[Federal Register Volume 62, Number 63 (Wednesday, April 2, 1997)]
[Rules and Regulations]
[Pages 15800-15803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8291]



[[Page 15799]]

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Part IV





Department of Housing and Urban Development





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24 CFR Parts 50 and 55



Protection and Enhancement of Environmental Quality; Technical and 
Clarifying Amendments; Final Rule

  Federal Register / Vol. 62, No. 63 / Wednesday, April 2, 1997 / Rules 
and Regulations  

[[Page 15800]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 50 and 55

[Docket No. FR-2206-F-04]


Protection and Enhancement of Environmental Quality; Technical 
and Clarifying Amendments

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: On September 27, 1996 (61 FR 50914), HUD published a final 
rule streamlining and updating 24 CFR part 50 in its entirety. Part 50 
describes the procedures used by HUD to carry out its responsibilities 
under the National Environmental Policy Act of 1969 (NEPA), the NEPA-
implementing regulations of the Council on Environmental Quality, and 
the other NEPA-related Federal environmental laws and authorities. This 
final rule makes several technical and clarifying amendments to 
Sec. 50.19 of the September 27, 1996 rule. Section 50.19 lists those 
activities which are excluded from the compliance requirements of the 
various environmental authorities. Further, this rule also makes a 
correction to the preamble of the September 27, 1996 final rule. This 
rule also makes a necessary conforming amendment to 24 CFR part 55 
(Floodplain Management).

EFFECTIVE DATE: May 2, 1997.

FOR FURTHER INFORMATION CONTACT: Richard H. Broun, Director, Office of 
Community Viability, Room 7240, Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410-7000. For 
telephone communication, contact Walter Prybyla, Deputy Director for 
Policy, Environmental Review Division at (202) 708-1201. Hearing or 
speech-impaired individuals may access this number via TTY by calling 
the Federal Information Relay Service number at 1-800-877-8339. (With 
the exception of the ``800'' number, these telephone numbers are not 
toll-free.)

SUPPLEMENTARY INFORMATION:

I. Background

A. The September 27, 1996 Final Rule

    On September 27, 1996 (61 FR 50914), HUD published a final rule 
streamlining and updating 24 CFR part 50 in its entirety. Part 50 
describes the procedures used by HUD to carry out its responsibilities 
under the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 
4321-4347), the NEPA-implementing regulations of the Council on 
Environmental Quality, and the other NEPA-related Federal environmental 
laws and authorities (see Sec. 50.4 of the September 27, 1996 final 
rule). The September 27, 1996 final rule became effective on October 
28, 1996.

B. Technical and Clarifying Amendments to the September 27, 1996 Final 
Rule

    Section 50.19 of the September 27, 1996 rule lists those activities 
and approvals of policy documents which are categorically excluded from 
the environmental assessment required by NEPA (except in extraordinary 
circumstances as described in Sec. 50.20(b)) and are not subject to the 
compliance requirements of the related environmental laws and 
authorities cited at Sec. 50.4. The final rule makes the following 
technical and clarifying changes to this section:
1. Refinancings Under HUD's Loan Guarantee Recovery Fund (LGRF) Program
    Currently, Sec. 50.19(b)(21) excludes the ``[r]efinancing of HUD-
insured mortgages that will not allow new construction or 
rehabilitation, nor result in any physical impacts or changes except 
for routine maintenance.'' This provision is intended to apply solely 
to the refinancing of HUD-insured mortgages on existing properties. 
Since publication of the September 27, 1996 final rule, the issue of 
refinancings under HUD's Loan Guarantee Recovery Fund (LGRF) program 
(24 CFR part 573) has arisen for the first time. This final rule 
updates 24 CFR part 50 by adding a new Sec. 50.19(b)(24) which 
categorically excludes HUD guarantees under the LGRF program of loans 
that refinance loans and mortgages where the refinancing will not allow 
further construction or rehabilitation, nor result in any physical 
impacts or changes except for routine maintenance. Compliance with 
Secs. 50.4(b)(1), 50.4(c)(1), and 51.303(a)(3), however, is required. 
LGRF refinancings would be identical or similar to HUD refinancings of 
HUD-held mortgages on existing properties allowed under 
Sec. 50.19(b)(21) and the proposed clarification does not constitute a 
substantive change to the current rule. HUD has determined that such 
refinancings do not involve physical development and should be 
categorically excluded from environmental assessment under NEPA and 
listed under Sec. 50.19 as not subject to the compliance requirements 
of most of the related environmental laws and authorities. This 
determination is based on the fact that unlike HUD financing of 
proposed physical development for which a full environmental review and 
compliance with the related authorities is required, the refinancing of 
existing loans and mortgages would apply only to already-completed 
construction and would not alter physical conditions so as to trigger 
compliance with most environmental laws, since any physical change 
would have occurred prior to the application for a HUD loan guarantee. 
Only three of the environmental requirements listed in Sec. 50.4 would 
apply to refinancing under the LGRF program. These requirements are 
flood insurance, protection of coastal barrier resources, and 
notification of airport hazards.
    A conforming amendment to 24 CFR part 55 (Floodplain Management) is 
required as a result of the new categorical exclusion for LGRF 
refinancings. Part 55 covers the proposed acquisition, construction, 
improvement, disposition, financing and use of properties located in a 
floodplain for which approval is required either from HUD or from a 
grant recipient subject to 24 CFR part 58 (Environmental Review 
Procedures for Entities Assuming HUD Environmental Responsibilities). 
Paragraph (b) of Sec. 55.12 describes the inapplicability of 24 CFR 
part 55 to certain categories of proposed actions. This final rule adds 
a new paragraph (b)(4) to Sec. 55.12 for HUD refinancings of loans and 
mortgages under the LGRF program.
2. Lender Insurance Program
    Section 427 of the Departments of Veterans Affairs and Housing and 
Urban Development, and Independent Agencies Appropriations Act, 1997 
(Pub. L. 104-204, approved September 26, 1996; 110 Stat. 2874, 2928) 
(the Appropriations Act) amended title II of the National Housing Act 
(12 U.S.C. 1707 et seq.) to provide that the Secretary may delegate to 
Direct Endorsement (DE) mortgagees the authority to insure mortgages on 
one-to four-family properties. Section 50.19(b)(17) of the September 
27, 1996 final rule provides that HUD's endorsement of one-to-four 
family mortgage insurance under the DE program is not subject to all of 
the individual compliance requirements of the Federal laws and 
authorities cited in Sec. 50.4; compliance with Secs. 50.4(b)(1), 
50.4(c)(1), and 51.303(a)(3), however, is required. Since section 427 
allows HUD to delegate the authority to insure mortgages to certain 
eligible DE mortgagees, this Lender Insurance process should be 
similarly excluded from certain requirements. Therefore, this final 
rule amends Sec. 50.19(b)(17) to include the Lender Insurance program.

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3. Tenant-based Rental Assistance
    Currently, Sec. 50.19(b)(11) provides that tenant-based rental 
assistance is categorically excluded from the assessment required by 
NEPA except in extraordinary circumstances (Sec. 50.20(b)), and is not 
subject to the related laws cited at Sec. 50.4. Regarding the approval 
of policy documents for tenant-based rental assistance, HUD is adding a 
parenthetical to clarify that the term ``leasing'' as covered in 
Sec. 50.19(c)(1) does not include tenant-based rental assistance. 
Paragraphs (b) and (c) of Sec. 50.19 provide a list of activities and 
policy documents, respectively, which are categorically excluded from 
the environmental review requirements described elsewhere in part 50. 
The list of policy documents in Sec. 50.19(c) was intended to be 
sufficiently broad to encompass any rules and notices proposed for 
publication in the Federal Register by HUD to establish the policies 
and procedures necessary for the implementation of a categorically 
excluded activity listed in Sec. 50.19(b) on the condition that such 
rules and notices otherwise do not involve real property transfer, 
physical development or standards setting described in 
Sec. 50.19(c)(1).
4. Other Miscellaneous Corrections and Clarifications to Sec. 50.19
    Currently, Sec. 50.19(b)(4) categorically excludes economic 
development activity costs that are not associated with construction or 
expansion of existing operations. This final rule clarifies the scope 
of the exclusion by revising the imprecise phrase ``expansion of 
existing operations'' to refer specifically to ``physical expansion of 
existing facilities.'' Generally, economic development results in some 
kind of expansion. Where expansion occurs in ways other than expansion 
of the physical plant, such as expansion in sales volume or number of 
employees, HUD does not anticipate significant environmental impact or 
physical changes that would trigger environmental reviews under the 
related environmental laws and authorities.
    A new paragraph (c)(5)(ii) is added to Sec. 50.19 to clarify that 
proposed Notices of Funding Availability (NOFA) are categorically 
excluded where an existing regulation or guideline pertaining to the 
NOFA contains no environmental review provisions because the regulation 
or guideline concerns only activities listed in Sec. 50.19(b).
    The final rule revises Sec. 50.19(c)(6) to refer specifically to 
the establishment and review of income limits and exclusions with 
regard to eligibility for or calculation of HUD housing assistance or 
rental assistance. This activity does not involve physical development 
or standards setting.

C. Corrected Preamble to the September 27, 1996 Final Rule

    The preamble to the September 27, 1996 final rule included a list 
of HUD programs subject to the requirements of 24 CFR part 50 (61 FR 
50915-50916). HUD wishes to make the following corrections to this 
list.
    1. The HOPE VI Revitalization Program is added to the list of 
programs administered by the Office of Public and Indian Housing. This 
program will remain subject to part 50 and is not affected by the 
October 14, 1996 effective date for the transition to 24 CFR part 58 
(Environmental Review Procedures for Entities Assuming HUD 
Environmental Responsibilities) of activities under title I of the 
United States Housing Act of 1937.
    2. The Nehemiah Housing Opportunity Grants Program (NHOP) is 
deleted from the list of programs administered by the Office of 
Housing. The Congress is no longer authorizing new grants under NHOP.
    3. Research grants authorized under sections 1051-53 of the Lead-
Based Paint Hazard Reduction Act of 1992 (LBPHRA) are added to the list 
of activities subject to 24 CFR part 50. The only lead-based paint 
grants that are statutorily permitted to be subject to 24 CFR part 58 
procedures are the abatement or hazard reduction grants that are 
authorized under section 1011 of the LBPHRA or under the 1992 HUD 
appropriations act.

II. Justification for Final Rulemaking

    HUD generally publishes a rule for public comment before issuing a 
rule for effect, in accordance with its own regulations on rulemaking 
in 24 CFR part 10. Part 10 provides for exceptions to the general rule 
if the agency finds good cause to omit advance notice and public 
participation. The good cause requirement is satisfied when prior 
public procedure is ``impracticable, unnecessary, or contrary to the 
public interest'' (24 CFR 10.1). HUD finds that in this case prior 
public procedure is unnecessary. This rule does not make any 
substantive amendments to the September 27, 1996 final rule. The rule 
clarifies that HUD's guarantees for the refinancing of a mortgage or 
loan under the LGRF program are categorically excluded. This amendment 
will benefit eligible program participants by facilitating their 
ability to secure a lower interest rate. This rule also clarifies that 
since the insurance of mortgages through the Direct Endorsement process 
is categorically excluded, the insurance of mortgages through the 
Lender Insurance process should be similarly excluded. The other 
amendments made by this final rule clarify the policies and procedures 
contained in the September 27, 1996 final rule.

III. Findings and Certifications

Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
implementing section 102(2)(C) of the National Environmental Policy Act 
of 1969 (42 U.S.C. 4332). The Finding of No Significant Impact is 
available for public inspection during business hours in the Office of 
the Rules Docket Clerk, Room 10276, Department of Housing and Urban 
Development, 451 Seventh Street, SW., Washington, DC 20410-0500.

Executive Order 12612, Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this rule have no federalism implications, and that the 
policies are not subject to review under the Order. This rule is 
limited to clarifying HUD's implementation of its responsibilities for 
environmental review and decision making under the National 
Environmental Policy Act and other related Federal environmental laws 
and authorities.

Executive Order 12606, The Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this final rule does not 
have potential for significant impact on family formation, maintenance, 
and general well-being, and, thus, is not subject to review under the 
Order. This rule clarifies 24 CFR part 50, which sets forth HUD's 
regulations governing the protection and enhancement of environmental 
quality. No significant change in existing HUD policies or programs 
will result from promulgation of this rule, as those policies and 
programs relate to family concerns.

Regulatory Flexibility Act

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)) has reviewed and approved this rule, and in so doing 
certifies that this

[[Page 15802]]

rule will not have a significant economic impact on a substantial 
number of small entities. This rule makes several technical and 
clarifying changes to the September 27, 1996 final rule. This final 
rule will have no adverse or disproportionate economic impact on small 
entities.

Unfunded Mandates Reform Act

    The Secretary has reviewed this rule before publication and by 
approving it certifies, in accordance with the Unfunded Mandates Reform 
Act of 1995 (2 U.S.C. 1532), that this rule does not impose a Federal 
mandate that will result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year.

Catalog of Federal Domestic Assistance

    The program numbers are 14.128-14.900.

List of Subjects

24 CFR Part 50

    Environmental quality, Environmental protection, Environmental 
review policy and procedures, Environmental assessment, Environmental 
impact statement, Compliance record.

24 CFR Part 55

    Floodplain management, Floodplains, Environmental protection.

    Accordingly, 24 CFR parts 50 and 55 are amended as follows:

PART 50--PROTECTION AND ENHANCEMENT OF ENVIRONMENTAL QUALITY

    1. The authority citation for part 50 continues to read as follows:

    Authority: 42 U.S.C. 3535(d) and 4332; and Executive Order 
11991, 3 CFR, 1977 Comp., p. 123.

    2. Section 50.19 is amended by:
    a. Revising paragraph (a);
    b. Adding a heading to paragraph (b);
    c. Revising paragraph (b)(14);
    d. Revising paragraph (b)(17);
    e. Adding a new paragraph (b)(24); and
    f. Revising paragraph (c), to read as follows:


Sec. 50.19  Categorical exclusions not subject to the Federal laws and 
authorities cited in Sec. 50.4.

    (a) General. The activities and related approvals of policy 
documents listed in paragraphs (b) and (c) of this section are not 
subject to the individual compliance requirements of the Federal laws 
and authorities cited in Sec. 50.4, unless otherwise indicated below. 
These activities and approvals of policy documents are also 
categorically excluded from the EA required by NEPA except in 
extraordinary circumstances (Sec. 50.20(b)). HUD approval or 
implementation of these categories of activities and policy documents 
does not require environmental review, because they do not alter 
physical conditions in a manner or to an extent that would require 
review under NEPA or the other laws and authorities cited at Sec. 50.4.
    (b) Activities. (1) Environmental and other studies, resource 
identification and the development of plans and strategies.
* * * * *
    (14) Economic development activities, including but not limited to, 
equipment purchase, inventory financing, interest subsidy, operating 
expenses and similar costs not associated with construction or physical 
expansion of existing facilities; however, in the case of equipment 
purchase, compliance with Sec. 50.4(b)(1) is required.
* * * * *
    (17) HUD's endorsement of one-to-four family mortgage insurance 
under the Direct Endorsement program, the insurance of one-to-four 
family mortgages under the Lender Insurance program, and HUD's 
acceptance for insurance of loans under Title I of the National Housing 
Act; however, compliance with Secs. 50.4 (b)(1) and (c)(1) and 
51.303(a)(3) is required.
* * * * *
    (24) HUD guarantees under the Loan Guarantee Recovery Fund Program 
(24 CFR part 573) of loans that refinance existing loans and mortgages, 
where any new construction or rehabilitation financed by the existing 
loan or mortgage has been completed prior to the filing of an 
application under the program, and the refinancing will not allow 
further construction or rehabilitation, nor result in any physical 
impacts or changes except for routine maintenance; however, compliance 
with Secs. 50.4 (b)(1) and (c)(1) and 51.303(a) is required.
    (c) Approval of policy documents. (1) Approval of rules and notices 
proposed for publication in the Federal Register or other policy 
documents that do not:
    (i) Direct, provide for assistance or loan and mortgage insurance 
for, or otherwise govern or regulate, real property acquisition, 
disposition, leasing (other than tenant-based rental assistance), 
rehabilitation, alteration, demolition, or new construction; or
    (ii) Establish, revise, or provide for standards for construction 
or construction materials, manufactured housing, or occupancy.
    (2) Approval of policy documents that amend an existing document 
where the existing document as a whole would not fall within an 
exclusion in this paragraph (c) but the amendment by itself would do 
so;
    (3) Approval of policy documents that set out fair housing or 
nondiscrimination standards or enforcement procedures or provide for 
assistance in promoting or enforcing fair housing or nondiscrimination;
    (4) Approval of handbooks, notices and other documents that provide 
operating instructions and procedures in connection with activities 
under a Federal Register document that has previously been subject to a 
required environmental review.
    (5) Approval of a Notice of Funding Availability (NOFA) that 
provides funding under, and does not alter any environmental 
requirements of, a regulation or program guideline that was previously 
published in the Federal Register, provided that
    (i) The NOFA specifically refers to the environmental review 
provisions of the regulation or guideline; or
    (ii) The regulation or guideline contains no environmental review 
provisions because it concerns only activities listed in paragraph (b) 
of this section.
    (6) Statutorily required and/or discretionary establishment and 
review of interest rates, loan limits, building cost limits, prototype 
costs, fair market rent schedules, HUD-determined prevailing wage 
rates, income limits and exclusions with regard to eligibility for or 
calculation of HUD housing assistance or rental assistance, and similar 
rate and cost determinations and related external administrative or 
fiscal requirements or procedures which do not constitute a development 
decision that affects the physical condition of specific project areas 
or building sites.

PART 55--FLOODPLAIN MANAGEMENT

    3. The authority citation for 24 CFR part 55 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 4001-4128; E.O. 11988, 42 FR 
26951, 3 CFR, 1977 Comp., p. 117.

    4. Section 55.12 is amended by revising paragraph (b)(3) and adding 
a new paragraph (b)(4) to read as follows:


Sec. 55.12  Inapplicability of 24 CFR part 55 to certain categories of 
proposed actions.

* * * * *
    (b) * * *

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    (3) HUD actions involving the disposition of individual HUD-
acquired, one- to four-family properties; and
    (4) HUD guarantees under the Loan Guarantee Recovery Fund Program 
(24 CFR part 573) of loans that refinance existing loans and mortgages, 
where any new construction or rehabilitation financed by the existing 
loan or mortgage has been completed prior to the filing of an 
application under the program, and the refinancing will not allow 
further construction or rehabilitation, nor result in any physical 
impacts or changes except for routine maintenance.
* * * * *
    Dated: March 4, 1997.
Andrew M. Cuomo,
Secretary.
[FR Doc. 97-8291 Filed 4-1-97; 8:45 am]
BILLING CODE 4210-32-P