National Flood Insurance Program: Removal of Best's Financial Size Category From Write-Your-Own Participation Criteria, 67654-67659 [2021-25956]

Download as PDF khammond on DSKJM1Z7X2PROD with RULES 67654 Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Rules and Regulations latitude 39°13′55″ N, longitude 076°30′18″ W, thence west and north along the shoreline to Sollers Point at latitude 39°14′01″ N, longitude 076°30′59″ W, thence west across the Patapsco River to and terminating at the point of origin, located at Baltimore, MD. These coordinates are based on datum NAD 83. (b) Definitions. As used in this section— Captain of the Port (COTP) means the Commander, U.S. Coast Guard Sector Maryland-National Capital Region. Designated representative means a Coast Guard Patrol Commander, including a Coast Guard coxswain, petty officer, or other officer operating a Coast Guard vessel and a Federal, State, and local officer designated by or assisting the Captain of the Port MarylandNational Capital Region (COTP) in the enforcement of the safety zone. (c) Regulations. (1) Under the general safety zone regulations in subpart C of this part, you may not enter the safety zone described in paragraph (a) of this section unless authorized by the COTP or the COTP’s designated representative. (2) To seek permission to enter, contact the COTP or the COTP’s representative by telephone at 410–576– 2693 or on Marine Band Radio VHF–FM channel 16 (156.8 MHz). Those in the safety zone must comply with all lawful orders or directions given to them by the COTP or the COTP’s designated representative. (d) Enforcement officials. The U.S. Coast Guard may be assisted in the patrol and enforcement of the safety zone by Federal, State, and local agencies. (e) Enforcement periods. This section will be enforced: (1) From 9 a.m. to 11:30 a.m. and from 1 p.m. to 3:30 p.m. on December 3, 2021. If necessary due to inclement weather or other reason on December 3, 2021, it will be enforced from 9 a.m. to 11:30 a.m. and from 1 p.m. to 3:30 p.m. on December 6, 2021. (2) From 9 a.m. to 11:30 a.m. and from 1 p.m. to 3:30 p.m. on December 4, 2021. If necessary due to inclement weather or other reason on December 4, 2021, it will be enforced from 9 a.m. to 11:30 a.m. and from 1 p.m. to 3:30 p.m. on December 7, 2021. DEPARTMENT OF VETERANS AFFAIRS PART 4—SCHEDULE FOR RATING DISABILITIES 38 CFR Part 4 ■ RIN 2900–AQ67 Authority: 38 U.S.C. 1155, unless otherwise noted. Dated: November 23, 2021. David E. O’Connell, Captain, U.S. Coast Guard, Captain of the Port Maryland-National Capital Region. Disability benefits, Pensions, Veterans. The Federal Emergency Management Agency (FEMA) is revising its regulations to remove a requirement that a private insurance company applying to participate in the WriteYour-Own program furnish its Best’s Financial Size Category for the purpose of setting marketing goals. DATES: This rule is effective November 29, 2021. ADDRESSES: The docket for this rulemaking is available for inspection using the Federal eRulemaking Portal at https://www.regulations.gov and can be viewed by following that website’s instructions. FOR FURTHER INFORMATION CONTACT: Sarah Ice, Federal Insurance and Mitigation Administration, FEMA, 400 C St. SW, Washington, DC 20472, (202) 320–5577, sarah.devaney-ice@ fema.dhs.gov. SUPPLEMENTARY INFORMATION: For the reasons set out in the preamble, 38 CFR part 4 is corrected by making the following correcting amendment: I. Background and Discussion of the Rule The National Flood Insurance Act of 1968 (NFIA), as amended (42 U.S.C. [FR Doc. 2021–25958 Filed 11–26–21; 8:45 am] BILLING CODE 9110–04–P VerDate Sep<11>2014 15:50 Nov 26, 2021 Jkt 256001 1. The authority citation for part 4 continues to read as follows: Schedule for Rating Disabilities: The Cardiovascular System; Correction § 4.100 [Amended] 2. Amend § 4.100 by removing paragraph (c). ■ AGENCY: ACTION: Department of Veterans Affairs. Correcting amendments. On September 30, 2021, the Department of Veterans Affairs (VA) published in the Federal Register a final rule that amended the portion of the VA Schedule for Rating Disabilities (‘‘VASRD’’ or ‘‘rating schedule’’) that addresses the cardiovascular system. This correction addresses the application of the general rating formula for diseases of the heart in the published final rule. SUMMARY: This correction is effective November 29, 2021. DATES: FOR FURTHER INFORMATION CONTACT: Gary VA is correcting its regulations, which published under ‘‘Schedule for Rating Disabilities: The Cardiovascular System’’ (RIN 2900–AQ67), on September 30, 2021, in the Federal Register at 86 FR 54089. The error is with § 4.100 Application of the general rating formula for diseases of the heart. VA removed left ventricular ejection fraction (LVEF) from the general rating formula for diseases of the heart but failed to remove every reference to LVEF in its evaluation criteria. Paragraph (c) of § 4.100 of title 38 Code of Federal Regulations (CFR) provides instructions for addressing situations where LVEF is not of record. These instructions are no longer relevant considering the removal of LVEF from consideration in evaluating heart diseases. VA is correcting that error by removing paragraph (c). SUPPLEMENTARY INFORMATION: List of Subjects in 38 CFR Part 4 Frm 00006 Fmt 4700 Sfmt 4700 [FR Doc. 2021–25931 Filed 11–26–21; 8:45 am] BILLING CODE 8320–01–P DEPARTMENT OF HOMELAND SECURITY Federal Emergency Management Agency 44 CFR Part 62 Reynolds, M.D., VASRD Program Management Office (210), Compensation Service, Veterans Benefits Administration, Department of Veterans Affairs, 810 Vermont Avenue NW, Washington, DC 20420, (202) 461– 9700. (This is not a toll-free telephone number.) PO 00000 Jeffrey M. Martin, Assistant Director, Office of Regulation Policy & Management, Office of the Secretary, Department of Veterans Affairs. [Docket ID FEMA–2021–0030] RIN 1660–AB13 National Flood Insurance Program: Removal of Best’s Financial Size Category From Write-Your-Own Participation Criteria Federal Emergency Management Agency, Department of Homeland Security (DHS). ACTION: Final rule. AGENCY: SUMMARY: E:\FR\FM\29NOR1.SGM 29NOR1 khammond on DSKJM1Z7X2PROD with RULES Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Rules and Regulations 4001 et seq.), authorizes the Administrator of the Federal Emergency Management Agency (FEMA) to establish and carry out the National Flood Insurance Program (NFIP) to enable interested persons to purchase insurance against loss resulting from physical damage to, or loss of, real or personal property arising from flood in the United States. See 42 U.S.C. 4011(a). Congress intended the NFIP to be ‘‘a program of flood insurance with largescale participation of the Federal Government and carried out to the maximum extent practicable by the private insurance industry.’’ See 42 U.S.C. 4001(b). Under the NFIA, FEMA may carry out the NFIP through the facilities of the Federal Government, using for the purposes of providing flood insurance coverage, insurance companies and other insurers, insurance agents and brokers, and insurance adjustment organizations, as fiscal agents of the United States. See 42 U.S.C. 4071. Pursuant to this authority, FEMA works closely with the insurance industry to facilitate the sale and servicing of flood insurance policies. A person can purchase an NFIP flood insurance policy, also known as the Standard Flood Insurance Policy (SFIP), either: (1) Directly from the Federal Government through a direct servicing agent, or (2) from a private insurance company (referred to as a Write Your Own (WYO) company) through the WYO Program. The SFIP sets out the terms and conditions of insurance. FEMA establishes terms of insurance and rates, which are the same whether purchased directly from the NFIP or through the WYO Program. FEMA enters into a standard Financial Assistance/Subsidy Arrangement (Arrangement) with the WYO companies, which addresses the terms and conditions for administering the NFIP policies, including compensation. FEMA publishes the annual Arrangement in the Federal Register. See 44 CFR 62.23(a). FEMA published the Fiscal Year 2021 Arrangement in March 2020, which became effective October 1, 2020. 85 FR 17339 (Mar. 27, 2020). FEMA regulations at 44 CFR part 62, the ‘‘Sale of Insurance and Adjustment of Claims,’’ set forth the manner in which NFIP flood insurance is made available to the public in participating communities, prescribes the general method by which FEMA exercises its responsibility regarding the manner in which claims for losses are paid, and states reasons for which a policy may be nullified or cancelled and the associated refunds. Section 62.24, ‘‘WYO VerDate Sep<11>2014 15:50 Nov 26, 2021 Jkt 256001 participation criteria,’’ establishes the criteria with which private insurance companies wishing to enter or reenter the WYO Program must comply. Section 62.24(d) outlines requirements that private companies must follow to demonstrate their plans to market flood insurance policies. As part of § 62.24(d) FEMA requires WYO companies to submit a marketing plan to ensure each company is taking reasonable steps to market flood insurance to the public. As a result, FEMA has set a goal for each WYO company to provide positive net new growth of NFIP flood policies, and encourages these companies by providing growth incentives. See Fiscal Year 2021 Arrangement, IV.B.3. FEMA’s intent behind the policy growth incentive is to motivate WYO companies to help FEMA in closing the insurance gap and to reach FEMA’s goal of doubling the number of properties covered against flood by 2022.1 Through the policy growth incentives, FEMA provides to WYO companies a flat dollar amount for each new policy they write. The actual incentive amount varies by the extent of net policy growth a WYO company achieves (i.e., a larger net growth will lead to a larger incentive). FEMA limits the total policy growth incentives paid to all WYO companies to two percent of aggregate written premium for all companies. Id. To qualify for the incentive, a WYO company must have an overall net policy growth of at least one policy, and the new policies it writes must be new to the NFIP, not a renewal previously written by another WYO company. FEMA pays the incentive to qualifying WYO companies at the end of each Arrangement year. Id. The last sentence of § 62.24(d) states, ‘‘A private insurance company applying for participation in the WYO program shall also furnish its Best’s Financial Size Category for the purpose of setting marketing goals.’’ Best’s, also known as ‘‘AM Best,’’ is a credit rating agency. AM Best rating services assess the creditworthiness of and/or reports on over 16,000 insurance companies 1 In 2017, the Federal Insurance and Mitigation Administration set two ambitious goals: (1) To quadruple the investment in mitigation across the nation by 2022, and (2) to double the number of insurance policies across the nation by 2022. These goals have become the basis for FEMA’s Strategic Objective 1.1: Incentivize investments that reduce risk, including pre-disaster mitigation, and reduce disaster costs at all levels; and Objective 1.2: Close the insurance gap. For more information, please see FEMA’s Strategic Plan 2018–2022 at https:// www.fema.gov/sites/default/files/2020-03/femastrategic-plan_2018-2022.pdf. Accessed Sept. 16, 2021. PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 67655 worldwide.2 Currently, FEMA does not require companies to provide their specific financial size category along with their marketing plan. This is because FEMA does not consider the size of an insurance carrier when formulating marketing strategies. Section 62.24(d) relates solely to information needed for marketing, not information relating to assessing a company’s financial strength. If FEMA wanted to assess a carrier’s size, it could do so without requiring information from AM Best. Carriers of all sizes use a rating agency, whether AM Best or a competitor, to comply with their state Department of Insurance, so FEMA could ask for that information if it wanted. In addition, most large carriers, which comprise the majority of WYO carriers, already have an AM Best rating and could make that information available. Moreover, in lieu of rating agency information, FEMA could also use the number of policies in force to assess carrier size. However, because the AM Best requirement in § 62.24(d) relates only to information needed to set marketing goals, and because FEMA neither requires nor uses this information for marketing, FEMA is removing from its regulations this requirement upon the public. II. Regulatory Analysis A. Administrative Procedure Act The Administrative Procedure Act (APA) generally requires agencies to publish a notice of proposed rulemaking in the Federal Register and provide interested persons the opportunity to submit comments. See 5 U.S.C. 553(b) and (c). The APA provides an exception to this prior notice and comment requirement for rules of agency organization, procedure, or practice. 5 U.S.C. 553(b)(3)(A). This final rule is a procedural rule promulgated for agency efficiency purposes. This action is limited to updating FEMA’s regulations to remove a requirement upon WYO applicants to furnish a particular piece of information regarding their financial size for the purpose of setting marketing goals that FEMA does not actually need from them or use in practice. As such, this rule simply updates FEMA’s regulations to align with current Agency practice. This rule does not affect the substantive rights or interests of WYO applicants. The AM Best requirement in the last sentence of § 62.24(d) was only related to the determination of marketing strategies; FEMA has never considered information from AM Best in 2 See https://www.ambest.com/home/ default.aspx. Accessed June 24, 2021. E:\FR\FM\29NOR1.SGM 29NOR1 67656 Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Rules and Regulations determining eligibility to participate in the WYO Program. Further, the APA generally requires that substantive rules incorporate a 30day delayed effective date. 5 U.S.C. 553(d). However, the APA provides an exception to the 30-day delayed effective date for rules which grant or recognize an exemption or relieve a restriction. 5 U.S.C. 553(d)(1). This rule relieves a restriction rendering private insurance companies ineligible to participate in the WYO Program unless they furnish information on their financial size. As mentioned above, FEMA does not require this information in practice to determine eligibility to participate, and is therefore updating its regulations to remove this unnecessary restriction upon the public. khammond on DSKJM1Z7X2PROD with RULES B. Executive Orders 12866, ‘‘Regulatory Planning and Review’’ and 13563, ‘‘Improving Regulation and Regulatory Review’’ Executive Orders 12866 (‘‘Regulatory Planning and Review’’) and 13563 (‘‘Improving Regulation and Regulatory Review’’) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Office of Management and Budget (OMB) has not designated this rule a ‘‘significant regulatory action’’ under section 3(f) of Executive Order 12866. Accordingly, the rule has not been reviewed by OMB. The following paragraphs explain the need for the updated regulation, the affected population, and the benefits. Need for Updated Regulation Current regulations require private insurance companies applying to participate in the WYO program to furnish their Best’s Financial Size Category for the purpose of setting marketing goals. However, this is no longer a FEMA practice as FEMA does not set marketing goals for participating WYO companies. Instead, FEMA utilizes the policy growth incentives to motivate companies to utilize their resources in the marketing and sales of new NFIP policies. The purpose and goals of the policy growth incentives is to (1) increase the number of customers with flood insurance policies; (2) increase the financial stability of the VerDate Sep<11>2014 15:50 Nov 26, 2021 Jkt 256001 program by distributing the policy base and increasing focus on lower risk policies; and (3) to act as a reinvestment to advance future growth activities. The policy growth incentives provide a flat dollar amount for each new policy a WYO company writes. To qualify for the policy growth incentives, the company must have an overall net growth and the new policies must be new to the NFIP and not a renewal previously written by another WYO Company. The total policy growth incentives paid to WYO companies will not exceed two percent of the aggregate net written premium collected by all WYO companies. FEMA will pay those WYO companies, who qualify for an incentive, at the end of the Arrangement year. FEMA is issuing this final rule to remove a requirement that a private insurance company applying to participate in the WYO program furnish its Best’s Financial Size Category for the purpose of setting marketing goals. Affected Population This rule affects private companies participating in and applying for participation in the WYO Program. Currently there are 12 of the 56 WYO companies who are either ‘‘Not Rated’’ or have never been rated by AM Best and do not utilize their service. This rule removes the requirement to provide information that FEMA no longer enforces or uses in implementing the NFIP. Although FEMA is no longer enforcing this requirement, 44 WYO companies continue to use AM Best services. FEMA will no longer require an AM Best rating because FEMA, to the extent necessary, can accurately assess the size of a carrier for marketing purposes without the rating. Nevertheless, size is not a consideration FEMA uses when formulating marketing strategies. FEMA assumes most of the larger carriers would continue to use AM Best for other purposes, so FEMA will still be able to review the rating. Accordingly, FEMA believes this change may have little to no effect on these companies’ choice to use a rating service. Baseline FEMA is issuing this rule to align regulations with current FEMA practice. Accordingly, FEMA is using a no-action baseline to show the effects of this rule compared to current regulations and practice. Costs FEMA expects the only costs from this rule to be the opportunity cost of time for WYO companies to familiarize PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 themselves with this final rule. Currently, 56 private companies participate in the WYO program. FEMA assumes that each company will have two Management Analysts 3 spending two hours to read and understand this rule. Using the hourly mean wage rate of $42.62 per hour with a 1.45 wage multiplier 4 results in a total cost of $123.60 ($42.62 × 2 hours × 1.45) per company. Based on a total of 44 companies, the total cost of this rule is estimated to be $5,438 in the first year. Distributional Effects This rule may result in distributional impacts to insurance rating companies by removing a requirement that FEMA does not impose in implementing the NFIP. This will simplify the Code of Federal Regulations and reduce confusion, and further align the regulations with FEMA’s current exercise of its authority. Rating services are an important part of large insurance carriers’ business and FEMA believes their use of AM Best is not predicated on the requirement in 44 CFR 62.24(d) for a size rating. Rather, large insurance carriers use the rating to not only market their company to policyholders but also to potential investors. It can also be required for State regulatory purposes. In most instances they choose to use multiple rating services. Moreover, the ‘‘size’’ category is not the only service provided by the rating agencies as it is a small part of a larger service. As such, FEMA does not believe this change will affect large WYO companies’ use of AM Best. It is possible that small WYO companies who have continued to use AM Best may to choose to use the services of a competitor. However, FEMA expects that these companies will continue to use the services of a rating company as they have continued to pay for AM Best services despite FEMA no longer enforcing a requirement to do so. Accordingly, this rule may result in distributional impacts as some WYOs may switch from AM Best to a different rating company or use no rating company at all. There are no impacts to 3 U.S. Department of Labor, Bureau of Labor Statistics, May 2020 National Industry-Specific Occupational Employment and Wage Estimates, NAICS 524120—Direct Insurance (except Life, Health, and Medical) Carriers. Available online at: https://www.bls.gov/oes/2020/may/naics5_ 524120.htm (mean wage rate for Management Analysts, SOC: 13–1111, NAICS 524120). Accessed June 8, 2021. 4 Bureau of Labor Statistics, the wage multiplier is calculated by dividing total compensation for all workers of $38.60 by wages and salaries for all workers of $26.53 per hour yielding a benefits multiplier of approximately 1.45. Available at https://www.bls.gov/news.release/archives/ecec_ 03182021.htm. Accessed June 8, 2021. E:\FR\FM\29NOR1.SGM 29NOR1 Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Rules and Regulations the Federal government associated with this rule. of the Unfunded Mandates Reform Act of 1995. Conclusion FEMA estimates this final rule will result in total costs to WYO companies of $5,438 in the first year. There are no impacts to the Federal government associated with this rule. FEMA believes this change may have little to no effect on companies’ choice to use a rating service, but the rule may result in distributional impacts as some WYOs may switch from AM Best to a different rating company. E. Paperwork Reduction Act of 1995 As required by the Paperwork Reduction Act of 1995 (PRA), Public Law 104–13, 109 Stat. 163, (May 22, 1995) (44 U.S.C. 3501 et seq.), FEMA may not conduct or sponsor, and a person is not required to respond to, a collection of information unless FEMA obtains approval from the Office of Management and Budget (OMB) for the collection and the collection displays a valid OMB control number. FEMA has determined that this rulemaking does not contain any collections of information as defined by that Act. khammond on DSKJM1Z7X2PROD with RULES C. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) (5 U.S.C. 601–612), and section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104–121, 110 Stat. 847, 858– 9 (Mar. 29, 1996) (5 U.S.C. 601 note) require that special consideration be given to the effects of regulations on small entities. The RFA applies only when an agency is ‘‘required by section 553 . . . to publish general notice of proposed rulemaking for any proposed rule.’’ 5 U.S.C. 603(a). An RFA analysis is not required for this rulemaking because FEMA is not required to publish a notice of proposed rulemaking. D. Unfunded Mandates Reform Act of 1995 The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 658, 1501–1504, 1531– 1536, 1571, pertains to any rulemaking which is likely to result in the promulgation of any rule that includes a Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million (adjusted annually for inflation) or more in any one year. If the rulemaking includes a Federal mandate, the Act requires an agency to prepare an assessment of the anticipated costs and benefits of the Federal mandate. The Act also pertains to any regulatory requirements that might significantly or uniquely affect small governments. Before establishing any such requirements, an agency must develop a plan allowing for input from the affected governments regarding the requirements. FEMA has determined that this rulemaking will not result in the expenditure by State, local, and Tribal governments, in the aggregate, nor by the private sector, of $100,000,000 or more in any one year as a result of a Federal mandate, and it will not significantly or uniquely affect small governments. Therefore, no actions are deemed necessary under the provisions VerDate Sep<11>2014 15:50 Nov 26, 2021 Jkt 256001 F. Privacy Act/E-Government Act Under the Privacy Act of 1974, 5 U.S.C. 552a, an agency must determine whether implementation of a proposed regulation will result in a system of records. A ‘‘record’’ is any item, collection, or grouping of information about an individual that is maintained by an agency, including, but not limited to, his/her education, financial transactions, medical history, and criminal or employment history and that contains his/her name, or the identifying number, symbol, or other identifying particular assigned to the individual, such as a finger or voice print or a photograph. See 5 U.S.C. 552a(a)(4). A ‘‘system of records’’ is a group of records under the control of an agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual. An agency cannot disclose any record which is contained in a system of records except by following specific procedures. The E-Government Act of 2002, 44 U.S.C. 3501 note, also requires specific procedures when an agency takes action to develop or procure information technology that collects, maintains, or disseminates information that is in an identifiable form. This Act also applies when an agency initiates a new collection of information that will be collected, maintained, or disseminated using information technology if it includes any information in an identifiable form permitting the physical or online contacting of a specific individual. The system of record for the NFIP, DHS/FEMA–003—National Flood Insurance Program Files, was published in the Federal Register on May 19, 2014 (79 FR 28747). This rule does not impact this existing system of record, nor does it create a new system of record. Therefore, this rule does not PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 67657 require coverage under an existing or new Privacy Impact Assessment or System of Records Notice. G. Executive Order 13175, ‘‘Consultation and Coordination With Indian Tribal Governments’’ Executive Order 13175, ‘‘Consultation and Coordination with Indian Tribal Governments,’’ 65 FR 67249 (Nov. 9, 2000), applies to agency regulations that have Tribal implications, that is, regulations that have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. Under this Executive order, to the extent practicable and permitted by law, no agency shall promulgate any regulation that has Tribal implications, that imposes substantial direct compliance costs on Indian Tribal governments, and that is not required by statute, unless funds necessary to pay the direct costs incurred by the Indian Tribal government or the Tribe in complying with the regulation are provided by the Federal Government, or the agency consults with Tribal officials. FEMA has reviewed this final rule under Executive Order 13175 and has determined that it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. This rule relieves a requirement on private insurance companies to furnish information on their financial size to participate in the WYO program. The removal of this requirement will not affect the substantive rights or interests of Indian Tribal governments. H. Executive Order 13132, ‘‘Federalism’’ Executive Order 13132, ‘‘Federalism,’’ 64 FR 43255 (Aug. 10, 1999), sets forth principles and criteria that agencies must adhere to in formulating and implementing policies that have federalism implications, that is, regulations that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. 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. E:\FR\FM\29NOR1.SGM 29NOR1 67658 Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES FEMA has determined that this rulemaking does not have a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government, and therefore does not have federalism implications as defined by the Executive Order. I. Executive Order 11988, ‘‘Floodplain Management’’ Pursuant to Executive Order 11988, ‘‘Floodplain Management,’’ 42 FR 26951 (May 24, 1977), each agency must provide leadership and take action to reduce the risk of flood loss, to minimize the impact of floods on human safety, health and welfare, and to restore and preserve the natural and beneficial values served by floodplains in carrying out its responsibilities for (1) acquiring, managing, and disposing of Federal lands and facilities; (2) providing Federally undertaken, financed, or assisted construction and improvements; and (3) conducting Federal activities and programs affecting land use, including but not limited to water and related land resources planning, regulating, and licensing activities. In carrying out these responsibilities, each agency must evaluate the potential effects of any actions it may take in a floodplain; ensure that its planning programs and budget requests reflect consideration of flood hazards and floodplain management; and prescribe procedures to implement the policies and requirements of the Executive order. Before promulgating any regulation, an agency must determine whether the proposed regulations will affect a floodplain(s), and if so, the agency must consider alternatives to avoid adverse effects and incompatible development in the floodplain(s). If the head of the agency finds that the only practicable alternative consistent with the law and with the policy set forth in Executive Order 11988 is to promulgate a regulation that affects a floodplain(s), the agency must, prior to promulgating the regulation, design or modify the regulation to minimize potential harm to or within the floodplain, consistent with the agency’s floodplain management regulations. It must also prepare and circulate a notice containing an explanation of why the action is proposed to be located in the floodplain. The purpose of this rule is to remove a requirement on private insurance companies to furnish information on their financial size to participate in the WYO program. In accordance with 44 VerDate Sep<11>2014 15:50 Nov 26, 2021 Jkt 256001 CFR part 9, ‘‘Floodplain Management and Protection of Wetlands,’’ FEMA determines that the changes proposed in this rule would not have an effect on floodplains. J. Executive Order 11990, ‘‘Protection of Wetlands’’ Executive Order 11990, ‘‘Protection of Wetlands,’’ 42 FR 26961 (May 24, 1977) sets forth that each agency must provide leadership and take action to minimize the destruction, loss or degradation of wetlands, and to preserve and enhance the natural and beneficial values of wetlands in carrying out the agency’s responsibilities. These responsibilities include (1) acquiring, managing, and disposing of Federal lands and facilities; and (2) providing federally undertaken, financed, or assisted construction and improvements; and (3) conducting Federal activities and programs affecting land use, including but not limited to water and related land resources planning, regulating, and licensing activities. Each agency, to the extent permitted by law, must avoid undertaking or providing assistance for new construction located in wetlands unless the head of the agency finds (1) that there is no practicable alternative to such construction, and (2) that the proposed action includes all practicable measures to minimize harm to wetlands which may result from such use. In making this finding, the head of the agency may take into account economic, environmental and other pertinent factors. In carrying out the activities described in Executive Order 11990, each agency must consider factors relevant to a proposal’s effect on the survival and quality of the wetlands. These include public health, safety, and welfare, including water supply, quality, recharge and discharge; pollution; flood and storm hazards; sediment and erosion; maintenance of natural systems, including conservation and long term productivity of existing flora and fauna, species and habitat diversity and stability, hydrologic utility, fish, wildlife, timber, and food and fiber resources. They also include other uses of wetlands in the public interest, including recreational, scientific, and cultural uses. The purpose of this rule is to remove a requirement on private insurance companies to furnish information on their financial size to participate in the WYO program. In accordance with 44 CFR part 9, ‘‘Floodplain Management and Protection of Wetlands,’’ FEMA determines that the changes in this rule would not have an effect on wetlands. PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 K. National Environmental Policy Act of 1969 (NEPA) Under the National Environmental Policy Act of 1969 (NEPA), as amended, 42 U.S.C. 4321 et seq., an agency must consider impacts of its actions on the environment and prepare an environmental assessment or environmental impact statement for any rulemaking that has potential to significantly affect the quality of the human environment. A categorical exclusion (CATEX) is a form of NEPA compliance that applies to actions that do not need to undergo detailed environmental analysis because it has been determined through experience that they typically do not have a significant impact on the human environment. An agency may apply a CATEX if the project fits within the identified criteria of the CATEX. Rulemaking is a major Federal action subject to NEPA. CATEX M1(d) included in the list of categorical exclusions found in the Department of Homeland Security Instruction Manual 023–01–001–01, Revision 01, Implementation of the National Environmental Policy Act, Appendix A, issued November 6, 2014, covers activities in support of FEMA’s administration of the National Flood Insurance Program, including revisions WYO participation criteria. This rule for the NFIP meets CATEX M1(d) and does not require further analysis under NEPA. L. Congressional Review of Agency Rulemaking Under the Congressional Review of Agency Rulemaking Act (CRA), 5 U.S.C. 801–808, before a rule can take effect, the Federal agency promulgating the rule must submit to Congress and to the Government Accountability Office (GAO) a copy of the rule; a concise general statement relating to the rule, including whether it is a major rule; the proposed effective date of the rule; a copy of any cost-benefit analysis; descriptions of the agency’s actions under the Regulatory Flexibility Act and the Unfunded Mandates Reform Act; and any other information or statements required by relevant executive orders. FEMA has sent this final rule to the Congress and to GAO pursuant to the CRA. The rule is not a ‘‘major rule’’ within the meaning of the CRA. It will not have an annual effect on the economy of $100,000,000 or more; it will not result in a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; and it will not have E:\FR\FM\29NOR1.SGM 29NOR1 Federal Register / Vol. 86, No. 226 / Monday, November 29, 2021 / Rules and Regulations significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreignbased enterprises in domestic and export markets. List of Subjects in 44 CFR Part 62 Claims, Flood insurance, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, the Federal Emergency Management Agency amends 44 CFR part 62 as follows: PART 62—SALE OF INSURANCE AND ADJUSTMENT OF CLAIMS 1. The authority citation for part 62 continues to read as follows: ■ Authority: 42 U.S.C. 4001 et seq.; 6 U.S.C. 101 et seq. Subpart C—Write-Your-Own (WYO) Companies § 62.24 [Amended] 2. In § 62.24, amend paragraph (d) by removing the last sentence. ■ Deanne Criswell, Administrator, Federal Emergency Management Agency. [FR Doc. 2021–25956 Filed 11–26–21; 8:45 am] BILLING CODE 9111–52–P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration [Docket No. 210217–0022; RTID 0648– XB121] Fisheries of the Exclusive Economic Zone Off Alaska; Atka Mackerel in the Bering Sea and Aleutian Islands Management Area National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Temporary rule; closure. AGENCY: NMFS is prohibiting directed fishing for Atka mackerel in the Central Aleutian district (CAI) of the Bering Sea and Aleutian Islands management area (BSAI) by vessels participating in the BSAI trawl limited access sector fishery. This action is necessary to prevent exceeding the 2021 total allowable catch (TAC) of Atka mackerel in the CAI allocated to vessels participating in the BSAI trawl limited access sector fishery. khammond on DSKJM1Z7X2PROD with RULES VerDate Sep<11>2014 15:50 Nov 26, 2021 Jkt 256001 FOR FURTHER INFORMATION CONTACT: Allyson Olds, 907–586–7228. SUPPLEMENTARY INFORMATION: NMFS manages the groundfish fishery in the BSAI exclusive economic zone according to the Fishery Management Plan (FMP) for Groundfish of the BSAI prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679. The 2021 TAC of Atka mackerel, in the CAI, allocated to vessels participating in the BSAI trawl limited access sector fishery was established as a directed fishing allowance of 1,372 metric tons by the final 2021 and 2022 harvest specifications for groundfish in the BSAI (86 FR 11449, February 25, 2021). In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Atka mackerel in the CAI by vessels participating in the BSAI trawl limited access sector fishery. While this closure is effective, the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip. Classification 50 CFR Part 679 SUMMARY: Effective 1200 hrs, Alaska local time (A.l.t.), November 23, 2021, through 2400 hrs, A.l.t., December 31, 2021. DATES: NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR part 679, which was issued pursuant to section 304(b), and is exempt from review under Executive Order 12866. Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment would be impracticable and contrary to the public interest, as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of the Atka mackerel directed fishing in the CAI for vessels participating in the BSAI trawl limited access sector fishery. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of November 22, 2021. The Assistant Administrator for Fisheries, NOAA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 67659 upon the reasons provided above for waiver of prior notice and opportunity for public comment. Authority: 16 U.S.C. 1801 et seq. Dated: November 23, 2021. Ngagne Jafnar Gueye, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service. [FR Doc. 2021–25921 Filed 11–23–21; 4:15 pm] BILLING CODE 3510–22–P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 679 [Docket No. 210217–0022; RTID 0648– XB142] Fisheries of the Exclusive Economic Zone Off Alaska; Pacific Ocean Perch in the Bering Sea and Aleutian Islands Management Area National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. AGENCY: ACTION: Temporary rule; closure. NMFS is prohibiting directed fishing for Pacific ocean perch in the Central Aleutian district (CAI) of the Bering Sea and Aleutian Islands management area (BSAI) by vessels participating in the BSAI trawl limited access sector fishery. This action is necessary to prevent exceeding the 2021 total allowable catch (TAC) of Pacific ocean perch in the CAI allocated to vessels participating in the BSAI trawl limited access sector fishery. SUMMARY: Effective 1200 hrs, Alaska local time (A.l.t.), November 23, 2021, through 2400 hrs, A.l.t., December 31, 2021. DATES: FOR FURTHER INFORMATION CONTACT: Allyson Olds, 907–586–7228. NMFS manages the groundfish fishery in the BSAI exclusive economic zone according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679. SUPPLEMENTARY INFORMATION: E:\FR\FM\29NOR1.SGM 29NOR1

Agencies

[Federal Register Volume 86, Number 226 (Monday, November 29, 2021)]
[Rules and Regulations]
[Pages 67654-67659]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25956]


=======================================================================
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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

44 CFR Part 62

[Docket ID FEMA-2021-0030]
RIN 1660-AB13


National Flood Insurance Program: Removal of Best's Financial 
Size Category From Write-Your-Own Participation Criteria

AGENCY: Federal Emergency Management Agency, Department of Homeland 
Security (DHS).

ACTION: Final rule.

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SUMMARY: The Federal Emergency Management Agency (FEMA) is revising its 
regulations to remove a requirement that a private insurance company 
applying to participate in the Write-Your-Own program furnish its 
Best's Financial Size Category for the purpose of setting marketing 
goals.

DATES: This rule is effective November 29, 2021.

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

FOR FURTHER INFORMATION CONTACT: Sarah Ice, Federal Insurance and 
Mitigation Administration, FEMA, 400 C St. SW, Washington, DC 20472, 
(202) 320-5577, [email protected].

SUPPLEMENTARY INFORMATION:

I. Background and Discussion of the Rule

    The National Flood Insurance Act of 1968 (NFIA), as amended (42 
U.S.C.

[[Page 67655]]

4001 et seq.), authorizes the Administrator of the Federal Emergency 
Management Agency (FEMA) to establish and carry out the National Flood 
Insurance Program (NFIP) to enable interested persons to purchase 
insurance against loss resulting from physical damage to, or loss of, 
real or personal property arising from flood in the United States. See 
42 U.S.C. 4011(a). Congress intended the NFIP to be ``a program of 
flood insurance with large-scale participation of the Federal 
Government and carried out to the maximum extent practicable by the 
private insurance industry.'' See 42 U.S.C. 4001(b). Under the NFIA, 
FEMA may carry out the NFIP through the facilities of the Federal 
Government, using for the purposes of providing flood insurance 
coverage, insurance companies and other insurers, insurance agents and 
brokers, and insurance adjustment organizations, as fiscal agents of 
the United States. See 42 U.S.C. 4071.
    Pursuant to this authority, FEMA works closely with the insurance 
industry to facilitate the sale and servicing of flood insurance 
policies. A person can purchase an NFIP flood insurance policy, also 
known as the Standard Flood Insurance Policy (SFIP), either: (1) 
Directly from the Federal Government through a direct servicing agent, 
or (2) from a private insurance company (referred to as a Write Your 
Own (WYO) company) through the WYO Program. The SFIP sets out the terms 
and conditions of insurance. FEMA establishes terms of insurance and 
rates, which are the same whether purchased directly from the NFIP or 
through the WYO Program.
    FEMA enters into a standard Financial Assistance/Subsidy 
Arrangement (Arrangement) with the WYO companies, which addresses the 
terms and conditions for administering the NFIP policies, including 
compensation. FEMA publishes the annual Arrangement in the Federal 
Register. See 44 CFR 62.23(a). FEMA published the Fiscal Year 2021 
Arrangement in March 2020, which became effective October 1, 2020. 85 
FR 17339 (Mar. 27, 2020).
    FEMA regulations at 44 CFR part 62, the ``Sale of Insurance and 
Adjustment of Claims,'' set forth the manner in which NFIP flood 
insurance is made available to the public in participating communities, 
prescribes the general method by which FEMA exercises its 
responsibility regarding the manner in which claims for losses are 
paid, and states reasons for which a policy may be nullified or 
cancelled and the associated refunds. Section 62.24, ``WYO 
participation criteria,'' establishes the criteria with which private 
insurance companies wishing to enter or reenter the WYO Program must 
comply. Section 62.24(d) outlines requirements that private companies 
must follow to demonstrate their plans to market flood insurance 
policies.
    As part of Sec.  62.24(d) FEMA requires WYO companies to submit a 
marketing plan to ensure each company is taking reasonable steps to 
market flood insurance to the public. As a result, FEMA has set a goal 
for each WYO company to provide positive net new growth of NFIP flood 
policies, and encourages these companies by providing growth 
incentives. See Fiscal Year 2021 Arrangement, IV.B.3. FEMA's intent 
behind the policy growth incentive is to motivate WYO companies to help 
FEMA in closing the insurance gap and to reach FEMA's goal of doubling 
the number of properties covered against flood by 2022.\1\ Through the 
policy growth incentives, FEMA provides to WYO companies a flat dollar 
amount for each new policy they write. The actual incentive amount 
varies by the extent of net policy growth a WYO company achieves (i.e., 
a larger net growth will lead to a larger incentive). FEMA limits the 
total policy growth incentives paid to all WYO companies to two percent 
of aggregate written premium for all companies. Id. To qualify for the 
incentive, a WYO company must have an overall net policy growth of at 
least one policy, and the new policies it writes must be new to the 
NFIP, not a renewal previously written by another WYO company. FEMA 
pays the incentive to qualifying WYO companies at the end of each 
Arrangement year. Id.
---------------------------------------------------------------------------

    \1\ In 2017, the Federal Insurance and Mitigation Administration 
set two ambitious goals: (1) To quadruple the investment in 
mitigation across the nation by 2022, and (2) to double the number 
of insurance policies across the nation by 2022. These goals have 
become the basis for FEMA's Strategic Objective 1.1: Incentivize 
investments that reduce risk, including pre-disaster mitigation, and 
reduce disaster costs at all levels; and Objective 1.2: Close the 
insurance gap. For more information, please see FEMA's Strategic 
Plan 2018-2022 at https://www.fema.gov/sites/default/files/2020-03/fema-strategic-plan_2018-2022.pdf. Accessed Sept. 16, 2021.
---------------------------------------------------------------------------

    The last sentence of Sec.  62.24(d) states, ``A private insurance 
company applying for participation in the WYO program shall also 
furnish its Best's Financial Size Category for the purpose of setting 
marketing goals.'' Best's, also known as ``AM Best,'' is a credit 
rating agency. AM Best rating services assess the creditworthiness of 
and/or reports on over 16,000 insurance companies worldwide.\2\ 
Currently, FEMA does not require companies to provide their specific 
financial size category along with their marketing plan. This is 
because FEMA does not consider the size of an insurance carrier when 
formulating marketing strategies. Section 62.24(d) relates solely to 
information needed for marketing, not information relating to assessing 
a company's financial strength. If FEMA wanted to assess a carrier's 
size, it could do so without requiring information from AM Best. 
Carriers of all sizes use a rating agency, whether AM Best or a 
competitor, to comply with their state Department of Insurance, so FEMA 
could ask for that information if it wanted. In addition, most large 
carriers, which comprise the majority of WYO carriers, already have an 
AM Best rating and could make that information available. Moreover, in 
lieu of rating agency information, FEMA could also use the number of 
policies in force to assess carrier size. However, because the AM Best 
requirement in Sec.  62.24(d) relates only to information needed to set 
marketing goals, and because FEMA neither requires nor uses this 
information for marketing, FEMA is removing from its regulations this 
requirement upon the public.
---------------------------------------------------------------------------

    \2\ See https://www.ambest.com/home/default.aspx. Accessed June 
24, 2021.
---------------------------------------------------------------------------

II. Regulatory Analysis

A. Administrative Procedure Act

    The Administrative Procedure Act (APA) generally requires agencies 
to publish a notice of proposed rulemaking in the Federal Register and 
provide interested persons the opportunity to submit comments. See 5 
U.S.C. 553(b) and (c). The APA provides an exception to this prior 
notice and comment requirement for rules of agency organization, 
procedure, or practice. 5 U.S.C. 553(b)(3)(A). This final rule is a 
procedural rule promulgated for agency efficiency purposes. This action 
is limited to updating FEMA's regulations to remove a requirement upon 
WYO applicants to furnish a particular piece of information regarding 
their financial size for the purpose of setting marketing goals that 
FEMA does not actually need from them or use in practice. As such, this 
rule simply updates FEMA's regulations to align with current Agency 
practice. This rule does not affect the substantive rights or interests 
of WYO applicants. The AM Best requirement in the last sentence of 
Sec.  62.24(d) was only related to the determination of marketing 
strategies; FEMA has never considered information from AM Best in

[[Page 67656]]

determining eligibility to participate in the WYO Program.
    Further, the APA generally requires that substantive rules 
incorporate a 30-day delayed effective date. 5 U.S.C. 553(d). However, 
the APA provides an exception to the 30-day delayed effective date for 
rules which grant or recognize an exemption or relieve a restriction. 5 
U.S.C. 553(d)(1). This rule relieves a restriction rendering private 
insurance companies ineligible to participate in the WYO Program unless 
they furnish information on their financial size. As mentioned above, 
FEMA does not require this information in practice to determine 
eligibility to participate, and is therefore updating its regulations 
to remove this unnecessary restriction upon the public.

B. Executive Orders 12866, ``Regulatory Planning and Review'' and 
13563, ``Improving Regulation and Regulatory Review''

    Executive Orders 12866 (``Regulatory Planning and Review'') and 
13563 (``Improving Regulation and Regulatory Review'') direct agencies 
to assess the costs and benefits of available regulatory alternatives 
and, if regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety effects, distributive impacts, and equity). 
Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, of reducing costs, of harmonizing rules, and of 
promoting flexibility.
    The Office of Management and Budget (OMB) has not designated this 
rule a ``significant regulatory action'' under section 3(f) of 
Executive Order 12866. Accordingly, the rule has not been reviewed by 
OMB. The following paragraphs explain the need for the updated 
regulation, the affected population, and the benefits.
Need for Updated Regulation
    Current regulations require private insurance companies applying to 
participate in the WYO program to furnish their Best's Financial Size 
Category for the purpose of setting marketing goals. However, this is 
no longer a FEMA practice as FEMA does not set marketing goals for 
participating WYO companies. Instead, FEMA utilizes the policy growth 
incentives to motivate companies to utilize their resources in the 
marketing and sales of new NFIP policies. The purpose and goals of the 
policy growth incentives is to (1) increase the number of customers 
with flood insurance policies; (2) increase the financial stability of 
the program by distributing the policy base and increasing focus on 
lower risk policies; and (3) to act as a reinvestment to advance future 
growth activities.
    The policy growth incentives provide a flat dollar amount for each 
new policy a WYO company writes. To qualify for the policy growth 
incentives, the company must have an overall net growth and the new 
policies must be new to the NFIP and not a renewal previously written 
by another WYO Company. The total policy growth incentives paid to WYO 
companies will not exceed two percent of the aggregate net written 
premium collected by all WYO companies. FEMA will pay those WYO 
companies, who qualify for an incentive, at the end of the Arrangement 
year.
    FEMA is issuing this final rule to remove a requirement that a 
private insurance company applying to participate in the WYO program 
furnish its Best's Financial Size Category for the purpose of setting 
marketing goals.
Affected Population
    This rule affects private companies participating in and applying 
for participation in the WYO Program. Currently there are 12 of the 56 
WYO companies who are either ``Not Rated'' or have never been rated by 
AM Best and do not utilize their service. This rule removes the 
requirement to provide information that FEMA no longer enforces or uses 
in implementing the NFIP. Although FEMA is no longer enforcing this 
requirement, 44 WYO companies continue to use AM Best services. FEMA 
will no longer require an AM Best rating because FEMA, to the extent 
necessary, can accurately assess the size of a carrier for marketing 
purposes without the rating. Nevertheless, size is not a consideration 
FEMA uses when formulating marketing strategies. FEMA assumes most of 
the larger carriers would continue to use AM Best for other purposes, 
so FEMA will still be able to review the rating. Accordingly, FEMA 
believes this change may have little to no effect on these companies' 
choice to use a rating service.
Baseline
    FEMA is issuing this rule to align regulations with current FEMA 
practice. Accordingly, FEMA is using a no-action baseline to show the 
effects of this rule compared to current regulations and practice.
Costs
    FEMA expects the only costs from this rule to be the opportunity 
cost of time for WYO companies to familiarize themselves with this 
final rule. Currently, 56 private companies participate in the WYO 
program. FEMA assumes that each company will have two Management 
Analysts \3\ spending two hours to read and understand this rule. Using 
the hourly mean wage rate of $42.62 per hour with a 1.45 wage 
multiplier \4\ results in a total cost of $123.60 ($42.62 x 2 hours x 
1.45) per company. Based on a total of 44 companies, the total cost of 
this rule is estimated to be $5,438 in the first year.
---------------------------------------------------------------------------

    \3\ U.S. Department of Labor, Bureau of Labor Statistics, May 
2020 National Industry-Specific Occupational Employment and Wage 
Estimates, NAICS 524120--Direct Insurance (except Life, Health, and 
Medical) Carriers. Available online at: https://www.bls.gov/oes/2020/may/naics5_524120.htm (mean wage rate for Management Analysts, 
SOC: 13-1111, NAICS 524120). Accessed June 8, 2021.
    \4\ Bureau of Labor Statistics, the wage multiplier is 
calculated by dividing total compensation for all workers of $38.60 
by wages and salaries for all workers of $26.53 per hour yielding a 
benefits multiplier of approximately 1.45. Available at https://www.bls.gov/news.release/archives/ecec_03182021.htm. Accessed June 
8, 2021.
---------------------------------------------------------------------------

Distributional Effects
    This rule may result in distributional impacts to insurance rating 
companies by removing a requirement that FEMA does not impose in 
implementing the NFIP. This will simplify the Code of Federal 
Regulations and reduce confusion, and further align the regulations 
with FEMA's current exercise of its authority.
    Rating services are an important part of large insurance carriers' 
business and FEMA believes their use of AM Best is not predicated on 
the requirement in 44 CFR 62.24(d) for a size rating. Rather, large 
insurance carriers use the rating to not only market their company to 
policyholders but also to potential investors. It can also be required 
for State regulatory purposes. In most instances they choose to use 
multiple rating services. Moreover, the ``size'' category is not the 
only service provided by the rating agencies as it is a small part of a 
larger service. As such, FEMA does not believe this change will affect 
large WYO companies' use of AM Best. It is possible that small WYO 
companies who have continued to use AM Best may to choose to use the 
services of a competitor. However, FEMA expects that these companies 
will continue to use the services of a rating company as they have 
continued to pay for AM Best services despite FEMA no longer enforcing 
a requirement to do so. Accordingly, this rule may result in 
distributional impacts as some WYOs may switch from AM Best to a 
different rating company or use no rating company at all. There are no 
impacts to

[[Page 67657]]

the Federal government associated with this rule.
Conclusion
    FEMA estimates this final rule will result in total costs to WYO 
companies of $5,438 in the first year. There are no impacts to the 
Federal government associated with this rule. FEMA believes this change 
may have little to no effect on companies' choice to use a rating 
service, but the rule may result in distributional impacts as some WYOs 
may switch from AM Best to a different rating company.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), and 
section 213(a) of the Small Business Regulatory Enforcement Fairness 
Act of 1996, Public Law 104-121, 110 Stat. 847, 858-9 (Mar. 29, 1996) 
(5 U.S.C. 601 note) require that special consideration be given to the 
effects of regulations on small entities. The RFA applies only when an 
agency is ``required by section 553 . . . to publish general notice of 
proposed rulemaking for any proposed rule.'' 5 U.S.C. 603(a). An RFA 
analysis is not required for this rulemaking because FEMA is not 
required to publish a notice of proposed rulemaking.

D. Unfunded Mandates Reform Act of 1995

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

E. Paperwork Reduction Act of 1995

    As required by the Paperwork Reduction Act of 1995 (PRA), Public 
Law 104-13, 109 Stat. 163, (May 22, 1995) (44 U.S.C. 3501 et seq.), 
FEMA may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless FEMA obtains approval 
from the Office of Management and Budget (OMB) for the collection and 
the collection displays a valid OMB control number. FEMA has determined 
that this rulemaking does not contain any collections of information as 
defined by that Act.

F. Privacy Act/E-Government Act

    Under the Privacy Act of 1974, 5 U.S.C. 552a, an agency must 
determine whether implementation of a proposed regulation will result 
in a system of records. A ``record'' is any item, collection, or 
grouping of information about an individual that is maintained by an 
agency, including, but not limited to, his/her education, financial 
transactions, medical history, and criminal or employment history and 
that contains his/her name, or the identifying number, symbol, or other 
identifying particular assigned to the individual, such as a finger or 
voice print or a photograph. See 5 U.S.C. 552a(a)(4). A ``system of 
records'' is a group of records under the control of an agency from 
which information is retrieved by the name of the individual or by some 
identifying number, symbol, or other identifying particular assigned to 
the individual. An agency cannot disclose any record which is contained 
in a system of records except by following specific procedures.
    The E-Government Act of 2002, 44 U.S.C. 3501 note, also requires 
specific procedures when an agency takes action to develop or procure 
information technology that collects, maintains, or disseminates 
information that is in an identifiable form. This Act also applies when 
an agency initiates a new collection of information that will be 
collected, maintained, or disseminated using information technology if 
it includes any information in an identifiable form permitting the 
physical or online contacting of a specific individual.
    The system of record for the NFIP, DHS/FEMA-003--National Flood 
Insurance Program Files, was published in the Federal Register on May 
19, 2014 (79 FR 28747). This rule does not impact this existing system 
of record, nor does it create a new system of record. Therefore, this 
rule does not require coverage under an existing or new Privacy Impact 
Assessment or System of Records Notice.

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

    Executive Order 13175, ``Consultation and Coordination with Indian 
Tribal Governments,'' 65 FR 67249 (Nov. 9, 2000), applies to agency 
regulations that have Tribal implications, that is, regulations that 
have substantial direct effects on one or more Indian Tribes, on the 
relationship between the Federal Government and Indian Tribes, or on 
the distribution of power and responsibilities between the Federal 
Government and Indian Tribes. Under this Executive order, to the extent 
practicable and permitted by law, no agency shall promulgate any 
regulation that has Tribal implications, that imposes substantial 
direct compliance costs on Indian Tribal governments, and that is not 
required by statute, unless funds necessary to pay the direct costs 
incurred by the Indian Tribal government or the Tribe in complying with 
the regulation are provided by the Federal Government, or the agency 
consults with Tribal officials.
    FEMA has reviewed this final rule under Executive Order 13175 and 
has determined that it does not have a substantial direct effect on one 
or more Indian tribes, on the relationship between the Federal 
Government and Indian Tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian Tribes. This 
rule relieves a requirement on private insurance companies to furnish 
information on their financial size to participate in the WYO program. 
The removal of this requirement will not affect the substantive rights 
or interests of Indian Tribal governments.

H. Executive Order 13132, ``Federalism''

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999), 
sets forth principles and criteria that agencies must adhere to in 
formulating and implementing policies that have federalism 
implications, that is, regulations that have substantial direct effects 
on the States, on the relationship between the National Government and 
the States, or on the distribution of power and responsibilities among 
the various levels of government. 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.

[[Page 67658]]

    FEMA has determined that this rulemaking does not have a 
substantial direct effect on the States, on the relationship between 
the National Government and the States, or on the distribution of power 
and responsibilities among the various levels of government, and 
therefore does not have federalism implications as defined by the 
Executive Order.

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

    Pursuant to Executive Order 11988, ``Floodplain Management,'' 42 FR 
26951 (May 24, 1977), each agency must provide leadership and take 
action to reduce the risk of flood loss, to minimize the impact of 
floods on human safety, health and welfare, and to restore and preserve 
the natural and beneficial values served by floodplains in carrying out 
its responsibilities for (1) acquiring, managing, and disposing of 
Federal lands and facilities; (2) providing Federally undertaken, 
financed, or assisted construction and improvements; and (3) conducting 
Federal activities and programs affecting land use, including but not 
limited to water and related land resources planning, regulating, and 
licensing activities. In carrying out these responsibilities, each 
agency must evaluate the potential effects of any actions it may take 
in a floodplain; ensure that its planning programs and budget requests 
reflect consideration of flood hazards and floodplain management; and 
prescribe procedures to implement the policies and requirements of the 
Executive order.
    Before promulgating any regulation, an agency must determine 
whether the proposed regulations will affect a floodplain(s), and if 
so, the agency must consider alternatives to avoid adverse effects and 
incompatible development in the floodplain(s). If the head of the 
agency finds that the only practicable alternative consistent with the 
law and with the policy set forth in Executive Order 11988 is to 
promulgate a regulation that affects a floodplain(s), the agency must, 
prior to promulgating the regulation, design or modify the regulation 
to minimize potential harm to or within the floodplain, consistent with 
the agency's floodplain management regulations. It must also prepare 
and circulate a notice containing an explanation of why the action is 
proposed to be located in the floodplain.
    The purpose of this rule is to remove a requirement on private 
insurance companies to furnish information on their financial size to 
participate in the WYO program. In accordance with 44 CFR part 9, 
``Floodplain Management and Protection of Wetlands,'' FEMA determines 
that the changes proposed in this rule would not have an effect on 
floodplains.

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

    Executive Order 11990, ``Protection of Wetlands,'' 42 FR 26961 (May 
24, 1977) sets forth that each agency must provide leadership and take 
action to minimize the destruction, loss or degradation of wetlands, 
and to preserve and enhance the natural and beneficial values of 
wetlands in carrying out the agency's responsibilities. These 
responsibilities include (1) acquiring, managing, and disposing of 
Federal lands and facilities; and (2) providing federally undertaken, 
financed, or assisted construction and improvements; and (3) conducting 
Federal activities and programs affecting land use, including but not 
limited to water and related land resources planning, regulating, and 
licensing activities. Each agency, to the extent permitted by law, must 
avoid undertaking or providing assistance for new construction located 
in wetlands unless the head of the agency finds (1) that there is no 
practicable alternative to such construction, and (2) that the proposed 
action includes all practicable measures to minimize harm to wetlands 
which may result from such use. In making this finding, the head of the 
agency may take into account economic, environmental and other 
pertinent factors.
    In carrying out the activities described in Executive Order 11990, 
each agency must consider factors relevant to a proposal's effect on 
the survival and quality of the wetlands. These include public health, 
safety, and welfare, including water supply, quality, recharge and 
discharge; pollution; flood and storm hazards; sediment and erosion; 
maintenance of natural systems, including conservation and long term 
productivity of existing flora and fauna, species and habitat diversity 
and stability, hydrologic utility, fish, wildlife, timber, and food and 
fiber resources. They also include other uses of wetlands in the public 
interest, including recreational, scientific, and cultural uses. The 
purpose of this rule is to remove a requirement on private insurance 
companies to furnish information on their financial size to participate 
in the WYO program. In accordance with 44 CFR part 9, ``Floodplain 
Management and Protection of Wetlands,'' FEMA determines that the 
changes in this rule would not have an effect on wetlands.

K. National Environmental Policy Act of 1969 (NEPA)

    Under the National Environmental Policy Act of 1969 (NEPA), as 
amended, 42 U.S.C. 4321 et seq., an agency must consider impacts of its 
actions on the environment and prepare an environmental assessment or 
environmental impact statement for any rulemaking that has potential to 
significantly affect the quality of the human environment. A 
categorical exclusion (CATEX) is a form of NEPA compliance that applies 
to actions that do not need to undergo detailed environmental analysis 
because it has been determined through experience that they typically 
do not have a significant impact on the human environment. An agency 
may apply a CATEX if the project fits within the identified criteria of 
the CATEX.
    Rulemaking is a major Federal action subject to NEPA. CATEX M1(d) 
included in the list of categorical exclusions found in the Department 
of Homeland Security Instruction Manual 023-01-001-01, Revision 01, 
Implementation of the National Environmental Policy Act, Appendix A, 
issued November 6, 2014, covers activities in support of FEMA's 
administration of the National Flood Insurance Program, including 
revisions WYO participation criteria. This rule for the NFIP meets 
CATEX M1(d) and does not require further analysis under NEPA.

L. Congressional Review of Agency Rulemaking

    Under the Congressional Review of Agency Rulemaking Act (CRA), 5 
U.S.C. 801-808, before a rule can take effect, the Federal agency 
promulgating the rule must submit to Congress and to the Government 
Accountability Office (GAO) a copy of the rule; a concise general 
statement relating to the rule, including whether it is a major rule; 
the proposed effective date of the rule; a copy of any cost-benefit 
analysis; descriptions of the agency's actions under the Regulatory 
Flexibility Act and the Unfunded Mandates Reform Act; and any other 
information or statements required by relevant executive orders.
    FEMA has sent this final rule to the Congress and to GAO pursuant 
to the CRA. The rule is not a ``major rule'' within the meaning of the 
CRA. It will not have an annual effect on the economy of $100,000,000 
or more; it will not result in a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions; and it will not have

[[Page 67659]]

significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic and 
export markets.

List of Subjects in 44 CFR Part 62

    Claims, Flood insurance, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, the Federal Emergency 
Management Agency amends 44 CFR part 62 as follows:

PART 62--SALE OF INSURANCE AND ADJUSTMENT OF CLAIMS

0
1. The authority citation for part 62 continues to read as follows:

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

Subpart C--Write-Your-Own (WYO) Companies


Sec.  62.24  [Amended]

0
2. In Sec.  62.24, amend paragraph (d) by removing the last sentence.

Deanne Criswell,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2021-25956 Filed 11-26-21; 8:45 am]
BILLING CODE 9111-52-P