[Federal Register: April 1, 2003 (Volume 68, Number 62)]
[Rules and Regulations]
[Page 15666-15669]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01ap03-7]
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DEPARTMENT OF HOMELAND SECURITY
Federal Emergency Management Agency
44 CFR Chapter I and Part 61
RIN 1660-AA25
National Flood Insurance Program (NFIP); Increased Rates for
Flood Coverage
AGENCY: Federal Emergency Managemnent Agency (FEMA), Emergency
Preparedness and Response Directorate, Homeland Security.
ACTION: Final rule.
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SUMMARY: We (the Mitigation Division of the Emergency Preparedness and
Response Directorate of DHS) are changing the way premiums are
calculated for policyholders who purchase flood insurance coverage
under the NFIP for ``Pre-FIRM'' buildings in Special Flood Hazard Areas
(SFHAs). (The term ``Pre-FIRM buildings'' means buildings whose
construction began on or before December 31, 1974, or before the
effective date of the community's Flood Insurance Rate Map (FIRM),
whichever date is later. Pre-FIRM buildings and their contents are
eligible for subsidized rates under the NFIP.)
These increased flood insurance rates will be implemented in
coordination with the elimination of the Expense Constant, a flat
charge that the policyholder previously paid to defray certain expenses
of the Federal Government related to flood insurance. As a result of
this change, the same amount of premium revenue will still be collected
to cover those expenses previously paid for by the Expense Constant;
however, policyholders will pay for those expenses through premiums
that vary by the amount of insurance that they purchase, instead of a
flat charge per policy. The end result will be revenue neutral. In
addition, we are revising the CFR chapter heading for our rules to
reflect the Homeland Security Act.
EFFECTIVE DATE: May 1, 2003, except for the revision of the heading of
44 CFR chapter I, which is effective March 1, 2003.
FOR FURTHER INFORMATION CONTACT: Thomas Hayes, DHS, Mitigation
Division, 500 C Street SW., Washington, DC 20472, 202-646-3419,
(facsimile) 202-646-7970, or (e-mail) Thomas.Hayes@fema.gov.
SUPPLEMENTARY INFORMATION:
Summary of Comments
On February 3, 2003, we published at 68 FR 5264 a proposed rule to
change the way premiums are calculated for policyholders who purchase
flood insurance coverage under the NFIP for ``Pre-FIRM'' buildings in
Special Flood Hazard Areas (SFHAs). (The term ``Pre-FIRM buildings''
means buildings whose construction began on or before December 31,
1974, or before the effective date of the community's Flood Insurance
Rate Map (FIRM), whichever date is later.)
During the comment period, we received three sets of comments. All
were in support of this change. These comments came from the
Association of State Floodplain Managers (ASFPM), the Florida Division
of Emergency Management, and an insurance company that participates in
the NFIP's Write Your Own program.
The following comment by the ASFPM is indicative of the other
responses as well:
We view this to be a positive effort by FIMA to encourage growth
in the Program:
[sbull] The change will be revenue neutral.
[sbull] It will remove a perceived barrier to the sale of flood
insurance--which may help the NFIP increase its policy base and
increase revenue.
[[Page 15667]]
[sbull] By making the NFIP ``more like other insurance industry
standards'' it may remove some resistance to write flood policies by
insurance agents.
Comparison of May 1, 2003 Rate Increases With Current Rates
The following chart compares the current rates we charge for Pre-
FIRM SFHA properties with the May 1, 2003 rates for Pre-FIRM, SFHA
properties. Also these rates apply only to the rates charged for the
``first layer'' of flood insurance coverage set by Congress in Section
1306 of the National Flood Insurance Act of 1968, as amended (Pub. L.
90-448):
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Current a zone \1\ May 1, 2003 a zone \1\ rates per year per $100
rates per year per $100 coverage on:
coverage on: ---------------------------------------------------
-------------------------- Structure
Type of structure ---------------------------------------
RCBAP \2\ Contents
Structure Contents -------------------------- All other
High rise Low rise
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1. Residential:
No Basement or Enclosure...... .68 .79 .85 .70 .76 .96
With Basement or Enclosure.... .73 .79 .90 .75 .81 .96
2. All other including hotels and
motels with normal occupancy of
less than 6 months duration:
No Basement or Enclosure...... .79 1.58 N/A N/A .83 1.62
With Basement or Enclosure.... .84 1.58 N/A N/A .88 1.62
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\1\ A zones are zones A1-A30, AE, AO, AH, and unnumbered A zones.
\2\ Residential Condominium Building Association Policies (RCBAP) are distinguished between High Rise (those
structures that have 3 or more floors and 5 or more units) and Low Rise (those structures that have either
less than 3 floors or less than 5 units).
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Current a zone \1\ May 1, 2003 a zone \1\ rates per year per $100
rates per year per $100 coverage on:
coverage on: ---------------------------------------------------
-------------------------- Structure
Type of structure ---------------------------------------
RCBAP \2\ Contents
Structure Contents -------------------------- All other
High rise Low rise
----------------------------------------------------------------------------------------------------------------
1. Residential:
No Basement or Enclosure...... .91 1.06 1.08 .93 .99 1.23
With Basement or Enclosure.... .98 1.06 1.15 1.00 1.06 1.23
2. All other including hotels and
motels with normal occupancy of
less than 6 months duration:
No Basement or Enclosure...... 1.06 2.10 N/A N/A 1.10 2.14
With Basement or Enclosure.... 1.12 2.10 N/A N/A 1.16 2.14
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\1\ V zones are zones V1-V30, VE, and unnumbered V zones.
\2\ Residential Condominium Building Association Policies (RCBAP) are distinguished between High Rise (those
structures that have 3 or more floors and 5 or more units) and Low Rise (those structures that have either
less than 3 floors or less than 5 units).
Prior to this change, as shown in the Current A Zone and Current V
Zone table, RCBAP policyholders were always charged the same building
rates as everyone else. In order to accomplish the elimination of the
Expense Constant in a revenue-neutral manner, it is now necessary to
vary the rates as shown in the accompanying tables.
National Environmental Policy Act (NEPA)
Pursuant to section 102(2) (c) of the National Environmental Policy
Act of 1969, 42 U.S.C. 4317 et seq., we conducted an environmental
assessment of this final rule. This assessment concludes that there
will be no significant impact on the human environment as a result of
the issuance of this final rule, and no Environmental Impact Statement
will be prepared. Copies of the environmental assessment and Finding of
No Significant Impact are on file for inspection through the Rules
Docket Clerk, DHS, room 840, 500 C St. SW., Washington, DC 20472.
Executive Order 12866, Regulatory Planning and Review
We have prepared and reviewed this rule under the provisions of
E.O. 12866, Regulatory Planning and Review. Under Executive Order
12866, 58 FR 51735, October 4, 1993, a significant regulatory action is
subject to OMB review and the requirements of the Executive Order. The
Executive Order defines ``significant regulatory action'' as one that
is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
(2) create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
For the reasons that follow we have concluded that the rule is
neither an economically significant nor a significant regulatory action
under the
[[Page 15668]]
Executive Order. The rule will be premium neutral for the National
Flood Insurance Fund. The adjustment in premiums rates will be offset
by the elimination of the Expense Constant. It will not have an annual
effect on the economy of $100 million or more or adversely affect in a
material way the economy, the insurance sector, competition, or other
sectors of the economy. It will create no serious inconsistency or
otherwise interfere with an action taken or planned by another agency.
It will not materially alter the budgetary impact of entitlements,
grants, user fees, or loan programs or the rights and obligations of
recipients thereof. Nor does it raise novel legal or policy issues
arising out of legal mandates, the President's priorities, or the
principles set forth in the Executive Order.
The Office of Management and Budget has not reviewed this rule
under the provisions of Executive Order 12866.
Paperwork Reduction Act
This rule does not contain a collection of information and is
therefore not subject to the provisions of the Paperwork Reduction Act.
Executive Order 13132, Federalism
Executive Order 13132 sets forth principles and criteria that
agencies must adhere to in formulating and implementing policies that
have federalism implications, that is, regulations that have
substantial direct effects on the States, or on the distribution of
power and responsibilities among the various levels of government.
Federal agencies must closely examine the statutory authority
supporting any action that would limit the policymaking discretion of
the States, and to the extent practicable, must consult with State and
local officials before implementing any such action.
We have reviewed this final rule under E.O.13132 and have
determined that the rule does not have federalism implications as
defined by the Executive Order. The rule will adjust the premiums for
buildings in Pre-FIRM Special Flood Hazard Areas. The rule in no way
that we foresee affects the distribution of power and responsibilities
among the various levels of government or limits the policymaking
discretion of the States.
List of Subjects in 44 CFR Part 61
Flood insurance.
0
Accordingly, we amend 44 CFR chapter I as follows:
Chapter I--Federal Emergency Management Agency, Department of Homeland
Security
0
1. Revise the heading of 44 CFR chapter I to read as set forth above.
PART 61--INSURANCE COVERAGE AND RATES
0
2. 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.
0
3. Revise Sec. 61.9 (a) to read as follows:
Sec. 61.9 Establishment of chargeable rates.
(a) Under section 1308 of the Act, we are establishing annual
chargeable rates for each $100 of flood insurance coverage as follows
for Pre-FIRM, A zone properties, Pre-FIRM, V-zone properties, and
emergency program properties.
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A zone \1\ rates per year per $100 coverage on: V zone \2\ rates per year per $100 coverage on:
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structure Structure
Type of structure --------------------------------------- ---------------------------------------
RCBAP \3\ Contents RCBAP \3\ Contents
-------------------------- All other -------------------------- All other
High rise Low rise High rise Low rise
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1. Residential:
No Basement or Enclosure.................... .85 .70 .76 .96 1.08 .93 .99 1.23
With Basement or Enclosure.................. .90 .75 .81 .96 1.15 1.00 1.06 1.23
2. All other including hotels and motels with
normal occupancy of less than 6 months
duration:
No Basement or Enclosure.................... N/A N/A .83 1.62 N/A N/A 1.10 2.14
With Basement or Enclosure.................. N/A N/A .88 1.62 N/A N/A 1.16 2.14
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\1\ 1 A zones are zones A1-A30, AE, AO, AH, and unnumbered A zones.
\2\ V zones are zones V1-V30, VE, and unnumbered V zones.
\3\ Residential Condominium Building Association Policies (RCBAP) are distinguished between High Rise (those structures that have 3 or more floors and 5
or more units) and Low Rise (those structures that have either less than 3 floors or less than 5 units).
[[Page 15669]]
* * * * *
Dated: March 26, 2003.
Michael D. Brown,
Acting Under Secretary, Emergency Preparedness & Response.
[FR Doc. 03-7685 Filed 3-31-03; 8:45 am]
BILLING CODE 6718-03-P