[Federal Register Volume 85, Number 139 (Monday, July 20, 2020)]
[Rules and Regulations]
[Pages 43946-43986]
[FR Doc No: 2020-09260]

Vol. 85

Monday,

No. 139

July 20, 2020

Part II

Department of Homeland Security

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Federal Emergency Management Agency

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44 CFR Parts 59, 61, and 62

National Flood Insurance Program: Conforming Changes To Reflect the
Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) and the
Homeowners Flood Insurance Affordability Act of 2014 (HFIAA), and
Additional Clarifications for Plain Language; Final Rule

Federal Register / Vol. 85, No. 139 / Monday, July 20, 2020 / Rules
and Regulations

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

44 CFR Parts 59, 61, and 62

[Docket ID FEMA-2018-0026]
RIN 1660-AA95

National Flood Insurance Program: Conforming Changes To Reflect
the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) and the
Homeowners Flood Insurance Affordability Act of 2014 (HFIAA), and
Additional Clarifications for Plain Language

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Final rule.

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SUMMARY: This final rule revises the National Flood Insurance Program
(NFIP) regulations to codify certain provisions of the Biggert-Waters
Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance
Affordability Act of 2014, and to clarify certain existing NFIP rules
relating to NFIP operations and the Standard Flood Insurance Policy.

DATES: This rule is effective on October 1, 2021.

ADDRESSES: The docket for this rulemaking is available for inspection
using the Federal eRulemaking Portal at http://www.regulations.gov and
can be viewed by following that website's instructions.

FOR FURTHER INFORMATION CONTACT: Kelly Bronowicz, Director,
Policyholder Services Division, Federal Insurance and Mitigation
Administration, Federal Emergency Management Agency, 400 C Street SW,
Washington, DC 20472,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background and Discussion of the Rule

    On July 16, 2018, FEMA published a Notice of Proposed Rulemaking
(NPRM) (83 FR 32956) proposing to make several non-substantive changes
to the NFIP regulations to improve their readability, uniformity, and
clarity. In addition, FEMA proposed to codify certain requirements of
the Biggert-Waters Flood Insurance Reform Act of 2012 (Pub. L. 112-141,
126 Stat. 916) (BW-12) and the Homeowner Flood Insurance Affordability
Act of 2014 (Pub. L. 113-89, 128 Stat. 1020) (HFIAA).
    The NPRM proposed to codify the provisions of BW-12 that require
FEMA to (1) increase the maximum coverage amount for multi-family
properties to the same amount as that allowed for commercial
properties; (2) establish a minimum deductible amount for NFIP polices;
(3) stop denying payment to policyholders for damage or loss to a
condominium unit under the Dwelling Form based solely on the fact that
the condominium association has inadequate flood insurance coverage on
the entire condominium; and (4) review, among other things, the
processes and procedures for making flood in progress determinations.
The NPRM also proposed to codify HFIAA's requirement that FEMA offer a
high deductible option of $10,000.
    The NPRM solicited public comment on these proposed changes. FEMA
received three comments related to the rulemaking and five unrelated
comments that were outside the scope of the rulemaking. FEMA does not
consider the five comments unrelated to this rulemaking in this
preamble. In this final rule, FEMA adopts the changes it proposed in
the NPRM, with some minor revisions in consideration of the related
comments and corrections of typographical errors. FEMA describes these
changes below.

II. Summary and Discussion of Public Comments

    Of the three comments germane to this rulemaking, one anonymous
commenter [FEMA-2018-0026-0005] commented on the need for more dams,
the second, from the Association of State Floodplain Managers (ASFPM)
[FEMA-2018-0026-0004], commented on the inclusion of spouses on the
General Property Form of the Standard Flood Insurance Form (SFIP) and
identified a typographical error, and the third, a member of the public
[FEMA-2018-0026-0003], suggested that FEMA should modify the
Residential Condominium Building Association Policy (RCBAP) to better
take into account certain State laws concerning the maintenance and
repair of condominium buildings and the units therein.

A. Dams

    The anonymous commenter [FEMA-2018-0026-0005] suggested that FEMA
``build more dams to hold back the waters from flooding.'' FEMA is
committed to building a culture of preparedness by, in part,
incentivizing investments that reduce risk--including pre-disaster
mitigation--and reduce disaster costs at all levels.\1\ This includes
encouraging the investment in infrastructure that reduces future
disaster costs, such as dams and levees. However, this comment suggests
actions beyond the scope of this rulemaking, which focuses on making
conforming and clarifying changes to the National Flood Insurance
Program's regulations and policy forms. For this reason, FEMA declines
to make changes to this rulemaking in response to this comment.
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    \1\ Federal Emergency Management Agency, 2018-2022 Strategic
Plan, https://www.fema.gov/media-library-data/1533052524696-b5137201a4614ade5e0129ef01cbf661/strat_plan.pdf.
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B. Spouse as Named Insured in General Property Form

    The Association of State Floodplain Managers (ASFPM) [FEMA-2018-
0026-0004] noted that it supports FEMA's effort to revise the NFIP's
regulations to clarify rules relating to the NFIP's operation and align
them with BW-12 and HFIAA. ASFPM disagreed, however, with FEMA's
proposal to add the insured's spouse as a named insured for both the
Dwelling Form and the General Property Form of the SFIP. While ASFPM
understands that a homeowners policy may typically include the
insured's spouse as a named insured, it is not included in a commercial
policy. ASFPM spoke with insurance specialists who confirmed that there
may be a good chance that the spouse is not part of the commercial
venture and has no interest in the business and therefore, should not
be automatically included in the General Property Form. ASFPM therefore
recommended removing the spouse as a named insured in the General
Property Form.
    FEMA did not intend to modify this provision in the NPRM and agrees
with ASFPM's comments that the spouse of a named insured should not
automatically be included as an insured in the General Property Form of
the SFIP. The current General Property Form of the SFIP does not
automatically include the spouse of a named insured as an insured under
the policy. See 44 CFR part 61, App. A(2), II.A. Accordingly, this
final rule will not modify the provision from the status quo. FEMA
thanks ASFPM for identifying this inadvertent proposed change.

C. Replacement of ``Covered'' With ``Insured''

    ASFPM [FEMA-2018-0026-0004] also noted that while it has no issues
with FEMA's proposal to replace the word ``covered'' with the word
``insured'' in the SFIP, the NPRM did not propose doing so throughout
the

SFIP, including the title of Section IV, ``Property Not Covered.''
ASFPM recommended that FEMA review the different SFIP forms and ensure
they are consistent with the use of ``insured.''
    FEMA proposed to replace the word ``covered'' with the word
``insured'' in the SFIP because ``covered'' is a generic and undefined
term that does not conform to common industry or Agency usage. FEMA
agrees with ASFPM's comment and has replaced the word ``covered'' with
``insured'' in all instances where appropriate throughout the three
SFIP forms.

D. Residential Condominium Building Association Policy (RCBAP)

    A member of the public [FEMA-2018-0026-0003] suggested several
modifications to the Residential Condominium Building Association
Policy (RCBAP). The RCBAP insures residential condominium association
buildings and offers building coverage up to $250,000 multiplied by the
number of units and contents coverage up to $100,000 per building.
Under existing NFIP regulations, the RCBAP acts as primary coverage for
an entire condominium building, including portions of a condominium
building which an individual unit owner is responsible for maintaining,
such as interior walls and cabinetry.\2\ Individual unit owners may
choose to purchase a Dwelling Form policy that provides excess building
coverage beyond that offered by an RCBAP, subject to statutory coverage
limits. The requirement that the RCBAP act as primary coverage for all
losses to condominium buildings and the units therein simplifies the
claims process by allowing the NFIP to pay claims without having to
divide payments between unit owners and condominium associations based
on a wide array of condominium building bylaws and relevant state laws.
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    \2\ See SFIP Dwelling Form, Art. VII.C.2.
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    The commenter suggested that FEMA modify the RCBAP to better take
into account certain state laws concerning the maintenance and repair
of condominium buildings and the units therein. The commenter explained
that many state laws divide responsibility for maintaining and
repairing condominium buildings between a condominium association and
individual unit owners. According to the commenter, the RCBAP's present
design causes FEMA to deem the excess building coverage of an
individual unit owner's Dwelling Form policy duplicative, excessive,
and unable to provide coverage that an individual policyholder could
use upon suffering a loss. The commenter stated that treating the
Dwelling Form's building coverage as excess to the RCBAP causes delays
in insurance payments reaching individual unit owners, which in turn
delays repairs, ultimately leading to litigation between condominium
owners and their associations. The commenter is concerned that as a
result, informed individual owners will cease purchasing building
coverage under a Dwelling Form policy if they are aware that they will
only receive payment of loss if the loss exceeds coverage under the
RCBAP.
    In addition, the commenter also stated that FEMA's treatment of a
unit owner's Dwelling Form policy as excess to a condominium
association's RCBAP violates section 1312(c) of the National Flood
Insurance Act of 1968 (42 U.S.C. 4019(c)) (added by section 100214 of
BW-12), which generally prohibits FEMA from denying or limiting
coverage under an individual condominium unit owner's policy based
solely or in part on the flood insurance coverage of the condominium
association on the overall property.
    The commenter also suggested defining the term ``common elements''
or making clear to policyholders that the applicable state definition
will be used in interpreting the policy, likely for the purposes of
interpreting Dwelling Form SFIP, Art. III.C.3.a. Moreover, the
commenter recommended expanding the condominium loss assessment
coverage provisions in III.C.3 of the Dwelling Form to clearly state
what flood damaged items, if any, are excluded from coverage under the
condominium loss assessment provision.
    In sum, the commenter proposed that FEMA redesign the RCBAP so that
it conforms with the laws in most states regarding condominiums (e.g.,
individuals insure the inside of their units, and the associations
insure what they are responsible for under state law to repair). The
commenter believes that this would (1) encourage individual unit owners
to purchase building coverage, and (2) protect financial institutions,
as a unit owner's financial institution is usually only named on the
individual's Dwelling Form policy but not the RCBAP.
    FEMA appreciates the commenter's suggestions on substantive changes
FEMA could make to the SFIP to increase its marketability. As part of
its 2018-2022 Strategic Plan, FEMA is committed to building a culture
of preparedness by, in part, taking steps to double the number of
properties covered by flood insurance through the private sector or the
government. FEMA believes that designing flood insurance products that
meet consumer needs will help achieve this goal. However, FEMA does not
intend to make such substantive changes to the SFIP in this rulemaking.
FEMA's intent in this rule is to clarify the SFIP to improve overall
readability as well as conform it to BW-12 and HFIAA. FEMA thanks the
commenter for this comment and will take it under advisement if FEMA
considers substantive changes to the SFIP in the future.
    FEMA disagrees with the commenter's view that making coverage under
a unit owner's Dwelling Form policy excess to the condominium
association's RCBAP violates 42 U.S.C. 4019(c). Condominium
associations commonly charge individual unit owners loss assessments
when the association's insurance coverage is insufficient to cover
damage after a flood. When a Dwelling Form policy insures a condominium
unit, the policy provides coverage for loss assessments charged to the
policyholder by their condominium association for covered flood damage.
See Dwelling Form SFIP, Art. III.C.3.a. Prior to the enactment of BW-
12, the policy excluded coverage for loss assessments if the reason for
the assessment is due to application of the RCBAP's coinsurance penalty
provision. See Dwelling Form SFIP, Art. III.C.3.b.4. As a result, FEMA
would deny coverage for a portion of flood damage under both the RCBAP
and the Dwelling Form of the SFIP.
    Section 100214 of BW-12 now prohibits FEMA from denying or limiting
coverage under an individual condominium unit owner's policy based
solely or in part on the flood insurance coverage of the condominium
association on the overall property, including situations where the
condominium association did not maintain a minimum amount of coverage
through an RCBAP. See 42 U.S.C. 4019(c). As a result, FEMA no longer
denies coverage for a loss assessment under the Dwelling Form SFIP that
results from the application of the RCBAP's coinsurance penalty, and
this rulemaking removes the contrary provision. See Dwelling Form SFIP,
Art. III.C.3.b.4.
    Contrary to the commentor's assertion, the current structure of the
RCBAP acting as primary coverage for a condominium building and the
Dwelling Form acting as excess coverage does not violate 42 U.S.C.
4019(c). The Dwelling Form's excess coverage provision (VII.C.2) does
not result in the denial of otherwise covered damage. Rather, it merely
apportions the coverage between the Dwelling Form and the RCBAP.
Ultimately, the flood

damage is still covered, though the payment may go to the condominium
association rather than directly to the unit owner.
    Additionally, interpreting 42 U.S.C. 4019(c) to prohibit treating
the Dwelling Form as excess coverage to the RCBAP coverage would be
contrary to FEMA's statutory authority, fundamental tenets of insurance
law, and Congressional intent. If FEMA were not able to treat Dwelling
Form coverage as excess to RCBAP coverage, Dwelling Form policyholders
could be entitled to receive payments for damage that FEMA would also
be required to pay for under an RCBAP. Congress has not given FEMA
authority to ``double pay'' for the same damage.\3\ Further, such
double payments would also be contrary to fundamental principles of
insurance law.\4\ Finally, Congress' intent in enacting 42 U.S.C.
4019(c) was to ensure Dwelling Form policyholders can still receive
payments where RCBAP coverage is inadequate; it was not intended to
require FEMA pay for the same damage under two separate policies.\5\
Treating the Dwelling Form coverage as excess to the RCBAP coverage
comports with this purpose.
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    \3\ Congress has only authorized FEMA to sell ``insurance
against loss resulting from physical damage to or loss of real
property or personal property.'' 42 U.S.C. 4011(a).
    \4\ For instance, one such principle is that of indemnity, which
requires that ``the value of the benefit paid the insured will not
exceed the amount of the loss.'' 1 New Appleman on Insurance Law
Library Edition Sec.  1.05 (2019). (This principle is essential for
mitigating the moral hazard that would result from policyholders
profiting from insured losses). And ``Congress did not intend to
abrogate standard insurance law principles'' when it created the
National Flood Insurance Program. Leland v. Fed. Ins. Adm'r, 934
F.2d 524, 530 (4th Cir. 1991) (quoting Drewett v. Aetna Cas. & Sur.
Co., 539 F.2d 496, 498 (5th Cir.1976)).
    \5\ In December 2011, the Senate Banking Committee explained the
intent behind section 116 of the Flood Insurance Reform and
Modernization Act of 2011 (2011 S. 1940), which eventually became
law as Section 100214 of BW-12. The Committee explained that the
provision ``[c]larifies that condominium owners with flood insurance
policies should receive claims payments regardless of the adequacy
of flood insurance coverage of the condominium association and other
condominium owners.'' See Senate Report 112-98, p. 8.
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    FEMA appreciates the commenter's suggestions to clarify parts of
the Dwelling Form's coverage for condominium loss assessments. However,
FEMA does not agree with the commenter's suggestion of defining
``common elements'' based on applicable state laws. The NFIP is a
national program that is best implemented through uniform guidance
irrespective of various state laws. Defining ``common elements'' based
on state law, rather than a uniform standard, would increase
policyholder confusion and complicate claims adjusting processes.
    FEMA also does not agree that it is necessary to list in the SFIP
items excluded from coverage of condominium loss assessments. FEMA has
already provided guidance in this respect in the NFIP Claims Manual.\6\
On page 54, the Manual explains ``[The Dwelling Form's coverage of
condominium loss assessments] does not include an assessment from the
Condominium Association for property not covered by the SFIP, such as
the cleanup of debris, sand, landscape lighting, repairs to parking
lots, decks, sidewalks, pools, etc.'' It is FEMA's position that this
guidance states with sufficient clarity what flood damaged items are
excluded from coverage under the condominium loss assessment provision.
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    \6\ https://www.fema.gov/media-library-data/1559248107320-0943773d439f0ea73003ce1adcf48be7/NFIP_Claims_Manual.pdf.
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    FEMA also wishes to point out that Coverage B (Personal Property)
in the Dwelling Form of the SFIP will continue to include coverage for
``interior walls, floor, and ceiling'' not otherwise covered by an
RCBAP policy. This coverage is limited to no more than 10 percent of
the contents coverage limit chosen by the insured. This allows an
individual unit owner to purchase his or her own policy that provides
coverage beyond that offered by the RCBAP.

III. Summary of Other Changes

    The final rule also includes corrections of typographical errors
and other non-substantive stylistic changes from the NPRM. For
instance, FEMA corrects the capitalization of some section headings to
ensure consistency. FEMA also removed an inadvertent inclusion of
``initial installment payment'' in the revised 44 CFR 61.11(c) and
added an inadvertently-removed unnumbered paragraph in the revised
RCBAP section III.C.2.a (stating ``[t]his coverage does not increase
the Coverage A or Coverage B limit of liability.''). FEMA also
hyphenated the usage of ``single-family'' and ``two-to-four'' through
the rule to conform to current NFIP styles. FEMA also updated cross-
references to the Dwelling Form in 44 CFR 61.17(g).
    Last, in the Maximum Amounts of Coverage Table at 44 CFR 61.6(a),
FEMA replaced the term ``Condominium Building'' with ``Residential
Condominium Building'' to make clear that the particular coverage limit
is limited to condominium buildings used for residential purposes,
rather than non-residential condominium buildings. This change reflects
current practice and is for clarification purposes only.

IV. Regulatory Analysis

A. Executive Orders 12866, ``Regulatory Planning and Review'', 13563,
``Improving Regulation and Regulatory Review'', and 13771, ``Reducing
Regulation and Controlling Regulatory Costs''

    Executive Orders 13563 (``Improving Regulation and Regulatory
Review'') and 12866 (``Regulatory Planning and Review'') direct
agencies to assess the costs and benefits of available regulatory
alternatives and, if regulation is necessary, to select regulatory
approaches that maximize net benefits (including potential economic,
environmental, public health and safety effects, distributive impacts,
and equity). Executive Order 13563 emphasizes the importance of
quantifying both costs and benefits, of reducing costs, of harmonizing
rules, and of promoting flexibility. Executive Order 13771 (``Reducing
Regulation and Controlling Regulatory Costs'') directs agencies to
reduce regulation and control regulatory costs and provides that ``for
every one new regulation issued, at least two prior regulations be
identified for elimination, and that the cost of planned regulations be
prudently managed and controlled through a budgeting process.''
    The Office of Management and Budget (OMB) has not designated this
rule a ``significant regulatory action'' under section 3(f) of
Executive Order 12866. Accordingly, OMB has not reviewed it. As this
rule is not a significant regulatory action, this rule is exempt from
the requirements of Executive Order 13771. See OMB's Memorandum
``Guidance Implementing Executive Order 13771, Titled `Reducing
Regulation and Controlling Regulatory Costs' '' (April 5, 2017).
    In this rule FEMA makes several nonsubstantive changes to the
National Flood Insurance Program (NFIP) regulations at 44 CFR parts 59,
61, and 62, as well as the Appendices to Part 61. FEMA is codifying
certain provisions of the Biggert Waters Flood Insurance Reform Act of
2012 (BW-12) and the Homeowner Flood Insurance Affordability Act of
2014 (HFIAA) that it has already implemented in its Flood Insurance
Manual and other related guidance documents. FEMA is also revising
certain provisions of the NFIP regulations relating to NFIP operations
and the Standard Flood Insurance Policy to consolidate and update the

regulatory text and standardize key terminology.
    There are 34 regulatory changes in this rule (itemized in Table 1).
The majority of these changes are nonsubstantive clarifications. The
remaining changes codify an existing practice, policy, or process.
    Pursuant to OMB Circular A-4, FEMA assesses the impacts of this
rule against a no-action baseline and a pre-statutory baseline. With
the no-action baseline, FEMA assesses what the world would be like
absent the final rule. With the pre-statutory baseline, FEMA assesses
what the world would be like absent the relevant statute(s) (in this
case, BW-12 and HFIAA). With this approach, FEMA considers the full
impacts of the rule.
    Under a no-action baseline, this rule has no quantifiable
transfers, costs, or benefits. The rule makes non-substantive
improvements to the language and organization of the NFIP regulations
through clarifications and codifications, which do not result in any
quantifiable transfers, costs, or benefits. The rule also codifies
certain provisions of BW-12 and HFIAA that FEMA has already implemented
via the Flood Insurance Manual and other related guidance documents,
which results in no quantifiable transfers or benefits. WYO (Write Your
Own) companies will, however, incur opportunity costs as they spend
time becoming familiar with the rule's changes. Pursuant to the final
rule, FEMA will no longer require individual waivers for condominium
loss assessment restrictions; this results in cost savings.
    The analysis below utilizes a pre-statutory baseline of 2012. The
summary of changes table (Table 1) lists all changes the rule makes to
FEMA's current regulations, a description of each change, and their
impact.

                                                             (a) Table 1--Summary of Changes
                                                                [Pre-statutory baseline]
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                                                                                Mandatory or discretionary
 Current section No./ subject matter                          Rule change                                     action                      Impact
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                                                     Non-substantive Clarifications & Consolidations
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1. Sec.   59 Definitions............  FEMA will add and revise definitions to support             Discretionary................  No change in compliance
                                       clarifications and codifications described below. This is                                  burden.
                                       a non-substantive change that clarifies existing
                                       definitions and does not alter the administration of the
                                       program.
2. Sec.   61.1 Purpose of part......  FEMA will remove irrelevant second sentence that does not   Discretionary................  No change in compliance
                                       relate to the substantive content of part 61. This is a                                    burden.
                                       non-substantive change that does not alter the
                                       administration of the program but rather provides greater
                                       clarity for the reader.
3. Sec.   61.3 Coverage and benefits  FEMA will clarify language to provide a more complete       Discretionary................  No change in compliance
 provided under the SFIP.              statement of coverage and benefits provided by the SFIP.                                   burden.
                                       The coverage and benefits provided under the SFIP are
                                       already stated in regulations; this is just a
                                       consolidated, unified statement of coverage and benefits
                                       under the SFIP. This is a non-substantive change that
                                       does not alter the administration of the program but
                                       rather provides greater clarity for the reader.
4. Sec.   61.5 Deductibles..........  An application of BW-12 section 100210 and HFIAA section    Mandatory....................  No change in compliance
                                       12, that will clarify existing policy/practice by moving                                   burden.
                                       content of 61.5 to new unified cancellation/nullification
                                       section in 44 CFR 62.5 (discussed below). FEMA also will
                                       replace the current deductible tables with provisions
                                       describing the minimum deductibles required by BW-12
                                       section 100210 and the $10,000 deductible option required
                                       by HFIAA section 12. This is a non-substantive change
                                       because FEMA has always had this authority and has always
                                       made these deductible options available to policyholders
                                       despite not being explicitly provided for in the CFR.
5. Sec.   61.6 Maximum amounts of     FEMA will clarify the maximum coverage limit tables in      Discretionary................  No change in compliance
 coverage available.                   section 61.6 with non-substantive changes to improve                                       burden.
                                       readability and conformance with standard program
                                       terminology and terminology introduced by BW-12. This is
                                       a non-substantive change that does not alter the
                                       administration of the program but rather provides greater
                                       clarity for the reader.
6. Sec.   61.10 Requirements for      FEMA will clarify/consolidate existing regulation           Discretionary................  No change in compliance
 Issuance or Renewal of Flood          language. This new provision will clarify that no flood                                    burden.
 Insurance Coverage.                   insurance coverage will be issued unless there is (a)
                                       receipt of full amount due and (b) submission of a
                                       complete application with all the required rating
                                       information. Although this has always been the case, and
                                       these concepts are covered in sections 61.5 and 61.11,
                                       FEMA believes that increased clarity is needed by adding
                                       a consolidated statement in the regulations. This is a
                                       non-substantive change that does not alter the
                                       administration of the program but rather provides greater
                                       clarity for the reader.
7. Sec.   61.13 Standard Flood        This provision will clarify that SFIP is authorized only    Discretionary................  No change in compliance
 Insurance Policy.                     under terms and conditions established by Act,                                             burden.
                                       regulations, SFIP, and Administrator interpretations.
                                       FEMA also will clarify that the agent acts only for
                                       policyholder and that the risk of loss is borne by the
                                       National Flood Insurance Fund, not the WYO company. This
                                       does not represent a substantive change in policy or
                                       terms and conditions of the SFIP, but instead will make
                                       terms clearer.

8. Sec.   62.5 Policy Nullification   FEMA will make changes that will clarify and consolidate    Discretionary................  No change in compliance
 and Cancellation.                     the existing reasons for which a policy may be cancelled                                   burden.
                                       or nullified. The current reasons for which a policy may
                                       be cancelled or nullified are spread throughout the
                                       regulations and FEMA's interpretations of those
                                       regulations in the Flood Insurance Manual. This will
                                       consolidate those reasons into one section for greater
                                       clarity and transparency to the public. This is a non-
                                       substantive change that does not alter the administration
                                       of the program but rather provides greater clarity for
                                       the reader.
9. Sec.   62.6 Broker and Agents for  This provision will clarify FEMA's existing policy by       Discretionary................  No change in compliance
 Servicing Agent.                      adding it to regulation that a broker or agent selling                                     burden.
                                       NFIP policies must be licensed in the state in which the
                                       property is located. This is a non-substantive change
                                       that does not alter the administration of the program but
                                       rather provides greater clarity for the reader.
10. SFIP Article I..................  FEMA will change SFIP Article I to clarify the types of     Discretionary................  No change in compliance
                                       property insured by the SFIP. Clarifications are about                                     burden.
                                       coverage limits and multiple policies covering one
                                       building. This is a non-substantive change that does not
                                       alter the administration of the program but rather
                                       provides greater clarity for the reader.
11. SFIP Article II--Definitions....  FEMA will revise and add some definitions for clarity. In   Discretionary................  No change in compliance
                                       particular, the changes will clarify that the named                                        burden.
                                       insured must also include the building owner if building
                                       coverage is purchased. This is a non-substantive change
                                       that does not alter the administration of the program but
                                       rather provides greater clarity for the reader.
12. SFIP Article III................  FEMA will clarify that references to insured property do    Discretionary................  No change in compliance
                                       not extend coverage to any type or item of property not                                    burden.
                                       otherwise insured in accordance with the terms and
                                       conditions of SFIP. This is a non-substantive change that
                                       does not alter the administration of the program but
                                       rather provides greater clarity for the reader.
13. SFIP Article III.A..............  FEMA is making minor non-substantive changes to Article     Discretionary................  No change in compliance
                                       III.A.5.b.2 to improve the grammar of the section; revise                                  burden.
                                       Article III.A.8 to remove the phrase ``in a building
                                       enclosure.'' This is a non-substantive change that does
                                       not alter the administration of the program but rather
                                       provides greater clarity for the reader.
14. SFIP Article III.B..............  FEMA will revise the numbering in this section to improve   Discretionary................  No change in compliance
                                       readability and organization; revise Article III.B.3 by                                    burden.
                                       removing the phrase ``in a building enclosure.'' This is
                                       a non-substantive change that does not alter the
                                       administration of the program but rather provides greater
                                       clarity for the reader.
15. SFIP Article III.D..............  FEMA will revise the language in this section so that the   Discretionary................  No change in compliance
                                       word ``structure'' is replaced by the word ``building''                                    burden.
                                       throughout the section except at III.D.5.c. The reason
                                       for this change is the NFIP insures SFIP defined
                                       ``buildings,'' not any structure that does not meet the
                                       definition of ``building'' as defined in the SFIP. FEMA
                                       also will improve the language in III.D.3.d and III.D.3.e
                                       by replacing the phrase ``this coverage'' with the phrase
                                       ``Coverage D'' to clarify that the coverage referred to
                                       in these provisions is Coverage D. This is a non-
                                       substantive change that does not alter the administration
                                       of the program but rather provides greater clarity for
                                       the reader.
16. SFIP Article V.B................  FEMA is making a non-substantive, clarifying adjustment to  Discretionary................  No change in compliance
                                       the Flood in Progress Exclusion at SFIP Art. V.B to align                                  burden.
                                       with reports required by BW-12 section 100227. This
                                       change does not impact the application of the exclusion,
                                       but will help support more consistent reading of the
                                       provison.
17. SFIP Article VII.B..............  FEMA will move the provision on concealment of fraud and    Discretionary................  No change in compliance
                                       policy voidance for consolidation into unified section on                                  burden.
                                       policy cancellations and nullifications (discussed
                                       below). This is a non-substantive change that does not
                                       alter the administration of the program but rather
                                       provides greater clarity for the reader.
18. SFIP Article VII.E..............  FEMA will remove Article VII.E, Cancellation of the Policy  Discretionary................  No change in compliance
                                       by You, and incorporate the language into a new                                            burden.
                                       consolidated section on policy nullifications,
                                       cancellations, and non-renewals. This is a non-
                                       substantive change that does not alter the administration
                                       of the program but rather provides greater clarity for
                                       the reader.

19. SFIP Article VII.F..............  FEMA will remove Article VII.F, Non-Renewal of the Policy   Discretionary................  No change in compliance
                                       by Us, and incorporate the language into a new Article                                     burden.
                                       VIII discussing policy nullifications, cancellations, and
                                       non-renewals. This is a non-substantive change that does
                                       not alter the administration of the program but rather
                                       provides greater clarity for the reader.
20. SFIP Article VII.G..............  This provision will revise the reformation section for      Discretionary................  No change in compliance
                                       clarity/readability. This is a non-substantive change                                      burden.
                                       that does not alter the administration of the program but
                                       rather provides greater clarity for the reader.
21. SFIP Article VII.U..............  FEMA will move the provision on duplicate policies for      Discretionary................  No change in compliance
                                       consolidation into unified section on policy                                               burden.
                                       cancellations and nullifications (discussed below). This
                                       is a non-substantive change that does not alter the
                                       administration of the program but rather provides greater
                                       clarity for the reader.
22. SFIP Article VII.V..............  FEMA will revise Article VII.V.1.a.1 of the current policy  Discretionary................  No change in compliance
                                       to remove all the language after ``It is your principal                                    burden.
                                       residence.'' The reason for this change is that this
                                       language, which is essentially a definition of the term
                                       ``principal residence,'' has been incorporated into the
                                       new definition of ``principal residence'' being added to
                                       Definitions section in Article II. This is a non-
                                       substantive change that does not alter the administration
                                       of the program but rather provides greater clarity for
                                       the reader.
23. SFIP Article VIII...............  FEMA will clarify the existing reasons for which a policy   Discretionary................  No change in compliance
                                       may be cancelled, nullified, or not renewed. This will                                     burden.
                                       mirror similar section being established at 44 CFR 62.5
                                       (discussed above). This is a non-substantive change that
                                       does not alter the administration of the program but
                                       rather provides greater clarity for the reader.
24. SFIP Article IX.................  FEMA will clarify that the SFIP and all disputes arising    Discretionary................  No change in compliance
                                       from the insurer's policy issuance, policy                                                 burden.
                                       administration, or the handling of any claim under the
                                       SFIP are governed by the National Flood Insurance Act and
                                       the regulations. This is a non-substantive change that
                                       does not alter the administration of the program but
                                       rather provides greater clarity for the reader.
25. Entire SFIP--Global Language      FEMA will replace the word ``covered'' with the word        Discretionary................  No change in compliance
 Replacements.                         ``insured'' because the word ``covered'' does not conform                                  burden.
                                       to common industry or Agency usage. This is a non-
                                       substantive change that does not alter the administration
                                       of the program but rather provides greater clarity for
                                       the reader.
26. 62.22 Judicial Review (preamble   FEMA will replace references to the ``Federal Insurance     Discretionary................  No change in compliance
 sec. III.F.5).                        Administration'' with the current organizational title,                                    burden.
                                       ``Federal Insurance and Mitigation Administration.'' This
                                       is a non-substantive change that does not alter the
                                       administration of the program but rather provides greater
                                       clarity for the reader.
27. SFIP Article VII.D..............  FEMA will redesignate Article VII.D as Article VII.C.       Discretionary................  No change in compliance
                                       Replaces the phrase ``structure during the course of                                       burden.
                                       construction'' in Article VII.D.2 of the current rule
                                       with ``building under construction,'' which is the proper
                                       term of art, as used in Article III.A.5.a and Article
                                       VI.A. This is a non-substantive change that does not
                                       alter the administration of the program but rather
                                       provides greater clarity for the reader.
28. Sec.   61.4 Limitations on        FEMA will delete this provision because some of the         Discretionary................  No change in compliance
 Coverage.                             language is duplicative with language in other sections,                                   burden.
                                       and the rest of the language is more appropriately moved
                                       to other sections of the regulation. Move 61.5(a) and (b)
                                       to become a new 44 CFR 61.4. This is a non-substantive
                                       change that does not alter the administration of the
                                       program but rather provides greater clarity for the
                                       reader.
29. Sec.   62.3 Servicing agent.....  FEMA will remove the name of specific direct servicing      Discretionary................  No change in compliance
                                       agent. This is a non-substantive change that codifies                                      burden.
                                       current practices that began more than a decade before
                                       the baseline regarding the public announcement of the
                                       direct servicing agent.
30. Part 59 Authority Citation......  FEMA will replace the citations to Reorganization Plan No.  Discretionary................  No change in compliance
                                       3 and Executive Order 12127 with a citation to the                                         burden.
                                       codification of the Homeland Security Act of 2002, 6
                                       U.S.C. 101 et seq. This is a non-substantive change that
                                       does not alter the administration of the program but
                                       rather provides greater clarity for the reader.
31. Part 61 Authority Citation......  FEMA will update authority citations to reflect changes to  Discretionary................  No change in compliance
                                       FEMA's source of authority from Executive orders to                                        burden.
                                       statute. This is a non-substantive change that does not
                                       alter the administration of the program but rather
                                       provides greater clarity for the reader.

32. Part 62 Authority Citation......  FEMA will update authority citations to reflect changes to  Discretionary................  No change in compliance
                                       FEMA's source of authority from Executive orders to                                        burden.
                                       statute. This is a non-substantive change that does not
                                       alter the administration of the program but rather
                                       provides greater clarity for the reader.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Codification of Existing Policy and Practice
--------------------------------------------------------------------------------------------------------------------------------------------------------
33. Sec.   61.11 Effective date and   FEMA will codify BW-12's addition of the Post-Wildfire      Mandatory....................  No change in compliance
 time of coverage under the Standard   Exception to the 30-day waiting period required by 42                                      burden.
 Flood Insurance Policy--New           U.S.C. 4013(c). This change does not alter the current
 Business Applications and             administration of the program because FEMA immediately
 Endorsements.                         complied with the law.
                                      FEMA also is making a clarification by removing the second
                                       clause of the first sentence of 61.11(e) and 61.11(f)
                                       because these clauses accommodate a business model that
                                       the WYO companies no longer use. This change does not
                                       alter the current administration of the program but
                                       rather provides greater clarity for the reader.
34. SFIP Article III.C..............  FEMA will codify BW-12 section 100214, which prohibits the  Mandatory....................  Cost savings of $2,048
                                       application of SFIP Article III.C.3.b.4 (disallowing the                                   over 10 years ($1,799
                                       payment of a condominium loss assessment on a unit policy                                  at 3 percent and
                                       if the condominium building is underinsured). Prior to BW-                                 $1,539 at 7 percent
                                       12, FEMA issued individual waivers of this provision as                                    discount rates.)
                                       the need arose. The changes will delete Article
                                       III.C.3.b.4, thus no longer requiring FEMA to issue
                                       individual waivers.
--------------------------------------------------------------------------------------------------------------------------------------------------------

1. Costs
    This rule makes non-substantive improvements to the language and
organization of the NFIP regulations. These changes do not result in
any quantifiable costs, other than opportunity costs, that WYO
companies will incur as they spend time becoming familiar with the
changes.
    This rule revises section 61.11 to codify an additional exception
to the 30-day waiting period before coverage on a flood insurance
policy takes effect. Prior to BW-12, there were only two exceptions to
this 30-day waiting period. The first exception was for the initial
purchase of flood insurance in connection with the making, increasing,
extension, or renewal of a loan. The second exception was for the
initial purchase of flood insurance pursuant to a revision or updating
of floodplain areas or flood risk zones, if such purchase took place
within 1 year of the notice of such revision.
    The final rule codifies Section 100241 of BW-12, which amended
Section 1306(c) of the NFIA (42 U.S.C. 4013(c)), by placing a third
exception to the 30-day new policy waiting period. This new exception
applies to situations where the flooding to an insured privately owned
property is the result of flooding on Federal land that was caused or
exacerbated by post-wildfire conditions, also on Federal land. FEMA
implemented this new exception via bulletin. See WYO Bulletin W-12045
(July 10, 2012) (announcing the implementation of Section 100241), see
also, WYO Bulletin W-18001 (Jan. 16, 2018) (replacing WYO Bulletin W-
12045). To date, circumstances have not existed requiring FEMA to apply
this exception. The change updates the regulations to reflect the
revised statutory language and existing Agency practice.
    According to FEMA's NFIP claim data, since implementation of this
exception in July 2012, no parties have made claims that apply to this
provision. Additionally, due to both the brief window of applicability
(the 30-day waiting period after initial enrollment in the NFIP) and
the narrow circumstances to which this exception applies (flood damage
due to flood on Federal land caused, or exacerbated, by post-wildfire
conditions), invocation of this exception will be rare. This provision
serves as an added enticement to potential enrollees of the NFIP to
join the NFIP if they believe that a wildfire on Federal land may
cause, or exacerbate, flooding on their property. In accordance with
the data, there has not been and FEMA estimates that there will
continue to be no additional burden on any party.
2. Benefits
    The majority of provisions represent clarifications of the
regulation, or remove regulations that are no longer applicable. The
few non-clarifying provisions reflect certain provisions that FEMA has
already implemented through policy. These provisions streamline
operations or meet greater potential needs of policyholders
(codifications). It is only with codifications where any quantifiable
impacts appear. This analysis considers the following as possible
benefits of this rule:
i. Clarification of NFIP Terms & Conditions
    This analysis looks at the many efficiencies of the final rule;
FEMA cannot quantify the bulk of these benefits. Although FEMA has not
quantified them, they are essential to the justification of the final
rule and provide significant benefits for stakeholders.
    Under current conditions, the NFIP-related sections of the CFR
contain inconsistencies or vague language that may cause confusion to
stakeholders. The following are selected examples of changes presented
in Table 1:
a. Making Explicit the Implicit
    The current NFIP deductible charts at 44 CFR 61.5(d) show several
possible deductible options, but not all the deductible options
available under the program. A note to these tables indicates that
policyholders may submit any other deductible amounts not currently
listed in this chart (including the $10,000 deductible option required
under HFIAA). Notwithstanding this note, the current regulation's
listing of deductible options may give readers the impression that the
list is exhaustive. In this rulemaking, FEMA removes the

deductible charts and replaces them with a requirement that FEMA must
provide policyholders with deductible options in various amounts, up to
and including $10,000, subject to certain minimum deductibles. This
change does not expand or contract the deductible options the NFIP
offers; rather, it clarifies that FEMA offers various options,
including the $10,000 deductible, subject to other restrictions.
    This rulemaking also changes the language in Appendix A(1) of Part
61 to clarify that FEMA also insures personal property under this
policy. FEMA has always insured personal property under this policy,
but the change makes this more explicit in the initial coverage
statement. This rulemaking also changes Appendix A(2) to Part 61 to
state that the policy insures only one building and that the insured
building is the one specifically described in the Flood Insurance
Application. FEMA has always limited coverage under the SFIP to one
building; with this change, FEMA clearly states this at the very
beginning of the SFIP.
b. Modifying, Adding or Removing Definitions
    In this rule, FEMA revises definitions such as ``deductible,''
``emergency program,'' ``act,'' and ``basement.'' These non-substantive
changes are clearer and more consistent with the language in the
Articles of the SFIP, as are the addition of acronyms for ease of
repetitive use (such as that for the Special Flood Hazard Area as
``SFHA'') or to remove a term or definition that FEMA no longer uses
(e.g., ``Expense Constant'' which no longer applies, or ``Probation
Premium'' which is better changed to ``Probation Surcharge'').
    This increased precision and consistent use of terms increases
clarity of FEMA's NFIP regulations for the insurance companies, flood
insurance policyholders, academic researchers, and private citizens.
This improved accuracy will minimize confusion.
ii. Codification of Dwelling Policy Underinsurance Exception
    Article III.C.3.b.4 of the SFIP, found in Appendix A(1) to Part 61,
prevents payment of condominium loss assessments on a unit policy if
the condominium building is underinsured. The SFIP also requires
policyholders to exhaust the coverage limits of the RCBAP policy (the
primary policy) before the Dwelling Policy (the secondary policy) can
take effect. This poses a challenge in the event FEMA disallows the
primary policy in the above circumstance. Since 2007, FEMA required
policyholders facing such a predicament to obtain a waiver from FEMA to
process such claims.
    Pursuant to Section 100214 of BW-12, this rule removes Article
III.C.3.b.4 of the SFIP, which prohibits such claim payments and
necessitates the submission and processing of waivers. As a result of
this statutory change, FEMA no longer requires waivers for this
prohibition.
    To estimate the cost savings that result from FEMA's removal of
this requirement, FEMA considered the frequency of these specific
circumstances. Between 2007, when FEMA began issuing the waivers, and
2013, when FEMA terminated the waiver process (following the passage
and FEMA's provisional implementation of BW-12), there were four
occurrences: Twice in Illinois, once in Texas, and once in Tennessee.
Four occurrences over 6 years equate to an estimated frequency of 0.667
instances each year, assuming that the rate remains consistent in the
future.
    FEMA requires 3 hours to process a waiver request. Two General
Schedule (GS) Federal employees in the National Capital Region, at the
GS-14 and GS-15 levels, process waiver requests in equal proportion.
Utilizing 2018 GS scale \7\ published hourly wage rates from the Office
of Personnel Management (OPM) for the midpoint (step 5) of these grade
levels FEMA calculated fully loaded \8\ wage rates of $90.85 and
$106.87 per hour, respectively. At approximately 90 minutes per officer
for each expected waiver, the subtotal is $136.28 \9\ and $160.30,\10\
respectively. An Assistant Administrator at the Senior Executive
Service (SES) level must clear each waiver. This review and approval
takes approximately 5 minutes.\11\ FEMA estimates that a fully loaded
SES hourly rate is $126.66 per hour.\12\ The subtotal of the SES time
is $10.56.\13\ The total opportunity cost to process each waiver is
$307.16.\14\
---------------------------------------------------------------------------

    \7\ GS Scale based on 2018 OPM tables, hourly basic wage rates
by grade and step for the locality pay area of Washington-Baltimore-
Arlington, DC-MD-VA-WV-PA. Accessed March 1st, 2018. https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/18Tables/html/DCB_h.aspx.
    \8\ Bureau of Labor Statistics, Employer Cost for Employee
Compensation News Release, Table 1. Employer costs per hour worked
for employee compensation and costs as a percent of total
compensation; civilian workers, by major occupational and industry
group, December 2017. https://www.bls.gov/news.release/archives/ecec_03202018.htm.
    The per hour benefits multiplier is calculated by dividing total
compensation for all workers ($35.87) by wages and salaries for all
workers ($24.49), which yields a per hour benefits multiplier of
1.46. ($35.87 / $24.49 = 1.46468). Fully-loaded wage rates are
calculated by multiplying the per hour benefits multiplier by the
applicable wage rate. GS-14: $62.23 x 1.46 = $90.85 and GS-15:
$73.20 x 1.46 = $106.87.
    \9\ $90.85 (hourly wage rate of $62.23 x 1.46) * 1.5 hours =
$136.28.
    \10\ $106.87 (hourly wage rate of $73.20 x 1.46) * 1.5 hours =
$160.30.
    \11\ FEMA bases SES salary estimates on OPM's Senior Executive
Service Report. The latest report available is for 2016. Across all
agencies the median SES pay is $173,882 (see table 13 at the
following link) https://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/reports-publications/ses-summary-2016.pdf. Accessed June 4, 2018.
    \12\ $173,882 annual wage/2087 annual hours = $83.32 hourly wage
rate x 1.46 benefits multiplier = $121.65 fully loaded hourly wage x
1.04115 inflation adjustment = $126.66 fully loaded $2018 hourly
wage. We calculated the inflation adjustment by subtracting the July
2016 CPI-U (240.6) from the April 2018 CPI-U (250.5). We divided the
result (9.9) by the July 2016 CPI-U (240.0). Calculation: (250.5-
240.6)/240.6 = 0.04115. BLS CPI-U data is available at http://data.bls.gov/cgi-bin/surveymost?bls. Select CPI for All Urban
Consumers (CPI-U) 1982-84 = 100 (Unadjusted)--CUUR0000SA0 and click
the Retrieve data button. Accessed June 8, 2018.
    \13\ $126.96 * 5 minutes = $10.56.
    \14\ $136.28 + $160.30 + $10.56 = $307.14.

         (b) Table 2--Projected Cost Savings of Codification of Dwelling Policy Underinsurance Exception
----------------------------------------------------------------------------------------------------------------
                                   Avg frequency  Total cost per    Annual cost
                                    of waivers        waiver          savings      NPV at 3% (m)   NPV at 7% (m)
----------------------------------------------------------------------------------------------------------------
Year 1..........................            0.67            $307            $205             205             205
Year 2..........................            0.67             307             205             199             191
Year 3..........................            0.67             307             205             193             179
Year 4..........................            0.67             307             205             187             167
Year 5..........................            0.67             307             205             182             156
Year 6..........................            0.67             307             205             177             146
Year 7..........................            0.67             307             205             171             136

Year 8..........................            0.67             307             205             166             128
Year 9..........................            0.67             307             205             162             119
Year 10.........................            0.67             307             205             157             111
                                 -------------------------------------------------------------------------------
    Total.......................            6.67           3,072           2,048          $1,799          $1,539
----------------------------------------------------------------------------------------------------------------

    Applying this cost to the estimated frequency of occurrence of 0.67
waivers per year and extending the avoided costs over a 10-year period
will project a total undiscounted cost savings of $2,048. The 10-year
total equates to $1,799 and $1,539, when discounted at 3 percent and 7
percent respectively.
3. Alternatives Considered
    Given that this rule has no direct compliance costs, no less
burdensome alternatives to the final rule are available. In the absence
of this final rule, stakeholders will continue to experience the
negative repercussions of inconsistences between the statutes,
regulations, and agency policy documents.
4. Summary
    For the 10-year period analyzed, FEMA does not anticipate any costs
resulting from the selected provisions of BW-12 and HFIAA that the rule
is implementing. During that same period analyzed, the estimated
quantified benefits total $2,048. The present value, discounted at 7
percent, of the estimated quantified benefits is approximately $1,539
and $1,799 discounted at 3 percent. FEMA's ability to administer the
NFIP in a more streamlined manner and the public's enhanced
understanding of the terms and conditions of the program justify the
final rule.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as
amended, requires Federal agencies to consider the potential impact of
regulations on small entities. The term ``small entities'' comprises
small businesses, not-for-profit organizations that are independently
owned and operated and are not dominant in their fields, and
governmental jurisdictions with populations of less than 50,000. 29 of
the 67 WYO companies participating in the NFIP (43 percent) are small
entities.\15\ However, this rule will not have a significant economic
impact on any company because this rule does not impose burdens on any
participating WYO company. The rule makes non-substantive improvements
to the language and organization of the NFIP regulations through
clarifications and codifications. The rule also codifies certain
provisions of BW-12 and HFIAA that FEMA has already implemented via the
Flood Insurance Manual and other related guidance documents.
Accordingly, FEMA certifies under 5 U.S.C. 605(b) that this rule would
not have a significant economic impact on a substantial number of small
entities.
---------------------------------------------------------------------------

    \15\ See Initial Regulatory Flexibility Analysis in the Notice
of Proposed Rulemaking at 84 FR 32983.
---------------------------------------------------------------------------

    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small
entities in understanding this rule. If the rule would affect your
small business, organization, or governmental jurisdiction and you have
questions concerning its provisions or options for compliance, please
contact the person listed in the FOR FURTHER INFORMATION CONTACT
section.

C. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 658, 1501-1504,
1531-1536, 1571, pertains to any rulemaking which is likely to result
in the promulgation of any rule that includes a Federal mandate that
may result in the expenditure by State, local, and Tribal governments,
in the aggregate, or by the private sector, of $100 million (adjusted
annually for inflation) or more in any one year. If the rulemaking
includes a Federal mandate, the Act requires an agency to prepare an
assessment of the anticipated costs and benefits of the Federal
mandate. The Act also pertains to any regulatory requirements that
might significantly or uniquely affect small governments. Before
establishing any such requirements, an agency must develop a plan
allowing for input from the affected governments regarding the
requirements.
    FEMA has determined that this rulemaking will not result in the
expenditure by State, local, and Tribal governments, in the aggregate,
nor by the private sector, of $100,000,000 or more in any one year as a
result of a Federal mandate, and it will not significantly or uniquely
affect small governments. Therefore, no actions are deemed necessary
under the provisions of the Unfunded Mandates Reform Act of 1995.

D. Paperwork Reduction Act of 1995

    Under the Paperwork Reduction Act of 1995 (PRA), as amended, 44
U.S.C. 3501-3520, an agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless the
agency obtains approval from the Office of Management and Budget (OMB)
for the collection and the collection displays a valid OMB control
number. See 44 U.S.C. 3506, 3507. This rulemaking does not call for a
new collection of information under the PRA. There is an existing
collection of information, 1660-0006, the National Flood Insurance
Program Policy Forms, Public Law 90-448 (1968) (expanded by Pub. L. 93-
234 (1973)) included in this rulemaking. BW-12 and HFIAA require
modifications to the NFIP. Program changes resulting from BW-12 and
HFIAA necessitated revision of the NFIP Policy Forms to assure proper
classification of properties for rating purposes and to rate and issue
the policies in accordance with the provisions of BW-12 and HFIAA.
However, this rule will not impact this collection because the forms
have already been updated as needed.

E. Privacy Act/E-Government Act

    Under the Privacy Act of 1974, 5 U.S.C. 552a, an agency must
determine whether implementation of a proposed regulation will result
in a system of records. A ``record'' is any item, collection, or
grouping of information about an individual that is maintained by an
agency, including, but not limited to, his/her education, financial
transactions, medical history, and criminal or employment history and
that contains his/her name, or the

identifying number, symbol, or other identifying particular assigned to
the individual, such as a finger or voice print or a photograph. See 5
U.S.C. 552a(a)(4). A ``system of records'' is a group of records under
the control of an agency from which information is retrieved by the
name of the individual or by some identifying number, symbol, or other
identifying particular assigned to the individual. See id. section
552a(a)(5). An agency cannot disclose any record which is contained in
a system of records except by following specific procedures.
    The E-Government Act of 2002, 44 U.S.C. 3501 note, also requires
specific procedures when an agency takes action to develop or procure
information technology that collects, maintains, or disseminates
information that is in an identifiable form. This Act also applies when
an agency initiates a new collection of information that will be
collected, maintained, or disseminated using information technology if
it includes any information in an identifiable form permitting the
physical or online contacting of a specific individual.
    In accordance with DHS policy, FEMA has completed a Privacy
Threshold Analysis (PTA) for this rule. DHS/FEMA has determined that
this rulemaking does not affect the 1660-0006 OMB Control Number's
current compliance with the E-Government Act of 2002 or the Privacy Act
of 1974, as amended. As a result, DHS/FEMA has concluded that the 1660-
0006 OMB Control Number is covered by the DHS/FEMA/PIA-011--National
Flood Insurance Program Information Technology Systems (NFIP ITS)
Privacy Impact Assessment (PIA). Additionally, DHS/FEMA has decided
that the 1660-0006 OMB Control Number is covered by the DHS/FEMA-003
National Flood Insurance Program Files, 79 FR 28747, May 19, 2014
System of Records Notice (SORN).

F. Executive Order 13175, ``Consultation and Coordination With Indian
Tribal Governments''

    Executive Order 13175, ``Consultation and Coordination with Indian
Tribal Governments,'' 65 FR 67249, (Nov. 9, 2000), applies to agency
regulations that have Tribal implications, that is, regulations that
have substantial direct effects on one or more Indian Tribes, on the
relationship between the Federal government and Indian Tribes, or on
the distribution of power and responsibilities between the Federal
Government and Indian Tribes. Under this Executive Order, to the extent
practicable and permitted by law, no agency shall promulgate any
regulation that has Tribal implications, that imposes substantial
direct compliance costs on Indian Tribal governments, and that is not
required by statute, unless funds necessary to pay the direct costs
incurred by the Indian Tribal government or the Tribe in complying with
the regulation are provided by the Federal government, or the agency
consults with Tribal officials.
    Nor, to the extent practicable by law, may an agency promulgate a
regulation that has Tribal implications and preempts Tribal law, unless
the agency consults with Tribal officials. This rule involves no
policies that have Tribal implications under Executive Order 13175.
This rule makes limited changes to the comprehensive, longstanding
National Flood Insurance Program regulations applicable to communities,
including participating Indian Tribal governments and Tribes, which
voluntarily choose to participate in the program. Because these program
updates are limited, they will not have substantial direct effects on
Indian Tribes, on the relationship between the national government and
Indian Tribes, or the distribution of power between the Federal
Government and Indian Tribes.

G. Executive Order 13132, ``Federalism''

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999),
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, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.'' For the
purposes of this Executive Order, the term States also includes local
governments or other subdivisions established by the States. Under this
Executive Order, Federal agencies must closely examine the statutory
authority supporting any action that would limit the policymaking
discretion of the States. Further, to the extent practicable and
permitted by law, no agency shall promulgate any regulation that has
federalism implications, that imposes substantial direct compliance
costs on State and local governments, and that is not required by
statute, unless the Federal Government provides funds necessary to pay
the direct costs incurred by the State and local governments in
complying with the regulation, or the agency consults with State and
local officials. Nor, to the extent practicable by law, may an agency
promulgate a regulation that has federalism implications and preempts
State law, unless the agency consults with State and local officials.
    FEMA has reviewed this rule under Executive Order 13132 and has
determined that it does not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government, and therefore does not have federalism
implications as defined by the Executive Order. This rule makes limited
changes to the comprehensive, longstanding National Flood Insurance
Program regulations governing the communities' participation in the
program. Because these program updates are limited, they will not have
substantial direct effects on the States or participating communities,
on the relationship between the national government and the States or
participating communities, or the distribution of power among the
various levels of government.

H. Executive Order 11988, ``Floodplain Management''

    Pursuant to Executive Order 11988, each agency must provide
leadership and take action to reduce the risk of flood loss and to
minimize the impact of floods on human safety, health and welfare. In
addition, each agency must restore and preserve the natural and
beneficial values served by floodplains in carrying out its
responsibilities for (1) acquiring, managing, and disposing of Federal
lands and facilities; (2) providing Federally undertaken, financed, or
assisted construction and improvements; and (3) conducting Federal
activities and programs affecting land use, including but not limited
to water and related land resources planning, regulating, and licensing
activities. In carrying out these responsibilities, each agency must
evaluate the potential effects of any actions it may take in a
floodplain; ensure that its planning programs and budget requests
reflect consideration of flood hazards and floodplain management; and
prescribe procedures to implement the policies and requirements of the
Executive Order.
    Before promulgating any regulation, an agency must determine
whether the proposed regulations will affect a floodplain(s), and if
so, the agency must consider alternatives to avoid adverse effects and
incompatible development in the floodplain(s). If the head of the
agency finds that the only practicable alternative consistent with the
law and with the policy set forth in Executive Order 11988 is to
promulgate a

regulation that affects a floodplain(s), the agency must, prior to
promulgating the regulation, design or modify the regulation in order
to minimize potential harm to or within the floodplain, consistent with
the agency's floodplain management regulations and prepare and
circulate a notice containing an explanation of why the action is
proposed to be located in the floodplain.
    The purpose of this rule is to implement insurance-related
administrative changes to clarify coverage, rates, and terms and
conditions. FEMA included the Federal Insurance actions covered in the
purpose of this rule as part of the NFIP Nationwide Programmatic
Environmental Impact Statement, published on November 3, 2017, and
completed in accordance with the Council on Environmental Quality's
National Environmental Policy Act implementing regulations in 40 CFR
1500-1508 and in accordance with FEMA Directive 108-1 and Instruction
108-1-1. FEMA determined that these actions will not have a significant
effect on land use, floodplain management, or wetlands.

I. Executive Order 11990, ``Protection of Wetlands''

    Executive Order 11990, ``Protection of Wetlands,'' 42 FR 26961 (May
24, 1977) sets forth that each agency must provide leadership and take
action to minimize the destruction, loss or degradation of wetlands,
and to preserve and enhance the natural and beneficial values of
wetlands in carrying out the agency's responsibilities. These
responsibilities include (1) acquiring, managing, and disposing of
Federal lands and facilities; and (2) providing Federally undertaken,
financed, or assisted construction and improvements; and (3) conducting
Federal activities and programs affecting land use, including but not
limited to water and related land resources planning, regulating, and
licensing activities. Each agency, to the extent permitted by law, must
avoid undertaking or providing assistance for new construction located
in wetlands unless the head of the agency finds (1) that there is no
practicable alternative to such construction, and (2) that the proposed
action includes all practicable measures to minimize harm to wetlands
which may result from such use. In making this finding, the head of the
agency may take into account economic, environmental and other
pertinent factors.
    In carrying out the activities described in Executive Order 11990,
each agency must consider factors relevant to a proposal's effect on
the survival and quality of the wetlands. These include public health,
safety, and welfare, including water supply, quality, recharge and
discharge; pollution; flood and storm hazards; sediment and erosion;
maintenance of natural systems, including conservation and long term
productivity of existing flora and fauna, species and habitat diversity
and stability, hydrologic utility, fish, wildlife, timber, and food and
fiber resources. They also include other uses of wetlands in the public
interest, including recreational, scientific, and cultural uses. The
purpose of this rule is to implement insurance-related administrative
changes to clarify coverage, rates, and terms and conditions. FEMA
included the Federal Insurance actions covered in the purpose of this
rule as part of the NFIP Nationwide Programmatic Environmental Impact
Statement, published on November 3, 2017, and completed in accordance
with the Council on Environmental Quality's National Environmental
Policy Act implementing regulations in 40 CFR 1500-1508 and in
accordance with FEMA Directive 108-1 and Instruction 108-1-1. FEMA has
determined that these actions will not have a significant effect on
land use, floodplain management, or wetlands.

J. National Environmental Policy Act of 1969 (NEPA)

    Section 102 of the National Environmental Policy Act of 1969
(NEPA), 83 Stat. 852 (Jan. 1, 1970) (42 U.S.C. 4321 et seq.) requires
agencies to consider the impacts of their proposed actions on the
quality of the human environment. The Council on Environmental
Quality's procedures for implementing NEPA, 40 CFR 1500 et seq.,
require Federal agencies to prepare Environmental Impact Statements
(EIS) for major Federal actions significantly affecting the quality of
the human environment. Each agency can develop categorical exclusions
to cover actions that have been demonstrated to not typically trigger
significant impacts to the human environment individually or
cumulatively. Agencies develop environmental assessments (EA) to
evaluate those actions that do not fit an agency's categorical
exclusion and for which the need for an EIS is not readily apparent. At
the end of the EA process, the agency will determine whether to make a
Finding of No Significant Impact (FONSI) or whether to initiate the EIS
process.
    Rulemaking is a major Federal action subject to NEPA. FEMA included
the Federal Insurance actions covered in the purpose of this rule as
part of the NFIP Nationwide Programmatic Environmental Impact
Statement, published on November 3, 2017, and completed in accordance
with the Council on Environmental Quality's National Environmental
Policy Act implementing regulations in 40 CFR 1500-1508 and in
accordance with FEMA Directive 108-1 and Instruction 108-1-1. FEMA has
determined that these actions will not have a significant effect on the
human environment.

K. Executive Order 12898 Environmental Justice

    Under Executive Order 12898, ``Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations,'' 59 FR 7629 (Feb. 16, 1994), as amended by Executive
Order 12948, 60 FR 6381, (Feb. 1, 1995), FEMA incorporates
environmental justice into its policies and programs. The Executive
Order requires each Federal agency to conduct its programs, policies,
and activities that substantially affect human health or the
environment in a manner that ensures that those programs, policies, and
activities do not have the effect of excluding persons from
participation in programs, denying persons the benefits of programs, or
subjecting persons to discrimination because of race, color, or
national origin.
    FEMA included the Federal Insurance actions covered in the purpose
of this rule as part of the NFIP Nationwide Programmatic Environmental
Impact Statement, published on November 3, 2017, and completed in
accordance with the Council on Environmental Quality's National
Environmental Policy Act implementing regulations in 40 CFR 1500-1508
and in accordance with FEMA Directive 108-1 and Instruction 108-1-1.
FEMA has determined that these actions will not have a
disproportionately high or adverse effect on human health or the
environment, nor will it exclude persons from participation in FEMA
programs, deny persons the benefits of FEMA programs, or subject
persons to discrimination because of race, color, or national origin.

L. Congressional Review of Agency Rulemaking

    Under the Congressional Review of Agency Rulemaking Act (CRA), 5
U.S.C. 801-808, before a rule can take effect, the Federal agency
promulgating the rule must submit to Congress and to the Government
Accountability Office (GAO) a copy of the rule; a concise general
statement relating to the rule, including whether it is a major rule;
the proposed effective date of the rule; a

copy of any cost-benefit analysis; descriptions of the agency's actions
under the Regulatory Flexibility Act and the Unfunded Mandates Reform
Act; and any other information or statements required by relevant
executive orders.
    FEMA has sent this final rule to the Congress and to GAO pursuant
to the CRA. The rule is not a ``major rule'' within the meaning of the
CRA. It will not have 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; and 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 in domestic and export markets.

List of Subjects

44 CFR Parts 59 and 61

    Flood insurance, Reporting and recordkeeping requirements.

44 CFR Part 62

    Claims, Flood insurance, Reporting and recordkeeping requirements.

    For the reasons stated in the preamble, FEMA amends 44 CFR Chapter
I as follows:

PART 59--GENERAL PROVISIONS

0
1. Revise authority citation for part 59 to read as follows:

    Authority:  42 U.S.C. 4001 et seq.; 6 U.S.C. 101 et seq.

0
2. In Sec.  59.1, remove definition for ``Emergency Flood Insurance
Program or emergency program,'' and add definitions, in alphabetical
order, for ``Condominium Building,'' ``Mixed Use Building,''
``Multifamily Building,'' ``Non-Residential Building,'' ``Non-
Residential Property,'' ``Other Residential Building,'' ``Other
Residential Property,'' ``Residential Building,'' ``Residential
Property,'' ``Single-Family Dwelling,'' and ``Two-to-Four Family
Building'' and revise the definitions for ``Act,'' ``Deductible,'' and
``Emergency Program'' to read as follows:

Sec.  59.1   Definitions.

* * * * *
    Act means the statutes authorizing the National Flood Insurance
Program that are incorporated in 42 U.S.C. 4001- et seq.
* * * * *
    Condominium Building means a type of building in the form of
ownership in which each unit owner has an undivided interest in common
elements of the building.
* * * * *
    Deductible means the amount of an insured loss that is the
responsibility of the insured and that is incurred before any amounts
are paid for the insured loss under the insurance policy.
* * * * *
    Emergency Program means the initial phase of a community's
participation in the National Flood Insurance Program, as prescribed by
Section 1306 of the Act.
* * * * *
    Mixed Use Building means a building that has both residential and
non-residential uses.
* * * * *
    Multifamily Building means an other residential building that is
not a condominium building.
* * * * *
    Non-Residential Building means a commercial or mixed-use building
where the primary use is commercial or non-habitational.
    Non-Residential Property means either a non-residential building,
the contents within a non-residential building, or both.
* * * * *
    Other Residential Building means a residential building that is
designed for use as a residential space for 5 or more families or a
mixed use building in which the total floor area devoted to non-
residential uses is less than 25 percent of the total floor area within
the building.
    Other Residential Property means either an other residential
building, the contents within an other residential building, or both.
* * * * *
    Residential Building means a non-commercial building designed for
habitation by one or more families or a mixed use building that
qualifies as a single-family, two-to-four family, or other residential
building.
    Residential Property means either a residential building or the
contents within a residential building, or both.
* * * * *
    Single-Family Dwelling means either (a) a residential single-family
building in which the total floor area devoted to non-residential uses
is less than 50 percent of the building's total floor area, or (b) a
single-family residential unit within a two-to-four family building,
other-residential building, business, or non-residential building, in
which commercial uses within the unit are limited to less than 50
percent of the unit's total floor area.
* * * * *
    Two-to-Four Family Building means a residential building, including
an apartment building, containing two-to-four residential spaces and in
which commercial uses are limited to less than 25 percent of the
building's total floor area.
* * * * *

PART 61--INSURANCE COVERAGE AND RATES

0
3. Revise the authority citation for part 61 to read as follows:

    Authority:  42 U.S.C. 4001 et seq.; 6 U.S.C. 101 et seq.

0
4. Revise Sec.  61.1 to read as follows:

Sec.  61.1   Purpose of part.

    This part describes the types of properties eligible for flood
insurance coverage under the Program, the limits of such coverage, and
the premium rates actually to be paid by insureds.

0
5. Revise Sec.  61.3 to read as follows:

Sec.  61.3   Coverage and benefits provided under the Standard Flood
Insurance Policy.

    (a) Insurance coverage under the Program is available for buildings
and their contents. Coverage for each may be purchased separately.
    (b) In addition to building and contents coverage, the Dwelling
Form of the Standard Flood Insurance Policy (SFIP) covers debris
removal, loss avoidance measures, and condominium loss assessments. The
General Property Form of the SFIP covers debris removal, loss avoidance
measures, and pollution damage. The Residential Condominium Building
Association Policy Form of the SFIP covers debris removal and loss
avoidance measures.
    (c) With the purchase of building coverage, the Standard Flood
Insurance Policy covers the costs associated with bringing the building
into compliance with local floodplain ordinances.

0
6. Revise Sec.  61.4 to read as follows:

Sec.  61.4   Special terms and conditions.

    (a) No new flood insurance or renewal of flood insurance policies
will be written for properties declared by a duly constituted State or
local zoning or other authority to be in violation of any floodplain,
mudslide (i.e., mudflow), or flood-related erosion area management or
control law, regulation, or ordinance.
    (b) In order to reduce the administrative costs of the Program, of
which the Federal Government pays a major share, applicants must pay
the

full policy premium at the time of application.

0
7. Revise Sec.  61.5 to read as follows:

Sec.  61.5   Deductibles.

    FEMA must provide policyholders with deductible options in various
amounts, up to and including $10,000, subject to the following minimum
deductible amounts:
    (a) The minimum deductible for policies covering pre-FIRM buildings
charged less than full-risk rates with building coverage amounts less
than or equal to $100,000 is $1,500.
    (b) The minimum deductible for policies covering pre-FIRM buildings
charged less than full-risk rates with building coverage amounts
greater than $100,000 is $2,000.
    (c) The minimum deductible for policies covering post-FIRM
buildings and pre-FIRM buildings charged full risk rates, with building
coverage amounts equal to or less than $100,000 is $1,000.
    (d) The minimum deductible for policies covering post-FIRM
buildings and pre-FIRM buildings charged full risk rates, with building
coverage amounts greater than $100,000 is $1,250.

0
8. Revise Sec.  61.6 to read as follows:

Sec.  61.6   Maximum amounts of coverage available.

    (a) Pursuant to section 1306 of the Act, the following are the
limits of coverage available under the emergency program and under the
regular program.

   Table 1 to Paragraph (a)--Maximum Amounts of Coverage Available \1\
------------------------------------------------------------------------
                                    Emergency        Regular Program
                                     Program    ------------------------
           Occupancy            ----------------
                                     Amount               Amount
------------------------------------------------------------------------
                            Bulding Coverage
------------------------------------------------------------------------
Single-Family Dwelling.........       * $35,000  $250,000.
Two-to-Four Family Building....        * 35,000  $250,000.
Other Residential Building           ** 100,000  $500,000.
 (including Multifamily
 Building).
Residential Condominium                     N/A  $250,000 times the
 Building.                                        number of units in the
                                                  building.
Non-Residential Building.......      ** 100,000  $500,000.
------------------------------------------------------------------------
                          Contents Coverage \2\
------------------------------------------------------------------------
Residential Property \3\.......          10,000  $100,000.
Non-Residential Property.......         100,000  $500,000.
------------------------------------------------------------------------
\1\ This Table provides the maximum coverage amounts available under the
  Emergency Program and the Regular Program, and the columns cannot be
  aggregated to exceed the limits in the Regular Program, which are
  established by statute. The aggregate limits for building coverage are
  the maximum coverage amounts allowed by statute for each building
  included in the relevant Occupancy Category.
\2\ The policy limits for contents coverage are not per building.
  Although a single insured may not have more than one policy covering
  contents in a building, several insureds may have separate policies of
  up to the policy limits.
\3\ The Residential Property occupancy category includes the Single-
  Family Dwelling, Two-to-Four Family Building, Other Residential
  Building, and Condominium Building occupancies categories.
* In Alaska, Guam, Hawaii, and U.S. Virgin Islands, the amount available
  is $50,000.
** In Alaska, Guam, Hawaii, and U.S. Virgin Islands, the amount
  available is $150,000.

    (b) Coverage and benefits payable under the SFIP pursuant to Sec.
61.3(b) and (c) are included in, not in addition to, the coverage
limits provided by the Act or stated in paragraph (a) of this section.

0
9. Add Sec.  61.10 to read as follows:

Sec.  61.10   Requirements for issuance or renewal of flood insurance
coverage.

    FEMA will not issue or renew flood insurance unless FEMA receives:
    (a) The full amount due (including applicable premiums, surcharges,
and fees); and
    (b) A complete application, including the information necessary to
establish a premium rate for the policy, or submission of corrected or
additional information necessary to calculate the premium for the
renewal of the policy.

0
10. Amend Sec.  61.11 by revising paragraphs (c) through (g) to read as
follows:

Sec.  61.11   Effective date and time of coverage under the Standard
Flood Insurance Policy--New business applications and endorsements.

* * * * *
    (c) Where the following conditions are met, the effective date and
time of any initial purchase of flood insurance coverage for any
privately-owned property will be 12:01 a.m. (local time) on the first
calendar day after the application date and the presentment of payment
of premium:
    (1) The Administrator has determined that the property is affected
by flooding on Federal land that is a result of, or is exacerbated by,
post-wildfire conditions, after consultation with an authorized
employee of the Federal agency that has jurisdiction of the land on
which the wildfire that caused the post-wildfire conditions occurred;
and
    (2) The flood insurance coverage was purchased not later than 60
calendar days after the fire containment date, as determined by the
appropriate Federal employee, relating to the wildfire that caused the
post-wildfire conditions described in clause (1).
    (d) Except as provided by paragraphs (a), (b), and (c) of this
section, the effective date and time of any new policy, added coverage,
or increase in the amount of coverage will be 12:01 a.m. (local time)
on the 30th calendar day after the application date and the presentment
of payment of premium; for example, a flood insurance policy applied
for with the payment of the premium on May 1 will become effective at
12:01 a.m. on May 31.
    (e) Adding new coverage or increasing the amount of coverage in
force is permitted during the term of any policy, subject to any
applicable waiting periods. The additional premium for any new coverage
or increase in the amount of coverage will be calculated pro rata in
accordance with the rates currently in force.
    (f) With respect to any submission of an application in connection
with new business, the payment by an insured to an agent or the
issuance of premium

payment by the agent does not constitute payment to the NFIP.
Therefore, it is important that an application for flood insurance, as
well as the full amount due, be mailed to the NFIP promptly in order to
have the effective date of the coverage based on the application date
plus the waiting period. If the application and the full amount due are
received at the office of the NFIP within ten (10) calendar days from
the date of application, the waiting period will be calculated from the
date of application. Also, as an alternative, in those cases where the
application and premium payment are mailed by certified mail within
four (4) calendar days from the date of application, the waiting period
will be calculated from the date of application even though the
application and full amount due are received at the office of the NFIP
after ten (10) calendar days following the date of application. Thus,
if the application and premium payment are received after ten (10)
calendar days from the date of the application or are not mailed by
certified mail within four (4) calendar days from the date of
application, the waiting period will be calculated from the date of
receipt at the office of the NFIP. To determine the effective date of
any coverage added by endorsement to a flood insurance policy already
in effect, substitute the term endorsement for the term application in
this paragraph (f).
    (g) The rules set forth in paragraphs (a) through (f) of this
section apply to Write Your Own (WYO) companies, except that agents
must mail the premium payments and accompanying applications and
endorsements to the WYO company and the WYO company must receive the
applications and endorsements, rather than the NFIP.

0
11. Amend Sec.  61.13 by revising paragraphs (e) and (f) and adding
paragraphs (g) and (h) to read as follows:

Sec.  61.13   Standard Flood Insurance Policy.

* * * * *
    (e) Authorized only under terms and conditions established by the
Act and Regulation. The Standard Flood Insurance Policy is authorized
only under terms and conditions established by Federal statute, the
program's regulations, the Federal Insurance Administrator's
interpretations, and the express terms of the policy itself.
Accordingly, representations regarding the extent and scope of coverage
that are not consistent with Federal statute, the program's
regulations, the Federal Insurance Administrator's interpretations, and
the express terms of the policy itself, are void.
    (f) Agent acts only for policyholder. The duly licensed property or
casualty agent acts for the policyholder and does not act as agent for
the Federal Government, the Federal Emergency Management Agency, the
Write Your Own (WYO) program participating insurance company authorized
by part 62 of this chapter, or the NFIP servicing agent.
    (g) Oral and written binders. No oral binder or contract will be
effective. No written binder will be effective unless issued with
express authorization of the Federal Insurance Administrator.
    (h) The Standard Flood Insurance Policy and endorsements may be
issued by private sector Write Your Own (WYO) property insurance
companies, based upon flood insurance applications and renewal forms,
all of which instruments of flood insurance may bear the name, as
Insurer, of the issuing WYO company. In the case of any Standard Flood
Insurance Policy, and its related forms, issued by a WYO company,
wherever the names ``Federal Emergency Management Agency'' and
``Federal Insurance and Mitigation Administration'' appear, a WYO
company must substitute its own name therefore. Standard Flood
Insurance Policies issued by WYO companies may be executed by the
issuing WYO company as Insurer, in the place and stead of the Federal
Insurance Administrator, but the risk of loss is borne by the National
Flood Insurance Fund, not the WYO company.

0
12. Amend Sec.  61.17 by revising paragraph (g) introductory text and
(g)(2) and (3) to read as follows:

Sec.  61.17   Group Flood Insurance Policy.

* * * * *
    (g) 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:
* * * * *
    (2) VIII. POLICY NULLIFICATION, CANCELLATION, AND NON-RENEWAL, C.
Cancellation of the Policy by You, does not apply to the GFIP.
    (3) VII. GENERAL CONDITIONS, E. Policy Renewal, does not apply to
the GFIP.
* * * * *

0
13. Revise Appendix A(1) to part 61 to read as follows:

Appendix A(1) to Part 61

Federal Emergency Management Agency, Federal Insurance and Mitigation
Administration

Standard Flood Insurance Policy

Dwelling Form

    Please read the policy carefully. The flood insurance provided
is subject to limitations, restrictions, and exclusions.

I. Agreement

    A. This policy insures the following types of property only:
    1. A one to four family residential building, not under a
condominium form of ownership;
    2. A single-family dwelling unit in a condominium building; and
    3. Personal property in a building.
    B. The Federal Emergency Management Agency (FEMA) provides flood
insurance under the terms of the National Flood Insurance Act of
1968 and its amendments, and Title 44 of the Code of Federal
Regulations.
    C. We will pay you for direct physical loss by or from flood to
your insured property if you:
    1. Have paid the full amount due (including applicable premiums,
surcharges, and fees);
    2. Comply with all terms and conditions of this policy; and
    3. Have furnished accurate information and statements.
    D. We have the right to review the information you give us at
any time and revise your policy based on our review.
    E. This policy insures only one building. If you own more than
one building, coverage will apply to the single building
specifically described in the Flood Insurance Application.
    F. Subject to the exception in I.G below, multiple policies with
building coverage cannot be issued to insure a single building to
one insured or to different insureds, even if separate policies were
issued through different NFIP insurers. Payment for damages may only
be made under a single policy for building damages under Coverage
A--Building Property.
    G. A Dwelling Form policy with building coverage may be issued
to a unit owner in a condominium building that is also insured under
a Residential Condominium Building Association Policy (RCBAP).
However, no more than $250,000 may be paid in combined benefits for
a single unit under the Dwelling Form policy and the RCBAP. We will
only pay for damage once. Items of damage paid for under an RCBAP
cannot also be claimed under the Dwelling Form policy.

II. Definitions

    A. In this policy, ``you'' and ``your'' refer to the named
insured(s) shown on the Declarations Page of this policy and the
spouse of the named insured, if a resident of the same household.
Insured(s) also includes: Any mortgagee and loss payee named in the
Application and Declarations Page, as well as any other mortgagee or
loss payee determined to exist at the time of loss, in the

order of precedence. ``We,'' ``us,'' and ``our'' refer to the
insurer.
    Some definitions are complex because they are provided as they
appear in the law or regulations, or result from court cases.
    B. Flood, as used in this flood insurance policy, means:
    1. A general and temporary condition of partial or complete
inundation of two or more acres of normally dry land area or of two
or more properties (one of which is your property) from:
    a. Overflow of inland or tidal waters;
    b. Unusual and rapid accumulation or runoff of surface waters
from any source;
    c. Mudflow.
    2. Collapse or subsidence of land along the shore of a lake or
similar body of water as a result of erosion or undermining caused
by waves or currents of water exceeding anticipated cyclical levels
that result in a flood as defined in B.1.a above.
    C. The following are the other key definitions we use in this
policy:
    1. Act. The National Flood Insurance Act of 1968 and any
amendments to it.
    2. Actual Cash Value. The cost to replace an insured item of
property at the time of loss, less the value of its physical
depreciation.
    3. Application. The statement made and signed by you or your
agent in applying for this policy. The application gives information
we use to determine the eligibility of the risk, the kind of policy
to be issued, and the correct premium payment. The application is
part of this flood insurance policy.
    4. Base Flood. A flood having a one percent chance of being
equaled or exceeded in any given year.
    5. Basement. Any area of a building, including any sunken room
or sunken portion of a room, having its floor below ground level on
all sides.
    6. Building
    a. A structure with two or more outside rigid walls and a fully
secured roof that is affixed to a permanent site;
    b. A manufactured home, also known as a mobile home, is a
structure: Built on a permanent chassis, transported to its site in
one or more sections, and affixed to a permanent foundation; or
    c. A travel trailer without wheels, built on a chassis and
affixed to a permanent foundation, that is regulated under the
community's floodplain management and building ordinances or laws.
    Building does not mean a gas or liquid storage tank, shipping
container, or a recreational vehicle, park trailer, or other similar
vehicle, except as described in C.6.c above.
    7. Cancellation. The ending of the insurance coverage provided
by this policy before the expiration date.
    8. Condominium. That form of ownership of one or more buildings
in which each unit owner has an undivided interest in common
elements.
    9. Condominium Association. The entity made up of the unit
owners responsible for the maintenance and operation of:
    a. Common elements owned in undivided shares by unit owners; and
    b. Other buildings in which the unit owners have use rights;
where membership in the entity is a required condition of ownership.
    10. Condominium Building. A type of building for which the form
of ownership is one in which each unit owner has an undivided
interest in common elements of the building.
    11. Declarations Page. A computer-generated summary of
information you provided in your application for insurance. The
Declarations Page also describes the term of the policy, limits of
coverage, and displays the premium and our name. The Declarations
Page is a part of this flood insurance policy.
    12. Deductible. The amount of an insured loss that is your
responsibility and that is incurred by you before any amounts are
paid for the insured loss under this policy.
    13. Described Location. The location where the insured
building(s) or personal property are found. The described location
is shown on the Declarations Page.
    14. Direct Physical Loss By or From Flood. Loss or damage to
insured property, directly caused by a flood. There must be evidence
of physical changes to the property.
    15. Dwelling. A building designed for use as a residence for no
more than four families or a single-family unit in a condominium
building.
    16. Elevated Building. A building that has no basement and that
has its lowest elevated floor raised above ground level by
foundation walls, shear walls, posts, piers, pilings, or columns.
    17. Emergency Program. The initial phase of a community's
participation in the National Flood Insurance Program. During this
phase, only limited amounts of insurance are available under the Act
and the regulations prescribed pursuant to the Act.
    18. Federal Policy Fee. A flat rate charge you must pay on each
new or renewal policy to defray certain administrative expenses
incurred in carrying out the National Flood Insurance Program.
    19. Improvements. Fixtures, alterations, installations, or
additions comprising a part of the dwelling or apartment in which
you reside.
    20. Mudflow. A river of liquid and flowing mud on the surface of
normally dry land areas, as when earth is carried by a current of
water. Other earth movements, such as landslide, slope failure, or a
saturated soil mass moving by liquidity down a slope, are not
mudflows.
    21. National Flood Insurance Program (NFIP). The program of
flood insurance coverage and floodplain management administered
under the Act and applicable Federal regulations in Title 44 of the
Code of Federal Regulations, Subchapter B.
    22. Policy. The entire written contract between you and us. It
includes:
    a. This printed form;
    b. The application and Declarations Page;
    c. Any endorsement(s) that may be issued; and
    d. Any renewal certificate indicating that coverage has been
instituted for a new policy and new policy term. Only one dwelling,
which you specifically described in the application, may be insured
under this policy.
    23. Pollutants. Substances that include, but are not limited to,
any solid, liquid, gaseous, or thermal irritant or contaminant,
including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and
waste. ``Waste'' includes, but is not limited to, materials to be
recycled, reconditioned, or reclaimed.
    24. Post-FIRM Building. A building for which construction or
substantial improvement occurred after December 31, 1974, or on or
after the effective date of an initial Flood Insurance Rate Map
(FIRM), whichever is later.
    25. Principal Residence. The dwelling in which you or your
spouse have lived for at least 80 percent of:
    a. The 365 days immediately preceding the time of loss; or
    b. The period of ownership of you or your spouse, if either you
or your spouse owned the dwelling for less than 365 days immediately
preceding the time of loss.
    26. Probation Surcharge. A flat charge you must pay on each new
or renewal policy issued covering property in a community the NFIP
has placed on probation under the provisions of 44 CFR 59.24.
    27. Regular Program. The final phase of a community's
participation in the National Flood Insurance Program. In this
phase, a Flood Insurance Rate Map is in effect and full limits of
coverage are available under the Act and the regulations prescribed
pursuant to the Act.
    28. Special Flood Hazard Area (SFHA). An area having special
flood or mudflow, and/or flood-related erosion hazards, and shown on
a Flood Hazard Boundary Map or Flood Insurance Rate Map as Zone A,
AO, A1-A30, AE, A99, AH, AR, AR/A, AR/AE, AR/AH, AR/AO, AR/A1-A30,
V1-V30, VE, or V.
    29. Unit. A single-family residential space you own in a
condominium building.
    30. Valued Policy. A policy in which the insured and the insurer
agree on the value of the property insured, that value being payable
in the event of a total loss. The Standard Flood Insurance Policy is
not a valued policy.

III. Property Insured

A. Coverage A--Building Property

    We insure against direct physical loss by or from flood to:
    1. The dwelling at the described location, or for a period of 45
days at another location as set forth in III.C.2.b, Property Removed
to Safety.
    2. Additions and extensions attached to and in contact with the
dwelling by means of a rigid exterior wall, a solid load-bearing
interior wall, a stairway, an elevated walkway, or a roof. At your
option, additions and extensions connected by any of these methods
may be separately insured. Additions and extensions attached to and
in contact with the building by means of a common interior wall that
is not a solid load-bearing wall are always considered part of the
dwelling and cannot be separately insured.
    3. A detached garage at the described location. Coverage is
limited to no more than 10 percent of the limit of liability on the
dwelling. Use of this insurance is at your option but reduces the
building limit of

liability. We do not cover any detached garage used or held for use
for residential (i.e., dwelling), business, or farming purposes.
    4. Materials and supplies to be used for construction,
alteration, or repair of the dwelling or a detached garage while the
materials and supplies are stored in a fully enclosed building at
the described location or on an adjacent property.
    5. A building under construction, alteration, or repair at the
described location.
    a. If the structure is not yet walled or roofed as described in
the definition for building (see II.B.6.a) then coverage applies:
    (1) Only while such work is in progress; or
    (2) If such work is halted, only for a period of up to 90
continuous days thereafter.
    b. However, coverage does not apply until the building is walled
and roofed if the lowest floor, including the basement floor, of a
non-elevated building or the lowest elevated floor of an elevated
building is:
    (1) Below the base flood elevation in Zones AH, AE, A1-A30, AR,
AR/AE, AR/AH, AR/A1-A30, AR/A, AR/AO; or
    (2) Below the base flood elevation adjusted to include the
effect of wave action in Zones VE or V1-V30.
    The lowest floor level is based on the bottom of the lowest
horizontal structural member of the floor in Zones VE or V1-V30 or
the top of the floor in Zones AH, AE, A1-A30, AR, AR/AE, AR/AH, AR/
A1-A30, AR/A, and AR/AO.
    6. A manufactured home or a travel trailer, as described in the
II.C.6. If the manufactured home or travel trailer is in a special
flood hazard area, it must be anchored in the following manner at
the time of the loss:
    a. By over-the-top or frame ties to ground anchors; or
    b. In accordance with the manufacturer's specifications; or
    c. In compliance with the community's floodplain management
requirements unless it has been continuously insured by the NFIP at
the same described location since September 30, 1982.
    7. The following items of property which are insured under
Coverage A only:
    a. Awnings and canopies;
    b. Blinds;
    c. Built-in dishwashers;
    d. Built-in microwave ovens;
    e. Carpet permanently installed over unfinished flooring;
    f. Central air conditioners;
    g. Elevator equipment;
    h. Fire sprinkler systems;
    i. Walk-in freezers;
    j. Furnaces and radiators;
    k. Garbage disposal units;
    l. Hot water heaters, including solar water heaters;
    m. Light fixtures;
    n. Outdoor antennas and aerials fastened to buildings;
    o. Permanently installed cupboards, bookcases, cabinets,
paneling, and wallpaper;
    p. Plumbing fixtures;
    q. Pumps and machinery for operating pumps;
    r. Ranges, cooking stoves, and ovens;
    s. Refrigerators; and
    t. Wall mirrors, permanently installed.
    8. Items of property below the lowest elevated floor of an
elevated post-FIRM building located in Zones A1-A30, AE, AH, AR, AR/
A, AR/AE, AR/AH, AR/A1-A30, V1-V30, or VE, or in a basement
regardless of the zone. Coverage is limited to the following:
    a. Any of the following items, if installed in their functioning
locations and, if necessary for operation, connected to a power
source:
    (1) Central air conditioners;
    (2) Cisterns and the water in them;
    (3) Drywall for walls and ceilings in a basement and the cost of
labor to nail it, unfinished and unfloated and not taped, to the
framing;
    (4) Electrical junction and circuit breaker boxes;
    (5) Electrical outlets and switches;
    (6) Elevators, dumbwaiters and related equipment, except for
related equipment installed below the base flood elevation after
September 30, 1987;
    (7) Fuel tanks and the fuel in them;
    (8) Furnaces and hot water heaters;
    (9) Heat pumps;
    (10) Nonflammable insulation in a basement;
    (11) Pumps and tanks used in solar energy systems;
    (12) Stairways and staircases attached to the building, not
separated from it by elevated walkways;
    (13) Sump pumps;
    (14) Water softeners and the chemicals in them, water filters,
and faucets installed as an integral part of the plumbing system;
    (15) Well water tanks and pumps;
    (16) Required utility connections for any item in this list; and
    (17) Footings, foundations, posts, pilings, piers, or other
foundation walls and anchorage systems required to support a
building.
    b. Clean-up.

B. Coverage B--Personal Property

    1. If you have purchased personal property coverage, we insure
against direct physical loss by or from flood to personal property
inside a building at the described location, if:
    a. The property is owned by you or your household family
members; and
    b. At your option, the property is owned by guests or servants.
    2. Personal property is also insured for a period of 45 days at
another location as set forth in III.C.2.b, Property Removed to
Safety.
    3. Personal property in a building that is not fully enclosed
must be secured to prevent flotation out of the building. If the
personal property does float out during a flood, it will be
conclusively presumed that it was not reasonably secured. In that
case, there is no coverage for such property.
    4. Coverage for personal property includes the following
property, subject to B.1 above, which is insured under Coverage B
only:
    a. Air conditioning units, portable or window type;
    b. Carpets, not permanently installed, over unfinished flooring;
    c. Carpets over finished flooring;
    d. Clothes washers and dryers;
    e. ``Cook-out'' grills;
    f. Food freezers, other than walk-in, and food in any freezer;
and
    g. Portable microwave ovens and portable dishwashers.
    5. Coverage for items of property below the lowest elevated
floor of an elevated post-FIRM building located in Zones A1-A30, AE,
AH, AR, AR/A, AR/AE, AR/AH, AR/A1-A30, V1-V30, or VE, or in a
basement regardless of the zone, is limited to the following items,
if installed in their functioning locations and, if necessary for
operation, connected to a power source:
    a. Air conditioning units, portable or window type;
    b. Clothes washers and dryers; and
    c. Food freezers, other than walk-in, and food in any freezer.
    6. If you are a tenant and have insured personal property under
Coverage B in this policy, we will cover such property, including
your cooking stove or range and refrigerator. The policy will also
cover improvements made or acquired solely at your expense in the
dwelling or apartment in which you reside, but for not more than 10
percent of the limit of liability shown for personal property on the
Declarations Page. Use of this insurance is at your option but
reduces the personal property limit of liability.
    7. If you are the owner of a unit and have insured personal
property under Coverage B in this policy, we will also cover your
interior walls, floor, and ceiling (not otherwise insured under a
flood insurance policy purchased by your condominium association)
for not more than 10 percent of the limit of liability shown for
personal property on the Declarations Page. Use of this insurance is
at your option but reduces the personal property limit of liability.
    8. Special Limits. We will pay no more than $2,500 for any one
loss to one or more of the following kinds of personal property:
    a. Artwork, photographs, collectibles, or memorabilia, including
but not limited to, porcelain or other figures, and sports cards;
    b. Rare books or autographed items;
    c. Jewelry, watches, precious and semi-precious stones, or
articles of gold, silver, or platinum;
    d. Furs or any article containing fur that represents its
principal value; or
    e. Personal property used in any business.
    9. We will pay only for the functional value of antiques.

C. Coverage C--Other Coverages

1. Debris Removal

    a. We will pay the expense to remove non-owned debris that is on
or in insured property and debris of insured property anywhere.
    b. If you or a member of your household perform the removal
work, the value of your work will be based on the Federal minimum
wage.
    c. This coverage does not increase the Coverage A or Coverage B
limit of liability.

2. Loss Avoidance Measures

a. Sandbags, Supplies, and Labor

    (1) We will pay up to $1,000 for costs you incur to protect the
insured building from a flood or imminent danger of flood, for the
following:
    (a) Your reasonable expenses to buy:

    (i) Sandbags, including sand to fill them;
    (ii) Fill for temporary levees;
    (iii) Pumps; and
    (iv) Plastic sheeting and lumber used in connection with these
items.
    (b) The value of work, at the Federal minimum wage, that you or
a member of your household perform.
    (2) This coverage for Sandbags, Supplies, and Labor only applies
if damage to insured property by or from flood is imminent and the
threat of flood damage is apparent enough to lead a person of common
prudence to anticipate flood damage. One of the following must also
occur:
    (a) A general and temporary condition of flooding in the area
near the described location must occur, even if the flood does not
reach the building; or
    (b) A legally authorized official must issue an evacuation order
or other civil order for the community in which the building is
located calling for measures to preserve life and property from the
peril of flood.
    This coverage does not increase the Coverage A or Coverage B
limit of liability.

b. Property Removed to Safety

    (1) We will pay up to $1,000 for the reasonable expenses you
incur to move insured property to a place other than the described
location that contains the property in order to protect it from
flood or the imminent danger of flood. Reasonable expenses include
the value of work, at the Federal minimum wage, you or a member of
your household perform.
    (2) If you move insured property to a location other than the
described location that contains the property in order to protect it
from flood or the imminent danger of flood, we will cover such
property while at that location for a period of 45 consecutive days
from the date you begin to move it there. The personal property that
is moved must be placed in a fully enclosed building or otherwise
reasonably protected from the elements.
    (3) Any property removed, including a moveable home described in
II.6.b and c, must be placed above ground level or outside of the
special flood hazard area.
    (4) This coverage does not increase the Coverage A or Coverage B
limit of liability.

3. Condominium Loss Assessments

    a. Subject to III.C.3.b below, if this policy insures a
condominium unit, we will pay, up to the Coverage A limit of
liability, your share of loss assessments charged against you by the
condominium association in accordance with the condominium
association's articles of association, declarations and your deed.
The assessment must be made because of direct physical loss by or
from flood during the policy term, to the unit or to the common
elements of the NFIP insured condominium building in which this unit
is located.
    b. We will not pay any loss assessment:
    (1) Charged against you and the condominium association by any
governmental body;
    (2) That results from a deductible under the insurance purchased
by the condominium association insuring common elements;
    (3) That results from a loss to personal property, including
contents of a condominium building;
    (4) In which the total payment combined under all policies
exceeds the maximum amount of coverage available under the Act for a
single unit in a condominium building where the unit is insured
under both a Dwelling Policy and a RCBAP; or
    (5) On any item of damage that has already been paid under a
RCBAP where a single unit in a condominium building is insured by
both a Dwelling Policy and a RCBAP.
    c. Condominium Loss Assessment coverage does not increase the
Coverage A Limit of Liability and is subject to the maximum coverage
limits available for a single-family dwelling under the Act, payable
between all policies issued and covering the unit, under the Act.

D. Coverage D--Increased Cost of Compliance

1. General

    This policy pays you to comply with a State or local floodplain
management law or ordinance affecting repair or reconstruction of a
building suffering flood damage. Compliance activities eligible for
payment are: elevation, floodproofing, relocation, or demolition (or
any combination of these activities) of your building. Eligible
floodproofing activities are limited to:
    a. Non-residential buildings.
    b. Residential buildings with basements that satisfy FEMA's
standards published in the Code of Federal Regulations [44 CFR
60.6(b) or (c)].

2. Limit of Liability

    We will pay you up to $30,000 under this Coverage D--Increased