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Insurance Waiver

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1577-DR
ApplicantCity of Los Angeles
Appeal TypeSecond
PA ID#037-44000-00
PW ID#multiple project worksheets
Date Signed2008-02-28T05:00:00
Citation: FEMA-1577-DR-CA, City of Los Angeles.

Cross-reference: Insurance waiver

Summary: As a result of high winds and extensive rainfall associated with the winter storms of December 27, 2004 through January 11, 2005, flooding damaged multiple facilities of the City of Los Angeles (Applicant). FEMA prepared PWs for the facilities according to 44 CFR §§206.252 and 206.253 requiring the Applicant to obtain and maintain insurance as a condition of receiving Federal assistance.
The Applicant submitted a letter dated July 14, 2005, from the California Department of Insurance (DOI) stating that adequate and necessary flood insurance was not reasonably available based on the affordability of flood insurance premiums. This certification letter was signed by a DOI analyst, rather than the California State Insurance Commissioner. The Infrastructure Branch Director denied the requested waiver on August 10, 2005.
The Applicant submitted its first appeal on January 31, 2006, requesting a waiver of the insurance requirements. The Acting Regional Administrator denied the appeal on May 18, 2007, stating that reasonable flood insurance was available under the National Flood Insurance Program (NFIP), that the Applicant did not meet the requirements for self-insurance under section 311(c) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), and that only certifications signed by the California State Insurance Commissioner are acceptable by FEMA.
The Applicant submitted its second appeal on August 30, 2007, reiterating the position presented in its first appeal and requesting a time extension to
November 3, 2007, to obtain a waiver signed by the State Insurance Commissioner. A waiver signed by the State Insurance Commissioner has not been provided.

Issues: Is the California Department of Insurance’s certification that the flood insurance requirement was not reasonable for the Applicant adequate to establish a waiver of insurance requirements?
Findings: No. The NFIP provides available and adequate insurance. Waivers can only be granted based on availability, adequacy, or necessity. The DOI recommendation was not signed by the insurance commissioner.

Rationale: Section 311 of the Stafford Act, 44 CFR §§59.2(a), 206.252(d), and 206.253(c).

Appeal Letter

February 22, 2008

Grace Koch
Governor’s Authorized Representative
Governor’s Office of Emergency Services
Response and Recovery Division
3650 Schriever Avenue
Mather, CA 95655

Re: Second Appeal–City of Los Angeles, PA ID 037-44000-00, Insurance Waiver,
FEMA-1577-DR-CA, Multiple Project Worksheets (PWs)
Dear Ms. Koch:

This letter is in response to your letter dated November 1, 2007, which transmitted the referenced second appeal of the City of Los Angeles (Applicant). The Applicant is appealing the Federal Emergency Management Agency’s (FEMA’s) requirement that the Applicant obtain and maintain insurance as a condition of receiving disaster assistance for a damaged facility.
High winds, extensive rainfall, and flooding associated with the winter storms of
December 27, 2004 through January 11, 2005, damaged thirty-one (31) of the Applicant’s facilities. The Applicant requested assistance from FEMA to repair the damages. The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) requires applicants to purchase insurance as a condition of receiving assistance. Section 311, Insurance, of the Stafford Act (42 U.S.C. 5154) allows this requirement to be waived if the State insurance commissioner certifies that the type and extent of required insurance is not reasonably available.
The Applicant petitioned the California State Insurance Commissioner for a certification that flood insurance is not reasonable and affordable for the facilities and that insurance is not needed due to the Applicant’s program for self-insurance. The Applicant submitted a letter dated
July 14, 2005, from the California Department of Insurance (DOI) supporting its position. This letter was signed by a DOI analyst rather than the California State Insurance Commissioner. The Infrastructure Branch Director denied the DOI waiver request on August 10, 2005.
The Applicant submitted its first appeal on January 31, 2006, requesting FEMA accept the DOI recommendation to waive the requirement. The Acting Regional Administrator denied the appeal on May 18, 2007, stating that reasonable flood insurance was available under the federally-subsidized National Flood Insurance Program (NFIP), and the Applicant did not meet the requirements for self-insurance. Additionally, the Applicant was informed that only certifications signed by the California State Insurance Commissioner are acceptable by FEMA.
The Applicant submitted its second appeal on August 30, 2007, reiterating the position presented in its first appeal and requesting a time extension to November 3, 2007, in order to obtain a waiver signed by the State Insurance Commissioner. The waiver was not available at the time of your transmittal of the Applicant’s second appeal on November 1, 2007.
Section 311 of the Stafford Act requires applicants who receive assistance under section 406 to obtain and maintain insurance in the amount of eligible damage to the facilities. Additionally, section 311(a)(2) further states, “In making a determination with respect to availability, adequacy, and necessity under paragraph (1), the President shall not require greater types and extent of insurance than are certified to him as reasonable by the appropriate State insurance commissioner responsible for regulation of such insurance.”
For the Applicant to receive a waiver of insurance requirements under section 311 of the Stafford Act, it must present a certification signed by the California State Insurance Commissioner that flood insurance for its facilities is not reasonably available. The certification must be based on the grounds of availability, adequacy, or necessity for the Applicant to receive a waiver under section 311. Affordability is not a viable argument if facilities are eligible for coverage under the federally-subsidized NFIP.
Based on a review of the information submitted with the appeal, I have determined the Acting Regional Administrator’s decision on the first appeal is consistent with program statute and regulations. Therefore, I am denying the second appeal.
Please inform the Applicant of my decision. This determination constitutes the final decision on this matter as set forth in 44 CFR §206.206.

Sincerely,
/s/
Carlos J. Castillo
Assistant Administrator
Disaster Assistance Directorate

cc: Nancy Ward
Regional Administrator
FEMA Region IX
Last updated February 4, 2020