Filling the Gaps

Although not normally enthralling reading, the May 4, 2001 issue of the Federal Register contained a notice that quickly caught my eye and tied up a few loose ends in my mind. The published Final Rule from the Federal Emergency Management Agency (FEMA) clarifying the application procedures for Letters of Map Revision (LOMR) and Letters of Map Revision Based on Fill (LOMR-F) took some of the loopholes out of Sections 65.2 through 65.6 of Title 44 of the Code of Federal Regulations (44 CFR), and went into effect on June 4, 2001. The reason for my interest is that I had just read two recent cases against FEMA that were clearly the impetus for the formal regulatory clarification. It isn't often that we so clearly see active cause and effect in government. This one was a good move, although not soon enough to avoid years of litigation over interpretation of FEMA's regulations for removing properties from the Special Flood Hazard Area (SFHA) commonly referred to as the 100-year floodplain.


Discrepancy in Purpose
FEMA's headaches arose from an apparent discrepancy in purpose between the processes for removing properties from floodplains when the land was unimproved as opposed to when the land was intended for development. Vacant land identified as "destined for development" was subject to more detailed scrutiny and required more information than land not so identified. From a broad perspective, we know that reasons besides waiver of mandatory flood insurance compel applications for removing the stigma of a flood-prone designation. In the court's narrower view, because vacant land cannot be insured against flood damage, the issue should be a moot one when viewed pragmatically. Why would anyone apply to remove a property from the floodplain for any reason other than construction of improvements? Apparently there were at least four possible interpretations of the regulations, and hence a string of lawsuits, first by one developer, and then by another wanting to tag onto the first one's success.

The Woodhill Corporation started its series of suits in 1997, resulting from denial of its application for a LOMR-F for certain filled lots in its Riverside Townes development in Illinois. Woodhill had been issued a Conditional LOMR-F in 1995 (a letter from FEMA saying that if the site is developed exactly as proposed, it should be in compliance with requirements for a final and binding LOMR-F, but that FEMA must review the final as-builts prior to issuing its Letter). FEMA then required Woodhill to provide the lowest floor elevations of the structures to be constructed before issuing the final LOMR-F. Woodhill did not supply these elevations, so FEMA denied the request for the LOMR-F. Woodhill's next move was to submit different documentation, removing information that previously showed that structures would be built at Riverside Townes, as though the lots were to remain vacant. However, FEMA informed the developer that information submitted in the first application could not be ignored, and again denied the request.

Phrasing Was Open to Interpretation
Five courtroom confrontations ensued as annual events from 1997 to 2001. Arguments ranged from the constitutional right to be granted a LOMR-F to arbitrary and capricious behavior of the federal agency. But the most important discussion for those of us working with the regulations was written into the court's opinion in the 1999 case. The U.S. Court of Appeals, Seventh Circuit, found that the phrasing of Section 65.5 of 44 CFR could be interpreted in several ways:
"Subsection (a)(3) applies when a ‘legally defined parcel of land is involved,' and subsection (a)(4) when ‘a structure is involved.' The passive phrasing (‘is involved') means that the distinction between the domain of Section 65.5(a)(3) and that of 65.5(a)(4) could be understood in at least four ways:

1. Whenever a structure is going to be built on the land, resort to (a)(4) is obligatory.
2. Whenever the FEMA has learned that a structure is planned for the land, (a)(4) supplies the exclusive avenue.
3. Whenever the application papers identify a structure to be built on the land, subsection (a)(4) controls.
4. Whenever the applicant seeks to exclude a structure rather than a parcel of land, subsection (a)(4) governs."

These may seem like fine lines to draw, but are necessary ones for legal argument. The court noted that Woodhill would prefer the fourth reading, although it would settle for the third, in seeking to exclude whole parcels from the SFHA rather than just the houses. FEMA on the other hand preferred the second interpretation, and by rejecting the LOMR-F application, rejected the fourth one. However, the court "must accept any plausible understanding of a regulation adopted by the regulation's author … . Sometimes it is enough if the interpretation is developed in litigation; a view of a text's meaning is no less authentic just because the agency first sees the need for precision once controversy breaks out … .But FEMA has been silent … . Accordingly, we construe Section 65.5(a) for ourselves … . The most natural reading is the fourth: if the applicant proposes to remove just a structure from the special hazard area, then the structure must meet the requirements of Section 65.5(a)_(4), while if the applicant proposes to remove a parcel of land, then the parcel must meet the requirements of Section 65.5(a)(3)." (168 F. 3d 1025 at 1027 and 1028).

The court then went on to discuss the purpose of the National Flood Insurance Program to issue flood insurance for improved real estate, and the senselessness of the regulations if development were not their purpose.

On September 1, 1999, FEMA issued Interim Procedures for issuing LOMR-Fs in an attempt to clarify when it would process requests under Section 65.5(a)(3) and when it would apply 65.5(a)(4). FEMA noted that it would not review previously issued determinations but would review previously denied LOMR-F applications under 65.5 (a)(4) on written request. That same day, Orchard Hill Construction (also of Illinois) filed suit against FEMA regarding denied LOMR-Fs for two lots on which the lowest floors of the structures were lower than the Base Flood Elevations. Orchard Hill wanted the Interim Procedures to apply to its application, and the court denied FEMA's new Proposed Rules as having no legal weight. This particular case outlines the distinction between Sections 65.5 (revising flood hazard boundaries but not base flood elevations) and 65.6 (involving changes in base flood elevation) for applications such as this one. FEMA was ordered to re-review Orchard Hill's LOMR-F applications under 44 CFR 65.5(a)(3). As of this writing, the opinion is not yet published except online (2001 U.S. Dist. LEXIS 2041).

New Bulletin Available
What's an agency to do? With the new rule, FEMA finally took charge of its regulations in the May 4 notice. Effective June 4, 2001, the rule removes the distinction between fill placed in a Special Flood Hazard Area containing structures and fill placed in such areas without structures, both of which are allowable under current laws and regulations governing community participation in the National Flood Insurance Program. Paragraphs 65.5(a)(1) through 65.5(a)(7) of Title 44 of the Code of Federal Regulations (44 CFR) apply to LOMR-F requests received after June 4, 2001. These paragraphs refer to revision of flood boundaries with no changes to base flood elevations. Paragraphs 65.6(a)(1) through 65.6 (a)(15) apply to LOMR requests, and address revision of base flood elevation determinations. To assist both those who submit and those who locally review development applications for properties in floodplains, FEMA has also provided Technical Bulletin 10-00 to evaluate whether structures are "reasonably safe from flooding."


Wendy Lathrop is licensed as a professional land surveyor in four Eastern states, and is a Contributing Editor for the magazine.

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