Policy Guidance for Closed Basin Lakes

The Federal Emergency Management Agency (FEMA) has been working with Tribal, State and local officials around Devils Lake, North Dakota to develop a comprehensive long term solution to the continuous flooding caused by this closed basin lake. The purpose of this memorandum is to establish a national policy for closed basin lakes, drawing from our experience in North Dakota. This document is intended to create a policy and procedural framework for the combining of resources (insurance, mitigation grant programs and other Federal, State and local programs) to contribute to a comprehensive unified solution to any closed basin lake flooding problem.

For the purpose of this guidance, a "closed basin lake" is a natural lake from which water leaves primarily through evaporation and whose surface area now exceeds or has exceeded one square mile at any time in the recorded past. Most of the nation's closed basin lakes are in the western half of the United States, where annual evaporation exceeds annual precipitation and where lake levels and surface areas are subject to considerable fluctuation due to wide variations in the climate. These lakes may overtop basin divides on occasion. Because of the unique type of flooding, special policy and procedural considerations are warranted.

The NFIP has amended the Standard Flood Insurance Policy to address the closed basin lake continuous flooding circumstance. An endorsement has been added to all policies allowing policyholders to file a total loss claim for an insured building that is actually damaged or under imminent threat of flooding, without the requirement for the building to be continuously inundated for 90 days. The claim payment, less salvage value, must be used by the policyholder to relocate their structure to a site outside the area subject to flooding. This special flood prone area around closed basin lakes will be referred to in this policy guidance and on Flood Insurance Rate Maps (FIRMs) as an Area of Special Consideration (ASC). The insurance claim provision, which may be used in conjunction with FEMA's Hazard Mitigation Grant Program (HMGP) and/or Flood Mitigation Assistance (FMA) Program, provides the means for homeowners and commercial business interests to relocate outside the ASC--thereby affording the community and its residents a permanent means of eliminating future flood losses. The success of this strategy relies on the cooperation and commitment of State, Tribal and local government as well as business interests in the area. As explained in sections to follow, the relocation assistance provided by FEMA under the insurance policy endorsement and acquisition assistance provided by FEMA through the HMGP or FMA programs must be joined by specific land use measures adopted and enforced by the State, Tribal, and local governments. These measures are intended to reinforce and ensure a permanent solution to the lake flooding.

FEMA's Regional Directors shall determine that the following requirements are satisfied before policyholders can qualify for insurance claim benefits under the closed basin lake flood insurance policy endorsement:

General Conditions:

  1. In order for a community or area to begin the process of being designated a "closed basin lake," and in order for homeowners and commercial interests to be eligible for a total loss claim under the closed basin lake flood insurance policy endorsement, the community, county, or other local jurisdiction must request this designation in writing to the FEMA Regional Director, through the State NFIP Coordinating Agency.
  2. If the Regional Director concurs that a "closed basin lake" flooding condition exists, then he or she will forward their written recommendation to FEMA's Mitigation Directorate, Technical Services Division, that the FIRM be revised to include an ASC.
  3. FEMA's Mitigation Directorate will establish elevation levels at which flooding may occur and notify the community in writing with this information. The purpose of this written notification is to expedite the community's ability to establish a temporary building moratorium. FEMA will also publish the ASC elevation in local newspapers to assist in the efforts to inform the public. Subsequently, FEMA will revise and publish a FIRM, which depicts areas subject to continuous flooding (the ASC). This published area will take into consideration United States Army Corps of Engineers (USACE) certified flood control projects and otherwise certified flood control projects designed to prevent future flooding. FEMA will, upon request from the appropriate land use jurisdiction, amend the ASC to remove areas protected by the construction of additional certified flood control projects.
  4. State, Tribal, and local governments will conduct a risk assessment that: (a) identifies the number of structures at risk around the lake within the published ASC; (b) provides the current elevation of these structures and an assessment of insurance coverage; (c) identifies properties that have received previous flood insurance claim payments; and (d) identifies any new or ongoing construction within the published ASC. FEMA will provide technical assistance for the conduct of the risk assessment. Further, funding through the FMA Program's Technical Assistance and Planning Grants, as well as through the five percent set-aside for State initiatives under the HMGP, may be used to support this assessment. The results of the assessment will provide the technical foundation for a plan defining the actions that will implement a long-term solution to the closed basin lake flooding.
  5. The FEMA Regional Director must determine and notify the State, Tribal, and local governments that they are in compliance with all of the requirements necessary for property owners to claim insurance benefits under the closed basin lake flood insurance policy endorsement. Within this notification will be the flood insurance purchase date for property owners. The FEMA Regional Director, in consultation with the Administrator of the Mitigation Division, will establish this date, from which property owners must have purchased and maintained flood insurance coverage, in order to be eligible for payments under the endorsement.

State Government:

The State and FEMA will work together to develop and enter into an agreement, prior to the provision of insurance claim payments, that articulates the actions the State will take to contribute to a permanent solution to the closed basin lake flooding problem. Commitments in this agreement must be reflected in future FEMA/State agreements for Presidential disaster declarations. A critical component of this agreement will be the State's acknowledgement that relocation and acquisition of structures and property in the ASC may become a priority use of HMGP funds. FMA grants for this area may also be used to advance a permanent solution to the flooding. Use of these programs will enable the State, in conjunction with local communities, to move forward to effect the acquisition of property that becomes available as residents relocate their homes to higher ground.

Tribes and Local Governments:

FEMA's new insurance endorsement can only be implemented if the tribe or local government:

  1. Participates in the NFIP; and
  2. Develops, adopts, and enforces a permanent land use ordinance, or a temporary moratorium for a period not to exceed six months to be followed by a permanent land use ordinance, prohibiting the construction of any residential or commercial buildings within the ASC. The only buildings the ordinance or temporary moratorium will allow on any portion of property within the ASC are certain, simple agricultural and recreational structures (see section 1(b) of Attachment 1 - Sample Closed Basin Lake Deed Restriction or section 2(b) of Attachment 2 - Sample Closed Basin Lake Conservation Easement). If any of these allowable structures are insurable buildings under the NFIP and are insured under the NFIP, they will not be eligible for the benefits of this endorsement. If a USACE certified flood control project or otherwise certified flood control project later protects the property, FEMA will, upon request from the appropriate land use jurisdiction, amend the ASC to remove areas protected by those projects. The restrictions of the permanent land use ordinance or temporary moratorium will then no longer apply in areas removed from the ASC. The community must agree to declare to FEMA any violations of this ordinance so that provisions of Section 1316 of the National Flood Insurance Act of 1968 can be used to deny insurance to any structure constructed within the ASC in violation of this ordinance.
  3. In addition, the local government or tribe must agree to notify, in writing by "certified mail/return receipt requested," all owners of structures within the ASC. The notification must inform property owners of the requirement that flood insurance must be purchased by the date specified by the FEMA Regional Director and maintained continuously thereafter, in order to be eligible for the opportunity to receive a claim payment in accordance with the new endorsement process.
  4. The local government or tribe must also agree to maintain any property acquired with FEMA grant funds as open space (as defined in Sections 1(a) and (b) of Attachment 1 - Sample Closed Basin Lake Deed Restriction, and as defined in Sections 2(a) and (b) of Attachment 2 - Sample Closed Basin Lake Conservation Easement). The local or tribal government must further agree to hold, manage and enforce all property protected by easements, unless the property with the easement is donated by the owner to a non-profit land trust organization.

Property Owners:

Property owners who become eligible for the new insurance endorsement must agree to relocate their structure outside the ASC. Property owners have several options concerning the disposition of their vacated land located in the ASC. They can either:

  1. Donate vacated property to the local government or a land use management organization that will deed-restrict it, for as long as it is within the ASC, for open space uses only [see Attachment 1 - Sample Closed Basin Lake Deed Restriction, especially sections 1(a) and 1(b) for definition of open space uses]; or
  2. Establish an easement on the property that permits only certain agricultural or recreational uses, and continue to use it for one of these exclusive purposes for as long as the property is within the ASC [see Attachment 2 - Sample Closed Basin Lake Conservation Easement, especially sections 2(a) and 2(b) for definition of these uses]; or
  3. Apply to the local government and the State to have the land acquired through the HMGP or FMA programs. This option would require an easement or deed restriction in perpetuity regardless of future certified flood control projects.

In any case, an easement or deed restriction must be in place prior to the approval of any insurance claim under the endorsement. Once approved, an advance payment of 60 percent will be provided, with the remainder payable upon the completion of the relocation.

SUMMARY:

FEMA's Regional Directors are responsible for implementing this "closed basin lake" policy and for ensuring that States, Tribal and local governments within the region are aware of the policy. FEMA's Office of Public Affairs, in conjunction with Regional Public Affairs Officers, will assist the regions in this regard. If the Regional Director determines that the local government or tribe has established new building restrictions as detailed above, and determines that the State is providing the support needed to eliminate future flood losses, then FEMA can agree to exercise the endorsement provision for eligible flood insurance policy holders and begin paying total loss claims when insured property owners' structures are actually damaged or under imminent threat of flooding.

Last Modified: Thursday, 25-May-2006 11:18:45 EDT