53798 Federal Register / Vol. 73, No. 181 / Wednesday, September 17, 2008 / Proposed Rules 

Clarity of This Regulation 

We are required by E.O. 12866, E.O. 

12988, and by the Presidential 

Memorandum of June 1, 1998, to write 

all rules in plain language. This means 

that each rule we publish must: 

(a) Be logically organized; 

(b) Use the active voice to address 

readers directly; 

(c) Use clear language rather than 

jargon; 

(d) Be divided into short sections and 

sentences; and 

(e) Use lists and tables wherever 

possible. 

If you feel that we have not met these 

requirements, send us comments by one 

of the methods listed in the ADDRESSES

section. To better help us revise the 

rule, your comments should be as 

specific as possible. For example, you 

should tell us the numbers of the 

sections or paragraphs that you find 

unclear, which sections or sentences are 

too long, the sections where you feel 

lists or tables would be useful, etc. 

Public Availability of Comments 

Before including your address, phone 

number, e-mail address, or other 

personal identifying information in your 

comment, you should be aware that 

your entire comment—including your 

personal identifying information—may 

be made publicly available at any time. 

While you can ask us in your comment 

to withhold your personal identifying 

information from public review, we 

cannot guarantee that we will be able to 

do so. 

List of Subjects in 30 CFR Part 250 

Administrative practice and 

procedure, Continental shelf, Oil and 

gas exploration, Public lands—mineral 

resources, Reporting and recordkeeping 

requirements. 

Dated: August 14, 2008. 

Foster L. Wade, 

Deputy Assistant Secretary—Land and 

Minerals Management. 

For the reasons stated in the 

preamble, Minerals Management 

Service (MMS) proposes to amend 30 

CFR part 250 as follows: 

PART 250—OIL AND GAS AND 

SULPHUR OPERATIONS IN THE 

OUTER CONTINENTAL SHELF 

1. The authority citation for part 250 

continues to read as follows: 

Authority: 31 U.S.C. 9701, 43 U.S.C. 1334. 

2. Amend § 250.1201 by adding the 

definition of Force majeure event in 

alphabetical order as follows: 

§ 250.1201 Definitions. 

* * * * * 

Force majeure event—an event 

beyond your control such as war, act of 

terrorism, crime, or act of nature which 

prevents you from operating the wells 

and meters on your OCS facility. 

* * * * * 

3. Amend § 250.1202 by revising 

paragraphs (d)(3), (k)(3), and (k)(4) as 

follows: 

§ 250.1202 Liquid hydrocarbon 

measurement. 

* * * * * 

(d) * * * 

(3) Prove each operating royalty meter 

to determine the meter factor monthly, 

but the time between meter factor 

determinations must not exceed 42 

days. When a force majeure event 

precludes the required monthly meter 

proving, meters must be proved within 

15 days after being returned to service; 

* * * * * 

(k) * * * 

(3) Prove allocation meters monthly if 

they measure 50 or more barrels per day 

per meter. When a force majeure event 

precludes the required monthly meter 

proving, meters must be proved within 

15 days after being returned to service; 

or 

(4) Prove allocation meters quarterly if 

they measure less than 50 barrels per 

day per meter. When a force majeure 

event precludes the required quarterly 

meter proving, meters must be proved 

within 15 days after being returned to 

service; 

* * * * * 

4. Amend § 250.1203 by revising 

paragraph (c)(1) as follows: 

§ 250.1203 Gas measurement. 

* * * * * 

(c) * * * 

(1) Calibrate meters monthly, but do 

not exceed 42 days between 

calibrations. When a force majeure 

event precludes the required monthly 

calibration, meters must be calibrated 

within 15 days after being returned to 

service; 

* * * * * 

5. Amend § 250.1204 by revising 

paragraph (b)(1) as follows: 

§ 250.1204 Surface commingling. 

* * * * * 

(b) * * * 

(1) Conduct a well test at least once 

every 2 months unless the Regional 

Supervisor approves a different 

frequency. When a force majeure event 

precludes the required bimonthly (or 

other frequency approved by the 

Regional Supervisor) well test, wells 

must be tested within 15 days after 

being returned to service; 

* * * * * 

6. Amend § 250.1500 by adding the 

definitions Contractor and Periodic in 

alphabetical order and by revising the 

definition of Production safety to read 

as follows: 

§ 250.1500 Definitions. 

* * * * * 

Contractor means anyone performing 

work for the lessee. However, these 

requirements do not apply to 

contractors providing domestic services 

to the lessee or other contractors. 

Domestic services include janitorial 

work, food and beverage service, 

laundry service, housekeeping, and 

similar activities. 

* * * * * 

Periodic means occurring or recurring 

at regular intervals. Each lessee must 

specify the intervals for periodic 

training and periodic assessment of 

training needs in their training 

programs. 

Production safety includes safety in 

production operations, as well as the 

installation, repair, testing, 

maintenance, and operation of surface 

or subsurface safety devices. Production 

operations include, but are not limited 

to, separation, dehydration, 

compression, sweetening, and metering 

operations. 

* * * * * 

[FR Doc. E8–21488 Filed 9–16–08; 8:45 am] 

BILLING CODE 4310–MR–P 

DEPARTMENT OF THE TREASURY 

31 CFR Part 50 

RIN 1505–AB10 

Terrorism Risk Insurance Program; 

Recoupment Provisions 

AGENCY: Departmental Offices, Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Department of the 

Treasury (Treasury) is issuing this 

proposed rule as part of its 

implementation of Title I of the 

Terrorism Risk Insurance Act of 2002 

(‘‘TRIA’’ or ‘‘the Act’’), as amended by 

the Terrorism Risk Insurance Extension 

Act of 2005 (‘‘Extension Act’’) and the 

Terrorism Risk Insurance Program 

Reauthorization Act of 2007 

(‘‘Reauthorization Act’’). The Act 

established a temporary Terrorism Risk 

Insurance Program (‘‘TRIP’’ or 

‘‘Program’’) under which the Federal 

Government would share the risk of 

insured losses from certified acts of 


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1Prior to the Reauthorization Act, under Section 

103(e)(7)(C) of TRIA, the Secretary was required to 

collect premiums in an amount equal to any 

mandatory recoupment amount. The 

Reauthorization Act changed the amount to 133 

percent of the mandatory recoupment amount. 

terrorism with commercial property and 

casualty insurers. The Reauthorization 

Act has now extended the Program until 

December 31, 2014. This proposed rule 

is the latest in a series of regulations 

Treasury has issued to implement the 

Act. The proposed rule incorporates and 

implements statutory requirements in 

section 103(e) of the Act, as amended by 

the Reauthorization Act, for the 

recoupment of the federal share of 

compensation for insured losses. In 

particular, the proposed rule describes 

how Treasury will determine the 

amounts to be recouped and establishes 

procedures insurers are to use for 

collecting Federal Terrorism Policy 

Surcharges and remitting them to 

Treasury. The rule generally builds 

upon previous rules issued by Treasury. 

DATES: Written comments must be 

received on or before October 17, 2008. 

ADDRESSES: Submit comments 

electronically through the Federal 

eRulemaking Portal: http:// 

www.regulations.gov, or by mail (if hard 

copy, preferably an original and two 

copies) to: Terrorism Risk Insurance 

Program, Public Comment Record, Suite 

2100, Department of the Treasury, 1425 

New York Avenue, NW., Washington, 

DC 20220. Because paper mail in the 

Washington, D.C., area may be subject to 

delay, it is recommended that comments 

be submitted electronically. All 

comments should be captioned with 

‘‘TRIA Recoupment Proposed Rule 

Comments.’’ Please include your name, 

affiliation, address, e-mail address, and 

telephone number in your comment. 

Comments will be available for public 

inspection on the Federal eRulemaking 

Portal and by appointment at the TRIP 

Office. To make appointments, call 

(202) 622–6770 (not a toll-free number). 

FOR FURTHER INFORMATION CONTACT: 

Howard Leikin, Deputy Director, 

Terrorism Risk Insurance Program, (202) 

622–6770 (not a toll-free number). 

SUPPLEMENTARY INFORMATION: 

I. Background 

On November 26, 2002, the President 

signed into law the Terrorism Risk 

Insurance Act of 2002 (Pub. L. 107–297, 

116 Stat. 2322). The Act was effective 

immediately. The Act’s purposes are to 

address market disruptions, ensure the 

continued widespread availability and 

affordability of commercial property 

and casualty insurance for terrorism 

risk, and allow for a transition period 

for the private markets to stabilize and 

build capacity while preserving state 

insurance regulation and consumer 

protections. 

Title I of the Act establishes a 

temporary federal program of shared 

public and private compensation for 

insured commercial property and 

casualty losses resulting from an act of 

terrorism. The Act authorizes Treasury 

to administer and implement the 

Terrorism Risk Insurance Program, 

including the issuance of regulations 

and procedures. The Program provides 

a federal backstop for insured losses 

from an act of terrorism. Section 103(e) 

of the Act gives Treasury authority to 

recoup federal payments made under 

the Program through policyholder 

surcharges. 

The Program was originally set to 

expire on December 31, 2005. On 

December 22, 2005, the President signed 

into law the Terrorism Risk Insurance 

Extension Act of 2005 (Pub. L. 109–144, 

119 Stat. 2660), which extended the 

Program through December 31, 2007. On 

December 26, 2007, the President signed 

into law the Terrorism Risk Insurance 

Program Reauthorization Act of 2007 

(Pub. L. 110–160, 121 Stat. 1839), which 

extends the Program through December 

31, 2014. 

The Reauthorization Act, among other 

changes, revised the recoupment 

provisions of the Act. These changes are 

explained below in the context of 

discussion of other provisions. 

II. Previous Rulemaking 

To assist insurers, policyholders, and 

other interested parties in complying 

with immediately applicable 

requirements of the Act, Treasury has 

issued interim guidances to be relied 

upon by insurers until superseded by 

regulations. Rules establishing general 

provisions implementing the Program, 

including key definitions, and 

requirements for policy disclosures and 

mandatory availability, can be found in 

Subparts A, B, and C of 31 CFR Part 50. 

Treasury’s rules applying provisions of 

the Act to State residual market 

insurance entities and State workers’ 

compensation funds are at Subpart D of 

31 CFR Part 50. Rules setting forth 

procedures for filing claims for payment 

of the Federal share of compensation for 

insured losses are at Subpart F of 31 

CFR Part 50. Subpart G of 31 CFR Part 

50 contains rules on audit and 

recordkeeping requirements for 

insurers, while Subpart I of 31 CFR Part 

50 contains Treasury’s rules 

implementing the litigation 

management provisions of section 107 

of the Act. 

III. The Proposed Rule 

This proposed rule would add a 

Subpart H to part 50, which comprises 

Treasury’s regulations implementing the 

Act. It also proposes to add definitions 

in § 50.5 of Subpart A and amend 

§§ 50.60 and 50.61 of Subpart G. 

A. Overview 

Section 103(e)(6) of the Act, as 

amended, establishes an insurance 

marketplace aggregate retention amount 

for insured losses in any Program Year. 

This essentially guarantees that a certain 

aggregate amount of the insured losses 

will be borne by insurers and their 

policyholders in the insurance 

marketplace, irrespective of individual 

insurer deductibles and share of losses 

above those deductibles. Under the 

Reauthorization Act, the insurance 

marketplace aggregate retention amount 

for any additional Program Year after 

2007 is the lesser of $27.5 billion and 

the aggregate amount, for all insurers, of 

insured losses during the Program Year. 

To carry this out, Sections 103(e)(7) and 

(e)(8) of the Act set forth the 

requirements for recoupment and policy 

surcharges for terrorism loss riskspreading premiums. The Act 

establishes a mandatory recoupment 

amount representing all or a portion of 

the federal payments for insured losses. 

The Act requires the Secretary to 

collect, through terrorism loss riskspreading premiums, an amount equal 

to 133 percent of the mandatory 

recoupment amount.1 The Act also 

authorizes the Secretary, at his 

discretion, to recoup additional 

amounts to the extent that federal 

payments exceed the mandatory 

recoupment amount. The Act requires 

that amounts established by the 

Secretary as terrorism loss riskspreading premiums are to be imposed 

as a policyholder premium surcharge on 

property and casualty insurance policies 

in force after the date of establishment 

of the surcharge. The Secretary is 

required to provide for insurers to 

collect terrorism loss risk-spreading 

premiums and remit the amounts 

collected to Treasury. 

The Reauthorization Act added 

section 103(e)(7)(E), which establishes 

deadlines by which the collection of 

terrorism loss risk-spreading premiums, 

which are required for mandatory 

recoupment, must be accomplished. The 

amounts and deadlines vary depending 

on when an act of terrorism occurs: 

• For any act of terrorism that occurs 

on or before December 31, 2010, the 

Secretary shall collect all required 

premiums by September 30, 2012; 


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53800 Federal Register / Vol. 73, No. 181 / Wednesday, September 17, 2008 / Proposed Rules 

2The collection timing requirements and the 

requirement to collect 133 percent of the mandatory 

recoupment amount were included in an 

amendment to H.R. 2761, the terrorism Risk 

Insurance Program Reauthorization Act of 2007. 153 

Cong. Rec. S14592 (daily ed. Nov. 16, 2007). In a 

letter dated November 15, 2007, to Chairman Dodd 

to the Senate Committee on Banking, Housing, and 

Urban Affairs, the Congressional Budget Office 

(CBO) estimated that the amended would cause 

Treasury to collect more revenues on an expedited 

basis an amounts sufficient to offset the estimated 

cost for the bill. http://www.cbo.gov/ftpdocs/88xx/ 

doc8825/TRIAltrSenBankingComm.pdf. In its 

earlier cost estimate for the bill, CBO had noted that 

gross collections of surcharges would be partially 

offset by a loss of receipts from income and payroll 

taxes and, consistent with standard procedures for 

estimating the revenue impact of indirect business 

taxes, had reduced the gross revenue impact of the 

insurance surcharges by 25 percent to reflect 

offsetting effects on income and payroll tax receipts. 

(S. Rep. No. 110–215, at 14 (2007).) 

• For any act of terrorism that occurs 

between January 1 and December 31, 

2011, the Secretary shall collect 35 

percent of any required premiums by 

September 30, 2012, and the remainder 

by September 30, 2017; and 

• For any act of terrorism that occurs 

on or after January 1, 2012, the Secretary 

shall collect all required premiums by 

September 30, 2017. 

The Reauthorization Act also requires 

the Secretary to issue regulations 

describing the procedures to be used for 

collecting the required premiums in 

these time periods.2

The Reauthorization Act also added a 

provision (Section 103(e)(7)(F)) 

requiring the Secretary to publish, 

within 90 days of an act of terrorism, an 

estimate of aggregate insured losses 

which shall be used as the basis for 

determining whether mandatory 

recoupment will be required. This 90- 

day period would begin to run from the 

date of certification. Such estimate is to 

be updated as appropriate, and at least 

annually. 

The proposed rule describes how 

Treasury will determine the amounts to 

be recouped, the factors and 

considerations that would be the basis 

for establishing the specific surcharge 

amount, the procedures for Treasury’s 

notification to insurers regarding the 

surcharges to be imposed, and the 

requirements for insurers to collect, 

report, and remit surcharges to the 

Treasury. Treasury seeks comment on 

all aspects of the proposed rule. 

It is Treasury’s intention, to the extent 

possible, to keep insurer reporting 

requirements for recoupment purposes 

consistent with reporting schedules and 

definitions that currently apply under 

state insurance regulations. Treasury 

notes that certain elements of the TRIA 

recoupment requirements are similar to 

the state processes involved in assessing 

insurers for state guaranty funds or 

collecting state premium taxes. In 

developing this proposed rule, Treasury 

has looked to these state regulatory 

processes as models for designing the 

recoupment mechanism and has 

consulted with the National Association 

of Insurance Commissioners (NAIC). 

B. Description of the Proposed Rule 

The major provisions of the proposed 

rule are as follows: 

1. Determination of Recoupment 

Amount 

The proposed rule describes how and 

when Treasury will determine 

recoupment amounts. Definitions of 

insurance marketplace aggregate 

retention amount, aggregate Federal 

share of compensation, mandatory and 

discretionary recoupment amounts, and 

uncompensated insured losses, which 

reflect requirements in the Act, would 

be added to § 50.5. 

The mandatory recoupment amount is 

the difference between the insurance 

marketplace aggregate retention amount 

for a Program Year and the aggregate 

amount, for all insurers, of 

uncompensated insured losses during 

such Program Year (unless the aggregate 

amount of uncompensated insured 

losses is greater than the insurance 

marketplace aggregate retention, in 

which case the mandatory recoupment 

amount is zero). For any Program Year 

beginning with 2008 through 2014, the 

insurance marketplace aggregate 

retention amount is the lesser of $27.5 

billion and the aggregate amount, for all 

insurers, of insured losses from Program 

Trigger Events during the Program Year. 

For example, if the aggregate amount of 

insured losses from Program Trigger 

Events during the Program Year were 

$10 billion, the insurance marketplace 

aggregate retention amount would be 

$10 billion. The mandatory recoupment 

amount would be the difference 

between $10 billion and the aggregate 

amount of uncompensated insured 

losses. ‘‘Uncompensated insured losses’’ 

is generally the aggregate amount of 

insured losses from Program Trigger 

Events not compensated by the Federal 

Government because the losses are 

within insurer deductibles or the 15 

percent insurer share, or otherwise not 

paid. The amount of uncompensated 

insured losses depends on the 

distribution of those losses among 

insurers. So continuing with the above 

example, if uncompensated insured 

losses amounted to $8 billion and 

Federal payments amounted to $2 

billion, the mandatory recoupment 

amount would be $2 billion (the 

difference between $10 billion and the 

aggregate amount of uncompensated 

insured losses of $8 billion). The 

amount the Secretary would be required 

to collect would be 133 percent of $2 

billion, or $2.67 billion. 

Section 103(e)(7)(D) of the Act also 

provides the Secretary with 

discretionary authority to recoup 

additional amounts to the extent that 

the amount of Federal financial 

assistance exceeds the mandatory 

recoupment amount. The Secretary may 

recoup such additional amounts the 

Secretary believes can be recouped 

based on: the ultimate costs to taxpayers 

of no additional recoupment; the 

economic conditions in the commercial 

marketplace; the affordability of 

commercial insurance for small- and 

medium-sized businesses; and such 

other factors that the Secretary 

considers appropriate. The proposed 

rule refers to these considerations in 

proposed § 50.70(b). Because of the great 

uncertainty as to economic conditions 

after the occurrence of an act of 

terrorism, Treasury believes it is 

prudent to retain maximum flexibility to 

address these considerations at a future 

time. In exercising this discretionary 

authority, however, Treasury generally 

intends to consider these various factors 

on a broad-scale basis. 

As described above, the 

Reauthorization Act included certain 

deadlines for the collection of 

mandatory recoupment amounts. The 

timing requirements for collecting 

‘‘required premiums’’ means that 

surcharges must be sufficient to recoup 

Federal funds outlaid as of these target 

dates for the Federal share of 

compensation for insured losses. 

The timing requirements for 

mandatory recoupment present two 

potential operational challenges, the 

severity of which depends on when an 

act of terrorism occurs within the 

designated time periods. The first is that 

in order to meet the deadlines, 

recoupment may have to be initiated 

based on estimates of insured losses and 

Federal outlays, but prior to the 

submission to Treasury of significant 

amounts of actual insurer claims for the 

Federal share of compensation for 

losses. The other challenge is that, 

again, in order to meet the deadlines, it 

may be difficult to provide the most 

desirable lead time notification to 

insurers for implementing surcharges. 

Both of these issues are further 

addressed below. 

Proposed § 50.71(a) provides that if 

payments for the Federal share of 

compensation have been made for a 

Program Year, and Treasury determines 

that insured loss information is 

sufficiently developed and credible to 

serve as a basis for calculating 


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recoupment amounts, then Treasury 

will make an initial determination of 

any mandatory or discretionary 

recoupment amounts for that Program 

Year. Treasury believes that it is 

desirable, to the extent possible, to base 

recoupment amounts on retrospective 

reviews of insured losses and the 

Federal share of compensation for those 

losses. Determining accurate 

recoupment amounts is dependent on 

the availability of mature and credible 

insured loss information. Enough time 

must pass to allow losses to be reported 

by insureds to their insurers, and for 

insurers to settle, pay and report their 

insured losses to Treasury and others 

such as states and statistical agents. It is 

clear that insured loss amounts will be 

changing over time. As new information 

becomes available, estimates of insured 

losses for a Program Year will gradually 

approach an accurate final number. 

Ideally, Treasury will use loss 

information obtained from the 

submissions by insurers for the Federal 

share of compensation, as well as other 

industry sources, to determine the 

appropriate time to make an initial 

determination of recoupment amounts. 

Thereafter, as described under proposed 

§ 50.71(c), Treasury will at least 

annually examine the latest available 

information on insured losses to 

recalculate any recoupment amounts 

until such time as Treasury determines 

that the calculation is considered final. 

However, Treasury must also be 

prepared to initiate mandatory 

recoupment based on estimates, 

prospectively, of insured losses, the 

Federal share of compensation for 

insured losses, and the resulting Federal 

outlays. Proposed § 50.71(b) provides 

that within 90 days after an act of 

terrorism, the Secretary shall publish an 

estimate of aggregate insured losses 

which shall be used as the basis for 

initially determining whether 

mandatory recoupment will be required. 

Further, if at any time Treasury projects 

that payments for the Federal share of 

compensation will be made for a 

Program Year, and that in order to meet 

the collection timing requirements of 

section 103(e)(7)(E) of the Act it is 

necessary to use an estimate of such 

payments as a basis for calculating 

recoupment amounts, Treasury will 

make an initial determination of any 

mandatory recoupment amounts for that 

Program Year. As noted above, Treasury 

will at least annually examine the latest 

available information on insured losses 

to recalculate any recoupment amounts. 

Treasury is proposing, in § 50.71(d), 

that it may issue a data call to insurers 

for the submission of information on 

insured losses from Program Trigger 

Events and for insurer deductible 

information. There are at least two 

circumstances where such a collection 

of data may be necessary. The first 

arises out of the requirement to publish 

within 90 days of an act of terrorism an 

estimate of insured losses and 

potentially to have to initiate mandatory 

recoupment based on the estimate in 

order to meet the Reauthorization Act’s 

timing requirements for collections. 

Treasury intends, to the extent possible, 

to rely on existing industry statistical 

reporting mechanisms in making initial 

estimates. However, in order to initiate 

recoupment, it may be necessary to have 

more timely detail regarding insurer 

deductibles and reserves for insured 

losses from lines of business not 

normally included in existing industry 

reporting. 

A second potential need for a data call 

arises even in the circumstance where 

Treasury is able to retrospectively 

review insured loss payments in order 

to determine a recoupment amount. 

Treasury will have accurate data on how 

much has been paid as the Federal share 

of compensation and will also have 

accurate data on the insured losses of 

the insurers that have submitted claims 

for the Federal share. However, 

Treasury will not have its own access to 

data on insured losses of insurers that 

have not submitted claims for the 

Federal share (in most cases because the 

insurers have not met their insurer 

deductibles). If it is apparent from 

industry sources that the aggregate 

amount of insured losses from Program 

Trigger Events for a Program Year is 

clearly below the specific dollar amount 

of the insurance marketplace aggregate 

retention amount, i.e., $27.5 billion, 

then Treasury will have the information 

that is needed to determine the 

mandatory recoupment amount. If the 

aggregate amount of such insured losses 

appears to be close to or greater than the 

specific insurance marketplace 

aggregate retention dollar amount, then 

Treasury may require more specific data 

on insured losses of insurers who have 

not submitted a claim for the Federal 

share. 

It is Treasury’s intention to proceed 

with the development of forms for the 

electronic submission of insurer 

responses to a data call, with 

appropriate opportunity being provided 

for public review and comment. The 

circumstances of a particular Program 

Trigger Event will likely have a 

significant bearing on which insurers 

should receive the data call and how the 

data should be coordinated, perhaps 

with the NAIC or a particular state. 

Additional data call guidance will be 

provided as necessary based on the 

circumstances of the particular Program 

Trigger Event. Treasury expects that for 

insurers that have already submitted 

data in conjunction with a claim for the 

Federal share, the requirement to 

respond to a special data call may not 

apply. 

2. Establishment of Federal Terrorism 

Policy Surcharge 

Once Treasury has determined an 

amount to be recouped, an assessment 

period and Surcharge amount will be 

established. The proposed rule includes 

new definitions for ‘‘Federal Terrorism 

Policy Surcharge’’ (also referred to 

herein as the Surcharge), ‘‘assessment 

period’’ and ‘‘Surcharge effective date’’, 

which would be added to § 50.5 of the 

regulations. Proposed § 50.72(b) 

provides that the Surcharge is the 

obligation of the policyholder and 

payable to the insurer with the premium 

for a property and casualty insurance 

policy in effect during the assessment 

period. 

Treasury is proposing to define an 

‘‘assessment period’’ as a period during 

which policyholders must pay, and 

insurers must collect, the Federal 

Terrorism Policy Surcharge for 

remittance to Treasury. Treasury’s 

intention is that, to the extent possible, 

assessment periods will be in full-year 

increments in order to equitably impose 

the Surcharge on policyholders who 

have policy term effective dates 

throughout the year. Due to the 

collection deadlines, however, this may 

not always be feasible. 

The proposed definition for ‘‘Federal 

Terrorism Policy Surcharge’’ is the 

amount established by Treasury as a 

policy surcharge on policies of 

‘‘property and casualty insurance’’ as 

that term is defined in the existing 

§ 50.5(n) (proposed to become § 50.5(u)). 

The Surcharge would be expressed as a 

percentage of the amount charged as 

written premium for commercial 

property and casualty coverage in such 

policies. 

The factors and considerations 

Treasury would consider in establishing 

the amount of the Federal Terrorism 

Policy Surcharge are set out in proposed 

§ 50.72(a). They include requirements of 

the Act as well as other factors. In 

particular, section 103(e)(7)(C) of TRIA 

as amended by the Reauthorization Act, 

requires that once a mandatory 

recoupment amount is determined, 

collections are to equal 133 percent of 

that amount. 

In order to estimate the premium base 

for the Surcharge during the anticipated 

assessment period, Treasury will use 

generally available industry reported 

information for written premium from 


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the prior calendar year for the lines of 

business defined as commercial lines of 

property and casualty insurance under 

Treasury regulations. Treasury is aware 

that there might be trends in written 

premium (e.g, hard or soft markets) that 

could be significant to the amounts 

anticipated during the assessment 

period. To the extent such trends are 

known and quantifiable, Treasury will 

consider the effect on the premium base 

and adjust the surcharge percentage 

accordingly. 

Establishment of the Surcharge will 

be heavily influenced by the collection 

timing requirements of section 

103(e)(7)(E) of the Act for mandatory 

recoupment. In the case of discretionary 

recoupment, the collection timing 

requirements do not apply, but the Act 

specifies that the Surcharge can be no 

greater, on an annual basis, than three 

percent of the premium charged for 

property and casualty insurance 

coverage under the policy. 

Section 103(e)(8)(D) of the Act also 

requires Treasury, in determining the 

method and manner of imposing the 

Surcharge, to take into consideration the 

economic impact on commercial centers 

of urban areas, risk factors related to 

rural areas and smaller commercial 

centers, and various exposures to 

terrorism risk for different lines of 

insurance. While Treasury will consider 

these factors at the time it becomes 

necessary to establish the amount of a 

Surcharge, for the following reasons it is 

likely that the same Federal Terrorism 

Policy Surcharge would apply to all 

commercial property and casualty lines 

of insurance, as defined by the Act, and 

all rating classifications. 

It is Treasury’s understanding, after 

consulting with industry experts, that 

recognition of differences in risk factors 

related to rural versus urban areas and 

different lines of insurance is 

substantially accomplished through the 

rating plans for commercial lines 

insurance policies. These rating plans 

reflect variations in the underlying 

premiums to which the Surcharge 

would be applied based on the same 

sorts of adjustment factors described in 

the Act—rural versus urban risks, line of 

business risk, etc. For example, the 

same Surcharge percentage will produce 

a larger dollar amount when applied to 

the greater premiums in larger urban 

centers than it will produce when 

applied to premiums for insurance 

policies covering risks in other areas. In 

other words, variations in underlying 

premium amounts for commercial lines 

insurance policies already appear to 

substantially operate in a way that 

addresses the adjustment factors 

described in the Act. 

Treasury is also concerned about the 

time and resources needed to perform 

the complex analyses and to construct 

and implement a detailed risk 

classification scheme reflecting these 

factors. Too detailed a schedule of 

Surcharges could also create an undue 

administrative burden in the insurance 

marketplace where, generally, surcharge 

mechanisms are implemented on a 

comparatively broad basis. Moreover, 

these economic considerations would 

need to be applied along with the 

requirements to collect 133 percent of 

the mandatory recoupment amount by 

certain deadlines. As noted above, the 

Surcharge may very well be 

implemented on the basis of estimates 

of future Federal outlays for the Federal 

share of compensation for insured 

losses. 

Treasury is therefore inclined to 

implement the same Surcharge for all 

commercial property and casualty lines 

of insurance and all rating 

classifications. However, based on a 

review of economic conditions at the 

time a Surcharge amount is established, 

Treasury might, if necessary, and within 

the collection timing constraints, 

mitigate economic impacts by imposing 

a lesser Surcharge over a longer period 

of time. Treasury welcomes comments 

on this approach. 

3. Notification of Recoupment 

Section 50.73 of the proposed rule 

states that Treasury will provide 

reasonable advance notice of any initial 

Surcharge effective date. This effective 

date shall be January 1, unless such date 

would not provide for sufficient notice 

of implementation while meeting the 

collection timing requirements of 

section 103(e)(7)(E) of the Act. As 

explained below, the purpose of a 

January 1 effective date is to coordinate 

with the NAIC Annual Statement 

reporting period. Treasury’s preference 

is to provide at least 180 days advance 

notice, allowing insurers to schedule 

necessary system changes and to take 

into account policy renewal cycles. 

Treasury will provide notification 

annually as to continuation of the 

Surcharge. Treasury also proposes to 

provide reasonable advance notice of 

any modification or cessation of the 

Surcharge. In such cases, Treasury 

anticipates providing at least 90 days 

notice. Notifications will be 

accomplished through publications in 

the Federal Register or in another 

manner Treasury deems appropriate, 

based upon the circumstances of the act 

of terrorism under consideration. 

With respect to a January 1 effective 

date, Treasury believes that there is a 

clear advantage to coordinating an 

assessment period and the written 

premium and remitted Surcharge 

amounts with the calendar year basis for 

the NAIC Annual Statements. However, 

the timing of an act of terrorism, the 

emerging estimates of insured losses 

and resulting Federal outlays, and the 

requirement to collect the Surcharges by 

certain deadlines could impinge on 

Treasury’s ability to provide a full 180 

days’ notice to insurers of a Surcharge 

implementation as of January 1. There 

are two possible alternatives for 

managing this circumstance for which 

Treasury is interested in public 

comment. 

The first alternative is a possible 

bifurcated notification to insurers. 

Treasury would notify insurers 180 days 

in advance of January 1, that an 

assessment period will commence, but 

the actual Surcharge amount would not 

yet be provided. This would allow 

insurers time to develop systems 

changes to implement a Surcharge. The 

actual Surcharge amount would be 

provided at a later date, perhaps at least 

60 days in advance of January 1. 

The second alternative is to relax the 

standard of a January 1 implementation 

date. The assessment period could start 

as of the first day of a later month, but 

continue through that calendar year. 

The result of this would be a more 

complicated reconciliation of written 

premium and Surcharge amounts with 

Annual Statement data, but would yet 

be substantially consistent with the 

Annual Statement reporting period. 

4. Collecting the Surcharge 

Section 50.74 of the proposed rule 

specifies that insurers shall collect a 

Federal Terrorism Policy Surcharge as 

established by Treasury on new, 

renewal, mid-term, or audit additional 

premiums for all property and casualty 

insurance policies with policy term 

effective dates during the assessment 

period. Policies placed in force prior to 

the assessment period are not subject to 

the Surcharge until renewal, regardless 

of mid-term endorsements. Property and 

casualty insurance has been previously 

defined in the existing § 50.5(n). That 

definition was the result of extensive 

consultation, which produced a 

regulatory definition of commercial 

property and casualty insurance crafted 

in terms of specific lines of business 

employed in the NAIC’s Exhibit of 

Premium and Losses, modified by the 

exceptions for certain types of insurance 

excluded by the Act. 

Insurers will be obligated to 

implement the Federal Terrorism Policy 

Surcharge on a policyholder transaction 

level. Treasury prefers a Surcharge 

collection mechanism that is relatively 


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3Under the Reauthorization Act, Section 

103(e)(8)(C) now applies only to discretionary 

recoupment. 

simple to administer and audit and that 

avoids complex calculations and 

systems adjustments. However, there is 

a complicating factor in the definition of 

commercial property and casualty 

insurance. Certain exclusions in the 

definition increase the likelihood of 

individual policies providing types of 

insurance that are considered to fall 

both within and outside the Act’s 

definition of property and casualty 

insurance. The authorities under the Act 

(at subsections 103(e)(8)(A) and (C) 3) 

limit the application of the Surcharge to 

the policy premium amount charged for 

property and casualty insurance 

coverage under the policy. 

In this rule, as a basic starting point, 

Treasury proposes that the Surcharge 

apply to the full premium for any policy 

falling within the definition of property 

and casualty insurance in proposed 

§ 50.5(u), i.e., the premium for the 

policy is reported on the insurer’s NAIC 

Annual Statement, or equivalent 

reporting document, in a specified 

commercial line of business as defined 

by Treasury in § 50.5(n)(1). However, a 

portion of a policy’s premium would 

not be subject to the Surcharge if, 

despite the line of business premium 

reporting to the NAIC, that portion of 

the premium is for coverage under the 

policy that is a type of insurance not 

considered to be commercial property 

and casualty insurance as specified in 

Treasury regulation § 50.5(n)(2). 

Treasury anticipates that these cases are 

most likely to occur within Line 17— 

Other Liability, where professional 

liability, excess liability and umbrella 

liability policy premiums are reported. 

There may also be cases occurring in 

other lines involving coverage that is 

considered to be personal, not 

commercial (residential dwellings 

insured under monoline policies where 

premium is reported on Line 3—Fire) 

and therefore should be excluded, 

consistent with Treasury’s rules in 

allocating such premiums for purposes 

of calculating direct earned premium. In 

the case of a policy providing multiple 

insurance coverages, where an insurer 

cannot identify the premium amount 

charged specifically for property and 

casualty coverage under the policy, the 

proposed rule provides for two 

circumstances. If the insurer estimates 

that the portion of the premium amount 

charged for coverage other than property 

and casualty insurance is de minimis to 

the total premium for the policy, the 

insurer may impose and collect from the 

policyholder a Surcharge amount based 

on the total premium for the policy. If 

the insurer estimates that the portion of 

the premium amount charged for 

coverage other than property and 

casualty insurance is not de minimis, 

the insurer shall impose and collect 

from the policyholder a Surcharge 

amount based on a reasonable estimate 

of the premium amount for the property 

and casualty insurance coverage under 

the policy. Treasury intends to develop 

reporting forms that will provide 

additional guidance for determining the 

premium subject to the Surcharge. 

As part of this rule, Treasury is 

proposing adding a definition to § 50.5 

for direct written premium, which is the 

premium information for commercial 

property and casualty insurance, as 

defined in the regulations, that is 

included by an insurer in column 1 of 

the Exhibit of Premiums and Losses of 

the NAIC Annual Statement or in an 

equivalent reporting requirement. 

Consistent with the discussion above, 

Treasury is proposing that in its 

reporting to Treasury, an insurer would 

subtract the premium that is not subject 

to the Surcharge. Otherwise, the full 

premium for the policy is included for 

Surcharge computation. Treasury is also 

proposing minor adjustments to the 

definition of direct earned premium to 

eliminate some inconsistencies between 

that definition and the new definition of 

direct written premium. The definition 

of direct written premium has been 

crafted to be consistent with premium 

billing and collection practices on a 

transactional level, as well as consistent 

with state regulatory requirements for 

reporting written premiums. The 

Surcharge itself is not considered 

premium. 

Treasury is also proposing in § 50.74 

that insurers may satisfy the obligation 

to collect the Federal Terrorism Policy 

Surcharge by simply remitting the 

calculated Surcharge amount to 

Treasury in circumstances where the 

expense of collecting the Surcharge 

from all policyholders during an 

assessment period exceeds the amount 

of the Surcharge anticipated to be 

collected. 

The Federal Terrorism Policy 

Surcharge is a repayment of Federal 

financial assistance in an amount 

required by law. It is not a premium 

paid by a policyholder to an insurer. 

The proposed rule provides that no fees 

or commissions may be charged on the 

Surcharge. In addition, the proposed 

rule provides that if an insurer returns 

any unearned premium to a 

policyholder, it shall also return any 

Federal Terrorism Policy Surcharge 

collected that is attributable to the 

unearned premium. 

As noted above, while the collection 

of the Surcharge is an obligation of the 

insurer, the payment of the Surcharge is 

an obligation of the policyholder. The 

proposed rule provides that the insurer 

shall have such rights and remedies to 

enforce the collection of the Surcharge 

that are equivalent to those that exist 

under applicable state or other law for 

nonpayment of premium. Insurers 

should follow the appropriate state law 

in such circumstances. 

5. Remitting the Surcharge 

Treasury is proposing in § 50.76 that, 

notwithstanding the definition of an 

insurer in existing § 50.5(f) (proposed to 

become § 50.5(l)), the collection, 

reporting and remittance of Federal 

Terrorism Policy Surcharges to Treasury 

shall be the responsibility of each 

individual insurer entity as otherwise 

defined in § 50.5(f) without including 

affiliates. This is because affiliations of 

insurers that are relevant in determining 

insurer deductibles are not pertinent to 

the collection and remittance of the 

Surcharges. 

Consistent with the Act, Treasury’s 

proposed approach to the collection and 

remittance of the Federal Terrorism 

Policy Surcharge is to place an 

obligation on the policyholder to pay 

the Surcharge and require the insurer to 

collect the Surcharge from each 

policyholder. Treasury’s proposed rule 

provides insurers the means to address 

non-payment of the Surcharge and 

provides for the reporting and 

remittance of the Surcharge to Treasury 

according to calculated amounts that are 

based on statutory financial reporting 

already required by the states. The 

description of premium subject to the 

Surcharge in proposed § 50.74(c) and 

the definition of ‘‘direct written 

premium’’ in proposed § 50.5(g) and 

other provisions of the proposed rule on 

the treatment of the Surcharge at both 

the policy transaction and financial 

statement reporting levels have been 

crafted so that the Surcharge amounts 

calculated for remittance to Treasury 

will be equivalent to the actual 

collections. By relying on premium 

amounts that are reported to the States, 

and that are already subject to other 

audit requirements, Treasury expects 

that its own audit responsibilities can be 

accomplished with less focus on 

individual insurer compliance with the 

Surcharge collection than would 

otherwise be necessary. This will result 

in a more efficient mechanism for 

recoupment for Treasury, insurers, and 

policyholders. 

In developing reporting and 

remittance frequency requirements, 

Treasury has considered the amount of 


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time insurers may be holding the funds 

collected prior to remittance to 

Treasury, and the current Value of 

Federal Funds published by the 

Treasury’s Financial Management 

Service. Treasury also recognizes that a 

monthly accounting period is standard 

within the insurance industry. The 

proposed rule would allow insurers to 

retain the interest (and therefore not 

have to separately account and remit 

such amounts to Treasury) on funds 

collected on a ‘‘written’’ basis and 

remitted monthly to Treasury. Treasury 

believes that this is a reasonably 

efficient approach to administering the 

collection and remittance requirements 

of the Act. Should the Value of Federal 

Funds at the time of any actual 

imposition of the Federal Terrorism 

Policy Surcharge be significantly greater 

than current levels, Treasury will revisit 

this issue. 

Section 50.75 of the proposed rule 

calls for insurers to report and remit 

Federal Terrorism Policy Surcharges on 

a monthly basis, starting with the first 

month within the assessment period, 

through November of the calendar year 

and on an annual basis as of the last 

month. As discussed earlier, ideally the 

first month within the assessment 

period would be January. The proposed 

requirements are intended to ease the 

administrative burden by building upon 

reporting requirements already imposed 

by the States. The definition of ‘‘direct 

written premium’’ on which an insurer 

must report and the specific due dates 

for reporting in proposed § 50.75(a) have 

been coordinated with NAIC Annual 

Statement requirements. The main 

reconciliation of information reported to 

Treasury and to NAIC would be 

accomplished with the year-end NAIC 

Annual Statements. 

The collection timing requirements of 

section 103(e)(7)(E) of the Act generally 

require recoupment of certain amounts 

of Federal outlays through September 

30, coinciding with the end of the 

Federal fiscal year. Treasury will 

estimate recoupment amounts and 

Surcharges so that these deadlines are 

met, while still keeping to an end of 

calendar year date for defining an 

assessment period. This end date will 

allow the reporting and reconciliation to 

be coordinated with Annual Statements. 

To accommodate possible changes in 

the Federal Terrorism Policy Surcharge 

amount from one year to another, 

Treasury is proposing that direct written 

premium be broken down by policy 

year. This is similar to requirements 

imposed at the state level with regard to 

other assessments. Further, since 

remittance is on a ‘‘written’’ basis, there 

will be a continued reporting 

requirement for one year following the 

end of the assessment period. During 

this period, Treasury anticipates that 

insurers will primarily be seeking 

reimbursement from Treasury for 

Federal Terrorism Policy Surcharges 

returned to policyholders in 

conjunction with a return of unearned 

premiums. 

Treasury will be developing forms for 

the reporting and remittance of the 

Federal Terrorism Policy Surcharge and 

plans on implementing an electronic 

reporting and payment facility. 

6. Audit Authority and Recordkeeping 

As stated previously, it is Treasury’s 

intention that its reporting 

requirements, coordinated and 

reconciled with other state level 

reporting, will result in less of an audit 

burden than might otherwise be 

necessary. The proposed rule includes a 

revision of § 50.60 and an addition to 

§ 50.61. The revision adds language to 

the effect that the Secretary of the 

Treasury, or an authorized 

representative, shall have, upon 

reasonable notice, access to all books, 

documents, papers and records of an 

insurer that are pertinent to the Federal 

Terrorism Policy Surcharge. The 

addition generally provides that records 

relating to premiums, Surcharges, 

collections and remittances to Treasury 

shall be retained by an insurer and kept 

available for review for not less than 

three (3) years following the conclusion 

of the assessment period or settlement 

of accounts with Treasury, whichever is 

later. 

7. Enforcement 

Insurers will be responsible for 

collecting appropriate Surcharge 

amounts from their policyholders. 

Because proposed § 50.74(d) provides 

that insurers have rights and remedies 

to enforce collection that are equivalent 

to those that exist under state law for 

nonpayment of premium, Treasury 

believes insurers will have the requisite 

tools to collect the Surcharge. Treasury 

may rely on its authority to impose civil 

monetary penalties on an insurer 

pursuant to section 104(e)(1)(A) of the 

Act for the failure to charge, collect or 

timely remit proper Surcharge amounts 

to enforce the provisions of this 

proposed rule. 

8. Other Technical Changes 

As noted under ‘‘Collecting the 

Surcharge,’’ Treasury is proposing some 

minor changes to the existing definition 

of ‘‘direct earned premium.’’ Although 

the complete definition is set out for 

information, no substantive changes 

were made to existing § 50.5(d)(1)(iv), 

(d)(2), (d)(3), and (d)(4). Similarly, 

although the existing provision on 

recordkeeping is set out in proposed 

§ 50.61(a), no substantive changes were 

made to that provision. 

IV. Procedural Requirements 

Executive Order 12866, ‘‘Regulatory 

Planning and Review’’. This rule is a 

significant regulatory action for 

purposes of Executive Order 12866, 

‘‘Regulatory Planning and Review,’’ and 

has been reviewed by the Office of 

Management and Budget. 

Regulatory Flexibility Act. Pursuant to 

the Regulatory Flexibility Act, 5 U.S.C. 

601 et seq., it is hereby certified that this 

proposed rule will not have a significant 

economic impact on a substantial 

number of small entities. Treasury is 

required to recoup all or a portion of the 

Federal share of compensation paid to 

insurers for insured losses in 

accordance with the Act. The Act itself 

requires that a policyholder surcharge 

be imposed on all policies of property 

and casualty insurance, as defined in 

the Act. The Act requires Treasury to 

provide for insurers to collect the 

surcharges and remit them to Treasury. 

The Act also defines property and 

casualty insurance to mean commercial 

lines insurance, with certain specific 

exclusions, without any reference to the 

size or scope of the insurer or the 

policyholder. Accordingly, any 

economic impact associated with the 

proposed rule flows from the Act and 

not the proposed rule. A regulatory 

flexibility analysis is thus not required. 

Paperwork Reduction Act. The 

collection of information contained in 

this proposed rule has been submitted 

to the Office of Management and Budget 

(OMB) for review under the 

requirements of the Paperwork 

Reduction Act, 44 U.S.C. 3507(d). 

Organizations and individuals 

desiring to submit comments 

concerning the collection of information 

in the proposed rule should direct them 

to: Office of Management and Budget, 

Attn: Desk Officer for the Department of 

the Treasury, Office of Information and 

Regulatory Affairs, Washington, DC 

20503. A copy of the comments should 

also be sent to Treasury at the addresses 

previously specified. Comments on the 

collection of information should be 

received by November 17, 2008. 

Treasury specifically invites 

comments on: (a) Whether the proposed 

collection of information is necessary 

for the proper performance of the 

mission of Treasury, and whether the 

information will have practical utility; 

(b) the accuracy of the estimate of the 

burden of the collections of information 

(see below); (c) ways to enhance the 


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quality, utility, and clarity of the 

information collection; (d) ways to 

minimize the burden of the information 

collection, including through the use of 

automated collection techniques or 

other forms of information technology; 

and (e) estimates of capital or start-up 

costs and costs of operation, 

maintenance, and purchase of services 

to maintain the information. 

At this time comments are being 

sought with respect to the collection of 

information in the proposed rule for: (a) 

The data call described at § 50.71 (d); (b) 

the burden of one-time systems changes 

needed for insurer collection and 

remittance of surcharges as required by 

§ 50.74 and § 50.75; (c) the monthly 

collection, remittance and reconciliation 

of surcharges pursuant to § 50.74 and 

§ 50.75; and (d) the recordkeeping 

requirement in § 50.61(b) for 

information to be used by Treasury (or 

its designees) to audit for the proper 

collection and remittance of recoupment 

amounts to Treasury. The forms to be 

prescribed by Treasury for the data call 

to collect information to ascertain the 

aggregate amount of insured losses will 

require information readily derived 

from existing normal industry internal 

and external reporting. This information 

would be needed by Treasury for the 

purpose of determining initial or 

recalculated recoupment amounts. 

Hence, Treasury may issue data calls to 

insurers for insurer deductible and 

insured loss information by Program 

Year. The number of respondents to 

such a data call is not expected to 

exceed 200 insurers. The data to be 

obtained in the immediate aftermath of 

certification of an act of terrorism would 

include the insurers’ total expected 

losses and estimated insurer 

deductibles. These data would be used 

to formulate initial estimates of 

aggregate insured losses for determining 

whether mandatory recoupment might 

be required. A subsequent call(s) to 

refine the information received would 

include catastrophe code, line of 

business, losses paid, allocated loss 

adjustment expenses paid, case reserves, 

incurred but not reported reserves as 

well as the total expected loss and 

insurer deductible data. All of these are 

routinely generated and reported data in 

the insurance industry. Treasury 

estimates that an insurer will require 5 

hours, on average, to assemble data and 

respond to the Treasury request. The 

estimated total burden would therefore 

be 1,000 hours (200 insurers × 5 hours). 

At a blended, fully loaded hourly rate of 

$85.00, the cost would be $85,000. 

If recoupment of the Federal share of 

compensation is implemented by 

Treasury, all insurers subject to the Act 

will be required to create and maintain 

records concerning their direct written 

premium, Surcharges, Surcharge 

amounts collected and Surcharge 

amounts remitted to Treasury. 

Calculating and imposing surcharges is 

a standard insurance processing system 

function that would be specifically 

implemented for the Federal Terrorism 

Policy Surcharge. The burden associated 

with the collection of information in the 

proposed rule is comprised of three 

components: (1) Surcharge 

implementation; (2) monthly 

submission and reconciliation; and (3) 

on-going recordkeeping. 

Treasury estimates that an insurer 

will require, one time at the onset of the 

imposition of Surcharges, 40 hours, on 

average, to make systems changes 

necessary to implement the collection of 

Surcharges from policyholders. 

Treasury also estimates that the 

proposed rule will impose an annual 

recordkeeping burden, with respect to 

each insurer subject to the Act, of 4 

hours. The estimated total burden for 

implementation is 80,000 hours (2,000 

insurers × 40 hours) and the estimated 

total annual recordkeeping burden is 

8,000 hours (4 hours × 2,000 insurers). 

If imposed, the first year cost to 

respondents for implementation of 

systems and procedures for the 

recoupment requirements is estimated 

to be $7,400,000 (approximately 80,000 

hours at a blended, fully loaded hourly 

rate of $92.50). Once implemented and 

incorporated into respondents’ systems, 

there is expected to be virtually no 

additional operation and maintenance 

cost. 

To limit the burden on insurers, the 

reporting requirement to Treasury is 

being designed for electronic 

fulfillment. The data required are those 

normally developed and reported in the 

conduct of policy writing and 

accounting. Development and 

transmission of the individual monthly 

submission (including the final month’s 

annual statement) is expected to be 5 

hours, or 60 hours annually for each of 

the estimated 2,000 insurers subject to 

the requirement. At a blended hourly 

rate of $70, the estimated annual burden 

to insurers is 120,000 hours and 

$8,400,000. 

The recordkeeping requirement is 

mandatory for any insurer that writes 

property and casualty insurance as 

defined by the Act and Treasury’s 

regulations. The number of insurers 

subject to recordkeeping is estimated to 

be 2,000. Treasury believes that the 

information that insurers would be 

required to generate and retain under 

§ 50.61(b) involves systems and records 

that insurers routinely operate and 

maintain in the course of issuing and 

administering policies, performing basic 

accounting, and regularly reporting to 

state regulators. The total annual 

recordkeeping costs for respondents is 

estimated to be $240,000 (approximately 

8,000 hours at a rate of $30.00 per hour). 

These costs could continue in 

subsequent years. 

The total first-year cost of these 

activities is estimated at $16,040,000 

with later years estimated at $8,400,000 

for collection and submission activities 

and $240,000 for recordkeeping. 

List of Subjects in 31 CFR Part 50 

Terrorism risk insurance. 

Authority and Issuance 

For the reasons stated above, 31 CFR 

part 50 is proposed to be amended as 

follows: 

PART 50—TERRORISM RISK 

INSURANCE PROGRAM 

1. The authority citation for part 50 is 

revised to read as follows: 

Authority: 5 U.S.C. 301; 31 U.S.C. 321; 

Title I, Pub. L. 107–297, 116 Stat. 2322, as 

amended by Pub. L. 109–144, 119 Stat. 2660 

and Pub. L. 110–160, 121 Stat. 1839 (15 

U.S.C. 6701 note). 

2. Section 50.5 is amended as follows: 

a. Paragraphs (d), (e), (f), (g), (h), (i), 

(j), (k), (l), (m), (n), (o), (p), (q), and (r) 

are redesignated as paragraphs (f), (k), 

(l), (m), (o), (p), (q), (r), (s), (t), (u), (v), 

(w), (y) and (aa), respectively. 

b. New paragraphs (d), (e), (g), (h), (i), 

(j), (n), (x), and (z) are added. 

c. Newly designated paragraph (f) is 

revised. 

The revisions read as follows: 

§ 50.5 Definitions. 

* * * * * 

(d) Aggregate Federal share of 

compensation—means the aggregate 

amount paid by Treasury for the Federal 

share of compensation for insured losses 

in a Program Year. 

(e) Assessment period—means a 

period, established by Treasury, during 

which policyholders of property and 

casualty insurance policies must pay, 

and insurers must collect, the Federal 

Terrorism Policy Surcharge for 

remittance to Treasury. 

(f) Direct earned premium means 

direct earned premium for all 

commercial property and casualty 

insurance issued by any insurer for 

insurance against all losses, including 

losses from an act of terrorism, 

occurring at the locations described in 

section 102(5)(A) and (B) of the Act. 

(1) State licensed or admitted 

insurers. For a State licensed or 


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admitted insurer that reports to the 

NAIC, direct earned premium is the 

premium information for commercial 

property and casualty insurance 

reported by the insurer on column 2 of 

the NAIC Exhibit of Premiums and 

Losses of the NAIC Annual Statement 

(commonly known as Statutory Page 

14). (See definition of property and 

casualty insurance.) 

(i) Premium information as reported 

to the NAIC should be included in the 

calculation of direct earned premiums 

for purposes of the Program only to the 

extent it reflects premiums for 

commercial property and casualty 

insurance issued by the insurer against 

losses occurring at the locations 

described in section 102(5)(A) and (B) of 

the Act. 

(ii) Premiums for personal property 

and casualty insurance (insurance 

primarily designed to cover personal, 

family or household risk exposures, 

with the exception of insurance written 

to insure 1 to 4 family rental dwellings 

owned for the business purpose of 

generating income for the property 

owner), or premiums for any other 

insurance coverage that does not meet 

the definition of commercial property 

and casualty insurance, should be 

excluded in the calculation of direct 

earned premiums for purposes of the 

Program. 

(iii) Personal property and casualty 

insurance coverage that includes 

incidental coverage for commercial 

purposes is primarily personal coverage, 

and therefore premiums may be fully 

excluded by an insurer from the 

calculation of direct earned premium. 

For purposes of the Program, 

commercial coverage is incidental if less 

than 25 percent of the total direct 

earned premium is attributable to 

commercial coverage. Commercial 

property and casualty insurance against 

losses occurring at locations other than 

the locations described in section 

102(5)(A) and (B) of the Act, or other 

insurance coverage that does not meet 

the definition of commercial property 

and casualty insurance, but that 

includes incidental coverage for 

commercial risk exposures at such 

locations, is primarily not commercial 

property and casualty insurance, and 

therefore premiums for such insurance 

may also be fully excluded by an insurer 

from the calculation of direct earned 

premium. For purposes of this section, 

commercial property and casualty 

insurance for losses occurring at the 

locations described in section 102(5)(A) 

and (B) of the Act is incidental if less 

than 25 percent of the total direct 

earned premium for the insurance 

policy is attributable to coverage at such 

locations. Also for purposes of this 

section, coverage for commercial risk 

exposures is incidental if it is combined 

with coverages that otherwise do not 

meet the definition of commercial 

property and casualty insurance and 

less than 25 percent of the total direct 

earned premium for the insurance 

policy is attributable to the coverage for 

commercial risk exposures. 

(iv) If a property and casualty 

insurance policy covers both 

commercial and personal risk 

exposures, insurers may allocate the 

premiums in accordance with the 

proportion of risk between commercial 

and personal components in order to 

ascertain direct earned premium. If a 

policy includes insurance coverage that 

meets the definition of commercial 

property and casualty insurance for 

losses occurring at the locations 

described in section 102(5)(A) and (B) of 

the Act, but also includes other 

coverage, insurers may allocate the 

premiums in accordance with the 

proportion of risk attributable to the 

components in order to ascertain direct 

earned premium. 

(2) Insurers that do not report to 

NAIC. An insurer that does not report to 

the NAIC, but that is licensed or 

admitted by any State (such as certain 

farm or county mutual insurers), should 

use the guidance provided in paragraph 

(f)(1) of this section to assist in 

ascertaining its direct earned premium. 

(i) Direct earned premium may be 

ascertained by adjusting data 

maintained by such insurer or reported 

by such insurer to its State regulator to 

reflect a breakdown of premiums for 

commercial and personal property and 

casualty exposure risk as described in 

paragraph (f)(1) of this section and, if 

necessary, re-stated to reflect the accrual 

method of determining direct earned 

premium versus direct premium. 

(ii) Such an insurer should consider 

other types of payments that 

compensate the insurer for risk of loss 

(contributions, assessments, etc.) as part 

of its direct earned premium. 

(3) Certain eligible surplus line carrier 

insurers. An eligible surplus line carrier 

insurer listed on the NAIC Quarterly 

Listing of Alien Insurers must ascertain 

its direct earned premium as follows: 

(i) For policies that were inforce as of 

November 26, 2002, or entered into 

prior to January 1, 2003, direct earned 

premiums are to be determined with 

reference to the definition of property 

and casualty insurance and the 

locations described in section 102(5)(A) 

and (B) of the Act by allocating the 

appropriate portion of premium income 

for losses for property and casualty 

insurance at such locations. The same 

allocation methodologies contained 

within the NAIC’s ‘‘Allocation of 

Surplus Lines and Independently 

Procured Insurance Premium Tax on 

Multi-State Risks Model Regulation’’ for 

allocating premium between coverage 

for property and casualty insurance for 

losses occurring at the locations 

described in section 102(5)(A) and (B) of 

the Act and all other coverage, to 

ascertain the appropriate percentage of 

premium income to be included in 

direct earned premium, may be used. 

(ii) For policies issued after January 1, 

2003, premium for insurance that meets 

the definition of property and casualty 

insurance for losses occurring at the 

locations described in section 102(5)(A) 

and (B) of the Act, must be priced 

separately by such eligible surplus line 

carriers. 

(4) Federally approved insurers. A 

federally approved insurer under 

section 102(6)(A)(iii) of the Act should 

use a methodology similar to that 

specified for eligible surplus line carrier 

insurers in paragraph (f)(3) of this 

section to calculate its direct earned 

premium. Such calculation should be 

adjusted to reflect the limitations on 

scope of insurance coverage under the 

Program (i.e., to the extent of federal 

approval of commercial property and 

casualty insurance in connection with 

maritime, energy or aviation activities). 

(g) Direct written premium—means 

the premium information for 

commercial property and casualty 

insurance as defined in paragraph (u) of 

this section that is included by an 

insurer in column 1 of the Exhibit of 

Premiums and Losses of the NAIC 

Annual Statement or in an equivalent 

reporting requirement. The Federal 

Terrorism Policy Surcharge is not 

included in amounts reported as direct 

written premium. 

(h) Discretionary recoupment 

amount—means such amount of the 

aggregate Federal share of compensation 

in excess of the mandatory recoupment 

amount that the Secretary has 

determined will be recouped pursuant 

to section 103(e)(7)(D) of the Act. 

(i) Federal Terrorism Policy 

Surcharge—means the amount 

established by Treasury under section 

103(e)(8) of the Act which is imposed as 

a policy surcharge on property and 

casualty insurance policies, expressed 

as a percentage of the written premium. 

(j) Insurance marketplace aggregate 

retention amount—means an amount for 

a Program Year as set forth in section 

103(e)(6) of the Act. For any Program 

Year beginning with 2008 through 2014, 

such amount is the lesser of 

$27,500,000,000 and the aggregate 

amount, for all insurers, of insured 


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losses from Program Trigger Events 

during the Program Year. 

* * * * * 

(n) Mandatory recoupment amount— 

means the difference between the 

insurance marketplace aggregate 

retention amount for a Program Year 

and the uncompensated insured losses 

during such Program Year. The 

mandatory recoupment amount shall be 

zero, however, if the amount of such 

uncompensated insured losses is greater 

than the insurance marketplace 

aggregate retention amount. 

* * * * * 

(x) Surcharge effective date—means 

the date established by Treasury that 

begins the assessment period. 

* * * * * 

(z) Uncompensated insured losses— 

means the aggregate amount of insured 

losses, from Program Trigger Events, of 

all insurers in a Program Year that is not 

compensated by the Federal 

Government because such losses: 

(1) Are within the insurer deductibles 

of insurers, or 

(2) Are within the portions of losses 

in excess of insurer deductibles that are 

not compensated through payments 

made as a result of claims for the 

Federal share of compensation. 

* * * * * 

3. Revise §§ 50.60 and 50.61 of 

Subpart G to read as follows: 

§ 50.60 Audit authority. 

The Secretary of the Treasury, or an 

authorized representative shall have, 

upon reasonable notice, access to all 

books, documents, papers and records 

of an insurer that are pertinent to 

amounts paid to the insurer as the 

Federal share of compensation for 

insured losses, or pertinent to any 

Federal Terrorism Policy Surcharge that 

is imposed pursuant to subpart H of this 

part, for the purpose of investigation, 

confirmation, audit and examination. 

§ 50.61 Recordkeeping. 

(a) Each insurer that seeks payment of 

a Federal share of compensation under 

Subpart F of this Part shall retain such 

records as are necessary to fully disclose 

all material matters pertinent to insured 

losses and the Federal share of 

compensation sought under the 

Program, including, but not limited to, 

records regarding premiums and 

insured losses for all commercial 

property and casualty insurance issued 

by the insurer and information relating 

to any adjustment in the amount of the 

Federal share of compensation payable. 

Insurers shall maintain detailed records 

for not less than five (5) years from the 

termination dates of all reinsurance 

agreements involving commercial 

property and casualty insurance subject 

to the Act. Records relating to premiums 

shall be retained and available for 

review for not less than three (3) years 

following the conclusion of the policy 

year. Records relating to underlying 

claims shall be retained for not less than 

five (5) years following the final 

adjustment of the claim. 

(b) Each insurer that collects a Federal 

Terrorism Policy Surcharge as required 

by subpart H of this part shall retain 

records related to such Surcharge, 

including records of the property and 

casualty insurance premiums subject to 

the Surcharge, the amount of the 

Surcharge imposed on each policy, 

aggregate Federal Terrorism Policy 

Surcharges collected, and aggregate 

Federal Terrorism Policy Surcharges 

remitted to Treasury during each 

assessment period. Such records shall 

be retained and kept available for 

review for not less than three (3) years 

following the conclusion of the 

assessment period or settlement of 

accounts with Treasury, whichever is 

later. 

4. Subpart H of part 50 is added to 

read as follows: 

Subpart H—Recoupment and Surcharge 

Procedures 

Sec. 

50.70 Mandatory and discretionary 

recoupment. 

50.71 Determination of recoupment 

amount. 

50.72 Establishment of Federal Terrorism 

Policy Surcharge. 

50.73 Notification of recoupment. 

50.74 Collecting the Surcharge. 

50.75 Remitting the Surcharge. 

50.76 Insurer responsibility. 

Subpart H—Recoupment and 

Surcharge Procedures 

§ 50.70 Mandatory and discretionary 

recoupment. 

(a) Pursuant to section 103 of the Act, 

the Secretary shall impose and insurers 

shall collect, such Federal Terrorism 

Policy Surcharges as needed to recover 

133 percent of the mandatory 

recoupment amount for any Program 

Year. 

(b) In his discretion, the Secretary 

may recover any portion of the aggregate 

Federal share of compensation that 

exceeds the mandatory recoupment 

amount through Federal Terrorism 

Policy Surcharges based on the factors 

set forth in section 103(e)(7)(D) of the 

Act. 

(c) If the Secretary is required to 

impose Federal Terrorism Policy 

Surcharges as provided in paragraph (a) 

of this section, then the required 

amounts shall be collected in 

accordance with section 103(e)(7)(E) of 

the Act: 

(1) For any act of terrorism that occurs 

on or before December 31, 2010, the 

Secretary shall collect all required 

amounts by September 30, 2012; 

(2) For any act of terrorism that occurs 

between January 1 and December 31, 

2011, the Secretary shall collect 35 

percent of any required amounts by 

September 30, 2012, and the remainder 

by September 30, 2017; and 

(3) For any act of terrorism that occurs 

on or after January 1, 2012, the Secretary 

shall collect all required amounts by 

September 30, 2017. 

§ 50.71 Determination of recoupment 

amounts. 

(a) If payments for the Federal share 

of compensation have been made for a 

Program Year, and Treasury determines 

that insured loss information is 

sufficiently developed and credible to 

serve as a basis for calculating 

recoupment amounts, Treasury will 

make an initial determination of any 

mandatory or discretionary recoupment 

amounts for that Program Year. 

(b) (1) Within 90 days after 

certification of an act of terrorism, the 

Secretary shall publish in the Federal 

Register an estimate of aggregate 

insured losses which shall be used as 

the basis for initially determining 

whether mandatory recoupment will be 

required. 

(2) If at any time Treasury projects 

that payments for the Federal share of 

compensation will be made for a 

Program Year, and that in order to meet 

the collection timing requirements of 

section 103(e)(7)(E) of the Act it is 

necessary to use an estimate of such 

payments as a basis for calculating 

recoupment amounts, Treasury will 

make an initial determination of any 

mandatory recoupment amounts for that 

Program Year. 

(c) Following the initial determination 

of recoupment amounts for a Program 

Year, Treasury will recalculate any 

mandatory or discretionary recoupment 

amount as necessary and appropriate, 

and at least annually, until a final 

recoupment amount for the Program 

Year is determined. Treasury will 

compare any recalculated recoupment 

amount to amounts already remitted 

and/or to be remitted to Treasury for 

Federal Terrorism Policy Surcharges 

previously established to determine 

whether any additional amount will be 

recouped by Treasury. 

(d) For the purpose of determining 

initial or recalculated recoupment 

amounts, Treasury may issue a data call 

to insurers for insurer deductible and 

insured loss information by Program 


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53808 Federal Register / Vol. 73, No. 181 / Wednesday, September 17, 2008 / Proposed Rules 

Year. Treasury’s determination of the 

aggregate amount of insured losses from 

Program Trigger Events of all insurers 

for a Program Year will be based on the 

amounts reported in response to a data 

call and any other information Treasury 

in its discretion considers appropriate. 

Submission of data in response to a data 

call shall be on a form promulgated by 

Treasury. 

§ 50.72 Establishment of Federal 

Terrorism Policy Surcharge. 

(a) Treasury will establish the Federal 

Terrorism Policy Surcharge based on the 

following factors and considerations: 

(1) In the case of a mandatory 

recoupment amount, the requirement to 

collect 133 percent of that amount; 

(2) The total dollar amount to be 

recouped as a percentage of the latest 

available annual aggregate industry 

direct written premium information; 

(3) The adjustment factors for 

terrorism loss risk-spreading premiums 

described in Section 103(e)(8)(D) of the 

Act; 

(4) The annual 3 percent limitation on 

terrorism loss risk-spreading premiums 

collected on a discretionary basis as 

provided in Section 103(e)(8)(C) of the 

Act; 

(5) A preferred minimum initial 

assessment period of one full year and 

subsequent extension periods in full 

year increments; 

(6) The collection timing 

requirements of section 103(e)(7)(E) of 

the Act; 

(7) The likelihood that the amount of 

the Federal Terrorism Policy Surcharge 

may result in the collection of an 

aggregate recoupment amount in excess 

of the planned recoupment amount; and 

(8) Such other factors as the Secretary 

considers important. 

(b) The Federal Terrorism Policy 

Surcharge shall be the obligation of the 

policyholder and is payable to the 

insurer with the premium for a property 

and casualty insurance policy in effect 

during the assessment period 

established by Treasury. See § 50.74(c). 

§ 50.73 Notification of recoupment. 

(a) Treasury will provide notifications 

of recoupment through publication of 

Notices in the Federal Register or in 

another manner Treasury deems 

appropriate, based upon the 

circumstances of the act of terrorism 

under consideration. 

(b) Treasury will provide reasonable 

advance notice to insurers of any initial 

Federal Terrorism Policy Surcharge 

effective date. This effective date shall 

be January 1, unless such date would 

not provide for sufficient notice of 

implementation while meeting the 

collection timing requirements of 

section 103(e)(7)(E) of the Act. 

(c) Treasury will provide reasonable 

advance notice to insurers of any 

modification or cessation of the Federal 

Terrorism Policy Surcharge. 

(d) Treasury will provide notification 

to insurers annually as to the 

continuation of the Federal Terrorism 

Policy Surcharge. 

§ 50.74 Collecting the Surcharge. 

(a) Insurers shall collect a Federal 

Terrorism Policy Surcharge from 

policyholders as required by Treasury. 

(b) Policies subject to the Federal 

Terrorism Policy Surcharge are those for 

which direct written premium is 

reported on commercial lines of 

business on the NAIC’s Exhibit of 

Premiums and Losses (commonly 

known as Statutory Page 14) as provided 

in § 50.5(u)(1), or equivalently reported. 

(c) For policies subject to the Federal 

Terrorism Policy Surcharge, the 

Surcharge shall be imposed and 

collected on a written premium basis for 

policies in force during the assessment 

period. All new, renewal, mid-term, and 

audit additional premiums for a policy 

term are subject to the Surcharge in 

effect on the policy term effective date. 

For purposes of this subpart: 

(1) Written premium basis means the 

premium amount charged a 

policyholder by an insurer for property 

and casualty insurance as defined in 

§ 50.5(u), including all premiums, 

policy expense constants and fees 

defined as premium pursuant to the 

Statements of Statutory Accounting 

Principles established by the National 

Association of Insurance 

Commissioners. 

(2) In the case of a policy providing 

multiple insurance coverages, if an 

insurer cannot identify the premium 

amount charged a policyholder 

specifically for property and casualty 

insurance under the policy, then: 

(i) If the insurer estimates that the 

portion of the premium amount charged 

for coverage other than property and 

casualty insurance is de minimis to the 

total premium for the policy, the insurer 

may impose and collect from the 

policyholder a Surcharge amount based 

on the total premium for the policy, but 

(ii) If the insurer estimates that the 

portion of the premium amount charged 

for coverage other than property and 

casualty insurance is not de minimis, 

the insurer shall impose and collect 

from the policyholder a Surcharge 

amount based on a reasonable estimate 

of the premium amount for the property 

and casualty insurance coverage under 

the policy. 

(3) The Federal Terrorism Policy 

Surcharge is not considered premium. 

(d) A policyholder must pay the 

applicable Federal Terrorism Policy 

Surcharge when due. The insurer shall 

have such rights and remedies to 

enforce the collection of the Surcharge 

that are the equivalent to those that exist 

under applicable state or other law for 

nonpayment of premium. 

(e) When an insurer returns an 

unearned premium to a policyholder, it 

shall also return any Federal Terrorism 

Policy Surcharge collected that is 

attributable to the unearned premium. 

(f) Notwithstanding paragraphs (a), 

(b), and (c) of this section, if the expense 

of collecting the Federal Terrorism 

Policy Surcharge from all policyholders 

of an insurer during an assessment 

period exceeds the amount of the 

Surcharge anticipated to be collected, 

such insurer may satisfy its obligation to 

collect by omitting actual collection and 

instead remitting to Treasury the 

amount otherwise due. 

(g) The Federal Terrorism Policy 

Surcharge is repayment of Federal 

financial assistance in an amount 

required by law. No fee or commission 

shall be charged on the Federal 

Terrorism Policy Surcharge. 

§ 50.75 Remitting the Surcharge. 

(a) Each insurer shall provide a 

statement of direct written premium and 

Federal Terrorism Policy Surcharges to 

Treasury on a monthly basis, starting 

with the first month within the 

assessment period, through November 

of the calendar year and on an annual 

basis as of the last month of the calendar 

year. Reporting will be on a form 

prescribed by Treasury and will be due 

according to the following schedule: 

(1) For each month beginning in the 

first month of the assessment period 

through November, the last business day 

of the calendar month following the 

month for which premium is reported, 

and 

(2) March 1 for the calendar year. 

(b) The monthly statements provided 

to Treasury will include the following: 

(1) Cumulative calendar year direct 

written premium adjusted for premium 

not subject to the Federal Terrorism 

Policy Surcharge, summarized by policy 

year. 

(2) The aggregate Federal Terrorism 

Policy Surcharge amount calculated by 

applying the established Surcharge 

percentage to the insurer’s adjusted 

direct written premium by policy year. 

(3) Insurer certification of the 

submission. 

(c) The annual statements to be 

provided to Treasury will include the 

following: 


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Federal Register / Vol. 73, No. 181 / Wednesday, September 17, 2008 / Proposed Rules 53809 

(1) Direct written premium as defined 

in § 50.5(g), adjusted for premium not 

subject to the Federal Terrorism Policy 

Surcharge, summarized by policy year 

and by commercial line of insurance as 

specified in § 50.5(u). 

(2) The aggregate Federal Terrorism 

Policy Surcharge amount calculated by 

applying the established Surcharge 

percentage to the insurer’s adjusted 

direct written premium by policy year. 

(3) In the case of an insurer that has 

chosen not to collect the Federal 

Terrorism Policy Surcharge from its 

policyholders as provided in § 50.74(f), 

a certification that the expense of 

collecting the Surcharge during the 

assessment period would have exceeded 

the amount of the Surcharge collected 

over the assessment period. 

(4) Insurer certification of the 

submission. 

(d) The calculated aggregate Federal 

Terrorism Policy Surcharge amount, as 

described in paragraphs (b)(2) and (c)(2) 

of this section, shall be remitted to 

Treasury upon submission of each 

monthly and annual statement. An 

insurer may request refund of any 

Federal Terrorism Policy Surcharges 

previously remitted to Treasury that 

were subsequently returned by the 

insurer to a policyholder as attributable 

to unearned premium under § 50.74(e). 

A negative calculated amount in a 

monthly or annual statement indicates 

payment from Treasury is due to the 

insurer. 

(e) Reporting shall continue for the 

one-year period following the end of the 

assessment period established by 

Treasury, unless otherwise permitted by 

Treasury. 

§ 50.76 Insurer responsibility. 

For purposes of the collection, 

reporting and remittance of Federal 

Terrorism Policy Surcharges to 

Treasury, an ‘‘insurer,’’ as defined in 

§ 50.5(l), shall not include any affiliate 

of the insurer. 

David G. Nason, 

Assistant Secretary (Financial Institutions). 

[FR Doc. E8–21699 Filed 9–16–08; 8:45 am] 

BILLING CODE 4810–25–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Federal Emergency Management 

Agency 

44 CFR Part 67 

[Docket No. FEMA–B–1004] 

Proposed Flood Elevation 

Determinations 

AGENCY: Federal Emergency 

Management Agency, DHS. 

ACTION: Proposed rule. 

SUMMARY: Comments are requested on 

the proposed Base (1 percent annualchance) Flood Elevations (BFEs) and 

proposed BFE modifications for the 

communities listed in the table below. 

The purpose of this notice is to seek 

general information and comment 

regarding the proposed regulatory flood 

elevations for the reach described by the 

downstream and upstream locations in 

the table below. The BFEs and modified 

BFEs are a part of the floodplain 

management measures that the 

community is required either to adopt 

or show evidence of having in effect in 

order to qualify or remain qualified for 

participation in the National Flood 

Insurance Program (NFIP). In addition, 

these elevations, once finalized, will be 

used by insurance agents, and others to 

calculate appropriate flood insurance 

premium rates for new buildings and 

the contents in those buildings. 

DATES: Comments are to be submitted 

on or before December 16, 2008. 

ADDRESSES: The corresponding 

preliminary Flood Insurance Rate Map 

(FIRM) for the proposed BFEs for each 

community are available for inspection 

at the community’s map repository. The 

respective addresses are listed in the 

table below. 

You may submit comments, identified 

by Docket No. FEMA–B–1004, to 

William R. Blanton, Jr., Chief, 

Engineering Management Branch, 

Mitigation Directorate, Federal 

Emergency Management Agency, 500 C 

Street SW., Washington, DC 20472, 

(202) 646–3151, or (e-mail) 

bill.blanton@dhs.gov. 

FOR FURTHER INFORMATION CONTACT: 

William R. Blanton, Jr., Chief, 

Engineering Management Branch, 

Mitigation Directorate, Federal 

Emergency Management Agency, 500 C 

Street SW., Washington, DC 20472, 

(202) 646–3151 or (e-mail) 

bill.blanton@dhs.gov. 

SUPPLEMENTARY INFORMATION: The 

Federal Emergency Management Agency 

(FEMA) proposes to make 

determinations of BFEs and modified 

BFEs for each community listed below, 

in accordance with section 110 of the 

Flood Disaster Protection Act of 1973, 

42 U.S.C. 4104, and 44 CFR 67.4(a). 

These proposed BFEs and modified 

BFEs, together with the floodplain 

management criteria required by 44 CFR 

60.3, are the minimum that are required. 

They should not be construed to mean 

that the community must change any 

existing ordinances that are more 

stringent in their floodplain 

management requirements. The 

community may at any time enact 

stricter requirements of its own, or 

pursuant to policies established by other 

Federal, State, or regional entities. 

These proposed elevations are used to 

meet the floodplain management 

requirements of the NFIP and are also 

used to calculate the appropriate flood 

insurance premium rates for new 

buildings built after these elevations are 

made final, and for the contents in these 

buildings. 

Comments on any aspect of the Flood 

Insurance Study and FIRM, other than 

the proposed BFEs, will be considered. 

A letter acknowledging receipt of any 

comments will not be sent. 

Administrative Procedure Act 

Statement. This matter is not a 

rulemaking governed by the 

Administrative Procedure Act (APA), 5 

U.S.C. 553. FEMA publishes flood 

elevation determinations for notice and 

comment; however, they are governed 

by the Flood Disaster Protection Act of 

1973, 42 U.S.C. 4105, and the National 

Flood Insurance Act of 1968, 42 U.S.C. 

4001 et seq., and do not fall under the 

APA. 

National Environmental Policy Act. 

This proposed rule is categorically 

excluded from the requirements of 44 

CFR part 10, Environmental 

Consideration. An environmental 

impact assessment has not been 

prepared. 

Regulatory Flexibility Act. As flood 

elevation determinations are not within 

the scope of the Regulatory Flexibility 

Act, 5 U.S.C. 601–612, a regulatory 

flexibility analysis is not required. 

Executive Order 12866, Regulatory 

Planning and Review. This proposed 

rule is not a significant regulatory action 

under the criteria of section 3(f) of 

Executive Order 12866, as amended. 

Executive Order 13132, Federalism. 

This proposed rule involves no policies 

that have federalism implications under 

Executive Order 13132. 

Executive Order 12988, Civil Justice 

Reform. This proposed rule meets the 

applicable standards of Executive Order 

12988. 


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