a, 4104b, 
4106, and 4128.


    2. Section 760.12 is added to read as follows:


Sec. 760.12  Required use of Standard Flood Hazard Determination Form

    A credit union shall use the standard flood hazard determination 
form developed by the Director of the Federal Emergency Management 
Agency (the FEMA) (as set forth in Appendix A of 44 CFR Part 65) when 
determining whether improved real estate or a mobile home offered as 
collateral security for a loan is located in an area identified by the 
Director of the FEMA as having special flood hazards and in which flood 
insurance has been made available under the National Flood Insurance 
Act of 1968. The standard flood hazard determination form may be used 
in a printed, computerized, or electronic manner.


    By the National Credit Union Administration Board on June 26, 
1995.
Becky Baker,
Secretary of the Board.
[FR Doc. 95-16199 Filed 7-5-95; 8:45 am]
BILLING CODES 4810-33-P; 6210-01-P; 6714-01-P; 6720-01-P; 6705-01-P; 
7535-01-P