Opinion
No. 99 C 5756.
February 22, 2001.
MEMORANDUM OPINION AND ORDER
In this lawsuit, Plaintiffs challenge the decision of the Federal Emergency Management Agency ("FEMA") to deny Plaintiff's request for a Letter of Map Revision based on Fill ("LOMR-F") for two Illinois home sites located within a Special Flood Hazard Area ("SFHA"). The LOMR-F, if granted, would exempt the owners of these two lots from the requirement that they purchase flood insurance, should they seek a federally-insured mortgage loan. Under the APA, 5 U.S.C. § 704, this court may set aside FEMA's decision if it is arbitrary or capricious, an abuse of discretion, or contrary to law. This court concludes that standard is met here and grants Plaintiff's petition.
FACTUAL BACKGROUND
A. Parties
The purpose of the National Flood Insurance Act ("NFIA"), 42 U.S.C. § 4001, et seq. is to: (1) authorize a flood insurance program by means of which flood insurance, over a period of time, can be made available on a nationwide basis through the cooperative efforts of the federal government and the private insurance industry, and (2) provide flexibility in the program so that such flood insurance may be based on workable methods of pooling risks, minimizing costs, and distributing burdens equitably among those who will be protected by flood insurance and the general public. 42 U.S.C. § 4001(d). Defendant FEMA is the federal agency authorized to administer the NFIA. FEMA identifies and maps flood hazard areas in each community that participates in the National Flood Insurance Program ("NFIP") by conducting flood hazard studies and publishing Flood Insurance Rate Maps ("FIRMs"). An area on the FIRM will be designated an SFHA if there is at least a 1% chance of inundation in any given year. This 1% annual chance of flood is determined from information obtained by FEMA through consultation with the community, floodplain topographic surveys, and detailed hydrologic and hydraulic analyses.
Defendants in this case also include James Lee Witt, the current Director of FEMA and Frederick H. Sharrocks, Jr., who served as Chief, Hazard Identification Branch, Mitigation Directorate of FEMA in 1997. Defendants' Rule 56.1(B)(3)(A) Response to Plaintiff's Rule 56.1(A) Statement of Material Facts, at d.)
The NFIA mandates that any property in a designated SFHA be covered by flood insurance. 42 U.S.C. § 4011. Moreover, federally-regulated lending institutions are prohibited from making any loan secured by a structure in an SFHA unless flood insurance has been secured for the life of the loan. "These rules make a[n] [SFHA] designation costly for persons who own property there and lead to disputes about boundaries." Woodhill Corp. v. Federal Emergency Management Agency, 168 F.3d 1025, 1026 (7th Cir. 1999). If an owner wishes to remove all or part of her property from an SFHA, she may request from FEMA a Letter of Map Revision. If the request is granted, the owner is no longer obligated to purchase flood insurance.
When, as here, a developer chooses to elevate some or all of its property with "fill," it may request that FEMA remove the elevated property from an SFHA. FEMA evaluates these LOMR-F requests pursuant to 44 C.F.R. § 65.5. The relevant paragraphs of this regulatory section are as follows:
(a) Data requirements for topographic changes. In many areas of special flood hazard (excluding V zones and floodways) it may be feasible to elevate areas with earth fill above the base flood elevation. Scientific and technical information to support a request to gain exclusion from an area of special flood hazard of a structure or parcel of land that has been elevated by the placement of fill shall include the following:
* * * * *
(3) If a legally defined parcel of land is involved, a topographic map indicating present ground elevations and date of fill. FEMA's determination as to whether a legally defined parcel of land is to be excluded from the area of special flood hazard shall be based upon a comparison of the ground elevations of the parcel with the elevations of the base flood. If the ground elevations of the entire legally defined parcel of land are at or above the elevations of the base flood the parcel may be excluded from the area of special flood hazard.
(4) If a structure is involved, a topographic map indicating structure location and ground elevations including the elevations of the lowest floor (including basement) and the lowest adjacent grade to the structure. FEMA's determination as to whether a structure is to be excluded from the area of special flood hazard shall be based upon a comparison of the elevation of the lowest floor (including basement) and the elevation of the lowest adjacent grade with the elevation of the base flood. If the entire structure and the lowest adjacent grade are at or above the elevation of the base flood, the structure may be excluded from the area of special flood hazard.
The dispute at issue here involves Lots 7 and 12 of the Tara Hill subdivision in the City of Darien, DuPage County, Illinois. Plaintiff Standard Bank Trust Company, as trustee, is the legal title holder of Lots 5 through 9 and 12 at Tara Hill. (Plaintiffs' Rule 56.1(A) Statement of Material Facts ("Plaintiffs' Statement"), at a.) Plaintiffs Orchard Hill Building Company, d/b/a Gallagher Henry, an Illinois general partnership, and Orchard Hill Construction, LLC, an Illinois limited liability company, are the beneficial owners of Lots 5 through 9 and 12. ( Id. at b.) According to FEMA, Lots 7 and 12 are currently within the SFHA associated with Wards Creek, a tributary that runs along one side of Tara Hill.
B. Plaintiffs' LOMR-F Requests
In order to produce buildable lots at Tara Hill having a surface elevation above the base flood elevation ("BFE"), Plaintiffs commissioned a mass earth moving and grading effort in 1989. ( Id. at ¶ 3.) Plaintiffs then received permits from the City of Darien and began to build structures on the property. (Defendants' Rule 56 Statement of Material Facts ("Defendants' Statement"), at ¶ 13.) For example, Plaintiffs received a permit for and built a structure on Lot 12 in 1990, and then received a permit for and built a structure on Lot 7 in 1991. ( Id.; Administrative Record ("AR"), Exhibit 41, Public Burden Disclosure Notice.)
On or about October 24, 1995, approximately six years after it had elevated the property with "fill," Plaintiffs requested that FEMA remove the SFHA designation from Lots 5, 6, 7, 8, 9 and 12. (Plaintiffs' Statement, at ¶ 6.) Plaintiffs indicated on its LOMR-F form that the BFE for each of the six lots was 710.3 feet, NGVD (National Geodetic Vertical Datum) and the existing or proposed elevation of the lowest ground on each of the six lots was 711.0. ( Id.) On July 10, 1996, FEMA issued an LOMR-F in Case No. 96-05-556A which removed Lots 5 through 7 from the SFHA but found that Lots 8, 9 and 12 (and the structure on Lot 12) were within the SFHA because "the proposed elevation of the lowest floors are lower than the 1% annual chance flood elevation [of] 711.2 feet." ( Id. at 9.) Specifically, FEMA found that the "Lowest Floor" was 710.52 for Lots 8 and 9 and 711.01 for Lot 12. ( Id.)
On or about October 28, 1996, Plaintiffs submitted another LOMR-F request to again seek the exclusion of Lots 8, 9, and 12 from the SFHA. ( Id. at 10.) Plaintiffs included in their submission an aerial photograph of Wards Creek and a topographic work map of Tara Hill prepared by the DuPage County Department of Environmental Concerns ("DCDEC") with relatively detailed two-foot topographic contours. ( Id.) On December 18, 1996, before deciding whether to grant Plaintiffs' request, FEMA asked that Plaintiffs submit a corrected BFE calculation and the "back-up data." (AR, Exhibit 8, FEMA's December 8, 1996 letter.) Plaintiffs complied promptly. They hired R.W. Lindley to perform the necessary measurements in response to FEMA's request and provide the calculations and supporting information to Dewberry Davis, FEMA's engineering consultants. (AR, Exhibit 8, Lindley's December 27, 1996 letter.) Lindley prepared hydraulic and hydrologic models and submitted them to Dewberry Davis on January 13, 1997. (Plaintiffs' Statement, at ¶ 12.) In his cover letter to Dewberry Davis, Lindley wrote: "The present models (both hydraulic and hydrologic) used to establish the BFE of [Tara Hill] now agree, within model tolerances, on the BFE of 712.1." (AR, Exhibit 23, Lindley's January 13 letter.) This BFE of 712.1 covered all six relevant lots.
On February 13, 1997, FEMA issued its determination in Case No. 97-05-470A which (1) accepted Plaintiffs' analysis of the BFE and thus increased it for each lot from 711.2 to 712.1; (2) reincluded Lot 7 within the SFHA because it found the elevation of the lowest floor of the structure built on Lot 7 to be 711.3; and (3) denied Plaintiffs' request to remove Lots 8, 9 and 12 from the SFHA because it found that the elevation of the lowest floor of the structures built on Lots 8, 9 and 12 to be 709.1, 709.1, and 711.3, respectively. ( Id. at ¶ 14.) After FEMA's February 13 determination, Plaintiffs continued to submit additional documents to FEMA, including an annotated DCDEC map. ( Id. at ¶ 15.) According to this annotated map, the SFHA had shifted entirely off Lots 7, 8, 9 and 12. ( Id. at ¶ 16.) Plaintiffs asked FEMA to review its determination in light of what Plaintiffs considered to be revised floodplain boundaries. FEMA, however, declined to reconsider or amend its February 13, 1997 determination. In a June 24, 1997 response to one of Lindley's requests for review, FEMA wrote:
You wrote that the determination in our February 13, 1997, LOMR-F is based on topographic information that conflicts with the DCDEC topographic information. . . . However, we considered the DCDEC topographic information when making our determination. The DCDEC topographic information reflects fill that was placed after the publication of the effective FIRM for DuPage County, Illinois. In reviewing requests to remove lots and/or structures from the flood hazard area, we compare property and surface elevations to the 1% annual chance water-surface elevation at the site as shown by the submitted data. If fill has been placed to elevate the property and/or structures above the 1% annual chance water-surface elevation, Subparagraph 65.5 (a)(4) of the NFIP regulations applies. Subparagraph 65.5(a)(4) requires that for a LOMR-F to be issued, any structures built on land that has been elevated above the 1% annual chance water-surface elevation by the placement of fill must have the lowest floor elevation and lowest adjacent grade equal to or above the 1% annual chance water-surface elevation. When fill has been placed, the elevation of the lowest floor must be considered because hydrostatic pressure could cause water to seep through the fill and into the basement, thereby flooding the structure. It is for this reason that we consider not just the lowest adjacent grade to the structure, but also the elevation of the lowest floor of the structure. The structures built on Lots 7, 8, 9 and 12 of the Tara Hills subdivision are considered to be prone to flooding because their lowest floors are below the Base Flood Elevation.
(AR, Exhibit 8, FEMA's June 24, 1997 letter.)
C. Woodhill Corporation v. Federal Emergency Management Agency
Over a year and a half later, on February 22, 1999, the United States Court of Appeals for the Seventh Circuit issued a ruling that was, and still is, directly relevant to this dispute. See Woodhill Corp. v. Federal Emergency Management Agency, 168 F.3d 1025 (7th Cir. 1999) (" Woodhill II"). Woodhill Corporation, a residential developer, had requested an LOMR-F for property upon which it was planning to build. Id. at 1027. Pursuant to 44 C.F.R. § 65.5(a)(4), which applies "[i]f a structure is involved," FEMA required Woodhill to provide the lowest floor elevations of the structures to be constructed. Id. Because Woodhill chose not to submit this information, FEMA denied its request. Id. With the hope that FEMA would instead review its request under § 65.5(a)(3), which applies "[i]f a legally defined parcel of land is involved," Woodhill submitted to FEMA documentation which omitted any reference to the structures that were to be built on its property. Id. FEMA, however, informed Woodhill that it could not ignore the original information, and therefore, again denied Woodhill's request pursuant to § 65.5(a)(4). Id. Woodhill then filed suit under both 42 U.S.C. § 4104 and the Administrative Procedures Act, 5 U.S.C. § 701 et seq. claiming that FEMA's denial was arbitrary and capricious. Id. The district court granted summary judgment in favor of FEMA because it found that the request clearly "involved" a structure which triggered § 65.5(a)(4). See Woodhill Corp. v. Federal Emergency Management Agency, No. 97 C. 677, 1998 WL 427604 (N.D.Ill. 1998) (" Woodhill I").
The Seventh Circuit disagreed. Woodhill II, 168 F.3d at 1028. While the court acknowledged that it must accept "any plausible understanding of a regulation adopted by the regulation's author," id. at 1027, it was compelled by FEMA's silence on the issue to construe the regulation for itself. Id. The court noted as follows:
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 § 65.5(a)(3) and that of § 65.5(a)(4) could be understood in at least four ways [hereinafter Options #1-4]:
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. Woodhill prefers the fourth reading. . . . For its part, the FEMA apparently prefers the second reading. . . . 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 § 65.5(a)(4), while if the applicant proposes to remove a parcel of land, then the parcel must meet the requirements of § 65.5(a)(3).Id. at 1027-28. The court found that Options #1-3 would make little, if any, sense because their application would render § 65.5(a)(3) wholly expendable. The court wrote:
What sense, indeed, does it make for the FEMA even to have a § 65.5(a)(3) if its submission in this suit is correct? The map is used to determine which parcels need insurance in order to qualify for loans or disaster relief. But flood insurance is limited to "improved real estate" — that is to parcels that contain structures! 42 U.S.C. § 4012a(b). Unimproved or agricultural land need not be insured in order to be eligible for loans or federal relief. Thus, someone would ask for revisions in the map only because structures are to be built; otherwise an application would be a waste of money. Indeed, the only reason to fill a parcel is to facilitate construction. If all current or contemplated structures must be handled under § 65.5(a)(4), what role is left for § 65.5(a)(3)?Id. at 1027. The court indicated that the § 65.5(a)(4) paradigm "a farm house or barn raised by fill to lie above the base flood elevation, although the bulk of the farm itself lies below that elevation." Id. at 1028. Because Woodhill had requested the removal of whole parcels of land, and not individual structures on the land such as a barn or house, the court declared FEMA's rejection of Woodhill's application to have rested on an error of law, and therefore set it aside under 5 U.S.C. § 706. Id. at 1028.
Subsequent to Woodhill II, the district court denied the Woodhill Corporation s request for attorneys' fees and other litigation costs pursuant to the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412. Woodhill Corp. v. Federal Emergency Management Agency, No. 97 C 677, 2000 WL 150763 (N.D.Ill. Feb. 7, 2000) (finding that FEMA "possessed a rational ground for its actions"). The Seventh Circuit, in an unpublished opinion, affirmed this decision. See Woodhill Corp. v. Federal Emergency Management Agency, 215 F.3d 1331 (7th Cir. 2000) ("The agency's position could not be condemned out of hand, and it received approval by the district court. Thus, it would not be appropriate to declare that the district court abused its discretion by finding the FEMA's position `substantially justified' even though it did not prevail."). FEMA claims that these subsequent opinions effectively supersede Woodhill II. The court finds this argument unpersuasive; neither opinion changes the fact that the Seventh Circuit deemed the denial of Woodhill's application under § 65.5 (a)(4) to be an "error of law," vacated the decision of the district court, and remanded the case with instructions for the district court to issue a judgment requiring FEMA to reconsider Woodhill's application under § 65.5(a)(3).
Plaintiffs in this case, still waiting for action from FEMA on their application, hoped that Woodhill II would spur a favorable response. On February 24, 1999, Lindley apprized Defendant Sharrocks by letter of the Seventh Circuit's opinion. (Plaintiffs' Statement at ¶ 19.) On August 18, 1999, FEMA responded to Lindley's letter by advising that, as a result of Woodhill II, FEMA was in the process of drafting procedures for the interpretation of 44 C.F.R. § 65.5. ( Id. at ¶ 20.) FEMA noted that "after this Federal Register publication, [it would] reconsider [Plaintiffs'] request and issue a new determination for the property, as appropriate." ( Id.)
D. FEMA's Interim Procedures
On September 1, 1999, FEMA issued Interim Procedures for issuing LOMR-Fs which sought to clarify when it would process an LOMR-F request under § 65.5(a)(3) and when it would process an LOMR-F request under § 65.5(a)(4). See 64 FR 47813. FEMA did not mention Woodhill II in these Interim Guidelines, but "recognize[d] the possible inconsistent treatment of structures for LOMR-F requests processed under 65.5(a)(3) or 65.5(a)(4)." Id. at *47814. It then declared that: "Paragraph 65.5(a)(3) [would] apply to requests to remove unimproved land elevated by placement of engineered fill if a structure is not involved at the time of the application for a LOMR-F" and "Paragraph 65.5(a)(4) [would] apply to requests to remove land elevated by placement of engineered fill if a structure is involved at the site at the time of application for a LOMR-F." Id. at *47815. FEMA noted that it would base its determination as to whether a "structure is involved" on the date that the building (or other floodplain development) permit was issued, and required the requestor to indicate on its application whether such a permit had been issued. Id. Thus, according to the Woodhill II schematic, FEMA directed its staff to follow Option #3.
As for the retroactivity of the Interim Procedures, FEMA noted that it would "not actively review previously issued determinations under § 65.5 for conformity with these Interim procedures[,] [but] will . . . review previously denied applications for a LOMR-F processed under paragraph 65.5(a)(4) upon written request." Id.
E. Procedural History
On September 1, 1999, the same day that FEMA issued its Interim Procedures, Plaintiffs filed a complaint in this court for mandamus, seeking to compel FEMA to make a final administrative decision. (Plaintiffs' Statement at ¶ 21.) On December 8, 1999, FEMA issued a final decision which (1) superseded FEMA's previous letter of February 13, 1997; (2) revised the NFIP map to remove Lots 5, 6, 8 and 9 from the SFHA; and (3) determined, pursuant to its Interim Procedures, that structures on Lots 7 and 12 were within the SFHA because the lowest floor of the structures on both lots (711.3) was lower than the corresponding BFE (712.1). ( Id. at ¶ 22.) FEMA's reference to the "lowest floor of the structures" indicated that it had again reviewed Plaintiffs' request pursuant to 44 C.F.R. § 65.5(a)(4).
On February 1, 2000, Plaintiffs amended their complaint to challenge FEMA's December 8, 1999 final decision. ( Id. at ¶ 23.) On June 6, 2000, the court entered an order directing the parties to file cross-motions for summary judgment. ( Id. at ¶ 26.) Plaintiffs raise two arguments: (1) because FEMA asked them to submit corrected BFE data, FEMA should have evaluated Plaintiffs' LOMR-F request under 44 C.F.R. § 65.6 (which governs revisions to BFIR determinations) instead of 44 C.F.R. § 65.5 (which governs revisions to special flood hazard area boundaries with no change to BFE determinations); (2) if, in the alternative, 44 C.F.R. § 65.5 is deemed to be the proper standard of review, FEMA nevertheless erred by using § 65.5(a)(4) as opposed to § 65.5(a)(3). FEMA counters that (1) the case must be dismissed because the court lacks subject-matter jurisdiction; and (2) according their September 1, 1999 Interim Procedures, the decision to review Plaintiffs' request under § 65.5(a)(4) was entirely justified.
F. Proposed Regulation
On October 16, 2000, FEMA filed with the court a proposed rule to govern procedures for issuing LOMR-Fs. In that proposed rule, FEMA invited comments with a deadline of November 9, 2000. As Plaintiffs point out, proposed regulations carry no more weight in this court than a position espoused in a brief. United Stationers, Inc. v. United States, 982 F. Supp. 1279, 1283 (N.D. Ill. 1997). Because the court has not been informed that the status of the proposed rule has changed, and because FEMA has focused little attention on this proposed rule in its briefs, the court will not afford the proposed rule any weight in this litigation.
DISCUSSION
A. Jurisdiction
The court must first determine whether it has subject-matter jurisdiction over this action. Plaintiffs allege in their Amended Complaint three jurisdictional bases: 28 U.S.C. § 1331, 42 U.S.C. § 4104(g), and 44 C.F.R. § 67.12. FEMA, which contests each of these bases, primarily notes that "the United States government may be sued only where Congress has waived its sovereign immunity and the existence of such waiver is a prerequisite for jurisdiction." LaBonte v. United States, 233 F.3d 1049, 1051 (7th Cir. 2000) (internal quotations omitted).
While § 1331 provides the court with original jurisdiction over "all civil actions arising under the Constitution, laws or treaties of the United States," it does not by itself waive FEMA's immunity. See Diaz v. Reno, 40 F. Supp.2d 984, 986 (N.D. Ill. 1999) (citing Arvanis v. Noslo Eng'g Consultants, Inc., 739 F.2d 1287 (7th Cir. 1984)). The NFIA, on the other hand, contains a limited waiver which allows aggrieved parties to contest "flood elevation determinations." 42 U.S.C. § 4104. See also Normandy Point Assocs. v. Federal Emergency Management Agency, 105 F. Supp.2d 822, 827 (S.D.Ohio 2000). According to 42 U.S.C. § 4104 (g), "any appellant aggrieved by any final determination of the Director [of FEMA] upon administrative appeal, as provided by this section, may appeal such determination to the United States district court for the district within which the community is located not more than sixty days after receipt of notice of such determination." 42 U.S.C. § 4104(g). Section 67.12 merely repeats the fact that an aggrieved individual may appeal from a proposed flood elevation determination. See 44 C.F.R. § 67.12. The limited waiver found in § 4104 and repeated in § 67.12, however, is inapplicable to this case. Section 4104 allows a community or individual to challenge FEMA's projected flood elevations. Plaintiffs here contest, not FEMA's projected or actual BFE determinations, but the measurements to which the BFE was compared.
Despite the foregoing, the court is not willing to dismiss this action for lack of subject matter jurisdiction. Defendants admitted in their Answer to Plaintiffs' Amended Complaint that FEMA's December 8, 1999 determination was a "final agency action." As such, it may be reviewed by this court under the Administrative Procedures Act ("APA"), 5 U.S.C. § 701 et seq. Defendants readily acknowledged this jurisdictional basis in their Response to Orchard Hill's Memorandum in Support of its Motion for Summary Judgment ("Defendants' Response") ("As set forth in Defendants' Motion for Summary Judgment, the APA provides the only basis of subject matter jurisdiction for Plaintiffs' actions."). Defendants' Response, at 3. Plaintiffs should have included the APA as a basis for jurisdiction in their Amended Complaint; nevertheless, because Plaintiffs have a right to be in this court, the court will overlook Plaintiffs' pleading error. With the issue of jurisdiction behind it, the court turns now to the parties' cross motions for summary judgment.
B. Standard of Review
Section 706 of the Administrative Procedure Act governs the court's review of FEMA's actions. Under this provision, when reviewing the actions of an administrative agency, the court must determine whether an agency action is, (1) arbitrary and capricious; (2) an abuse of discretion; or (3) otherwise not in accordance with the law. See 5 U.S.C. § 706. While this standard does not mean no review at all, FEMA's decision will be accorded a high degree of deference. See Mount Sinai Medical Center v. Shalala, 196 F.3d 703, 708 (citing Citizens to Preserve Overton Park, 401 U.S. 402, 415 (1971); Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994)). The court will not find FEMA's denial of Plaintiffs' request to be arbitrary or capricious as long as `the agency's path may be reasonably discerned.'" Id. (citing Bagdonas v. Dep't of Treasury, 93 F.3d 422, 426 (7th Cir. 1996)).
C. Section 65.6
Plaintiffss' first argument in support of their motion for summary judgment is that FEMA's resort to 44 C.F.R. § 65.5, regardless of the chosen subsection, when reviewing Plaintiffs' LOMR-F request was arbitrary, capricious and an error of law. Section 65.5 is entitled "Revision to special flood hazard area boundaries with no change to base flood elevation determinations." See 44 C.F.R. § 65.5 (emphasis added). Plaintiffs argue that FEMA should have instead relied solely on 44 C.F.R. § 65.6 which is entitled "Revisions to Base Flood Elevation Determinations." Basically, Plaintiffs argue that after FEMA relied upon their submissions to change the BFE, it should have relied upon the same submissions and determined that the relevant lots were situated outside of the SFHA. See Plaintiffs' Memorandum of Law in Support of Their Motion for Summary Judgment, at 8 ("[I]f FEMA grants a request to change the BFE under § 65.6, as it did here, it should also be held to grant the request to change the floodplain boundaries submitted pursuant to said request.").
For purposes of review, upon receiving Plaintiffs' October 29, 1996 LOMR-F request, FEMA asked Plaintiffs to submit additional data, including "a corrected Base Flood Elevation (BFE) for Tara Hill Subdivision with the back-up data to support the BFE." Plaintiffs did as asked, and FEMA accepted Plaintiffs' noted increase of the BFE from 711.2 to 712.1 for each of the six relevant lots. FEMA did not, however, accept the floodplain boundaries indicated on the DCDEC maps. Instead, FEMA (1) determined the scope of the SFHA according to what Plaintiffs considered to be an outdated, less detailed 1982 FIRM; and, once it determined that the lots were within the SFHA, (2) compared the revised BFE to the lowest floor of the structures built on Lots 7 and 12. Because FEMA concluded that the lowest floor of the structures on Lots 7 and 12 fell below the revised BFE, it refused to remove Lots 7 and 12 from the SFHA.
Given these facts, FEMA's reliance on § 65.5 was neither arbitrary, capricious nor an error of law. To be sure, as already noted, the title of § 65.5 explicitly excludes revisions to SFHAs where there has been a change to the BFE determination. A careful reading of § 65.5, however, shows that its title refers only to the requestor's initial request. See § 65.5(a) ("Scientific and technical information to support a request to gain exclusion from an area of special flood hazard of a structure or parcel of land that has been elevated by the placement of fill shall include the following:") (emphasis added). In fact, § 65.5 specifically contemplates that, at some point after the initial request, the BFE will need to be substantiated with technical data. See § 65.5(a)(5) ("[T]echnical data prepared and certified by a registered professional engineer may be submitted.").
Moreover, as Defendants note, "there is nothing in the regulations . . . that limits FEMA to only looking at one part of the regulatory framework in considering Plaintiffs' LOMR-F request." Defendants' Response, at 6. Plaintiffs' initial request here was for an LOMR-F. In order to evaluate the LOMR-F request, FEMA asked Plaintiffs to substantiate the BFE. Once FEMA learned that the BFE had changed, though, it was not required to search for and exclusively use another applicable regulation. Plaintiffs' § 65.6 argument therefore fails. The only remaining inquiry, then, is which particular subsection of § 65.5 was applicable to Plaintiffs' LOMR-F request.
D. Section 65.5
Plaintiffs argue that, in light of Woodhill II, FEMA's application of § 65.5(a)(4) to its LOMR-F request was arbitrary, capricious, and an error of law. Plaintiffs claim that FEMA should have evaluated its request pursuant to § 65.5(a)(3) because its request concerned the removal of parcels of land as opposed to the individual structures situated on such parcels. According to Woodhill II, which determined that § 65.5(a)(4) governs only when "the applicant seeks to exclude a structure rather than a parcel of land," it appears clear that FEMA should have analyzed Plaintiffs' request under § 65.5(a)(3). FEMA reluctantly acknowledges Woodhill II, but claims that it clarified its policy, thus addressing the Seventh Circuit's concern, when it issued its Interim Procedures. See 64 FR 47813. According to these Interim Procedures, § 65.5(a)(4) is to be used when "a structure is involved at the site at the time of the application for a LOMR-F." 64 FR at 47815. FEMA will consider a structure to be "involved" if, at the time of the LOMR-F request, a building or other floodplain development permit has been issued. Id.
The court must decide what weight to give to these Interim Procedures. In Woodhill II, the Seventh Circuit spoke to the deference owed an agency's interpretation of its own regulation. See Woodhill II, 168 F.3d at 1027. The court stated that "it must accept any plausible understanding of a regulation adopted by the regulation's author." Id. (emphasis added). Given FEMA's silence on the issue, the court then proceeded to explain that Options #1, 2, and 3 made little sense because flood insurance is limited to "`improved real estate' — that is, to parcels that contain structures." Id. at 1028 (citing 42 U.S.C. § 4012a(b)). Because an LOMR-F application virtually ensures the ultimate presence of a structure, the court reasoned, questions such as whether a permit was issued, or even whether a structure had already been built, at the time of the application are irrelevant.
FEMA's Interim Procedures do not address the Seventh Circuit's concern. Under the Interim Procedures, § 65.5(a)(4) will apply whenever FEMA knows, based on the requestor's application, that a structure is, or will be, built on the relevant property. But, according to Woodhill II, where an LOMR-F application has been filed, FEMA always knows that a structure will be built. FEMA appears to be right back where it started. Granted, FEMA has now spoken; but, in doing so, it has not convinced this court that its now articulated interpretation of § 65.5 is plausible. Accordingly, following the procedure set forth in Woodhill II, the court directs FEMA to reconsider Plaintiffs' LOMR-F request with respect to Lots 7 and 12 under 44 C.F.R. § 65.5(a)(3).
CONCLUSION
For the reasons stated above, the court grants Plaintiffs' motion for summary judgment [Doc. 20-1], denies FEMA's motion for summary judgment [Doc. 23-1], and orders FEMA to reconsider Plaintiffs' LOMR-F request with respect to Lots 7 and 12 under 44 C.F.R. § 65.5(a)(3).