[Federal Register Volume 64, Number 241 (Thursday, December 16, 1999)]
[Rules and Regulations]
[Pages 70191-70193]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32657]


=======================================================================
-----------------------------------------------------------------------

FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Part 61

RIN 3067-AD05


National Flood Insurance Program (NFIP); Standard Flood Insurance 
Policy

AGENCY: Federal Emergency Management Agency (FEMA).

ACTION: Final rule.

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

SUMMARY: We (FEMA) are increasing the limit of liability under Coverage 
D--Increased Cost of Compliance of the Standard Flood Insurance Policy 
from $15,000 to $20,000. New information indicates an expected decrease 
in annual claims, and based on this decrease, we believe the limit of 
liability can be increased with no change in premium.

EFFECTIVE DATE: May 1, 2000.

FOR FURTHER INFORMATION CONTACT: Charles M. Plaxico, Jr., Federal 
Emergency Management Agency, Federal Insurance Administration, (202) 
646-3422, (facsimile) (202)646-4327, or (email) 
[email protected].

SUPPLEMENTARY INFORMATION: On February 25, 1997, we published in the 
Federal Register, 62 FR 8391, a final rule that adds Coverage D--
Increased Cost of Compliance (ICC) to the Standard Flood Insurance 
Policy. We set the limit of liability for this coverage at $15,000. We 
considered several issues in arriving at that figure.

    First, the pricing for this coverage has to be actuarially sound 
with premiums varying, to the extent possible, by risk. Second, 
Sec. 555 of the National Flood Insurance Reform Act of 1994, which

[[Page 70192]]

mandates ICC coverage, sets a cap of $75 that we may charge for this 
coverage. Third, our initial estimates were that the number of 
policyholders receiving benefits under ICC coverage would be between 
3400-3700 each year. Fourth, we considered the uncertainties associated 
with the introduction of the product, especially since we had had no 
direct experience with ICC coverage.
    In making initial estimates of ICC claims, we had access to our 
loss experience from 1978 through 1994. The latest experience period 
for estimating ICC claims runs through 1998. Based on our additional 
experience with flood losses--losses large enough to trigger community 
declarations of substantial damage--we have decreased the number of 
expected annual ICC claims to a range of 2700--2900. On this basis, we 
are confident that the limit of liability for ICC coverage can be 
increased from $15,000 to $20,000 (a 33% increase) with no change in 
premium. The number of ICC claims actually filed since the introduction 
of this coverage is small compared to the number that we expected based 
on our flood claims filed under building coverage. We intend to 
continue analyzing this discrepancy, make further adjustments in 
premium charges, coverage amounts, or both as warranted, and to 
continue our education efforts with policyholders and local officials 
to make sure that they adequately understand the coverage.

Administrative Procedure Act Determination

    We are publishing this final rule without opportunity for prior 
public comment under the Administrative Procedure Act, 5 U.S.C. 553. 
This final rule is a rule of agency procedure or practice that is 
excepted from the prior public comment requirements of Sec. 553(b). The 
rule makes nonsubstantive, nonsignificant changes to 44 CFR part 61 by 
conferring a benefit to flood insurance policyholders, increasing 
coverage for the increased cost of compliance without an increase in 
premium.

National Environmental Policy Act

    The requirements of 44 CFR Part 10, Environmental Consideration, 
categorically exclude this final rule. We have not prepared an 
environmental impact assessment.

Executive Order 12866, Regulatory Planning and Review

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

Paperwork Reduction Act

    The final rule is not subject to the provisions of the Paperwork 
Reduction Act of 1995.

Executive Order 13132, Federalism

    This rule involves no policies that have federalism implications 
under Executive Order 13132, Federalism, dated August 4, 1999. The rule 
simply increases coverage for the increased cost of compliance from 
$15,000 to $20,000 without an increase in premium. It involves no 
preemption of State law nor does it limit State policymaking 
discretion. In light of the purpose of the rule and the absence of 
federalism implications, we have not consulted with State and local 
officials during preparation of this rule.
    I certify that the requirements of Executive Order 13132 have been 
met in a meaningful and timely manner.

Executive Order 12778, Civil Justice Reform

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

Congressional Review of Agency Rulemaking

    We have sent this final rule 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 is an administrative action in support of 
normal day-to-day activities that increases a benefit to policyholders 
without increasing premiums. 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. 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, and (2) from the Paperwork Reduction 
Act. The 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 Part 61

    Flood insurance.

    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.

    2. The first sentence of the second paragraph of Coverage D--
Increased Cost of Compliance in Article 4 of Appendix A(1) to Part 61 
that begins ``The limit of liability * * *'' is revised to read as 
follows:

Appendix A(1) to Part 61

* * * * *

Article 4

* * * * *

Coverage D--Increased Cost of Compliance

* * * * *
    The limit of liability under this Coverage D (Increased Cost of 
Compliance) is $20,000. * * *
* * * * *
    2. The first sentence of the second paragraph of Coverage D--
Increased Cost of Compliance in Article 4 of Appendix A(2) to Part 61 
that begins ``The limit of liability * * *'' is revised to read as 
follows:

Appendix A(2) to Part 61

* * * * *

Article 4

* * * * *

Coverage D--Increased Cost of Compliance

* * * * *
    The limit of liability under this Coverage D (Increased Cost of 
Compliance) is $20,000. * * *
* * * * *
    3. The first sentence of the second paragraph of Coverage D--
Increased Cost of Compliance in Article 4 of Appendix A(3) to Part 61 
that begins ``The limit of liability * * *'' is revised to read as 
follows:

Appendix A(3)--to Part 61

* * * * *

Article 4

* * * * *

[[Page 70193]]

Coverage D--Increased Cost of Compliance

* * * * *
    The limit of liability under this Coverage D (Increased Cost of 
Compliance) is $20,000. * * *
* * * * *
(Catalog of Federal Domestic Assistance No. 83.100, ``Flood 
Insurance''; No. 83.516, ``Disaster Assistance'')

    Dated: December 13, 1999.
Jo Ann Howard,
Administrator,
Federal Insurance Administration.
[FR Doc. 99-32657 Filed 12-15-99; 8:45 am]
BILLING CODE 6718-03-P