66026 Federal Register / Vol. 62, No. 242 / Wednesday, December 17, 1997 / Rules and Regulations

iii. By removing the remainder of

§ 186.250.

§ 186.350 [Amended]

C. Section 186.350 is amended by

removing the entry beginning with ‘‘70

parts per million in dried apple

pomace...’’.

§ 186.450 [Amended]

D. Section 186.450 is amended by

removing the phrase ‘‘citrus molasses

and’’.

§§ 186.600 [Removed]

E. By removing § 186.600.

§ 186.1000 [Amended]

F. Section 186.1000 is amended by

removing from the table in paragraph (a)

the entry for ‘‘apple pomace, dried,’’

‘‘corn soapstock,’’ ‘‘grape, pomace,

dried,’’ and ‘‘sunflower seed hulls.’’

§ 186.1075 [Amended]

G. Section 186.1075 is amended by

removing from the table in paragraph (a)

the entry for ‘‘soybean soapstock.’’

§ 186.1350 [Amended]

H. Section 186.1350 is amended by

removing the entry in the table for

‘‘apple pomace, dried.’’

I. Section 186.1650 is revised to read

as follows:

§ 186.1650 Dialifor.

Tolerances are established for

combined residues of the insecticide

dialifor (S-(2-chloro-1-

phthalimidoethyl) O,O-diethyl

phosphorodithioate) and its oxygen

analog S-(2-chloro-1-phthalimido-ethyl)

O,O-diethyl phosphorothioate in or on

the following processed foods when

present therein as a result of application

to the following growing citrus:

Commodity Parts per million

Dried citrus pulp .... 15

§ 186.2000 [Amended]

J. Section 186.2000 is amended by

removing the entry in the table for

‘‘Soybean soap stock.’’

§ 186.2400 [Removed]

K. Section 186.2400 is removed.

§ 186.2700 [Amended]

L. Section 186.2700 is amended by

removing from the table in paragraph (a)

the entry for ‘‘raisin waste.’’

§ 186.2950 [Amended]

M. Section 186.2950 is amended by

removing from the table the entries

‘‘apple pomace (dried),’’ ‘‘citrus

molasses,’’ ‘‘grape pomace,’’ and ‘‘raisin

waste.’’

§ 186.3050 [Removed]

N. Section 186.3050 is removed.

O. Section 186.3250 is revised to read

as follows:

§ 186.3250 Fluazifop-butyl.

Tolerances are established for

residues of (±)-2-[4-[[5-(trifluoromethyl)-

2-pyridinyl]oxy]phenoxy]propanoic

acid (fluazifop), both free and

conjugated, and of (±)-butyl 2[4-[[5-

(trifluoromethyl)-2-

pyridinyl]oxy]phenoxy]propanoate

(fluazifop-butyl), all expressed as

fluazifop, in or on the following feeds:

Food Parts per

million

Soybean, meal .............................. 2.0

§ 186.3350 and 186.3450 [Removed]

P. Sections 186.3350 and 186.3450 are

removed.

§ 186.3550 [Amended]

Q. Section 186.3550 is amended by

removing from the table in paragraph (a)

the entries ‘‘apple pomace, dried,’’

‘‘grape pomace, dried,’’ and ‘‘raisin

waste.’’

§ 186.3750 [Amended]

R. Section 186.3750 is amended by

removing from the table the entries

‘‘grape, pomace, dry,’’ ‘‘raisin waste,’’

and ‘‘soapstock.’’

§§ 186.4000 and 186.4800 [Removed]

S. Sections 186.4000, 186.4800 are

removed.

T. Section 186.4975 is revised to read

as follows:

§ 186.4975 Profenofos.

A regulation is established permitting

residues of the insecticide profenofos

[O-(4-bromo-2-chlorophenyl)-O-ethyl-Spropyl phosphorothioate] and its

metabolites converted to 4-bromo-2-

chlorophenol and calculated as

profenofos in cottonseed hulls at 6.0

ppm.

§ 186.5000 [Amended]

U. Section 186.5000 is amended by

removing the entries in the table for

‘‘apple pomace, dried’’ and ‘‘grape

pomace, dried.’’

§ 186.5450 [Removed]

V. Section 186.5450 is removed.

[FR Doc. 97–32788 Filed 12–16–97; 8:45 am]

BILLING CODE 6560–50–F

FEDERAL EMERGENCY

MANAGEMENT AGENCY

44 CFR Part 61

RIN 3067–AC73

National Flood Insurance Program

(NFIP); Standard Flood Insurance

Policy

AGENCY: Federal Emergency

Management Agency (FEMA).

ACTION: Final rule.

SUMMARY: This rule increases the

amount of the deductible under the

Standard Flood Insurance Policy—from

$750 to $1,000—for structures with

subsidized coverage.

EFFECTIVE DATE: May 1, 1998.

FOR FURTHER INFORMATION CONTACT:

Charles M. Plaxico, Jr., Federal

Emergency Management Agency,

Federal Insurance Administration, 202–

646–3422, (facsimile) 202–646–4327.

SUPPLEMENTARY INFORMATION: On

October 7, 1997, FEMA published in the

Federal Register, 62 FR 52304, a

proposed rule to amend the regulations

of the National Flood Insurance Program

(NFIP) to increase the deductible from

$750 to $1,000 for structures with

subsidized coverage. The proposal also

described a buy-back feature that would

permit insureds to ‘buy back,’ in

consideration of additional premium, a

reduced deductible under the Standard

Flood Insurance Policy (SFIP).

During the comment period,

comments were received from: The

Flood Insurance Producers National

Committee (FIPNC), a staff underwriter

from one of the insurance companies

participating in the NFIP’s Write Your

Own (WYO) program, and the

Association of State Flood Plain

Managers (ASFPM).

FIPNC agreed with the proposed

change in its entirety and recommended

that the amount of the reduced

deductible that a policyholder could

buy back be set at $500. While the

policy language itself will remain silent

on the amount of the reduced buy-back,

the $500 figure is the amount

contemplated by the Federal Insurance

Administration in implementing this

rule.
Federal Register / Vol. 62, No. 242 / Wednesday, December 17, 1997 / Rules and Regulations 66027

The underwriter from one of the WYO

companies expressed concern that

changing the deductible would

introduce complexities that would

undermine the NFIP’s growth and

policy sales goals. Assuming that the

commenter is referring to the

underwriting steps to reduce the

deductible to $500 for an additional

charge, any additional complexity is

more than offset by the ability of the

insured to purchase the desired

coverage. Since optional increased

deductibles have already been available

for many years, it would appear that the

flexibility to reduce the deductible does

not add any large degree of complexity

in writing the policy.

The underwriter also expressed

concern that increasing the deductible

and offering a buy-back would require

‘‘enormous changes’’ to the computer

systems of a participating company. It is

unclear why this would be necessary.

The FIA consulted with the NFIP

Bureau and Statistical Agent and several

WYO companies before initiating

rulemaking. There was no indication at

all that establishing a surcharge for an

optional deductible would pose any

difficulty. From past experience, the

proposed lead-time for implementing

this change should be adequate.

The underwriter also raised the

question of whether increasing the

deductible would ‘‘provide enough

benefit to warrant such a drastic

change.’’ It is FEMA’s position that the

change is far from ‘‘drastic’’ and actually

is only a modest one for agents and

companies participating under the WYO

Program. The reason for implementing

this change is to benefit the general

body of taxpayers by distributing costs

more equitably between the public

taxpayers who have subsidized the

coverage and the policyholders who

benefit from less than actuarial rates.

The last issue raised by the insurance

underwriter focused on whether the

deductible will be accepted by mortgage

companies and recommended that

FEMA coordinate the rule change with

lending institutions prior to

implementation. It is a standard

procedure for FEMA to coordinate with

the Federal agencies that regulate

lending activities any change connected

with the National Flood Insurance

Program. This change will be no

exception. Before the effective date of

May 1, 1998, in addition to the close

coordination FEMA will make with

these agencies, FEMA will incorporate

this change in its lenders workshops

scheduled for this fiscal year.

ASFPM, the third commenter,

believed that the ‘‘Federal Insurance

Administration (FIA) has unnecessarily

narrowed its options for building

reserves for catastrophic loss years.’’

ASFPM recommended that before FIA

inaugurates an increase in the

deductible for subsidized policies other

measures should be taken. ASFPM said

that, ‘‘Limiting the options to those

whose costs are borne by the policy

holder ignores a number of

programmatic, process, and operational

measures that should be examined. FIA

has a responsibility to demonstrate to

Congress, and the rate payers, that its

performance as a business is efficient.’’

FEMA disagrees that it has restricted

its options. To increase the deductible

for subsidized policies through

rulemaking, which is the necessary and

appropriate vehicle for changes to the

Standard Flood Insurance Policy, does

not prevent FEMA from continuing to

pursue other program improvements

that do not require rulemaking, such as

the ones recommended by the

Association. FEMA does not believe that

it serves business efficiency by delaying

modest actions that can reasonably be

taken now to reduce outlays from the

National Flood Insurance Fund while

other initiatives, including some of

those proposed by the Association, are

already underway independent of

rulemaking.

ASFPM also expressed concern that

the NFIP’s ‘‘ ‘administrative

grandfathering’ measure allows a

policyholder to ‘lock in’ a rate

regardless of future changes in risk or in

the mapped Special Flood Hazard

Area.’’ Unlike the ‘‘lock in’’ feature of

many home purchase agreements where

a homebuyer may ‘‘lock in’’ a set

interest rate for his or her mortgage loan

for the term of the loan and can thereby

be assured of the same monthly

payment for the entire term of the loan,

there are no such guarantees for policyholders under the NFIP. While the

policyholder with a pre-FIRM structure

may be entitled under the NFIP’s

‘‘administrative grandfathering’’

provision to the same risk classification,

it does not guarantee that the

policyholder will not experience an

increase in the premium paid each year

for flood insurance coverage. The entire

issue of ‘‘administrative

grandfathering,’’ however, is under

review by the Federal Insurance

Administration. In the meantime, FEMA

will implement this modest change of

increasing the deductible for subsidized

policies.

FEMA agrees wholeheartedly with the

ASFPM’s recommendation that

underused, low-cost mitigation

measures should be encouraged, such as

relocating furnaces and hot water

heaters. FEMA encourages such

measures in its Interagency Hazard

Mitigation Team Reports, through its

publications to homeowners and

insureds, by assigning mitigation

specialists to assist flood victims and

communities during the recovery

process, and by conducting on-site

mitigation workshops after flood

disasters. States, localities, and FEMA

have been working in partnership for

years on this issue and will continue to

work to implement the type of low cost

mitigation measures cited by the

Association. To suggest that increasing

the deductible should be delayed until

after more success is achieved in this

area is not reasonable.

ASFPM also recommended that

FEMA improve ‘‘quality control when

policies are written and by evaluating

the policies currently on the books.’’

The Association argued that corrections

in ratings ‘‘will increase premium

income in a manner that will benefit all

policy holders.’’ FIA has conducted

studies to determine the possible extent

of misrating. These studies show that

only a relatively small percentage of

NFIP policies are misrated. FEMA has

underway efforts to improve the quality

of underwriting in the NFIP.

First, during fiscal year 1997, the

NFIP conducted 396 workshops for

insurance agents to master the

underwriting requirements of the NFIP

so that policies will be rated properly

when submitted to the NFIP or to the

Write Your Own company participating

in the NFIP. So far, 150 workshops for

agents have been scheduled for fiscal

year 1998.

Second, there are other initiatives

underway designed to improve the

quality control of NFIP’s underwriting.

In May 1998, FIA will use a Geographic

Information System (GIS) to ensure that

structures insured by Preferred Risk

Policies (PRP) are in fact located in

zones entitling them to PRP rates. If this

proves to be an effective tool for

monitoring structures insured under

PRP policies, FIA may expand the use

of the GIS system as a quality control

tool for other policies as well. Also, a

condominium re-inspection program

has been an effective tool to ensure

proper rating of condominiums.

ASPFM cited the difficult experience

of State and local floodplain managers

in administering the NFIP’s ‘substantial

damage’ provision after significant flood

damage. The Association recommended

that ‘‘FEMA should examine current

methods for determining ‘substantial

damage’ and seek to simplify the

process.’’ FEMA has long recognized the

problems with regard to State and

community implementation of the NFIP

substantial damage requirement. The
66028 Federal Register / Vol. 62, No. 242 / Wednesday, December 17, 1997 / Rules and Regulations

NFIP substantial damage requirement,

although a necessary step to reduce

flood damages, has often created

financial hardship for individual

property owners who must comply with

a floodplain management ordinance

which requires that buildings be

elevated or floodproofed to an elevation

above the base flood elevation (a flood

having a one percent chance of being

equaled or exceeded in any given year).

FEMA believes that the new Increased

Cost of Compliance (ICC) coverage

under the Standard Flood Insurance

Policy, a coverage mandated by § 555 of

Pub. L. 103–325 and implemented by

FEMA through publication of a final

rule on February 25, 1997, in the

Federal Register 62 FR 8391, will help

policyholders to pay for the additional

costs to comply with State or

community floodplain management

laws or ordinances for substantially

damaged as well as repetitively

damaged buildings. In addition, FEMA

has developed the ‘‘Residential

Substantial Damage Estimator,’’ which

is a computer program to assist State

and local officials in estimating building

value and damage costs for both single

family and manufactured homes.

Furthermore, FIA has worked closely

with the Mitigation Directorate to

develop a procedure for alerting both

the local community and the FEMA

Regional Mitigation staff of potential

cases of substantial damage after a flood

event. Once sufficient claims have been

paid on the new coverage, FEMA

intends to evaluate how well the ICC

coverage is working. FEMA will also

continue to examine how well

communities are implementing the

substantial damage requirement and

evaluate methods for determining

substantial damage.

The Association also stated that ‘‘the

claims adjustment process should be

critically evaluated to determine that

claims amounts are appropriate. The

Association is aware of anecdotal

evidence that some policyholders may

be receiving claim payments that are in

excess of damage. Occasionally, it is

perceived that a claims adjuster may be

lax because the dollars used to pay

claims are not the responsibility of his

or her insurance company.’’

On the broader issues of claims

payments and fiscal responsibility,

FEMA has adopted a number of

safeguards to ensure a claim program of

the highest quality and service possible.

A company participating in the NFIP’s

Write Your Own program bears

responsibility for overpayments that

result from error—and not simply a

matter of judgement—and must

reimburse the National Flood Insurance

Fund for overpayments due to such

errors. FEMA has a regular system of reinspections and audits to maintain

quality control over the claim process.

The NFIP has on its staff experienced

general property adjusters who conduct

random re-inspections of claims

handled by each of the companies

participating in the NFIP’s Write Your

Own program. In addition to the claims

re-inspection program, claims are

audited by an accounting firm selected

by FEMA’s Office of Inspector General.

These audits include a representative

number of claim files for each year that

are reviewed for compliance with NFIP

regulations. Under the NFIP’s claim

audit procedures, Write Your Own

companies themselves must hire

independent auditors to do audits every

two years. In addition, FIA is about to

conduct a study that will review the

whole process of claims adjustments

and audits. The experience from past

audits and re-inspections is that claims

overpayments have not been a

significant problem. Nonetheless, FEMA

invites concrete evidence on any

policyholders who may have received

‘‘claim payments that are in excess of

damage’’ or where the claims adjuster

‘‘may be lax.’’ That information may be

submitted directly to: Federal

Emergency Management Agency,

Federal Insurance Administration, 500

C Street SW., Washington, DC 20472,

Attention: Director of Claims.

The Association also recommended

that the expense allowance—the amount

of premium retained by companies

participating in the NFIP’s Write Your

Own program, especially the amount of

commission paid to agents for policy

renewals—be examined ‘‘carefully

because the NFIP is fundamentally a

program designed to reduce federal

disaster expenditures and to help

floodplain occupants.’’ FEMA is in the

process of evaluating what percentage of

the expense allowance is appropriate for

companies to retain and how that

should relate to meeting specified

growth goals.

Finally, the Association cited

repetitive losses as a ‘‘significant drain

on the National Flood Insurance Fund’’

and urged ‘‘closer examination of the

repetitive loss problem in order to

determine whether certain types of risks

can be discriminated, and perhaps

targeted with mitigation information.’’

The problem of repetitive losses has

presented a significant challenge to the

program. In the past, FIA proposed

several remedies, including premium

surcharges, to address the problem of

repetitive flood losses. These proposals,

however, encountered political

opposition and have not been

implemented.

Currently, FEMA is addressing this

problem through its Community Rating

System (CRS), implementation of ICC

coverage, and mitigation grant and

assistance programs authorized by

Congress. The NFIP’s CRS, through

community-wide premium discounts,

gives incentives to communities to

mitigate repetitive flood losses. In

addition, Congress authorized ICC

coverage not only for substantially

flood-damaged buildings but also for

repetitively flood-damaged buildings in

States and communities that require

compliance with laws and ordinances

affecting these buildings. With passage

of the National Flood Insurance Reform

Act, Pub. L. 103–325, Congress also

authorized establishment of a Federal

grant program—Flood Mitigation

Assistance (FMA)—to provide financial

assistance to States and communities for

flood mitigation planning and activities.

A major statutory goal of FEMA is to

fund cost-effective mitigation measures

that reduce the number of repetitively

damaged buildings. FEMA’s Hazard

Mitigation Grant Program authorized

under § 404 of the Robert T. Stafford

Disaster Relief and Emergency

Assistance Act also provides financial

assistance to States and communities to

fund mitigation measures for

repetitively damaged buildings

following a major disaster declaration.

FEMA will continue to explore other

measures to address the issue of

repetitive losses.

Increasing the deductible is one

relatively modest step that is expected

to reduce outlays from the National

Flood Insurance Fund by $6.3 million in

the first full year of implementation.

This action is a measured change

compatible with Congressional intent

for the program. The subsidy study that

the ASFPM wished to see completed

before the increase in deductible takes

effect is intended to examine the affects

of subsidy changes of much greater

impact and wider scope. FEMA intends

to pursue a balanced approach through

its program initiatives for the NFIP with

modest reductions in subsidy that are

consistent with the larger NFIP subsidy

issue. These efforts complement the

recommendations made by the

Association. FEMA does not agree that

increasing the deductible should be

delayed until larger scale solutions are

identified and implemented.

National Environmental Policy Act

Pursuant to section 102(2)(C) of the

National Environmental Policy Act of

1969, 42 U.S.C. 4371 et seq., and the

implementing regulations of the Council
Federal Register / Vol. 62, No. 242 / Wednesday, December 17, 1997 / Rules and Regulations 66029

on Environmental Quality, 40 CFR parts

1500–1508, FEMA has conducted an

environmental assessment of this final

rule. The assessment concludes that

there will be no significant impact on

the human environment as a result of

the issuance of this final rule, and no

Environmental Impact Statement will be

prepared. Copies of the environmental

assessment are on file for inspection

through the Rules Docket Clerk, Federal

Emergency Management Agency, room

840, 500 C Street SW., Washington, DC

20472.

Executive Order 12866, Regulatory

Planning and Review

This final rule is not a significant

regulatory action within the meaning of

§ 2(f) of E.O. 12866 of September 30,

1993, 58 FR 51735, but attempts to

adhere to the regulatory principles set

forth in E.O. 12866. The final rule has

not been reviewed by the Office of

Management and Budget under E.O.

12866.

Paperwork Reduction Act

This final rule does not contain a

collection of information and therefore

is not subject to the provisions of the

Paperwork Reduction Act of 1995.

Executive Order 12612, Federalism

This final rule involves no policies

that have federalism implications under

E.O. 12612, Federalism, dated October

26, 1987.

Executive Order 12778, Civil Justice

Reform

This final rule meets the applicable

standards of § 2(b)(2) of E.O. 12778.

Congressional Review of Agency

Rulemaking

This final rule has been submitted to

the Congress and to the General

Accounting Office under the

Congressional Review of Agency

Rulemaking Act, Pub. L. 104–121. The

rule is not a ‘‘major rule’’ within the

meaning of that Act. It does not result

in nor is it likely to result in an annual

effect on the economy of $100,000,000

or more; it will not result in a major

increase in costs or prices for

consumers, individual industries,

Federal, State, or local government

agencies, or geographic regions; 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 foreignbased enterprises.

This final rule is exempt (1) from the

requirements of the Regulatory

Flexibility Act, and (2) from the

Paperwork Reduction Act. The rule is

not an unfunded Federal mandate

within the meaning of the Unfunded

Mandates Reform Act of 1995, Pub. L.

104–4. It does not meet the

$100,000,000 threshold of that Act, and

any enforceable duties are imposed as a

condition of Federal assistance or a duty

arising from participation in a voluntary

Federal program.

List of Subjects in 44 CFR Part 61

Flood insurance.

Accordingly, 44 CFR Part 61 is

amended as follows:

PART 61—INSURANCE COVERAGE

AND RATES

1. The authority citation for Part 61

continues to read as follows:

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

Reorganization Plan No. 3 of 1978, 43 FR

41943, 3 CFR, 1978 Comp., p. 329; E.O.

12127 of Mar. 31, 1979, 44 FR 19367, 3 CFR,

1979 Comp., p. 376.

2. Paragraph C. of Article 7 of

Appendix A(1) is revised to read as

follows:

Appendix A(1)—Federal Emergency

Management Agency, Federal

Insurance Administration Standard

Flood Insurance Policy

* * * * *

C. For any flood insurance policy

issued or renewed for a property located

in an Emergency Program community or

for any property located in a Regular

Program community in Zones A, AO,

AH, A1–A30, AE, AR, AR/AE, AR/AH,

AR/AO, AR/A1–A30, AR/A, VO, V1–

V30, VE, or V where the rates available

for buildings built before the effective

date of the initial Flood Insurance Rate

Map or December 31, 1974, whichever

is later, are used to compute the

premium, the amount of the deductible

for each loss occurrence is determined

as follows: We shall be liable only when

such loss exceeds $1,000, or the amount

of any other deductible that you

selected when you applied for this

policy or subsequently by endorsement.

* * * * *

3. Paragraph C. of Article 7 of

Appendix A(2) is revised to read as

follows:

Appendix A(2)—Federal Emergency

Management Agency, Federal

Insurance Administration Standard

Flood Insurance Policy

C. For any flood insurance policy

issued or renewed for a property located

in an Emergency Program community or

for any property located in a Regular

Program community in Zones A, AO,

AH, A1–A30, AE, AR, AR/AE, AR/AH,

AR/AO, AR/A1–A30, AR/A, VO, V1–

V30, VE, or V where the rates available

for buildings built before the effective

date of the initial Flood Insurance Rate

Map or December 31, 1974, whichever

is later, are used to compute the

premium, the amount of the deductible

for each loss occurrence is determined

as follows: The Insurer shall be liable

only when such loss exceeds $1,000, or

the amount of any other deductible that

the Insured selected when it applied for

this policy or subsequently by

endorsement.

* * * * *

4. Paragraph C. of Article 7 of

Appendix A(3) is revised to read as

follows:

Appendix A(3)—Federal Emergency

Management Agency, Federal

Insurance Administration Standard

Flood Insurance Policy

C. For any flood insurance policy

issued or renewed for any property

located in Zones A, AO, AH, A1–A30,

AE, AR, AR/AE, AR/AH, AR/AO, AR/

A1–A30, AR/A, VO, V1–V30, VE, or V

where the rates available for buildings

built before the effective date of the

initial Flood Insurance Rate Map or

December 31, 1974, whichever is later,

are used to compute the premium, the

amount of the deductible for each loss

occurrence is determined as follows:

The Insurer shall be liable only when

such loss exceeds $1,000, or the amount

of any other deductible that the Insured

selected when it applied for this policy

or subsequently by endorsement.

* * * * *

(Catalog of Federal Domestic Assistance No.

83.100, ‘‘Flood Insurance’’; No. 83.516,

‘‘Disaster Assistance’’)

Dated: December 12, 1997.

Edward T. Pasterick,

Acting Executive Administrator, Federal

Insurance Administration.

[FR Doc. 97–32945 Filed 12–16–97; 8:45 am]

BILLING CODE 6718–03–M

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 69

[CC Docket Nos. 96–262, 94–1, 91–213, 95–

72; FCC 97–368]

Access Charge Reform; Price Cap

Performance Review for Local

Exchange Carriers; Transport Rate

Structure

AGENCY: Federal Communications

Commission.

ACTION: Final rule; petition for

reconsideration; correction.