[Federal Register Volume 66, Number 116 (Friday, June 15, 2001)]
[Rules and Regulations]
[Pages 32666-32673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-15053]



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Part II





Federal Emergency Management Agency





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44 CFR Part 209



Supplemental Property Acquisition and Elevation Assistance; Final Rule

Federal Register / Vol. 66, No. 116 / Friday, June 15, 2001 / Rules 
and Regulations

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FEDERAL EMERGENCY MANAGEMENT AGENCY

44 CFR Part 209

RIN 3067-AD06


Supplemental Property Acquisition and Elevation Assistance

AGENCY: Federal Emergency Management Agency (FEMA).

ACTION: Final Rule.

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SUMMARY: We, FEMA, announce the availability of a Supplemental Property 
Acquisition and Elevation Assistance Program established for the 
acquisition or elevation, for hazard mitigation purposes, of properties 
that have been made uninhabitable by floods in areas that had a major 
disaster declaration in federal fiscal years 1999 or 2000, and for 
which Congress has authorized supplemental hazard mitigation 
assistance.

EFFECTIVE DATE: This final rule is effective August 14, 2001.

FOR FURTHER INFORMATION CONTACT: Robert F. Shea, Mitigation 
Directorate, Federal Emergency Management Agency, 500 C Street SW., 
Washington, DC 20472, (202) 646-3619, (facsimile) (202) 646-3104, or 
(email) <a href="/cdn-cgi/l/email-protection#f3919c91dd809b9692b395969e92dd949c85"><span class="__cf_email__" data-cfemail="e5878a87cb968d8084a583808884cb828a93">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This final rule provides guidance on the 
administration of a Supplemental Property Acquisition and Elevation 
Assistance program. Congress made funds available under the 
Consolidated Appropriations Act for FY 2000, Pub. L. 106-113, which 
provides up to $215 million for the acquisition of properties affected 
by Hurricane Floyd or surrounding events, and under Pub. L. 106-246, 
which provides $50 million for the acquisition or elevation of 
properties made uninhabitable by floods in areas that have had a major 
disaster declaration in federal fiscal years 1999 or 2000. This grant 
authority is for projects to acquire floodprone properties and demolish 
or relocate structures, or to elevate floodprone structures. Funds 
under this assistance program are available only for those properties 
that serve as the principal residence for the owner, are located in the 
100-year floodplain, and were made uninhabitable by the declared 
disaster.
    The purpose of the supplemental property acquisition and elevation 
assistance is to provide State and local governments with a mechanism 
for reducing or eliminating future disaster losses by clearing the 
floodplain and helping occupants to move out of harm's way or by 
elevating structures above expected flood levels. Individual homeowners 
are not eligible to apply directly for these funds and cannot determine 
from this rule whether they would be eligible to participate in the 
grant program. State and local government leadership is required to 
determine priorities for funding and to provide technical assistance 
and oversight for project development and implementation.
    This rule incorporates Federal, State, and local experiences 
acquired in implementation of Pub. L. 106-113. We invited comments on 
our interim final rule published February 11, 2000, 65 FR 7270, but our 
Rules Docket Clerk did not receive any. We have included in this rule 
explanatory details that were provided previously to State grantees in 
correspondence and that reflect how the program was implemented in 
practice.
    We will allocate funds from this program among the States that 
received major disaster declarations during federal fiscal years 1999 
and 2000 based on the number and value of properties meeting the 
eligibility criteria whose owners express interest in participating in 
the assistance program. We will request in writing that States provide 
individual property applications for funding to their FEMA Regional 
Director following publication of this rule. We will verify project 
eligibility of the applications provided by States in order to assure 
that all projects meet the criteria for the supplemental assistance 
program. None of the funds made available for special property 
acquisition and elevation assistance under this authority will be used 
in any calculation of a State's funding allocation under the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act Hazard Mitigation 
Grant Program, 42 U.S.C. 5170c.
    This rule explains the program eligibility criteria to ensure that 
States target those properties that were severely impacted by Federal 
disasters and would likely flood again in the future. It explains how 
we and the States set priorities for projects to ensure that we use 
funds in a cost-effective manner. We intend to target the funding to 
meet the needs of lower income households in the areas that are most 
affected by flood damage, by acquiring structures that had a fair 
market value of less than $300,000 just before the declared disaster 
event. For those properties affected by Hurricane Floyd and acquired 
with funds provided under Pub. L. 106-113, there is no limit on the 
total value of the property; the Federal contribution toward the 
purchase of these properties, however, may not exceed $225,000. In 
addition, these properties should be contiguous to other buyout 
parcels, part of an acquisition in the same neighborhood or part of a 
community acquisition plan.
    This rule and the program requirements are structured to parallel 
our Hazard Mitigation Grant Program (HMGP), which also has post-
disaster property acquisition, and elevation authority. However, the 
funding made available under this program has significant restrictions 
that differ from the HMGP, which States should note:
    (a) Funds are to be used for acquisition, or elevation projects 
only;
    (b) To be eligible, projects may only include properties that:
    (1) Are located in the 100-year floodplain;
    (2) Are the principal residence of the owner;
    (3) Were made uninhabitable by flooding as the result of a major 
disaster; and
    (4) Had a fair market value of less than $300,000 on the day before 
the declared disaster event if acquired under Pub. L. 106-246;
    (c) Subgrantees may pay participating homeowners no more than the 
fair market value of the property just before the declared disaster 
event.
    The HMGP does not have the limitations described above. In 
addition, where specific supplemental authorities contain other 
restrictions, the rule identifies those authorities.
    We encourage States to implement this program in conjunction with 
the HMGP to the extent possible. States and applicants should use HMGP 
guidance materials for acquisition projects, including the HMGP Interim 
Desk Reference (FEMA-345) and the Property Acquisition Handbook (FEMA-
317) to the extent that the guidance does not conflict with these 
regulations or the authorizing legislation. For example, FEMA-345 and 
FEMA-317 provide model deed restrictions and easements, and detailed 
procedures for avoiding duplication of benefits provided by other 
programs or insurance. The model deed language and the duplication of 
benefits review process apply to this special authority.
    Communities interested in participating should note that properties 
purchased with this special funding must remain as open space in 
perpetuity and may receive no future disaster assistance from any 
Federal source. For example, public park facilities on purchased open 
space land are not eligible for our Public Assistance program funding 
if future flood disasters occur in the area.
    States are responsible for measuring both the expected benefits of 
funded

[[Page 32667]]

projects and actual program effectiveness after future flood events. 
This process will help us and the States to assess program results and 
improve future mitigation program implementation.

National Environmental Policy Act (NEPA)

    NEPA imposes requirements for considering the environmental impacts 
of agency decisions. It requires that an Environmental Impact Statement 
(EIS) be prepared for ``major federal actions significantly affecting 
the quality of the human environment.'' If an action may or may not 
have a significant impact, an environmental assessment (EA) must be 
prepared. If, as a result of this study, a Finding of No Significant 
Impact (FONSI) is made, no further action is necessary. If it will have 
a significant effect, then the assessment is used to develop an EIS.
    Categorical Exclusions. Agencies can categorically identify actions 
(for example, repair of a building damaged by a disaster) that do not 
normally have a significant impact on the environment. Unless a major 
federal action is categorically excluded, an agency must prepare an EA 
or EIS.
    The purpose of the supplemental property acquisition and elevation 
assistance is to provide State and local governments with a means of 
reducing or eliminating future disaster losses by clearing the 
floodplain and helping occupants to move out of harm's way or by 
elevating structures above expected flood levels. Accordingly, this 
rule is excluded from the preparation of an environmental assessment or 
environmental impact statement under 44 CFR 10.8(d)(2)(ii), where the 
rule is related to actions that qualify for categorical exclusion under 
44 CFR 10.8(d)(2)(vii) and 44 CFR 10.8(d)(2)(xv). We will perform an 
environmental review under 44 CFR part 10, Environmental 
Considerations, on each proposed acquisition, or elevation project 
before funding and implementation.

Executive Order 12866, Regulatory Planning and Review

    We have prepared and reviewed this rule under the provisions of 
E.O. 12866, Regulatory Planning and Review. Under Executive Order 
12866, 58 FR 51735, October 4, 1993, a significant regulatory action is 
subject to OMB review and the requirements of the Executive Order. The 
Executive Order defines ``significant regulatory action'' as one that 
is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    This rule sets out our administrative procedures for making funds 
available for acquiring, relocating or elevating properties that have 
been made uninhabitable by Hurricane Floyd and by floods in areas that 
have had major disaster declarations in federal fiscal years 1999 or 
2000, with up to $265,000,000 available for this purpose. (Pub. L. 106-
113, November 11, 1999 appropriated $215,000,000 for post Hurricane 
Floyd buyouts, and Pub. L. 106-246, July 13, 2000, appropriated 
$50,000,000 for buyouts and elevations in areas that had a major 
disaster declaration in federal fiscal years 1999 or 2000). Most of the 
$265,000,000 appropriated funds will be obligated by the end of federal 
fiscal year 2001. As such the rule will have an effect on the economy 
of more than $100,000,000. The impact of the rule will promote public 
health and safety by providing low-income homeowners with the financial 
means to move voluntarily out of high-risk flood hazard areas or to 
elevate homes above the 100-year flood level. Therefore, this rule is a 
major rule as defined in 5 U.S.C. 804(2) and is an economically 
significant rule under Executive Order 12866. The Office of Management 
and Budget (OMB) has reviewed this rule under Executive Order 12866.

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, February 16, 1994, we have undertaken to 
incorporate environmental justice into our 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, denying persons the benefits of, or subjecting 
persons to discrimination because of their race, color, or national 
origin.
    No action that we can anticipate under the final rule will have a 
disproportionately high and adverse human health and environmental 
effect on any segment of the population. Properties that have a high 
risk of flooding are frequently associated with depressed property 
values and inhabited by low-income residents. This is the case in many 
communities that this rule targets for acquisitions and elevations. By 
offering such populations pre-event fair market value for their damaged 
residences to relocate voluntarily outside the flood hazard area, this 
rule helps give low-income homeowners the means to move to safer 
ground. In some cases, where a party acquires very low-priced 
residences, the buyout offer may not be enough to pay for available 
housing outside the hazard area because the law caps the offer at pre-
event fair market value. In such cases we will coordinate with the 
State to help identify alternative funding sources for those buyouts or 
to cover the relocation differential.

Paperwork Reduction Act

    FEMA has submitted to the OMB a request to continue using the 
collection of information from States and local governments that is 
contained in this final rule for the implementation of Supplemental 
Property Acquisition and Elevation Assistance. The collection has been 
submitted in accordance with the requirements of the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3507).
    We published this collection previously in the interim final rule 
and at that time we asked OMB to give us an emergency approval to use 
the collection until the final rule is published. We also requested 
public comments on the practical utility of the data being collected, 
the accuracy of the burden estimate, ways in which we could enhance the 
quality, utility and clarity of the information being collected, and 
ways in which we could minimize the burden on respondents, including 
the use of information technology. We did not receive any comments and 
have determined that we should continue to collect the data.

Collection of Information

    Title. Supplemental Property Acquisition and Elevation Assistance.
    Type of Information Collection. Revision of a Currently Approved 
Collection.
    OMB Number: 3067-0279.

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    Abstract. This collection is in accordance with FEMA's 
responsibilities under 44 CFR 206.3 to provide an orderly and 
continuing means of assistance by the Federal Government to State and 
local governments. The assistance provides help to alleviate the 
suffering and damage that result from major disasters and emergencies. 
Under Pub. L. 106-113 we may provide assistance for the acquisition of 
properties affected by Hurricane Floyd or surrounding events for hazard 
mitigation purposes. Under Public Law 106-246, we may provide 
assistance for the acquisition and elevation of properties in areas 
that had major disaster declarations in federal fiscal years 1999 and 
2000.
    Forms: SF424, Application for Federal Assistance; FEMA Form 20-15, 
Budget Information--Construction Programs; Project Narrative; FEMA Form 
20-16, 20-16b and 20-16c, Assurances and Certifications; Standard Form 
LLL, Disclosure of Lobbying Activities; FEMA Form 20-10 Financial 
Status Report; and the Performance/Progress Report format; Duplication 
of benefits review--communities and individual homeowners; Agreement-
Settlement/Deeds/Easement--communities and individual homeowners; 
Individual homeowners--Initial meetings/letters and appraisal/
inspection visit, review, offer.
    Affected Public: Individuals and Households; State, local and 
tribal governments. The forms, format and agreements allow State and 
local officials to apply for the Supplemental Property Acquisition and 
Elevation Assistance on behalf of their communities and citizens.

Estimated Total Annual Burden Hours

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                                                                      No. of         Hours per     Annual burden
                    Type of collection/forms                        respondents      response          hours
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SF-424 (Application face sheet).................................             263             .75             197
20-15 Budget--Construction......................................             263           17.2             4524
Project Narrative (section 209.8(b))............................             263           15               3945
20-16 (Summary of assurances and certifications)................             263            1.7              447
20-16b (Assurances, non-construction)...........................  ..............        (\1\)     ..............
20-16c (lobbying certification).................................  ..............        (\1\)     ..............
SF-LLL (lobbying disclosure)....................................             263             .5              132
Form 20-10-- Financial Status Report (213  x  quarterly = 852)..            1052            8               8416
Performance/Progress Report (213  x  quarterly=852).............            1052            4.2             4418
Duplication of benefits review:
    Communities.................................................             263           12.62            3319
    Individual homeowners.......................................            6625            1               6625
Agreement--Settlement/Deeds/Easement:
    Communities.................................................             263            6.31            1660
    Individual homeowners.......................................            6625            1               6625
Individual Homeowners--Initial Meeting/Letters..................            6625            2              13250
Individual Homeowners--Appraisal/Inspection Visit, Review, Offer            6625            1               6625
                                                                 -----------------------------------------------
        Total burden............................................  ..............  ..............          60,182
----------------------------------------------------------------------------------------------------------------
\1\ Included in 20-16.

    Estimated Cost. We have calculated the estimated costs associated 
with the collection of this information for the application process and 
the quarterly reporting process to be $1,012,460. This calculation is 
based on the number of burden hours for each type of information 
collection/form, as indicated above, and the estimated wage rates for 
those individuals responsible for collecting the information or 
completing the forms. We used two wage rates; both rates were 
determined using data from the U.S. Department of Labor, Bureau of 
Labor Statistics (BLS). We assumed that urban and regional planners are 
the most likely staff to have responsibility for information collected 
and forms completed at the State level. Current BLS data indicate that 
the median annual earnings of urban and regional planners were $42,860 
in 1998, or an hourly rate of $20.61. States may use existing systems 
for submitting grant applications and reporting. We further assumed 
that community officials would have the same hourly rate as the urban 
and regional planners. In order to estimate the costs associated with 
information collection by individual homeowners, we used BLS data 
reflecting the median weekly earnings of full-time wage and salary 
workers nationwide, without regard to sex, age or race. Current BLS 
data indicates that these median weekly earnings were $549 in 1999, or 
a hourly rate of $13.73.

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                                                                     Estimated     Annual burden
                                                                    hourly rate        hours      Estimated cost
----------------------------------------------------------------------------------------------------------------
State and community officials...................................          $20.61          27,057        $557,654
Individuals.....................................................           13.73          33,125         454,806
                                                                 -----------------------------------------------
    Total burden................................................           16.82          60,182       1,012,460
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    Comments: Interested persons should submit written comments to the 
Desk Officer for the Federal Emergency Management Agency, Office of 
Management and Budget, Office of Information and Regulatory Affairs, 
725-17th Street, NW., Washington, DC 20503 within 30 days of this 
notice.

FOR FURTHER INFORMATION CONTACT: For copies of this collection of 
information, contact Muriel B. Anderson, Federal Emergency Management 
Agency, 500 C Street, SW., Washington, DC 20472, (telephone) 202-646-
2625, (facsimile) 202-646-3347, or (e-mail) <a href="/cdn-cgi/l/email-protection#cda0b8bfa4a8a1e3aca3a9a8bfbea2a38daba8a0ace3aaa2bb"><span class="__cf_email__" data-cfemail="86ebf3f4efe3eaa8e7e8e2e3f4f5e9e8c6e0e3ebe7a8e1e9f0">[email protected]</span></a>.

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Executive Order 13132, Federalism

    Executive Order 13132, Federalism, dated August 4, 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, or on 
the distribution of power and responsibilities among the various levels 
of government. Federal agencies must closely examine the statutory 
authority supporting any action that would limit the policymaking 
discretion of the States, and to the extent practicable, must consult 
with State and local officials before implementing any such action.
    We have reviewed this rule under E.O.13132 and have concluded that 
the rule does not have federalism implications as defined by the 
Executive Order. We have determined that the rule does not 
significantly affect the rights, roles, and responsibilities of States, 
and involves no preemption of State law nor does it limit State 
policymaking discretion. We have, nevertheless, worked with affected 
States to develop this rule.
    In May 2000 we solicited responses from Hurricane Floyd-affected 
States on several important and complex policy issues about acquisition 
of floodprone residences. These issues arose during the development of 
procedures and regulations for the special buyout authority following 
the catastrophic flooding of Hurricane Floyd. We incorporated in this 
rule responses that we received from the States and also plan to use 
them in our continuing efforts to review and strengthen other existing 
mitigation programs and policies.

Congressional Review of Agency Rulemaking

    We have sent this final rule to the Congress and to the General 
Accounting Office under the Congressional Review of Agency Rulemaking 
Act, Pub. L. 104-121. The rule is a ``major rule'' within the meaning 
of that Act. It is an administrative action in support of normal day-
to-day grant activities required by: (1) Pub. L. 106-113, which 
prescribes how we must transfer the $215,000,000 appropriation through 
grants to certain States; and (2) Pub. L. 106-246, which prescribes how 
we must transfer an additional $50,000,000 through grants to States 
that had a major disaster declaration in federal fiscal years 1999 or 
2000.
    The rule will not result in a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions. It will not have ``significant adverse 
effects'' on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises. This final rule is subject to 
the information collection requirements of the Paperwork Reduction Act 
and OMB has assigned Control No. 3067-0279. The rule is not an unfunded 
Federal mandate within the meaning of the Unfunded Mandates Reform Act 
of 1995, Pub. L. 104-4, and any enforceable duties that we impose are a 
condition of Federal assistance or a duty arising from participation in 
a voluntary Federal program.

List of Subjects in 44 CFR Part 209

    Administrative practice and procedure, Disaster assistance, Grant 
Programs, Reporting and recordkeeping requirements.

    Accordingly, amend Chapter I, Subchapter D, of Title 44, Code of 
Federal Regulations, by revising Part 209 to read as follows:

PART 209--SUPPLEMENTAL PROPERTY ACQUISITION AND ELEVATION 
ASSISTANCE

Sec.
209.1  Purpose.
209.2  Definitions.
209.3  Roles and responsibilities.
209.4  Allocation and availability of funds.
209.5  Applicant eligibility.
209.6  Project eligibility.
209.7  Priorities for project selection.
209.8  Application and review process.
209.9  Appeals.
209.10  Project implementation requirements.
209.11  Grant administration.
209.12  Oversight and results.

    Authority: Pub. L. 106-113, Div. B, sec. 1000(a)(5) (enacting 
H.R. 3425 by cross-reference), 113 Stat. 1501, 1536; Pub. L. 106-
246, 114 Stat. 511, 568; Robert T. Stafford Disaster Relief and 
Emergency Assistance Act, 42 U.S.C. 5121, Reorganization Plan No. 3 
of 1978, 43 FR 41943, 3 CFR, 1978 Comp., p. 329; E.O. 12127, 44 FR 
19367, 3 CFR, 1979 Comp., p. 376; E.O. 12148, 44 FR 43239, 3 CFR, 
1979 Comp., p. 412.


Sec. 209.1  Purpose.

    This part provides guidance on the administration of a program to 
provide supplemental property acquisition and elevation assistance made 
available by Congress to provide funds for the acquisition or 
elevation, for hazard mitigation purposes, of properties that have been 
made uninhabitable by floods in areas that were declared major 
disasters in federal fiscal years 1999 and 2000.


Sec. 209.2  Definitions.

    Except as noted in this part, the definitions listed at Secs. 206.2 
and 206.431 apply to the implementation of this part.
    Allowable open space uses means recreational and wetland management 
uses including: Parks for outdoor recreational activities; nature 
reserves; cultivation; grazing; camping (except where adequate warning 
time is not available to allow evacuation); temporary storage in the 
open of wheeled vehicles which are easily movable (except mobile 
homes); unimproved, permeable parking lots; and buffer zones. Allowable 
uses generally do not include walled buildings, flood reduction levees, 
highways or other uses that obstruct the natural and beneficial 
functions of the floodplain.
    Applicant means a State agency, local government, or qualified 
private nonprofit organization that submits an application for 
acquisition or elevation assistance to the State or to FEMA.
    Cost-effective means that the mitigation activity will not cost 
more than the anticipated value of the reduction in both direct damages 
and subsequent negative impacts to the area if future disasters were to 
occur. Both costs and benefits will be computed on a net present value 
basis. The State will complete an analysis of the cost effectiveness of 
the project, in accordance with FEMA guidance and using a FEMA-approved 
methodology. FEMA will review the State's analysis.
    Pre-event fair market value means the value a willing buyer would 
have paid and a willing seller would have sold a property for had the 
disaster not occurred.
    Principal residence means a residence that is occupied by the legal 
owner; and is the dwelling where the legal owner normally lives during 
the major portion of the calendar year.
    Qualified alien means an alien who meets one of the following 
criteria:
    (1) An alien lawfully admitted for permanent residence under the 
Immigration and Nationality Act (INA);
    (2) An alien granted asylum under section 208 of the INA;
    (3) A refugee admitted to the United States under section 207 of 
the INA;
    (4) An alien paroled into the United States under section 212(d)(5) 
of the INA for at least one year;
    (5) An alien whose deportation is being withheld under section 
243(h) of the INA as in effect prior to April 1, 1997, or section 
241(b)(3) of the INA;

[[Page 32670]]

    (6) An alien granted conditional entry pursuant to section 
203(a)(7) of the INA as in effect prior to April 1, 1980;
    (7) An alien who is a Cuban and Haitian entrant (as defined in 
section 501(e) of the Refugee Education Assistance Act of 1980); or
    (8) An alien who (or whose child or parent) has been battered and 
meets the requirements of 8 U.S.C. 1641(c).
    Qualified private nonprofit organization means an organization with 
a conservation mission as qualified under section 170(h) of the 
Internal Revenue Code of 1954, as amended, and the regulations 
applicable under that section.
    Repetitive Loss Structure means a structure covered by a contract 
for flood insurance under the National Flood Insurance Program (NFIP) 
that has incurred flood-related damage on two occasions during a 10-
year period, each resulting in at least a $1000 claim payment;
    State Hazard Mitigation Plan means the hazard mitigation plan that 
reflects the State's systematic evaluation of the nature and extent of 
vulnerability to the effects of natural hazards typically present in 
the State and includes a description of actions needed to minimize 
future vulnerability to hazards.
    Subgrantee means the government or other legal entity to which a 
subgrant is awarded and which is accountable to the grantee for the use 
of the funds provided. Subgrantees can be a State agency, local 
government, qualified private nonprofit organizations, or Indian tribes 
as outlined in 44 CFR 206.434;
    Substantial Damage means damage of any origin sustained by a 
structure whereby the cost of restoring the structure to its before-
damage condition would equal or exceed 50 percent of the market value 
of the structure before the damage occurred;
    Uninhabitable means that properties are certified by the 
appropriate State or local official normally empowered to make such 
certifications as meeting one or more of the following criteria:
    (1) Determined by an authorized local government official to be 
substantially damaged, according to National Flood Insurance Program 
criteria contained in 44 CFR 59.1;
    (2) Have been red- or yellow-tagged and declared uninhabitable due 
to environmental contamination by floodwaters, or otherwise determined 
to be uninhabitable by a State or local official in accordance with 
current codes or ordinances; or
    (3) Have been demolished due to damage or environmental 
contamination by floodwaters.
    We, our, or us means FEMA.


Sec. 209.3  Roles and responsibilities.

    The following describes the general roles of FEMA, the State, local 
communities or other organizations that receive grant assistance, and 
participating homeowners.
    (a) Federal. We will notify States about the availability of funds, 
and will allocate available funding to States that received major 
disaster declarations during the period covered by the supplemental 
authority. Our Regional Directors will verify project eligibility, 
provide technical assistance to States upon request, make grant awards, 
and oversee program implementation.
    (b) State. The State will be the Grantee to which we award funds 
and will be accountable for the use of those funds. The State will 
determine priorities for funding within the State. This determination 
must be made in conformance with the HMGP project identification and 
selection criteria (44 CFR 206.435). The State also will provide 
technical assistance and oversight to applicants for project 
development and to subgrantees for project implementation. The State 
will report program progress and results to us. The States also will 
recover and return to us any funds made available from other sources 
for the same purposes. When Native American tribes apply directly to 
us, they will be the grantee and carry out ``state'' roles.
    (c) Applicant (pre-award) and subgrantee (post-award). The 
applicant (a State agency, local government, or qualified private 
nonprofit organization) will coordinate with interested homeowners to 
complete an application to the State. The subgrantee implements all 
approved projects, generally takes title to all property, and agrees to 
dedicate and maintain the property in perpetuity for uses compatible 
with open-space, recreational, or wetlands management practices. The 
subgrantee will receive, review and make final decisions about any 
appraisal disputes that are brought by participating homeowners. The 
subgrantee is accountable to the State, as well as to us, for the use 
of funds.
    (d) Participating homeowners. The participating homeowners will 
notify the community of their interest to participate; provide 
necessary information to the community coordinator about property 
ownership, disaster damage, and other disaster benefits received or 
available; review the offer made from the community; and accept it or 
request a review appraisal.


Sec. 209.4  Allocation and availability of funds.

    (a) We will allocate available funds based on the number and value 
of properties that meet the eligibility criteria and whose owners want 
to participate in an acquisition or elevation project.
    (b) We may reallocate funds for which we do not receive and approve 
adequate applications. We will obligate most available funds within 12 
months following the deadline for submitting applications, unless 
extenuating circumstances exist.


Sec. 209.5  Applicant eligibility.

    The following are eligible to apply to the State for a grant:
    (a) State and local governments;
    (b) Indian tribes or authorized tribal organizations. A tribe may 
apply either to the State or directly to us; and
    (c) Qualified private nonprofit organizations.


Sec. 209.6  Project eligibility.

    (a) Eligible types of project activities. This grant authority is 
for projects to acquire floodprone properties and demolish or relocate 
structures per Sec. 209.10(i), or to elevate floodprone structures. 
Approved projects must meet the following criteria and comply with all 
other program requirements described in this rule;
    (b) Eligibility criteria. To be eligible, projects must:
    (1) Be cost effective. The State will complete an analysis of the 
cost-effectiveness of the project, in accordance with our guidance and 
using a methodology that we approve. We will review the State's 
analysis;
    (2) Include only properties that:
    (i) For acquisition, the owner agrees to sell voluntarily;
    (ii) Are within the 100-year floodplain based on best available 
data or as identified by a FIRM or FEMA-approved Disaster Recovery Map;
    (iii) Were made uninhabitable (as certified by an appropriate State 
or local official) by the effects of a declared major disaster during 
federal fiscal years 1999 or 2000;
    (iv) For acquisition, had a pre-event fair market value of less 
than $300,000 just before the disaster event. Properties submitted for 
buyout under Pub. L. 106-113 (the original Hurricane Floyd supplemental 
buyout program) are exempt from this policy, with the limitation that 
in no case does the Federal share or offer for any such property exceed 
$225,000; and
    (v) Served as the principal residence for the owner. For 
multifamily units

[[Page 32671]]

such as condominium buildings, all units within the structure should be 
principal residences of the owners and not sublet.
    (3) Conform with 44 CFR part 9, Floodplain Management and 
Protection of Wetlands; 44 CFR part 10, Environmental Considerations; 
and any applicable environmental and historic preservation laws and 
regulations.
    (c) For acquisition projects, an owner who is not a United States 
citizen or qualified alien may receive current fair market value for 
his or her property. He or she may not receive additional amounts for 
pre-event fair market value.
    (d) Funds available under Pub. L. 106-113 (the original Floyd 
supplemental appropriation) are limited to use for acquisition purposes 
only.


Sec. 209.7  Priorities for project selection.

    (a) It is the State's responsibility to identify and select 
eligible buyout projects for funding under the supplemental grant 
program. All funded projects must be consistent with the State Hazard 
Mitigation Plan. The mitigation planning process or any other 
appropriate means may identify buyout and elevation projects.
    (d) States will set priorities in their State mitigation plan to 
use as the basis for selecting projects for funding. The State's 
priorities will address, at a minimum, substantially damaged 
properties, repetitive loss target properties, and such other criteria 
that the State deems necessary to comply with the law. States and 
subgrantees are to give priority consideration to projects for 
acquisition or elevations of repetitive loss properties, and must 
include all eligible repetitive loss properties in the projects 
submitted to us for funding.

(Approved under OMB control number 3067-0212).


Sec. 209.8  Application and review process.

    (a) General. This section describes the procedures to be used by 
the State in submitting an application for funding under the 
Supplemental Property Acquisition and Elevation Assistance program. 
Under this program, the State is the grantee and is responsible for 
processing subgrants to applicants in accordance with 44 CFR part 13 
and this part.
    (b) Timeframes. We will establish deadlines for States to submit 
applications, and States will set local application deadlines. States 
may begin forwarding applications to us immediately upon Notice of 
Availability of Funds and must forward all applications not later than 
the date set by the Regional Director. States must provide to us the 
information described below in paragraph (c) of this section for each 
property proposed for acquisition or elevation in support of the 
supplemental allocation requested and within the timeframe that we 
establish. We will verify project eligibility estimates provided by 
States in order to assure that all projects meet the criteria for the 
supplemental grant awards. We will perform an independent verification 
of this information for not less than 50 percent of the properties 
submitted.
    (c) Format. The State will forward its application to the Regional 
Director. The Application will include: a Standard Form (SF) 424, 
Application for Federal Assistance; FEMA form 20-15, Budget 
Information--Construction Programs; Project Narrative (section 
209.8(c)--community project applications (buyout plans) selected by the 
State); FEMA form 20-16, 20-16b and 20-16c Assurances and 
Certifications; Standard Form LLL, Disclosure of Lobbying Activities; 
FEMA form 20-10, Financial Status Report; the Performance/Progress 
Report format; and the State's certification that the State has 
reviewed all applications and that they meet program eligibility 
criteria. The Project Narrative (community project applications) will 
include:
    (1) Community applicant information, including contact names and 
numbers;
    (2) Description of the problem addressed by the proposed project;
    (3) Description of the applicant's decision-making process, 
including alternatives considered;
    (4) Project description, including property locations/addresses and 
scope of activities;
    (5) Project cost estimate and match source;
    (6) For acquisition projects, open space use description and 
maintenance assurance;
    (7) Risk and cost-effectiveness information, or State's benefit-
cost analysis;
    (8) Environmental and historic preservation information including
    (i) Whether the property is now or ever has been used for 
commercial or industrial purposes, and
    (ii) Any information regarding historic preservation that is 
readily available; and
    (9) Attachments for each property as follows:
    (i)A photograph of the structure from the street;
    (ii) Owner's name;
    (iii) Complete address, including zip code;
    (iv) Latitude and longitude;
    (v) The date of construction;
    (vi) Proximity to the 100-year floodplain;
    (vii) Panel and date of the applicable Flood Insurance Rate Map, if 
any;
    (viii) The elevation of the first habitable floor and an estimate 
of the depth of flooding in the structure;
    (ix) The estimated pre-event fair market value of the home. 
Applicants will estimate the value of properties using the best 
available information, such as inspections, public records and market 
values of similar properties in similar neighborhoods to arrive at a 
pre-event fair market value that reflects what a willing buyer would 
have paid a willing seller had the disaster not occurred. If tax 
assessment data are used as the basis, the applicant should add the 
relevant adjustment percentage for that jurisdiction to adjust the tax 
assessment to the current fair market value. These adjustment data 
should be obtained from the jurisdiction's tax assessor's office. For 
any jurisdictions where the adjustment factor is over 25 percent, 
applicants should include a justification for the high adjustment 
factor. Applicants should not include any other project costs in the 
property values. These costs will be reflected elsewhere;
    (x) Indication whether flood insurance was in force at the time of 
the loss, and policy number, if available.
    (xi) Indications that the property will meet the definition of 
uninhabitable:
    (A) Substantial damage determination, and name and title of 
determining official, or if not yet determined then:
    (1) For manufactured homes (mobile homes), inundation of 1 foot or 
more of water above the first habitable floor or other evidence of 
substantial damage; or
    (2) For permanent structures other than manufactured homes, 
inundation of 5 feet or more of water above the first above-ground 
habitable floor or other evidence of substantial damage. Habitable 
floors do not include basements.
    (B) Were red- or yellow-tagged and declared uninhabitable due to 
environmental contamination by floodwaters, or otherwise determined to 
be uninhabitable by a State or local official under current codes or 
ordinances; or
    (C) Were demolished due to damage or environmental contamination by 
floodwaters.
    (xii) Information regarding whether the structure is on the NFIP 
repetitive loss list (provide NFIP Repetitive Loss Property Locator 
Number, if available); and
    (xiii) Observations on whether acquisition or elevation of the 
structure

[[Page 32672]]

may result in a mixture of vacant lots and lots with structures 
remaining on them.
    (9) FEMA review and approval. We will review and verify the State's 
eligibility determination and either approve, deny, or request 
additional information within 60 days. The Regional Director may extend 
this timeframe if complicated issues arise. We have final approval 
authority for funding of all projects.


(Approved under OMB control number 3067-0279).


Sec. 209.9  Appeals.

    The State may appeal any decision that we make regarding projects 
submitted for funding in the Supplemental Property Acquisition and 
Elevation Assistance program. The State must submit the appeal in 
writing to the Regional Director and must include documentation that 
justifies the request for reconsideration. The appeal must specify the 
monetary figure in dispute and the provisions in Federal law, 
regulation, or policy with which the appellant believes the initial 
action was inconsistent. The applicant must appeal within 60 days of 
the applicant's receipt of our funding decision. The State must forward 
any appeal from an applicant or subgrantee with a written 
recommendation to the Regional Director within 60 days of receipt. 
Within 90 days following the receipt of an appeal, the Regional 
Director will notify the State in writing as to the new decision or the 
need for more information.


Sec. 209.10  Project implementation requirements.

    Subgrantees must enter into an agreement with the State, with the 
written concurrence of the Regional Director, that provides the 
following assurances:
    (a) The subgrantee will administer the grant and implement the 
project in accordance with program requirements, 44 CFR parts 13 and 
14, the grant agreement, and with applicable Federal, State, and local 
laws and regulations.
    (b) The State and subgrantee will administer the grant in an 
equitable and impartial manner, without discrimination on the grounds 
or race, color, religion nationality, sex, age, or economic status in 
compliance with section 308 of the Stafford Act (42 U.S.C. 5151) and 
Title VI of the Civil Rights Act. In implementing the grant, the State 
and the subgrantee will ensure that no discrimination is practiced.
    (c) The State and subgrantee will ensure that projects involving 
alterations to existing structures comply with all applicable State and 
local codes.
    (d) The State and subgrantee will ensure that projects comply with 
applicable State and local floodplain management requirements. 
Structures will be elevated to the Base Flood Elevation.
    (e) Property owners participating in acquisition projects may 
receive assistance up to the pre-event fair market value of their real 
property, except as limited by the eligibility criteria.
    (f) The subgrantee will establish a process, which we must approve, 
whereby property owners participating in acquisition projects may 
request a review of the appraisal for their property, or request a 
second appraisal.
    (g) The State will reduce buyout assistance by any duplication of 
benefits from other sources. Such benefits include, but are not limited 
to, payments made to the homeowner for repair assistance; insurance 
settlements; legal settlements; Small Business Administration loans; 
and any other payments made by any source to address the property loss 
unless the property owner can provide receipts showing that the 
benefits were used for their intended purpose to make repairs to the 
property.
    (h) Increased Cost of Compliance coverage benefits under the 
National Flood Insurance Program (NFIP) may be used to match elevation 
or acquisition and relocation projects. Increased Cost of Compliance 
claims can only be used for NFIP-approved costs; these can then be 
applied to the project grant match. This coverage does not pay for 
property acquisition, but can pay demolition or structure relocation.
    (i) The following restrictive covenants must be conveyed in the 
deed to any property acquired, accepted, or from which structures are 
removed (``the property''):
    (1) The property must be dedicated and maintained in perpetuity for 
uses compatible with open space, recreational, or wetlands management 
practices; and
    (2) No new structure(s) will be built on the property except as 
indicated in this paragraph:
    (A) A public facility that is open on all sides and functionally 
related to a designated open space or recreational use;
    (B) A public rest room; or
    (C) A structure that is compatible with open space, recreational, 
or wetlands management usage and proper floodplain management policies 
and practices, which the Director approves in writing before the 
construction of the structure begins.
    (D) In general, allowable open space, recreational, and wetland 
management uses include parks for outdoor recreational activities, 
nature reserves, cultivation, grazing, camping (except where adequate 
warning time is not available to allow evacuation), temporary storage 
in the open of wheeled vehicles that are easily movable (except mobile 
homes), unimproved, permeable parking lots and buffer zones. Allowable 
uses generally do not include walled buildings, flood reduction levees, 
highways or other uses that obstruct the natural and beneficial 
functions of the floodplain.
    (3) After completing the acquisition project, no application for 
future disaster assistance will be made for any purpose with respect to 
the property to any Federal entity or source, and no Federal entity or 
source will provide such assistance, even for the allowable uses of the 
property described above.
    (4) Any structures built on the property according to paragraph 
(i)(2) of this section, must be: Located to minimize the potential for 
flood damage; floodproofed; or elevated to the Base Flood Elevation 
plus one foot of freeboard.
    (5) The subgrantee or other public property owner will seek the 
approval of the State grantee agency and our Regional Director before 
conveying any interest in the property to any other party. The 
subgrantee or other public entity or qualified private nonprofit 
organization must retain all development rights to the property. Our 
Regional Director will only approve the transfer of properties that 
meet the criteria identified in this paragraph.
    (6) In order to carry out tasks associated with monitoring, we, the 
subgrantee, or the State have the right to enter the parcel, with 
notice to the parcel owner, to ensure compliance with land use 
restrictions. Subgrantees may identify the open space nature of the 
property on local tax maps to assist with monitoring. Whether the 
subgrantee obtains full title or a conservation easement on the parcel, 
the State must work with subgrantees to ensure that the parcel owner 
maintains the property in accordance with land use restrictions. 
Specifically, the State may:
    (i) Monitor and inspect the parcel every two years and certify that 
the owner continues to use the inspected parcel for open space or 
agricultural purposes; and

[[Page 32673]]

    (ii) Take measures to bring a non-compliant parcel back into 
compliance within 60 days of notice.
    (7) Only as a last resort, we reserve the right to require the 
subgrantee to bring the property back into compliance and transfer the 
title and easement to a qualified third party for future maintenance.
    (8) Every 2 years on October 1st, the subgrantee will report to the 
State, certifying that the property continues to be maintained 
consistent with the provisions of the agreement. The State will report 
the certification to us.


Sec. 209.11  Grant administration.

    (a) Cost share. We may contribute up to 75 percent of the total 
eligible costs. The State must ensure that non-Federal sources 
contribute not less than 25 percent of the total eligible costs for the 
grant. The State or any subgrantee cannot use funds that we provide 
under this Act as the non-Federal match for other Federal funds nor can 
the State or any subgrantee use other Federal funds as the required 
non-Federal match for these funds, except as provided by statute.
    (b) Allowable costs. A State may find guidance on allowable costs 
for States and subgrantees in Office of Management and Budget (OMB) 
Circulars A-87 and A-122 on Cost Principles. States may use up to 7 
percent of the grant funds for management costs of the grant. The State 
should include management costs in its application. Subgrantees must 
include reasonable costs to administer the grant as a direct project 
cost in their budget.
    (c) Progress reports. The State must provide a quarterly progress 
report to us under 44 CFR 13.40, indicating the status and completion 
date for each project funded. The report will include any problems or 
circumstances affecting completion dates, scope of work, or project 
costs that may result in noncompliance with the approved grant 
conditions.
    (d) Financial reports. The State must provide a quarterly financial 
report to us under 44 CFR 13.41.
    (e) SMARTLINK Drawdowns. The State will make SMARTLINK drawdowns to 
reimburse or advance allowable costs to subgrantees for approved 
projects.
    (f) Audit requirements. Uniform audit requirements as set forth in 
44 CFR part 14 apply to all grant assistance provided under this 
subpart. We may elect to conduct a Federal audit on the disaster 
assistance grant or on any of the subgrants.
    (g) If a mitigation measure is not completed, and there is not 
adequate justification for non-completion, no Federal funding will be 
provided for that project.


Sec. 209.12  Oversight and results.

    (a) FEMA oversight. Our Regional Directors are responsible for 
overseeing this grant authority and for ensuring that States and 
subgrantees meet all program requirements. Regional Directors will 
review program progress quarterly.
    (b) Monitoring and enforcement. We, subgrantees, and States will 
monitor the properties purchased under this authority and ensure that 
the properties are maintained in open space use. We and the State may 
enforce the agreement by taking any measures that we or they deem 
appropriate.
    (c) Program results. The State will review the effectiveness of 
approved projects after each future flood event in the affected area to 
monitor whether projects are resulting in expected savings. The State 
will report to us on program effectiveness after project completion and 
after each subsequent flood event.

    Dated: June 8, 2001.
Joe M. Allbaugh,
Director.
[FR Doc. 01-15053 Filed 6-14-01; 8:45 am]
BILLING CODE 6718-04-P


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