[Federal Register Volume 81, Number 41 (Wednesday, March 2, 2016)]
[Rules and Regulations]
[Pages 11000-11053]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03433]



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Vol. 81

Wednesday,

No. 41

March 2, 2016

Part III





 Department of Agriculture





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 Rural Utilities Service





Rural Housing Service





Rural Business-Cooperative Service





Farm Service Agency





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7 CFR Parts 25, 1703, 1709, et al.





Environmental Policies and Procedures; Final Rule

  Federal Register / Vol. 81 , No. 41 / Wednesday, March 2, 2016 / 
Rules and Regulations  

[[Page 11000]]


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DEPARTMENT OF AGRICULTURE

Office of the Secretary

7 CFR Part 25

Rural Utilities Service

7 CFR Parts 1703, 1709, 1710, 1717, 1720, 1721, 1724, 1726, 1737, 
1738, 1739, 1740, 1753, 1774, 1775, 1779, 1780, 1781, 1782, 1784, 
and 1794

Rural Housing Service

Rural Business-Cooperative Service

Rural Utilities Service

Farm Service Agency

7 CFR Parts 1924, 1940, 1942, 1944, 1948, 1951, 1955, 1970, and 
1980

Rural Housing Service

7 CFR Parts 3550, 3555, 3560, 3565, 3570, and 3575

Rural Business-Cooperative Service

Rural Utilities Service

7 CFR Parts 4274, 4279, 4280, 4284, 4287, 4288, and 4290

RIN 0575-AC56


Environmental Policies and Procedures

AGENCY: Rural Business-Cooperative Service, Rural Housing Service, 
Rural Utilities Service, Farm Service Agency, USDA.

ACTION: Final rule.

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SUMMARY: Rural Development, a mission area within the U.S. Department 
of Agriculture comprised of the Rural Business-Cooperative Service 
(RBS), Rural Housing Service (RHS), and Rural Utilities Service (RUS), 
hereafter referred to as the Agency, has unified and updated the 
environmental policies and procedures covering all Agency programs by 
consolidating two existing Agency regulations that implement the 
National Environmental Policy Act (NEPA) and other applicable 
environmental requirements. These final rules supplement the 
regulations of the Council on Environmental Quality (CEQ), the 
regulations of the Advisory Council on Historic Preservation(ACHP), 
associated environmental statutes, Executive Orders and Departmental 
Regulations. The majority of the changes to the existing rules relate 
to the categorical exclusion provisions in the Agency's procedures for 
implementing NEPA. These changes consolidate the provisions of the 
Agency's two current NEPA rules, and better conform the Agency's 
regulations, particularly for those actions listed as categorical 
exclusions, to the Agency's current activities and recent experiences 
and to CEQ's Memorandum for Heads of Federal Departments and Agencies 
entitled ``Establishing, Applying, and Revising Categorical Exclusions 
under the National Environmental Policy Act'' issued on November 23, 
2010.

DATES: 
    Effective date: The effective date for the final rule is April 1, 
2016.
    Applicability date: For proposals that had a complete application 
submitted on or prior to April 1, 2016, either 7 CFR part 1794 or 7 CFR 
part 1940, subpart G, applies, as applicable. If the application was 
not complete prior to April 1, 2016, then 7 CFR part 1970 applies.

FOR FURTHER INFORMATION CONTACT: Kellie M. Kubena, Director, 
Engineering and Environmental Staff, Rural Utilities Service, Stop 
1571, 1400 Independence Ave. SW., Washington, DC 20250-1571; email: 
[email protected]; telephone: (202) 720-1649.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

    This section describes NEPA requirements, including the different 
levels of environmental review and how the Agency makes a determination 
regarding the appropriate level of environmental review. It also 
describes the Agency's mission and its existing NEPA-implementing 
regulations.

A. National Environmental Policy Act

    NEPA (Pub. L. 91-190, 42 U.S.C. 4321-4370) established a national 
environmental policy to, among other things, ``create and maintain 
conditions under which man and nature can exist in productive harmony'' 
(42 U.S.C. 4331(a)); sets goals for the protection, maintenance, and 
enhancement of the environment; and provides a process for carrying out 
the policy and working toward those goals. NEPA also created the 
Council on Environmental Quality (CEQ), which was later directed, by 
Executive Order, to promulgate binding regulations to guide all Federal 
agencies in preparation of agency-specific regulations for implementing 
NEPA (Executive Order No. 11514, ``Protection and Enhancement of 
Environmental Quality'' [March 5, 1970], as amended by Executive Order 
No. 11991, ``Relating to Protection and Enhancement of Environmental 
Quality'' [May 24, 1977]). The CEQ regulations are found at 40 CFR 
parts 1500-1508 (available online at: https://ceq.doe.gov/ceq_regulations/Council_on_Environmental_Quality_Regulations.pdf) and 
are referenced in this preamble.
    As set forth in CEQ's NEPA-implementing regulations, the NEPA 
process requires different levels of environmental review and analysis 
of Federal agency actions, depending on the nature of the proposed 
action and the context in which it would occur. The three levels of 
analysis are: Categorical exclusion (CE), environmental assessment 
(EA), and environmental impact statement (EIS).
    A CE is a category of actions that each Federal agency determines, 
by regulation, does not individually or cumulatively have a significant 
effect on the human environment (40 CFR 1508.4). The agency's 
procedures must provide for ``extraordinary circumstances'' in which a 
normally categorically excluded action may have a significant 
environmental effect. Examples of Agency CEs are routine financial 
transactions including but not limited to loans for purchase of real 
estate or equipment and small-scale construction. Even if a proposed 
action is classified by an agency as a CE, such proposed action is 
still screened for any extraordinary circumstances that would indicate 
a potential to have significant impacts. The CEs outlined in this rule 
are expected to have no or minimal environmental effects; however, 
extraordinary circumstances could include environmental effects limited 
or prohibited by other statutes, such as the Endangered Species Act or 
the National Historic Preservation Act, in a particular Federal action. 
If a CE applies, and the Federal agency determines that there are no 
extraordinary circumstances, the agency typically documents that 
determination in the project file. If, however, a CE applies and the 
agency determines that there are extraordinary circumstances, the 
agency would proceed to prepare an EA or an EIS.
    An EA is prepared to determine whether the impacts of a particular 
proposal might be significant (40 CFR 1508.9). In an EA, the Federal 
agency briefly describes the need for the proposal, alternatives to the 
proposal, and the potential environmental impacts of the proposed 
agency action and alternatives to that action, including the no action 
alternative. An EA results in either a Finding of No Significant

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Impact (FONSI) or a determination that the environmental impact may be 
significant and therefore an EIS is required.
    A Federal agency is required to prepare an EIS for any major 
Federal action that may significantly affect the quality of the human 
environment (NEPA, 42 U.S.C. 4332(2)(C)). The EIS must include a 
detailed evaluation of: (1) The environmental impacts of the proposed 
action; (2) any adverse environmental effects that cannot be avoided; 
(3) alternatives to the proposed action; (4) the relationship between 
local, short-term resource uses and the maintenance and enhancement of 
long-term ecosystem productivity; and (5) any irreversible and 
irretrievable commitments of resources. NEPA requires that this 
evaluation be started once a proposal is concrete enough to warrant 
analysis and must be completed at the earliest possible time to ensure 
that planning and implementation decisions reflect the consideration of 
environmental values.

B. Agency's Mission

    By statutory authority, the Agency is the leading Federal advocate 
for rural America, administering a multitude of programs, ranging from 
housing and community facilities to infrastructure and business 
development. Its mission is to increase economic opportunity and 
improve the quality of life in rural communities by providing the 
leadership, infrastructure, venture capital, and technical support that 
enables rural communities to prosper. The Agency supports these 
communities in a dynamic global environment defined by the Internet 
revolution, and the rise of new technologies, products, and new 
markets.
    To achieve its mission, the Agency provides Federal financial 
assistance (including direct loans, grants, certain cooperative 
agreements, and loan guarantees) and technical assistance to help 
enhance the quality of life and provide the foundation for economic 
development in rural areas. Like all Federal agencies, the Agency is 
responsible for determining the appropriate level of review for every 
proposed action it takes. As part of the Agency's environmental review 
responsibilities under NEPA, the Agency's responsible official examines 
an individual proposed action to determine whether it qualifies for a 
CE under the Agency's NEPA regulations. The Agency's process is 
consistent with that described in guidance issued by CEQ in 2010 on 
establishing, applying, and revising CEs (``Final Guidance for Federal 
Departments and Agencies on Establishing, Applying, and Revising 
Categorical Exclusions Under the National Environmental Policy Act'' 
(CEQ CE Guidance) (75 FR 75628)). This guidance states:

``When determining whether to use a categorical exclusion for a 
proposed activity, a Federal agency must carefully review the 
description of the proposed action to ensure that it fits within the 
category of actions described in the categorical exclusion. Next, 
the agency must consider the specific circumstances associated with 
the proposed activity, to rule out any extraordinary circumstances 
that might give rise to significant environmental effects requiring 
further analysis and documentation'' in an EA or EIS (75 FR 75631).

    The Agency requires applicants to describe their proposals in 
sufficient detail to enable the Agency to determine the required level 
of NEPA review. If the proposed action does not fall within an 
established CE or if there are extraordinary circumstances associated 
with the proposed action, the Agency's responsible official then 
determines if the action is one that normally requires the preparation 
of an EA or EIS. Those types of actions are specified in the Agency's 
final regulations.
    If a proposed action, which is not a CE, does not normally require 
the preparation of an EIS, the Agency's responsible official will 
proceed to prepare an EA to determine if the potential environmental 
impacts of the proposed action may be significant. If the Agency 
concludes, based on the EA, that the impacts would not be significant, 
the Agency will prepare and issue a FONSI. If, however, the Agency 
concludes that the impacts may be significant, the Agency's responsible 
official will proceed to issue a notice of intent to prepare an EIS.
    The Agency's procedures for determining whether to apply a CE or to 
prepare an EA or EIS and the manner in which those determinations are 
documented are set forth in the Agency's final NEPA regulations. To 
achieve the Agency's mission and to improve the delivery of its 
programs, the Agency consolidated and updated the existing 
environmental regulations into these final regulations to eliminate 
confusion between the two sets of NEPA regulations within the Agency, 
to promote consistency, and to facilitate NEPA reviews.

C. Existing Agency NEPA Regulations

    Each Federal agency's NEPA implementing procedures are specific to 
the actions taken by that agency and supplement the CEQ regulations (40 
CFR 1507.3). Both RBS/RHS and RUS have promulgated Agency NEPA 
regulations. The Agency also completes various other review 
requirements for its programs under the umbrella of NEPA, including 
historic preservation reviews under 16 U.S.C. 470f of the National 
Historic Preservation Act, and consultation on federally-listed species 
under 16 U.S.C. 1536 of the Endangered Species Act.
    The environmental policies and procedures that had been utilized by 
RBS and RHS to implement NEPA were published as a final rule by the 
Farmers Home Administration (FmHA) on January 30, 1984 (7 CFR part 
1940, subpart G, 49 FR 3724) and were amended on September 19, 1988 (53 
FR 36266). RBS and RHS are successor agencies to FmHA, which ceased to 
exist on October 20, 1994, pursuant to The Agricultural Reorganization 
Act of 1994 (Pub. L. 103-354). Also pursuant to this Act, the farm 
programs under FmHA were transferred to the Farm Service Agency (FSA) 
that was established by the 1994 USDA reorganization.
    RUS was established as part of the same 1994 USDA reorganization 
that established RBS and RHS, and is comprised of Rural Electrification 
Administration (REA), Electric and Telecommunications Programs combined 
with the Water and Waste Program from the former FmHA. The 
environmental policies and procedures that had been applicable to RUS 
programs were published as a final rule on March 13, 1984, by the REA 
(7 CFR part 1794, 49 FR 9544), were revised and published as a final 
rule in 1998 (63 FR 68648) to accommodate the 1994 USDA reorganization, 
and have been amended through 2003 (68 FR 45157).
    The Agency's existing regulations for implementing NEPA needed to 
be updated to reflect the Agency's current structure and programs, CEQ 
guidance documents, and Executive Orders. In addition, the Agency 
consolidated the Agency's approach to environmental reviews for all 
assistance programs within the USDA Rural Development mission area to 
promote consistency, rather than having separate NEPA procedures for 
RBS/RHS and RUS.
    Under this final rule, 7 CFR part 1970 replaces 7 CFR part 1794 for 
RUS and 7 CFR part 1940, subpart G, for RBS and RHS. While 7 CFR part 
1940, subpart G, no longer applies to RBS and RHS, it will continue to 
apply to FSA.

D. Rulemaking Process

    The Agency published a notice of proposed rulemaking related to 
environmental policies and procedures on February 4, 2014 (79 FR 6740). 
At

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that time, comments on the proposed rule were due no later than April 
7, 2014. In response to a request, the Agency extended the comment 
period from April 7, 2014 to May 7, 2014 (79 FR 18482). The Agency 
received over 500 written comment letters from organizations and 
individuals during the public comment period. The Agency considered the 
comments individually and collectively and has modified the proposed 
rule in response to comments, as discussed more fully below.

II. Purpose of Final Agency Environmental Regulations

    Under 7 CFR part 1970, subparts A through D, the Agency 
consolidates, simplifies, and updates the NEPA rules promulgated 
separately by RBS/RHS and RUS. Although some substantive policy changes 
were made to reflect recent environmental policies established by 
Executive Orders and CEQ guidance, the Agency's main goal is to update 
and merge the two sets of regulations, rather than to promulgate new 
rules or requirements. The Agency has determined that a consolidated 
environmental rule will be easier to read, understand, and use. In 
preparing the consolidated rule, the Agency sought to combine the 
requirements from both part 1940, subpart G, and part 1794 to eliminate 
redundancy; promote consistency among the RBS, RHS, and RUS programs; 
and reduce confusion on the part of applicants for Agency financial 
assistance programs and the public.
    The final changes are intended to (1) better align the Agency's 
regulations with the CEQ NEPA regulations and recent guidance, (2) 
update the provisions with respect to current technologies (e.g., 
renewable energy) and recent regulatory requirements, (3) promote 
consistency among the Agency's programs, and (4) reflect Agency 
practice.
    The consolidation encompasses the CEs currently in part 1940, 
subpart G, and in part 1794. In addition, the Agency has modified and 
expanded its list of CEs in a manner consistent with CEQ regulations 
and guidance. CEQ encourages the development and use of CEs and has 
identified them as an ``essential tool'' in facilitating NEPA 
implementation so that more resource-intensive EAs and EISs can be 
``targeted toward proposed actions that truly have the potential to 
cause significant environmental impacts'' (CEQ CE Guidance, 75 FR 
75631). Appropriate reliance on CEs provides a reasonable, 
proportionate, and effective analysis for many proposed actions, 
thereby helping agencies reduce paperwork (40 CFR 1508.4) and delay (40 
CFR 1508.5).
    The final rule outlines the processes the Agency will use to ensure 
that Agency actions comply with NEPA and other applicable environmental 
requirements in order to make better decisions based on an 
understanding of the environmental consequences of proposed actions, 
and take actions that protect, restore, and enhance the quality of the 
human environment. In this rule, NEPA review includes all applicable 
environmental review requirements such as those under the Endangered 
Species Act and the National Historic Preservation Act.

III. Comments Received and Agency Responses

    The Agency received over 500 written comment letters from 
organizations and individuals. Almost all comment letters were 
submitted by rural electric cooperatives and associated organizations 
and were related to the application of the proposed rules to the RUS 
Electric Program. Approximately 70 commenters expressed support for the 
detailed comments submitted by the National Rural Electric Cooperative 
Association (NRECA), although several included additional substantive 
comments.
    EarthJustice and the Natural Resources Defense Council (NRDC) also 
submitted detailed comments related to the RUS Electric Program. 
Comments were submitted by the Council for Rural and Affordable 
Housing, the National Association of Credit Specialists (NACS), and the 
Center for Equal Opportunity related to other aspects of the proposed 
regulations. Table 1 shows the major categories of comments received.

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           Major comment category                                 Affected NEPA rule sections
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Definition of and NEPA compliance for loan-   Sec.   1970.6, Sec.   1970.8, Sec.   1970.53.
 servicing actions and lien sharing.
CEs, including definition of extraordinary    Sec.   1970.52, Sec.   1970.53, Sec.   1970.54.
 circumstances, proposed CE definitions, and
 inclusion of additional actions as CEs.
EAs, including resources needed to determine  Sec.   1970.101, Sec.   1970.102, Sec.   1970.103.
 appropriate level of NEPA documentation,
 use of environmental reports, public
 comment period, and supplementation.
EISs, including actions that require          Sec.   1970.151, Sec.   1970.152.
 preparation of an EIS and procurement of
 environmental professional services for EIS
 preparation support.
Authority to consider and impose mitigation   Sec.   1970.16.
 measures.
General NEPA compliance policy issues.......  Sec.   1970.4, Sec.   1970.5, Sec.   1970.9, Sec.   1970.13, Sec.
                                                1970.14.
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    The Agency received no comments on the following sections of the 
proposed rule and, in the final rule, is not making any substantive 
changes beyond those discussed in the Notice of Proposed Rulemaking: In 
subpart A, Sec. Sec.  1970.1, 1970.3, 1970.10, 1970.11, 1970.12, 
1970.15, 1970.17, and 1970.18; in subpart B, Sec. Sec.  1970.51 and 
1970.55; in subpart C, Sec.  1970.104; and in subpart D, Sec. Sec.  
1970.153, 1970.154 and 1970.155. The responses to comments in this 
section of the Preamble do not reflect minor changes made in the final 
rule for purposes of clarity, format, or readability. These changes are 
summarized in Section IV of the Preamble.

A. Procedural Comments

    Comment: NRECA requested the Agency extend the public comment 
period for 60 days.
    Response: The Agency extended the comment period on the proposed 
rule for 30 days, to May 7, 2014 (79 FR 18482).
    Comment: NRECA, with numerous rural electric cooperatives 
expressing support for the NRECA comments (referred to hereinafter as 
NRECA et al.), also requested the Agency to modify the proposed rules 
and reissue them as a revised draft for additional public comment.
    Response: The responses to the public comments received on the 
proposed rule do not require and have not resulted in extensive changes 
to the proposed rule. A number of the changes clarify and reflect 
Agency practice under current Agency regulations. In addition, the 
public had a total of 60 days to submit comments on the proposed rule 
which, as noted, resulted in the receipt of over 500 comment letters. 
For these reasons, the Agency has determined that the public has had a 
sufficient opportunity to review and comment on the proposed rule and 
that

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issuance of a revised draft is not warranted.

B. General Comments on Proposed Rule

    Comment: A commenter stated that the proposed rule (Sec. Sec.  
1970.4, 1970.6, and 1970.14) appears to equate Native Hawaiians with 
Indian tribes, which is incorrect since the former classification is 
racial/ethnic while the latter is tribal.
    Response: The references to Native Hawaiians, Native Alaskans, and 
Indian tribes used in the proposed rule are consistent with the 
National Historic Preservation Act, 16 U.S.C. 470 et seq., and 
applicable regulations (36 CFR part 800). For this reason, the Agency 
retains its proposed language and has made no modification to the 
proposed rule in response to this comment.

C. Modifications Related to Servicing Actions and Lien Sharing

    Comments: A substantial majority (approximately 90%) of the 
comments received on the proposed rule were in response to proposed 
Sec.  1970.8, ``Actions requiring environmental review''--specifically 
proposed Sec. Sec.  1970.8(b)(2) and (b)(2)(iii) relating to loan-
servicing actions and lien sharing, respectively. These comments also 
referred to the related definition for loan-servicing actions in 
proposed Sec.  1970.6. While the primary intent of the proposed rule 
was to consolidate the environmental rules of the three agencies (RBS, 
RHS, and RUS) that are under the Rural Development mission area, the 
overwhelming majority of the comments on these sections were directed 
at RUS's Electric Program with respect to its borrowers.
    The commenters had opposing viewpoints with respect to their 
recommendations for the definition and Agency handling of loan-
servicing actions and lien sharing as a ``major Federal action.'' Some 
commenters wanted the definition of loan-servicing to be expanded and 
to include more Agency actions, such as ``lien accommodations, lien 
subordinations and lien releases'' and that such actions should be 
included as ``major Federal actions.'' They argued that when RUS 
chooses to share, subordinate, or release its lien on the assets of an 
existing borrower to allow that borrower to obtain new financing for 
new generation capacity (the example cited most often), RUS is 
providing that borrower with financial assistance that furthers the new 
generation project.
    Other commenters, however, wanted the list of actions requiring 
environmental review in Sec.  1970.8 to exclude most loan-servicing 
actions because they are actions that ``involve no reasonably 
foreseeable physical changes in the real world and are therefore 
unlikely to have the potential to significantly affect the human 
environment.'' They also argued that RUS lacks sufficient Federal 
control and responsibility over any subsequent lien sharing for actions 
to be undertaken by borrowers that involve no direct Agency financial 
assistance. They stated that the proposed rule should define as ``major 
Federal actions'' only those actions likely to have an effect on the 
environment and that involve appropriate Federal involvement, control 
and responsibility. One commenter was not clear as to whether lien 
accommodations, lien subordinations, and lien releases are included 
within the definition of financial assistance or the definition of 
loan-servicing actions.
    Of the commenters arguing to include loan-servicing actions as 
Federal actions requiring environmental review, and to expand the 
definition of loan-servicing, several of the commenters asserted that, 
in addition to all agency ``consents'' being loan-servicing actions, 
the regulation should further clarify that all ``approvals'' are also 
Federal actions, including approvals issued pursuant to existing loan 
contracts and mortgages. These commenters also stated that the 
definition should include decisions to grant a trust indenture that 
``allows third parties to take over administration of the loan 
contracts and mortgages governing an existing borrower's debt.'' The 
commenters' concerns appeared to focus on the use of coal and its 
effects.
    In contrast, a substantial number of other commenters stated that 
neither consents nor approvals should be Federal actions for purposes 
of NEPA. These commenters stated that consents and approvals routinely 
provided by RUS under its contractual agreements and security 
instruments do not involve construction and do not have the potential 
to foreseeably change the use of the property. Additionally, these 
commenters concluded that such actions were ``unlikely to have the 
potential to significantly affect the human environment'' and should 
not be considered major Federal actions. As one lender stated in its 
comments, loan-servicing actions aid lenders in facilitating the 
technicalities of their respective financing arrangements and, ``by 
their very nature are not major federal actions'' because they are 
routine in nature and ``certainly lack the potential to meet the NEPA 
standard of significantly affecting the human environment.''
    Several commenters stated that the proposed rule did not articulate 
any rationale or justification for the ``180 degree shift'' in the 
Agency's departure from its longstanding policy. Since 1998, RUS's 
environmental regulations specifically stated that ''[a]pprovals 
provided by RUS pursuant to loan contracts and security instruments, 
including approvals of lien accommodations, are not actions for the 
purposes of [the RUS NEPA regulations] and the provisions of [the RUS 
NEPA regulations] shall not apply to the exercise of such approvals'' 
(7 CFR 1794.3).
    Response:
Introduction
    The Agency's response to these comments addresses the following: 
(1) Use of the term ``major Federal action'' in the proposed rule; (2) 
a clarification and description of ``loan-servicing actions'' which 
includes processes for the collection of debt, methods for modifying 
existing debt, lien releases of security instruments, approvals and 
consents, and decisions related to the use of different security 
instruments, including trust indentures; and (3) the extent to which 
lien sharing and lien subordination require NEPA review.
    It is important to note that loan-servicing actions and lien 
sharing are very different matters. In addition, lien sharing (also 
referred to as a lien accommodation) is different from lien 
subordination. Lien sharing and lien subordination are treated 
differently under the Agency's final environmental rule as explained 
more fully below. For clarity, the Agency has modified and added to the 
definitions in Sec.  1970.6 and has modified Sec.  1970.8, which 
describes actions requiring environmental review.
    This response also provides additional detail on the Agency's final 
position on loan-servicing and loan security actions, including some 
historical background on the unique nature of the RUS Electric and 
Telecommunications Programs and the process by which the Agency 
monitors and administers the financial assistance until the end of a 
grant or until a loan or loan guarantee is paid in full. This 
discussion further supports the clarifications to Sec. Sec.  1970.6 and 
1970.8 in the final rule.
Major Federal Actions
    The Agency has concluded based on comments received that it 
inadvertently introduced confusion by using the term ``major Federal 
action'' in proposed Sec.  1970.8. Commenters seemed to interpret the 
use of that term as shorthand for ``major Federal action significantly 
affecting the quality of the human environment'' and thus as an

[[Page 11004]]

indication that the Agency proposed to prepare an EIS for all actions 
described in proposed Sec.  1970.8(b). That was not the Agency's 
intention and the Agency has deleted the word ``major'' in the final 
rule to avoid confusion.
    NEPA requires Federal agencies to prepare an EIS for ``major 
Federal actions significantly affecting the quality of the human 
environment. . .'' 42 U.S.C. 4332(C). The CEQ regulations define 
``major Federal action'' as including actions with effects that may be 
major and which are potentially subject to Federal control and 
responsibility. Major reinforces but does not have a meaning 
independent of significantly. 40 CFR 1508.18.
    Thus, actions over which a Federal agency has sufficient control 
and responsibility are Federal actions to which NEPA applies and for 
which environmental review is required. However, only those major 
Federal actions significantly affecting the quality of the human 
environment must be the subject of an EIS.
    Agency actions that could have significant environmental impacts 
will be the subject of an EIS as described in Sec.  1970.151. Agency 
actions that will not individually or cumulatively have a significant 
environmental impact are listed as CEs in Sec. Sec.  1970.53-1970.55. 
Agency actions not within these categories will be the subject of an EA 
as described in Sec.  1970.101. Actions over which the Agency does not 
have sufficient control and responsibility are not Federal actions and 
thus are not subject to NEPA.
Servicing Actions
    The Agency has determined that the definition and treatment of 
loan-servicing actions needs further clarification in this final rule. 
The terminology itself is the first area of clarification. Although the 
comments received and the discussion thus far refer to ``loan-
servicing'', it is recognized that the concept of servicing is not 
restricted to loans, but applies to guarantees and grants as well 
although the particular servicing actions may differ. Therefore, 
``loan-servicing'' and ``loan-servicing action'' have been changed to 
``servicing'' and ``servicing action''.
    Proposed Sec.  1970.6 defined ``loan-servicing actions'' as ``[a]ll 
Agency actions on a particular loan after loan closing or, in the case 
of guaranteed loans, after the issuance of the loan guarantee, 
including, but not limited to transfers, assumptions, consents, or 
leases of Agency-owned real property obtained through foreclosure.'' In 
addition, proposed Sec.  1970.8(b)(2) stated that ``[c]ertain loan-
servicing actions'' are ``major Federal actions.'' After review of its 
servicing actions, the Agency has determined that the definition of the 
term ``loan-servicing actions'' needs to be revised in accordance with 
the plain meaning, industry usage, and to be more inclusive as noted 
above. Specifically, the Agency is clarifying that servicing actions 
are routine, ministerial, or administrative actions that are expected 
to occur as part of providing the particular type of financial 
assistance. As such, these actions fall within the original review of 
the financial assistance request, are not in and of themselves Federal 
actions requiring NEPA review, and will not be subject to new or 
additional NEPA reviews. The final rule reflects this clarification. 
This is consistent with past Agency pattern and practice, other federal 
agencies, industry standards, and the nature of servicing loans, loan 
guarantees, and grants after a financial assistance decision has been 
approved. Additional background in support of the change to servicing 
actions in the final rule is provided below. While the comments and the 
discussion below focus on RUS Electric and Telecommunications Programs, 
the final rule applies to all programs within the USDA Rural 
Development mission area that provide financial assistance.
    NEPA is a procedural and planning statute under which Federal 
agencies are required to integrate the consideration of environmental 
values in their decision-making processes. Based on Agency experience 
and lending industry standards, its servicing actions involve routine, 
ministerial, or administrative standard actions related to direct 
financial assistance for which an appropriate NEPA review has already 
been conducted and on which a funding commitment decision has already 
been made. That is, the life cycle of financial assistance includes 
routine, ministerial, or administrative servicing activities that are 
conducted until the grant purpose ends or until a loan or loan 
guarantee is paid in full in accordance with the terms and conditions 
of its financial assistance documents, including security instruments. 
Servicing actions are an integral part of the Agency's obligation and 
responsibility for extending, managing, monitoring, servicing, and 
collecting its debt and assuring that its collateral is maintained. 
NEPA reviews for subsequent routine, ministerial, or administrative 
servicing actions would be not only duplicative of the NEPA review 
originally conducted for the financial assistance decision, but also 
unnecessary because these actions have no potential to affect the human 
environment.
    This definition of servicing actions is consistent with lending 
industry standards and Agency practice. In the lending industry, usage 
of the term ``loan-servicing'' relates to collection, disbursement, 
billing, and payments made to service a debt. The U.S. Treasury 
Department, Financial Management Service, Managing Federal Receivables, 
A Guide for Managing Loans and Administrative Debt (May 2005), states 
that basic servicing includes: Billing the debtor, processing and 
crediting payment, monitoring the account, timely responding to 
borrower inquiries, and providing agency management with regular 
aggregate reports on receivables and debt collection reports. 
Compromising, adjusting, reducing or charging-off debts or claims and 
modifying or releasing the terms of security instruments, leases, 
contracts, and agreements, are also routine collection activities 
available to the Agency pursuant to Section 1981(b) of the Consolidated 
Farm and Rural Development Act (7 U.S.C. 1981(b)), the Debt Collection 
Act of 1982 and the Debt Collection Improvement Act of 1996 (31 U.S.C. 
3701, 3711-3720E). The Office of Management and Budget (OMB) requires 
federal lending agencies to vigorously pursue debt collection (OMB 
Circular A-129, Policies for Federal Credit Programs and Non-Tax 
Receivables (Jan. 2013)). It was not the Agency's intent in the draft 
rule to make these actions separate Federal actions requiring separate 
NEPA review.
    As stated previously, the Agency reviewed its servicing actions, 
including its administrative ``back office'' actions. These servicing 
actions do not involve new projects, substantive changes to a project, 
new construction not reviewed under the original request for financial 
assistance, or a change in the use of the property that was the purpose 
of the original financial assistance. These servicing actions are for 
projects or facilities previously receiving financial assistance and 
the appropriate environmental review was conducted for the action prior 
to the time financial assistance was made. As a lender and as part of 
its due diligence and rural development mission, the Agency analyzes 
and assesses the risk that the proposed project will not be completed 
and that a loan would not be repaid. The Agency has specific statutory 
tools to deal with the risk of default after the funds have been 
advanced. The need for such servicing actions is known and contemplated 
at the time the financing is made and these actions are

[[Page 11005]]

considered part of one action, i.e., providing financial assistance. 
The life cycle of financial assistance includes all of these activities 
from loan origination through final repayment and, in the case of a 
grant, through completion of the original purpose, evaluation of such 
purpose, and closeout of the grant. As a result, the Agency is 
clarifying that servicing actions are included within the original 
review of the financing and will not be subject to new or additional 
NEPA reviews in this final rule. As mentioned previously, this is 
consistent with past Agency pattern and practice, industry standards, 
and the nature of servicing loans, loan guarantees, and grants after 
financial assistance has been provided. This is consistent with the 
practices of the U.S. Department of Justice, the major collector of 
delinquent debt on behalf of the Federal government.
Actions on Delinquent Debt of Financially Troubled Borrowers
    The Agency considers debt restructuring, as referred to by many 
commenters, as a generic term for actions authorized by statute, as 
previously discussed, including compromising, adjusting, reducing, or 
charging-off debts or claims, and modifying or releasing the terms of 
security instruments, leases, contracts, and agreements (Section 
1982(b) of the Consolidated Farm and Rural Development Act (7 U.S.C. 
1981(b)). In addition, many RD program regulations provide for specific 
workout options for financially troubled borrowers, such as debt 
rescheduling, consolidation, writedown, extended terms and/or reduced 
interest rates. All of these actions are included within the definition 
of servicing actions. Most often, when repayment of debt is in 
jeopardy, default, or a borrower is experiencing financial distress, 
some form of compromising, adjusting, reducing, or charging-off debts 
or claims is requested after the project is already completed. These 
actions are intended to avoid default on existing debt, improve the 
borrower's repayment ability, and maximize recovery to the Agency. Such 
actions relate specifically to financial assistance already made and 
advanced, and would not require separate environmental review. If, 
however, the Agency were asked to provide new financial assistance 
along with such debt restructuring, a new environmental review would be 
required for the new financial assistance.
Prepayments and Lien Releases of Security Instruments
    When a borrower pays its debt in full or in part, the acceptance of 
the funds and any releasing of the secured lien is ministerial and non-
discretionary. A majority of the Agency programs have agreements or 
promissory notes that allow prepayments. Generally, in the lending 
industry, a borrower has a right to prepay its debt in full or in part 
unless specifically prohibited in writing. When a borrower prepays its 
debt it is exercising its contractual rights. The Agency simply accepts 
the funds in a prepayment in accordance with the terms of the agreement 
or promissory note. As such, prepayments are included in the definition 
of servicing actions. Furthermore, the Agency is required generally by 
state law to release the applicable security instrument since it no 
longer has any debt that is secured. For this reason, a lien release is 
a ministerial action and not a separate action requiring a NEPA review. 
The term ``lien release'' is also included in the definition of 
servicing actions under ``modifying or releasing the terms of security 
instruments, leases, contracts, and agreements.''
Consents and Approvals
    Consents and approvals the Agency may give pursuant to its 
contractual documents and security instruments are included within the 
definition of servicing actions. They are routine, ministerial, or 
administrative in nature. Further, they are assumed as part of the 
Agency's decision on its initial approval of financial assistance and 
the Agency's subsequent monitoring and administration of its debt and 
collateral, and have no potential to affect the quality of the human 
environment within the meaning of NEPA. For these reasons, no 
additional NEPA analysis and documentation is required.
    The United States Court of Appeals, seventh Circuit has held that 
RUS, as a lending agency, can only protect itself and compensate for 
borrowers' risk of default by setting terms and conditions on its 
extension of financial assistance. See Wabash Valley Power Assoc. v. 
Rural Electrification Administration, 988 F. 2d 1480 (7th Cir. 1993). 
In Circular A-129, Policies for Federal Credit Programs and Non-Tax 
Receivables (January 2013), OMB advises agencies to have contractual 
agreements that include all covenants and restrictions necessary to 
protect the Federal Government's interest. RUS has established a unique 
contractual relationship with its borrowers and its general scheme of 
consents and approvals are made to assure that its collateral is 
maintained during the term of its loan or loan guarantee.
    RUS's Electric Program provides system financing to furnish and 
improve electric services to rural Americans in rural areas, as defined 
at 7 U.S.C. 901 et seq. Additionally by statute, RUS is required to 
certify that a loan will be repaid in the time agreed upon and is 
adequately secured. As such, RUS's contractual provisions and security 
instruments are focused on assuring that the loan funds are used for 
statutory purposes in rural areas and steps are taken to protect RUS's 
security. Since 1998, the existing RUS environmental regulation has 
specifically stated that ''[a]pprovals provided by RUS pursuant to loan 
contracts and security instruments, including approvals of lien 
accommodations, are not actions for the purposes of [the RUS NEPA 
regulations] and the provisions of [the RUS NEPA regulations] shall not 
apply to the exercise of such approvals.'' (7 CFR 1794.3).
    The Agency agrees with the substantial majority of commenters who 
believe that providing consents and approvals per se, does not make 
those consents or approvals additional or new Federal actions that have 
the potential to affect the quality of the human environment within the 
meaning of NEPA. To the contrary, RUS has reviewed the consents and 
approvals it may give pursuant to its contractual documents and 
security instruments and has determined that they are routine, 
ministerial, or administrative in nature and consistent with standard 
lending practices to protect collateral and maintain its first lien 
position. For example, consents and approvals for depreciation rates, 
accounting compliance, rates to members (sufficient to pay debt), 
contracts for operation and management, patronage refunds, transmission 
agreements, termination of franchises and territory, contracts for 
power supply and requirements or contracts for financial transactions 
all involve actions to protect the security of and repayment to the 
Federal Government. The Agency, as a lender, agrees with the 
substantial majority of commenters that its consents and approvals are 
not separate actions requiring environmental review, and in fact are 
known and contemplated within the context of standard lending processes 
and practices at the time the Agency decides whether or not to provide 
financial assistance. Therefore, these actions are included in the 
definition of servicing actions for a loan, loan guarantee, or grant. 
This is

[[Page 11006]]

consistent with RUS's past and current administrative pattern and 
practice.
Trust Indentures
    Contrary to some commenters' assertions, RUS's decision to use a 
trust indenture as a security instrument is not a Federal action. 
Rather, as explained below, a trust indenture documents what collateral 
secures the debt and how the collateral will be maintained. As such, it 
is simply a documentation of the financial assistance decision, not a 
separate decision subject to additional NEPA analysis and 
documentation. The original provision of financial assistance is the 
Federal action.
    Historically, RUS's Electric Program did not provide project 
financing but provided 100% system financing and took a secured first 
lien on an electric borrower's entire utility system through a system-
wide mortgage. In the late 1960s and thereafter, due to limited RUS 
funding and because the utility industry is so capital intensive, most 
RUS borrowers began financing all or a part of their capital needs with 
commercial lenders. The use of trust indentures became more prevalent 
with RUS borrowers as RUS became unable to finance 100% of all of its 
borrowers' capital needs as it had in the past. A few commenters took 
issue with the use of trust indentures by some RUS borrowers, asserting 
that under an indenture, a trustee ``take[s] over'' ``governing an 
existing borrower's debt,'' and that RUS delegates its administrative 
tasks to third parties. The Agency disagrees with this assertion, which 
is a misunderstanding of an indenture. A trust indenture, as used by 
lenders, is simply a shared security instrument.
    The Administrator of RUS, for example, is required by the Rural 
Electrification Act to insure and certify that prior to making a loan, 
the security for the loan is reasonably adequate and that such loan 
will be repaid within the time agreed (7 U.S.C. 904). RUS has 
historically required its loans to be secured in order for them to be 
repaid according to the terms and conditions of its loan documents. A 
trust indenture secures the assets of a borrower for lenders in case of 
a default and sets terms (i.e., financial ratios) for the debt to be 
secured once a lender has agreed to make a loan or guarantee a loan. 
The indenture trustee neither takes over the role of any lender nor 
governs the existing borrower's debt. The trustee's duties are 
ministerial and non-discretionary prior to a default.
    As a result, the Agency also disagrees with the commenter's 
assertion that RUS delegates its administrative tasks to third parties. 
This, again, is a misunderstanding of the nature of a security 
instrument, whether a mortgage or an indenture. If RUS is the actual 
lender or guarantor, the appropriate environmental review will be 
conducted for the project at the time a decision is made on whether or 
not to provide financial assistance. The type and use of security 
instruments, such as trust indentures, does not have any effect on the 
environmental review process completed at the time RUS makes a decision 
on whether or not to provide financial assistance. The use of an 
indenture by RUS and a borrower does not ``outsource its decision-
making authority.''
    The Agency does not agree that the use of a trust indenture 
``should itself trigger environmental review as appropriate.'' As 
stated previously, a trust indenture is merely one form of a security 
instrument that is executed and delivered to document and secure a debt 
after a determination is made to provide financial assistance. Just 
like a promissory note that documents repayment of the debt, a trust 
indenture documents what collateral secures the debt and how the 
collateral will be maintained.
Lien Sharing
    The Agency has included a definition of lien sharing (referred to 
in comments as a lien accommodation) in the final rule. Lien sharing is 
an agreement between lenders to pro-rata payment on shared secured 
collateral without priority preference (see Sec.  1970.6). As discussed 
below, it is not considered to be a servicing action. If, however, the 
Agency were asked to provide new financial assistance along with a 
request to share its lien, a new environmental review would be 
required.
    The Agency agrees with commenters who argued that the Agency has no 
authority or control and responsibility over future actions to be taken 
as a result of a private lender's request for lien sharing and thus has 
clarified in the final rule (Sec.  1970.8(d)) that lien sharing is not 
a Federal action to which NEPA applies.
    Any lien sharing for RBS, RHS and certain RUS programs would occur 
as part of the original request for financial assistance. These 
programs generally provide financial assistance for specific projects. 
The security for these projects relies on the project's revenues and 
assets for repayment of its debt. As a project financier, the Agency's 
focus is on the borrower, the Agency's security interest, and on the 
project financed until the financial assistance is repaid in full.
    A project requires 100% funding in order to be completed to serve 
rural America. If the Agency does not fund the entire project, it is 
possible that it will need to ``share'' a first lien on the project 
with other lenders. Therefore, the sharing of the lien has already been 
anticipated and considered. As such, the appropriate NEPA review has 
been performed prior to the approval of financial assistance for the 
original loan or loan guarantee.
    Lien sharing for RUS Electric and other Telecommunications Programs 
is unique. In these programs, RUS provides system-wide financial 
assistance to borrowers for furnishing and improving electric service 
to persons in rural areas and for the construction and improvement of 
facilities for telecommunication service in rural areas. It should be 
noted that there are instances where system-wide liens are taken in the 
Water and Waste Disposal Program. RUS relies on all of the borrower's 
revenues, and repayment is secured by a lien on all of the borrower's 
electric and telecommunications assets (i.e., its entire utility 
system) at the time the first loan or loan guarantee is made. In 
addition, RUS takes a secured first lien on all assets subsequently 
acquired by the borrower. RUS typically makes multiple loans and loan 
guarantees to its borrowers. RUS tries to maximize repayment where 
repayment terms are initially set for 35 years and each subsequent loan 
or guarantee extends the term of its system-wide first lien for another 
35 years. In these programs, lien sharing is expected after initial 
loans and loan guarantees are made.
    In addition, for the Electric and Telecommunications Programs, RUS 
is not a lender of last resort. When considering its financial needs 
and timing of its projects, a borrower has options and choices that are 
solely within the borrower's discretion. The borrower can determine to 
seek financing from any lender at any time for any project. RUS has no 
influence or control over the outcome of these private transactions.
    As RUS borrowers have utilized non-Federal lenders and incurred 
additional non-Federal debt, RUS could be over secured at any time 
during the long-term repayment period and RUS has become a minority 
debt holder. In order for RUS's Electric and Telecommunications 
Programs' borrowers to effectively and efficiently manage their 
business operations and financing, they have contractually agreed to 
give RUS a long-term secured first system-wide lien on all assets and 
all after-acquired assets, but they

[[Page 11007]]

reasonably expect and have relied on RUS to share its lien to 
facilitate the use of non-Federal funds for financing infrastructure.
    In 1993, at the request of a private lender providing financing to 
an Electric Program borrower for a capital investment and as a result 
of legislation (7 U.S.C. 936e), Congress directed the USDA Secretary to 
expeditiously either offer to share the Federal Government's lien on 
the borrower's (if equity exceeds 110%) system or offer to subordinate 
the government's lien on the assets financed by the private lender. In 
the mandate to share the Federal Government's first lien, Congress 
intended for RUS's Electric and Telecommunications Programs' borrowers 
to have access to private-sector financing for facilitating 
infrastructure development. Congress also stated clearly that any 
regulations implementing this requirement were to focus only on 
maintaining reasonably adequate security for a RUS loan or loan 
guarantee. Sharing its first lien also shares the risk of lending with 
other lenders. RUS shares its lien on a pro-rata basis. The actual 
``sharing'' only occurs following a default and enforcement remedy 
against the system or in the bankruptcy proceedings. Currently, RUS's 
Electric Program has a default rate of 0.04%. It is clear that Congress 
intended the sharing of the Federal Government's system-wide first lien 
to facilitate the use of non-Federal funds to finance infrastructure 
and that RUS's primary interests are repayment of the borrowers' debt. 
In following this Congressional mandate, and in actual practice as 
stated above, RUS lacks significant discretion and control or 
responsibility related to sharing its secured system-wide first liens 
and, as discussed below, any subsequent activities taken between the 
borrower and a non-Federal lender.
    Some commenters suggested that RUS can ``influence the type of 
generation its borrowers construct or acquire;'' the Agency does not 
agree with this statement. RUS's Electric Program has approximately 550 
borrowers, of which approximately 40 are involved in generation and 
most of those are not currently building new generation. Since 2003, 
RUS has provided 100% direct financing to a borrower for one coal plant 
and to two borrowers to purchase minority interests in coal-based 
generation facilities constructed by investor-owned utilities. RUS can 
only determine what projects or facilities for which it will provide 
financial assistance and cannot substitute its business judgment for 
that of its borrowers with regard to projects or facilities for which 
the borrower seeks to use non-Federal financing.
    RUS routinely consents to private-lender requests for sharing its 
lien unless it would adversely affect RUS's financial interests, i.e., 
the borrower cannot repay its RUS loans or guarantees due to the new 
loan. If a RUS Electric Program borrower borrows non-Federal funds or 
places a lien on its system without RUS sharing, RUS's remedy is to sue 
the borrower for contractual breach or refuse to provide the borrower 
with any additional RUS financial assistance. RUS cannot directly 
control whether the borrower accepts private-sector financing and what 
it does with that financing.
    For there to be a Federal action to which NEPA applies, there must 
be Federal control and responsibility. In the lien sharing context, the 
non-Federal lender provides the financial assistance and sets its own 
terms and conditions for the project it finances. Negotiation of any 
terms or conditions are between the lender and its borrower, and the 
non-Federal lender makes its own risk and security assessments. RUS 
cannot choose its borrowers' lender and is not a party to the lender's 
loan contracts or decision making. RUS's consent is not a prerequisite 
to construction, nor can RUS require the borrower to consider 
alternatives, change locations, or prevent, alter, or manage 
construction of the project. Because RUS does not have any permitting 
or independent regulatory authority, it has insufficient legal or 
regulatory control over what, where, or when a project will be 
constructed. In addition, RUS is a lender and not a regulator; 
therefore, the Agency does not have sufficient control and 
responsibility over the non-Federal lenders or borrowers or the non-
Federally financed project to trigger NEPA review. All of those non-
Federally funded projects are instead under the regulatory control and 
oversight of applicable Federal and state environmental agencies, laws, 
and regulations.
    Therefore, in consideration of all the comments on this matter, the 
Agency has concluded that it does not have sufficient control and 
responsibility over projects or facilities that it does not finance. 
Simply sharing its first lien with a non-Federal lender is not a 
Federal action for purposes of NEPA, and such sharing does not 
``Federalize'' the project.
Lien Subordination
    Unlike lien sharing, lien subordination is a Federal action subject 
to NEPA review. Lien subordination is addressed in Circular A-129, 
Policies for Federal Credit Programs and Non-Tax Receivables (January 
2013), where OMB advises Federal agencies not to subordinate the 
Federal Government's interest since a subordination increases the risk 
of loss to the government because non-Federal lenders would have first 
claim on a borrower's assets. The Agency agrees that subordinating its 
lien is different from lien sharing, and is to be used sparingly since 
it imposes greater financial risk to the Agency since other creditors 
would have first claim on the borrower's assets. The Agency considers 
Subordination to be a form of financial assistance and will require the 
appropriate environmental review. The Agency has clarified this in the 
final rule (Sec.  1970.8), and has included a new definition of lien 
subordination (Sec.  1970.6).
Joint Ownership
    Some commenters suggested changes to the percent of ownership 
thresholds for Federal actions (as described in Sec.  1970.8(c)), or 
that there be additional flexibility in environmental review 
requirements at certain ownership levels. Response: The provisions in 
Sec.  1970.8(c) are unchanged from those in 7 CFR 1794.20, based on the 
Agency's experience that the approach used has proven reasonable and 
not a burden to applicants. Furthermore, it is the Agency's experience 
that applicants having a minority interest in an action as defined in 
part 1794 and part 1970 is equivalent to having no control. Section 
1970.8(c) remains unchanged in the final rule.
Approval of Planning Documents, Timing
    Two commenters recommended that the Agency clarify that the 
approval of planning documents, such as construction work plans, is not 
a federal action subject to environmental review. Response: In 
accordance with 40 CFR 1505.1(b) and 1970.8(b)(1), the Agency has 
defined the Federal action and major decision point at which NEPA must 
be complete as the approval of financial assistance, not approval of 
planning documents (See 1970.8(b)(1)).
    All of the Agency's programs require planning documents that, for 
example, define the purpose and need for the proposal, determine 
project eligibility, or address legal, financial, design, and 
environmental considerations during the underwriting process. 
Therefore, planning documents establish and define the basis for 
applications of financial assistance but are not major decision points 
for the purposes of NEPA and other environmental or historic 
preservation statutes and

[[Page 11008]]

regulations. That decision point is the approval of the request for 
financial assistance.
    Another commenter asserted that the timing of the environmental 
review process could be changed to allow obligation of funds prior to 
completion of the environmental review. Response: The objective of NEPA 
and other statutes integrated into part 1970, are that Federal agencies 
consider the effects of their actions before decisions are made and 
before actions are taken. For example, in accordance with 40 CFR 
1500.1(b), NEPA procedures must insure that environmental information 
is available to public officials and citizens before [emphasis added] 
decisions are made and before [emphasis added] actions are taken. In 
addition and in accordance with 36 CFR 800.1(c), the agency official 
must complete the section 106 process `prior to the approval of any 
Federal funds [emphasis added] on the undertaking.'' Based on these 
regulations and other requirements, the Agency has established that the 
approval of financial assistance is the Agency's major decision point 
prior to which the environmental review process must be completed. In 
addition, the timing of the environmental review process is addressed 
at Sec.  1970.11, and this section remains unchanged from the proposed 
rule.
Guaranteed Loans
    Comments suggested that the proposed rule does not go far enough 
when considering projects involving loan guarantees. One commenter said 
guaranteed lenders should not be included in the definition of 
``applicants'', while another asserted that loan guarantee transactions 
have been erroneously included in the NEPA review process and should in 
fact be totally exempted from the process. Response: The Agency 
considers providing guaranteed loans as a form of financial assistance. 
This is consistent with Federal credit law and OMB policies (OMB 
Circular A-129). In addition, excluding Section 313A of the RE Act, as 
amended, part 1940, subpart G and part 1794 have classified guaranteed 
loans as ``Federal actions'' subject to NEPA since 1984.
Summary Revisions to Final Rule
    In light of the discussion above, the Agency is revising proposed 
Sec. Sec.  1970.6 and 1970.8 as described below. While the revisions 
address comments that primarily focused on RUS's Electric and 
Telecommunications Programs, as stated previously, the final rules 
apply to all financial assistance programs (i.e., RBS, RHS and RUS) 
within the USDA Rural Development mission area.
    The Agency is clarifying the definitions for financial assistance 
and servicing actions; and providing new definitions for lien sharing, 
lien subordination, loan, grant, loan guarantee, and cooperative 
agreement in the final rule (Sec.  1970.6). The definition of multi-
tier action was revised to include similar Agency relending programs 
and actions. Both revised and new definitions are set forth in the 
regulatory text of this rule at Sec.  1970.6.
    In addition, the Agency is modifying Sec.  1970.8 (1) to delete the 
word ``major'' from ``major Federal action'' to avoid confusion and to 
be consistent with CEQ regulations, (2) to make it clear that servicing 
actions do not require separate NEPA reviews, (3) to make it clear that 
lien sharing is not a Federal action for purposes of NEPA, and (4) to 
require that requests for lien subordination be subject to NEPA review. 
The Agency has revised Sec.  1970.8(a) and (b) and added new paragraphs 
(d) and (e) as set forth in the regulatory text of this rule.
    Further, the Agency has made conforming changes to Sec.  1970.53(a) 
by deleting proposed Sec.  1970.53(a)(1) referring to refinancing of 
debt and that portion of proposed Sec.  1970.53(a)(5) that refers to 
servicing actions. As explained in detail in Section III.C, actions on 
debt are included in the definition of servicing actions in revised 
Sec.  1970.6, and servicing actions are routine, ministerial, or 
administrative components of financial assistance and do not require 
separate NEPA review.

D. Specific Comments on Proposed Rule--Subpart A

Section 1970.4 Policies
    Comment: One commenter requested that Sec.  1970.4 be removed from 
the proposed rulemaking because it appeared to impose substantive 
obligations that are beyond the procedural mandate of NEPA as written, 
and likely to create ambiguity about the obligations of the Agency when 
implementing NEPA (e.g., the borrower would be required, whenever 
practicable, to avoid or minimize ``adverse environmental impacts'' as 
well as to avoid conversion of wetlands and farmlands and development 
in floodplains (including 500-year floodplains)). The commenter also 
identified a perceived conflict between the use of the term 
``practicable'' in Sec.  1970.4(a) and another statement in the 
preamble of the proposed rule that stated that the modifier 
``practicable'' is not to be used in the proposed rule in order to be 
consistent with CEQ regulations. Finally, this same commenter 
identified Sec.  1970.4(g), related to reductions in greenhouse gas 
emissions (GHG), as another example of ambiguity being introduced into 
the process by requiring an evaluation of opportunities to reduce a 
project's potential emission of substantial quantities of GHG, where 
the Agency does not have the statutory authority under NEPA to require 
the reduction of GHG emissions. The commenter also stated that the 
Agency did not provide a clear definition of what would be considered a 
substantial quantity, and that, if the borrower were to exceed the 
unclear threshold, there would be no clear understanding on what 
reducing greenhouse gases to the ``maximum extent feasible'' would 
mean. The commenter recommended removal of this section entirely 
because the Agency does not have authority to require GHG reductions, 
and inclusion of this language is not consistent with CEQ regulations.
    Response: The Agency has an obligation under NEPA to protect the 
environment and it is Agency policy to avoid funding projects with 
adverse environmental impacts and to minimize impacts where financial 
assistance is approved. The term ``adverse'' is not as broad as the 
commenter concludes, but rather is specific to the context of the 
various Executive Orders and statutes, such as Executive Order 11988 
which is listed in Sec.  1970.3(gg). While the term ``practicable'' is 
used in the rule language in Sec.  1970.4 (``where a practicable 
alternative exists''), its use was explained in the preamble of the 
proposed rule that tied it directly to language found in Executive 
Order 11988; it is not specific to Sec.  1970.4. Rather than prohibit 
the use of ``practicable'', the Agency simply noted in the preamble to 
the proposed rule that the Executive Order uses ``practicable'' while 
NEPA requires the term ``reasonable''. The terms are essentially 
interchangeable, as both involve the consideration of relevant 
constraints imposed by environmental, economic, legal, social and 
technological parameters (see also 7 CFR 1940.302(h) and 40 CFR 
1505.2(b)). The Agency identified no inconsistency with use of the term 
``practicable''.
    Regarding the language related to GHG reductions, the insertion of 
this Executive Order language is not regulatory but reflects new USDA 
policies and is consistent with Executive Order 13514 on Federal 
Sustainability that requires the Federal government to reduce GHG 
pollution by 28 percent by 2020; and by an even more recent Executive 
Order 13693

[[Page 11009]]

signed by the President on March 19, 2015, calling for even greater 
reductions in GHG (40 percent from 2008 levels over the next decade). 
The inclusion of GHG emission reduction language was also recommended 
by CEQ. No change has been made to the regulations in response to the 
comments relating to Sec.  1970.4. However, the Agency recognizes the 
ambiguity in some of the phrasing related to GHG reductions in 
particular, and has developed additional guidance for applicants to 
further clarify how GHG emissions are to be considered and evaluated in 
applicant proposals.
    Comment: Many commenters stated that the policy statement regarding 
the need for electric generating facilities (which are identified as 
critical actions/facilities in Sec.  1970.6) to avoid development 
within the 500-year floodplain exceeded the requirements of NEPA and 
Executive Order 11988 (Floodplain Management). Some commenters also 
wanted the Agency to recognize that many of the areas served are rural, 
less-developed, and much more prone to be within the 500-year 
floodplain than more urban and developed areas. Commenters stated that 
the Agency should recognize that adequate protection measures can be 
implemented in the 500-year floodplain without requiring burdensome 
practicability analyses, and that the Agency should change the rule to 
prohibit development within the 100-year floodplain instead of the 500-
year floodplain. They also requested clarification on how an applicant 
is supposed to show ``demonstrated significant need'' to justify 
development within the floodplain.
    Response: The proposed 500-year floodplain language is consistent 
with guidance from the Federal Interagency Floodplain Task Force to all 
Federal agencies in implementing Executive Order 11988. While Executive 
Order 11988 itself does not discuss critical actions within the 500-
year floodplain, the Water Resources Council Floodplain Management 
Guidelines for Implementing Executive Order 11988 (43 FR 6030, February 
10, 1978) do, in their discussion of Step 1 of the 8-step decision-
making process. The definition of critical action is sufficiently 
comprehensive and consistent with the definition issued by FEMA in 44 
CFR 9.4 (Floodplain Management and Protection of Wetlands, 
Definitions). The Agency does not consider the proposed language to be 
a prohibition. The statement--``unless there is a demonstrated, 
significant need for the proposal and no practicable alternative 
exists''--provides sufficient flexibility in considering specific 
project actions in the Agency's decision-making capacity. The key is 
that the applicant and Agency need to demonstrate that there is no 
practicable alternative to locating there, with the 8-step process 
essentially providing the means to do so. The facility would also have 
to be designed to a higher protection standard, and have flood 
evacuation plans, including identification of access roads that would 
be usable during a flood. The Agency wishes to maintain consistency 
with the Federal guidelines and has not changed the rule to prohibit 
development within the 100-year floodplain, instead of the 500-year 
floodplain, as requested. That said, the Agency also acknowledges that 
some of the phrasing in the rule may be too limiting and has eliminated 
the phrase ``there are no exceptions to this policy'' in the last 
sentence of Sec.  1970.4(a). The revised language is consistent with 
the USDA Departmental Regulation 9500-3 (Land Use Policy, issued March 
22, 1983), Sec.  6(i), Responsibilities: ``When land use regulations or 
decisions are inconsistent with USDA policies and procedures for the 
protection of important farmlands, rangelands, forest lands, wetlands, 
or floodplains, USDA agencies shall not assist in actions that would 
convert these lands to other uses or encroach upon floodplains, unless 
(1) there is demonstrated, significant need for the project, program, 
or facility, and (2) there are no practicable alternative actions or 
sites that would avoid conversion of these lands or, if conversion is 
unavoidable, reduce the number of acres to be converted or encroached 
upon directly or indirectly.''
    Additionally, Executive Order 13690 (Establishing a Federal Flood 
Risk Management Standard and a Process for Further Soliciting and 
Considering Stakeholder Input, January 30, 2015) modifies and expands 
upon Executive Order 11988, establishing a new flood risk management 
standard, and acts to revise the Water Resources Council's Floodplain 
Management Guidelines. The Agency also wishes to be consistent with 
this Executive Order and associated standards and guidelines.
    No other changes have been made to the regulation in response to 
these comments.
Section 1970.5 Responsible Parties
    Comment: Many commenters recommended that the provision for 
applicants to cooperate with the Agency on achieving environmental 
goals as a requirement for financial assistance is not appropriate in 
the NEPA rule.
    Response: The Agency has an obligation under NEPA to protect, 
restore and enhance the environment and it is Agency policy to avoid or 
minimize funding projects with adverse environmental impacts. The 
intent of part 1970 is to provide a necessary framework for the 
consideration of environmental impacts of its actions. There is no 
intent to condition financial assistance on anything other than the 
action under consideration and only those actions over which the Agency 
has control and responsibility. The proposed language in Sec.  
1970.5(b) was specifically provided to address uncooperative applicants 
and applicants which provide insufficient documentation on those 
projects requiring applicant-prepared documentation. In either 
instance, if the applicant does not provide a complete information 
package, the Agency cannot complete the necessary environmental impact 
analysis and process the application. For these reasons, no changes 
were made to the regulation in response to these comments.
Section 1970.6 Definitions
    Comment: Many commenters requested clarification on the definition 
of loan-servicing actions.
    Response: These comments have been addressed in a separate 
discussion relating to NEPA compliance for loan-servicing actions in 
Section III.C of this preamble.
    Comment: Another commenter requested clarification of the 
definition for ``previously disturbed or developed land,'' specifically 
as it related to another description of previously disturbed land found 
elsewhere in the preamble. This commenter also requested clarification 
on what is considered mitigation under the proposed regulations and 
recommended that a definition of mitigation be included in Sec.  
1970.6. A third commenter was confused about whether the categories of 
``environmental reports'' currently used by RUS will continue to be 
used.
    Response: The Agency agrees that the definition of previously 
disturbed or developed land should be clarified and has modified the 
language accordingly. With respect to mitigation, the Agency did not 
include a definition in Sec.  1970.6 in the final rule because it 
considers the definition of mitigation found in the CEQ regulations at 
40 CFR 1508.20 as the controlling definition and there is no need for 
duplication. However, the Agency will provide further clarification and 
examples of types of mitigation in guidance documents for applicants; 
this guidance will be available on the Agency's Web site. See also 
related

[[Page 11010]]

comments and responses in Sec.  1970.16 Mitigation.
    Regarding use of the term ``environmental report,'' the Agency has 
reconsidered and decided to continue to use this term. In the final 
rule, the term ``environmental report'' (ER) is being used to apply 
only to the environmental documentation required for CEs classified in 
Sec.  1970.54. A definition of environmental report has been added to 
the final rule (Sec.  1970.6) to clarify its meaning and use.
Section 1970.8 Actions Requiring Environmental Review
    Comment: All of the comments received on the proposed section, 
which comprised the majority of comments on the proposed rule, were in 
response to Sec.  1970.8(b) relating to the inclusion of loan-servicing 
actions as ``major Federal actions.''
    Response: These comments have been addressed in a separate 
discussion relating to NEPA compliance for loan-servicing actions in 
Section III.C of this preamble.
Section 1970.9(c) Levels of Environmental Review
    Comment: Many commenters stated that the language used to describe 
``connected actions'' in Sec.  1970.9(c) went beyond what the CEQ 
regulations provide with respect to the Agency's use of the term 
``closely related.'' While CEQ regulations describe ``connected 
actions'' to be ``closely related,'' CEQ goes on to provide three 
specific tests and does not use ``closely related'' as part of any test 
for determining whether an action is connected. Commenters were 
particularly concerned about fully integrated electric transmission 
systems where many projects that are not ``connected'' could be 
interpreted to be ``closely related'' because they occur near one 
another in time or space or are each solving different parts of a local 
or regional problem. The commenters recommended that the Agency only 
provide that the scope of analysis for EAs and EISs will include 
``connected actions'' as defined by CEQ. Another commenter requested 
that the Agency clarify the roles and responsibilities of each entity, 
when multiple organizations are involved in developing a single 
environmental document, and also consider providing guidance on how to 
determine the analysis boundaries for connected actions.
    Response: Section 1970.9(c) is fully consistent with the CEQ 
regulations at 40 CFR 1508.24, which requires a scope of actions that 
are closely related (e.g., connected, similar, cumulative) to be 
analyzed in the same NEPA document in order to fully assess the 
potential combined and cumulative impacts of these actions. In 
particular, determining whether an action is ``connected'' involves 
considering whether an action would automatically trigger another 
action, would not or could not proceed unless other actions were taken 
previously or simultaneously, or are interdependent parts of a larger 
action (40 CFR 1508.24(a)(1)). However, to ensure clarity on the issue, 
the Agency has deleted the term ``closely related'' in Sec.  1970.9(c) 
because, as noted by commenters, ``closely related'' is already 
included in the definition of ``scope'' under ``connected actions'' in 
40 CFR 1508.25. In addition, while not all closely related actions may 
be connected actions under 40 CFR 1508.25, they could be similar or 
cumulative and, if so, should be analyzed in the same NEPA document, at 
least as part of a cumulative impact assessment.
    As part of the scoping process and its responsibility to emphasize 
interagency cooperation and public involvement in evaluating the 
environmental considerations of its actions, the Agency will work with 
all appropriate entities on jointly funded, specific actions in 
determining the scope of analysis for each action to be considered in 
preparing a single environmental document. Determining the scope of 
each action applies to CEs as well as EAs and EISs. CEQ has issued 
guidance to ensure that connected actions and related actions with 
cumulatively significant impacts are considered in the same NEPA 
document, including CEs (Final Guidance for Federal Departments and 
Agencies on Establishing, Applying, and Revising Categorical Exclusions 
under the National Environmental Policy Act, 75 FR 75628).
    The Agency will request additional information, on an as-needed 
basis and using its discretion and expertise, from the applicant and 
other agencies to determine the scope of the action to be analyzed. 
Respective roles and responsibilities would also be defined, possibly 
through a memorandum of understanding or similar document. No 
additional Agency guidance is necessary at this time.
    The Agency has made a similar conforming change to Sec.  
1970.51(b)(3) to clarify the applicability of a CE relative to 
cumulative actions.
Section 1970.9(d) Levels of Environmental Review
    Comment: A commenter stated that the submittal of construction work 
plans by an applicant is a form of application for funding and, in 
accordance with Sec.  1970.9(d), will require environmental 
documentation at the time of submittal (``the Agency may request any 
additional environmental information at or prior to the time of 
approval''). However, the proposed rule does not clearly state what 
environmental documentation is required when submitting a construction 
work plan. As noted in Sec.  1970.6, projects identified in 
construction work plans can have long lead times, which means they can 
change in scope over time or may never occur. As a result, the 
commenter stated that multiple unavoidable revisions would need to be 
made to NEPA documents for projects contained in construction work 
plans and requested that Sec.  1970.9(d) in the final rule require that 
only a determination of future NEPA requirements be made for these 
projects.
    Response: The Agency understands that the processing requirements 
for construction work plans/loan designs are different than the single 
project/single application/single loan process more typical of many 
Agency programs. Construction work plans, for example, are a 
prerequisite to a loan application for some programs. The Agency also 
understands that construction work plan descriptions of projects often 
lack sufficient information to provide a preliminary NEPA 
classification, and this is the reason that the Agency may request 
additional information on multi-year project construction as specified 
in Sec.  1970.9(d). Such requests could include information on project 
construction (e.g., percent pole replacement on transmission line 
rebuilds) or maps/other environmental resource information to correctly 
classify a project. The Agency expects that this type of information 
can be gathered through public database searches, e.g., facility 
locations relative to federally-designated critical habitat, federally-
owned/managed lands, tribal lands, etc. The final rule language does 
state that additional environmental information may be required at this 
stage of the financial assistance application process, recognizing that 
different types of documentation are required at various stages in the 
application and approval process. For example, if after review of a 
construction work plan, the Agency determines that a proposed action 
may be eligible for a CE under Sec.  1970.54, the Agency would ask the 
applicant to provide an environmental report (see below) in order to 
determine if there were extraordinary circumstances that would prevent 
the application of the CE.

[[Page 11011]]

The Agency is now using the term ``environmental report,'' previously 
required by RUS in support of both CEs that required the preparation of 
ERs and EAs, as the environmental documentation that is required to 
support a proposed action's classification as a CE classified in Sec.  
1970.54, and only a CE. A new definition of environmental report has 
been added to Sec.  1970.6. If the Agency determines the proposed 
action should be the subject of an EA, the Agency would ask the 
applicant to prepare the EA in accordance with Sec.  1970.102. No 
changes have been made to the rule language except to the final 
sentence in Sec.  1970.9 to clarify that any request for additional 
environmental information would occur prior to the time of loan 
approval.
Section 1970.13 Consideration of Alternatives
    Comment: A commenter recommended that the Agency consider a full 
range of alternative solutions to a given need, and to consider 
alternatives such as energy efficiency and distributed generation where 
the need is generation- or transmission-based. The commenter stated 
that not only are these solutions economically and technically 
feasible, they are often the easiest to procure and cost the least.
    Response: The Agency will consider all reasonable alternatives to 
the proposed action, where reasonable alternatives would include those 
that meet the underlying purpose and need to which the Agency is 
responding. No change has been made to the regulation in response to 
this comment. However, the Agency has developed additional guidance 
relating to alternative development and analysis for electric 
generation and transmission projects that addresses the need to 
consider a full range of alternatives, including load management, 
energy conservation, and other generation technologies (e.g., natural 
gas, nuclear, wind, solar). This guidance is available on the Agency's 
Web site.
Section 1970.14 Public Involvement
    Comment: A commenter stated that non-Federal parties under proposed 
Sec.  1970.14 may try to utilize the proposed rules simply to block the 
development of certain properties (e.g., housing for low-income, 
elderly and disabled persons).
    Response: Public involvement is an important component of the NEPA 
process. That participants in the NEPA process may oppose a proposed 
action is not a valid reason to curtail public involvement. Blocking a 
proposed action can be achieved when the Federal agency fails to comply 
with NEPA, including failing to ensure public comments are sought and 
considered. This rule does not provide a formal appeal process per se, 
but one objective of NEPA and other related environmental statutes, 
regulations, and Executive Orders, is to provide for public involvement 
activities. Section 1970.14 provides for these public involvement 
processes. No change has been made to the regulation in response to 
this comment.
Section 1970.16 Mitigation
    Comment: Commenters questioned the Agency's authority to consider 
and impose mitigation measures. They stated that the Agency should 
recognize that its ability to impose substantive mitigation 
requirements must be based on some other legal authority and not as a 
function of NEPA which is a procedural statute. They also stated that, 
while agencies must analyze possible mitigation measures, those 
measures need not be legally enforceable, funded or even in final form 
to comply with NEPA's procedural requirement, as recognized in a CEQ 
2011 guidance letter referenced by the commenters. The CEQ letter 
stated that agencies should not commit to mitigation measures if there 
are insufficient legal authorities or if it is not reasonable to 
foresee the availability of sufficient resources to perform or ensure 
performance of mitigation.
    Response: Although NEPA is a procedural statute, the Agency notes 
that it also has an action-forcing component in Section 102(2)(c). 
Further, courts have recognized that the absence of a discussion of 
possible mitigation in NEPA documents undermines this action-forcing 
component. Additionally, 40 CFR 1505.3(a) and (b) state that agencies 
shall ``include appropriate conditions in grants, permits or other 
approvals'' and ``condition funding of actions on mitigation''.
    Under its organic statutes, the Agency has authority to impose 
reasonable terms and conditions on its provision of financial 
assistance. As a condition to receiving financial assistance, the 
Agency can require substantive mitigation measures to reduce potential 
environmental impacts. Mitigation measures, for the purposes of NEPA, 
do not include those measures that are otherwise required by Federal, 
state, or local statutes or regulations.
    Regarding the request to add a definition of mitigation to Sec.  
1970.5, the Agency does not see a need because it would simply 
duplicate the definition of mitigation already included in the CEQ 
regulations at 40 CFR 1508.20. However, the Agency has developed 
examples of types of mitigation (e.g., spatial or temporal construction 
restrictions based on the presence of endangered species) to include in 
Agency guidance documents available on its Web site. Such guidance also 
addresses the development and use of formal mitigation plans by 
applicants and the Agency, to include oversight roles and 
responsibilities for mitigation implementation. No changes to the 
regulation have been made in response to this comment.

E. Specific Comments on Proposed Rule--Subpart B

Section 1970.51 Applying CEs
    Comment: Commenters stated that the Agency exceeded CEQ 
requirements in the discussion of cumulative actions and cumulative 
effects as discussed in Sec.  1970.51(b)(3). They state that CEQ 
requires an agency to consider cumulative actions but does not apply 
any ``related to'' standard. Rather, the courts consider a number of 
factors to help determine whether an action is a cumulative action that 
should be considered with a proposed action. Commenters requested that 
the expanded scope of analysis be removed and the Agency simply 
incorporate or refer to the CEQ requirement.
    Response: With respect to the language in Sec.  1970.51(b)(3) 
relating to cumulative actions and effects, the Agency agrees that the 
proposed rule language needs further clarification. The Agency has 
clarified Sec.  1970.51(b)(3) to better describe the applicability of a 
CE relative to cumulative effects, consistent with 40 CFR 
1508.25(a)(2).
    However, it is important to point out that the purpose of Sec.  
1970.51(b)(3) is to ensure that connected actions and related actions 
with cumulative significant impacts are considered in the same NEPA 
analysis, including a CE. An applicant may not split up one proposed 
action into smaller parts in an effort to qualify for a CE, rather than 
preparing an EA (or an EIS). CEQ has issued guidance which specifically 
addresses this potential occurrence:

``When developing a new or revised categorical exclusion, Federal 
agencies must be sure the proposed category captures the entire 
proposed action. Categorical exclusions should not be established or 
used for a segment or an interdependent part of a larger proposed 
action. The actions included in the category of actions described in 
the categorical exclusion must be stand-alone actions that have 
independent utility''. Final Guidance for Federal Departments and 
Agencies on Establishing, Applying, and

[[Page 11012]]

Revising Categorical Exclusions under the National Environmental 
Policy Act (75 FR 75632).

    The Agency recognizes that applicant proposals may be related (such 
as for integrated infrastructure), although not connected. As long as 
the proposals have independent utility, they would not be considered as 
connected actions. However, if the proposals, taken together, could 
have cumulatively significant impacts, the Agency would be required to 
prepare an EA (or an EIS). No other changes have been made to the 
regulation in response to this comment.
Section 1970.52 Extraordinary Circumstances
    Comment: One commenter requested clarification on whether the 
crossing of a waterbody with a special use designation would qualify as 
a CE under the proposed rulemaking.
    Response: Based on the information provided, a state special use 
water designation would fall within the definition of extraordinary 
circumstances in Sec.  1970.52(b)(4)((v), areas having formal Federal 
or state designations. The Agency would need additional information on 
the specific project before making a determination as to whether 
application of a CE was appropriate. The critical issue is whether 
there is an ``adverse effect'' on ``specially designated waters'' from 
the crossing, not simply its presence.
    Comment: Another commenter requested a definition of the term 
``important'' as it relates to sensitive resources in Sec.  1970.52, 
clarification as to whether the presence of a sensitive resource or the 
occurrence of an adverse impact will trigger an EA, and asked whose 
opinion would be used to determine the trigger for an EA--the Agency or 
the agency which had regulatory authority over the sensitive resource 
in question.
    Response: The term ``important'' is not used in Sec.  1970.52. It 
is used in the preamble to the draft regulations, in the context of 
important farmland. Important farmland is defined by the USDA Natural 
Resources Conservation Service in Departmental Regulation 9500-3, and 
reference to important farmland is also currently included in the 
existing Agency rules at 7 CFR 1794.6 and 7 CFR 1940.304.
    The presence of an extraordinary circumstance would typically 
require the preparation of an EA to determine whether the proposed 
action could pose significant environmental impacts. However, the 
Agency also recognizes that there may be a situation where a sensitive 
resource is present, but it is clear there would be no environmental 
impacts from the proposed action. Thus, the trigger for an EA or an EIS 
would be present if the Agency, after consultation with the appropriate 
regulatory or natural resource agency, concludes the impacts would be 
significant. Therefore, determining effects to the listed resource or 
situation in Sec.  1970.52 is based on both the presence of a special 
resource and the proposal's potential to cause significant adverse 
environmental effects on that resource. Section 1970.52(c) has been 
deleted and Section 1970.52(a) revised to clarify that a higher level 
of NEPA review would be triggered ``in the event of an extraordinary 
circumstance,'' rather than ``in the presence of an extraordinary 
circumstance.''
    It is the Agency's sole responsibility to determine whether to 
prepare an EA (or an EIS) and not apply a categorical exclusion. As 
needed, the Agency could consult with the appropriate agency with 
expertise on the resource to assist in the determination.
Section 1970.53 CEs Involving No or Minimal Disturbance Without an 
Environmental Report
    Comment: Many commenters stated that the proposed rule included no 
discussion of how the Agency would document the CE process at the time 
the decision is made, thereby putting the Agency's determination at 
risk of being classified as a post-hoc rationalization in any 
subsequent litigation. The commenters also stated that the Agency 
should require concise documentation supporting CE decisions but also 
not impose too onerous a burden on documentation.
    Response: It is important to clarify that there are two types of 
documentation related to CEs. First, for those CEs listed in Sec.  
1970.53, applicants are not expected to submit any environmental 
documentation in most situations. The Agency, however, reserves the 
right to request additional documentation from applicants if needed to 
support their determinations. For those CEs listed in Sec.  1970.54, 
CEs involving small-scale development, applicants are required to 
submit an environmental report to the Agency. The titles of these two 
subsections have been edited to clarify whether an environmental report 
is required, e.g., Sec.  1970.53 CEs involving no or minimal 
disturbance without an environmental report and Sec.  1970.54 CEs 
involving small-scale development with an environmental report. Section 
1970.54 identifies the minimum documentation requirements an applicant 
must provide. The Agency has developed applicant guidance for preparing 
an environmental report required for these actions. This guidance is 
available on the Agency's Web site.
    Second, for all CEs, the Agency will prepare internal documentation 
for its files to demonstrate that, prior to a decision to approve an 
action with a CE, the Agency considered the potential for extraordinary 
circumstances and determined whether the application of a CE was 
appropriate in the circumstances. The Agency's internal documentation 
will include a description of the proposed action, rationale for why 
the proposed action fits within a CE, and confirmation that no 
extraordinary circumstances exist. The details associated with this 
Agency requirement are addressed in internal Agency guidance for staff. 
Such Agency guidance has been developed and includes a CE form that 
will be used by Agency staff to document application of CEs. No change 
has been made to the final regulation in response to this comment.
    Comment: A commenter stated that some actions in Sec.  1970.53 have 
the potential to result in adverse impacts and should require 
documentation. This commenter used an example of financial assistance 
that enabled an existing coal plant to continue operations, which could 
result in greater impacts than enabling the same coal plant to expand 
operation at greater capacity than before. The commenter recommended 
that the Agency require environmental documentation for RUS's loan-
servicing actions and for its loans for upgrades to generation 
facilities because many of these actions have the potential for 
extraordinary circumstances.
    Response: Routine financial transactions that provide financial 
assistance to existing businesses or other entities to facilitate their 
continuing operations (with no expansion of size or capacity) are 
categorically excluded under Sec.  1970.53(a) because they do not 
impose or facilitate the imposition of any new environmental impacts. 
If the Agency had been involved in the financing for the original 
construction of the facility, a NEPA document would likely have been 
prepared at that time. Financial assistance for the expansion of an 
existing coal plant, as described in the comment, would not qualify for 
a CE under Sec.  1970.53. The Agency's position on loan-servicing 
actions, in general, is addressed in the discussion under Sec.  1970.8 
and in Section III.C. No change has been made to the regulation based 
on these comments.
    Comment: A commenter recommended that the Agency expand the list of 
CEs in Sec.  1970.53, involving no

[[Page 11013]]

or minimal disturbance, to clearly include the collocation of 
telecommunications facilities and promote deployment of distributed 
antenna systems and small cell networks. The commenter stated that 
collocation of telecommunications facilities on existing infrastructure 
accelerates deployment of broadband networks without the need to 
develop duplicative, potentially environmentally disruptive new sites. 
The commenter provided examples from other agency regulations, 
including a similar U.S. Department of Energy (DOE) CE at 10 CFR part 
1021 Appendix B4.7.
    Response: The Agency agrees with the commenter and has added a new 
CE at Sec.  1970.53(d)(5) in the final rule to categorically exclude 
the collocation of telecommunications equipment and deployment of 
distributed antenna systems and small cell networks provided that the 
latter technologies are not attached to and will not cause adverse 
effects to historic properties. Related revisions were also made in the 
final rule to Sec.  1970.53(d)(1), which categorically excludes 
upgrading and rebuilding existing telecommunication facilities (both 
wired and wireless) or the addition of aerial telecommunication cables 
to electric power lines, and the new Sec.  1970.53(d)(2), which 
categorically excludes burying facilities for communication purposes in 
previously developed, existing rights-of-way. Additional language has 
been added to this CE to indicate that its use is intended for areas 
already committed to urbanized development or rural settlements. The 
Agency has determined that adding additional aerial cables on existing 
electric power lines, whether at distribution or transmission voltages, 
has minimal or no potential for affecting environmental resources. 
Constuction activities related to adding an additional cable to 
existing structures, based on Agency experience and other Federal 
agency practice, typically occur on previously disturbed, existing 
rights-of-way similar to routine maintenance activities by utility 
crews.
Section 1970.53(a) Routine Financial Actions
CE Sec.  1970.53(a)(1) [Related to Refinancing of Debt]
    Comment: Many commenters recommended that the Agency revise the CE 
in three ways: (1) Clarify that the debt refinancing covered by the CE 
is limited to when RUS provides the refinancing or continues to extend 
credit to the borrower under the refinancing; (2) clarify that because 
debt refinancing may be undertaken in a debt restructuring, the Agency 
should include both debt refinancing and debt restructuring in the CE; 
and (3) remove the proviso that the CE does not apply if the applicant 
is using refinancing as a means to avoid compliance with environmental 
requirements. Rather, the commenters stated, the Agency should use the 
``extraordinary circumstances'' review to ensure that refinancing or 
restructuring does not include a feature that makes the exclusion 
inappropriate. Other commenters asked for clarification on what 
refinancing actions are covered by this CE, and requested that the 
proposed rule specify that debt refinancing may require an 
environmental review, depending on both the nature and purpose of the 
refinancing.
    Response: Based on the number of comments received, this section 
requires clarification. The Agency reviewed the nature of and use of 
refinancing. Prepayments, as previously discussed, are different from 
refinancing. ``Refinancing'' to simply change an interest rate is a 
servicing action. There are no changes in the scope of the project as 
originally approved and financed, or no new projects or facilities 
requiring a new NEPA review. RBS, RHS and RUS each have limited or no 
authority to ``refinance'' in this manner.
    Another type of refinancing occurs if the Agency provides financial 
assistance to pay off all or a portion of existing debt and the 
refinancing involves new projects or facilities. At the time the Agency 
makes a decision to refinance and to provide financial assistance for 
the new project or facility, the appropriate NEPA review would occur in 
accordance with Sec.  1970.8(b)(1).
    Yet another type of refinancing or other financial assistance 
involves financing provided by a non-Federal lender and is generally 
referred to as ``up-front,'' ``bridge,'' ``construction,'' or 
``interim'' financing. These actions usually involve short-term 
temporary financing. The purpose of the temporary financing is that it 
provides a bridge to and is to be replaced by the Agency at a specified 
time. The Agency's financial assistance is a replacement of the 
temporary financing with permanent long-term financing. In all of these 
cases, the Agency knows in advance that the applicant will request 
permanent long-term Agency financial assistance, and the applicant and 
the Agency conduct the appropriate NEPA review before any Agency 
financial assistance is approved. These actions are covered under Sec.  
1970.8(1),'' providing financial assistance.'' For these reasons, the 
Agency is deleting ``refinancing of debt'' as a CE in Sec.  1970.53(a).
    Debt restructuring is a generic term that includes compromising, 
adjusting, reducing, or charging-off debts or claims and other debt 
workout options. These types of actions are also included within the 
definition of servicing action in Sec.  1970.6. However, if additional 
financial assistance is requested along with any such actions, the 
Agency would undertake the appropriate NEPA review at that time.
CE Sec.  1970.53(a)(5) [Related to Loan-Servicing Actions]
    Comment: A commenter identified a potential inconsistency between 
Sec.  1970.9(c) which requires the Agency to complete a single 
environmental document evaluating an applicant's proposal and other 
activities within the scope of analysis, and Sec.  1970.53(a)(5), which 
the commenter says seems to allow (and in fact requires under some 
circumstances) at least two separate reviews. The commenter stated that 
the Agency cannot take an action but defer some portion of the NEPA 
analysis to a subsequent review. If what the Agency intends is that an 
appropriate environmental analysis will occur for a separate and later 
Agency action, the Agency should remove references to ``such actions'' 
and ``separate environmental review'' in this CE. Commenters also 
expressed confusion about the Agency's reference to ``such actions [not 
being] ripe for immediate review'' and whether it was referring to a 
loan-servicing action or to reasonably foreseeable construction or 
changes in operation. Further, as noted in Section III.C, many 
commenters did not agree with the Agency's inclusion of loan-servicing 
actions as major Federal actions requiring NEPA analysis.
    Response: As explained in Section III.C, servicing actions are 
directly related to financial assistance and do not require separate 
NEPA review. Sections 1970.6 and 1970.8 have been revised to clarify 
the definition and treatment of servicing actions, and conforming 
changes have been made to Sec.  1970.53(a)(5). Specifically, the Agency 
is removing servicing actions as a CE in Sec.  1970.53(a)(5) in the 
final rule. Other revisions to proposed Sec.  1970.53(a)(5), re-
numbered as Sec.  1970.53(a)(4) in the final rule, include removal of 
the last sentence relating to actions not being ripe for immediate 
review to help eliminate any confusion related to this matter.
    With respect to Sec.  1970.9, there is no inconsistency between 
Sec.  1970.9 and Sec.  1970.53(a)(5) in the proposed rule.

[[Page 11014]]

Section 1970.9 simply explains the three types of NEPA reviews: CE, EA 
and EIS. Subsection (c) notes that, for each type, the Agency will 
evaluate the proposal and closely related actions in the same NEPA 
document. Proposed Sec.  1970.53(a)(5) described one type of action 
that is categorically excluded from formal NEPA documentation, although 
not NEPA review. To the extent that separate reviews are required, they 
would occur at different times and under different circumstances. See 
also the discussion of modifications to Sec.  1970.9(c), above.
    Comment: A commenter was unable to find where Sec.  1970.53(a) 
covered subsequent loans for project cost overruns and recommended 
that, if it was not covered, then it needed to be cited as a CE without 
documentation.
    Response: Providing subsequent loans for project cost overruns was 
not specifically addressed in the draft rule but has been added to the 
final rule as a CE without documentation. Additional funding for a cost 
overrun would involve financial assistance and thus is subject to NEPA 
review. However, a request for additional funding to address a cost 
overrun where there is no substantial change to the original proposal 
would be eligible for a CE, and added as a new CE in Sec.  
1970.53(a)(5). This addition is consistent with the CE currently 
included in 7 CFR 1794.21(c)(4).
CE Sec.  1970.53(c) Minor Construction Proposals
    Comment: One commenter stated that the 15-acre land-clearing 
threshold for minimal disturbance under proposed Sec.  1970.53(c)(9) 
should be applied to all proposed actions. Therefore, if less than 15 
acres of land clearing was required for a project, it would fall under 
proposed Sec.  1970.53(c)(9).
    Response: Proposed Sec.  1970.53(c)(9) refers to only land clearing 
operations (e.g., timber harvesting) that would not include any site 
development activities after the land was cleared. This CE does not 
apply to any site development activities that may occur on the land 
after it was cleared. CEs in Sec.  1970.54, CEs involving small-scale 
development with an environmental report, use a 10-acre threshold. The 
use of this 10-acre limit is based on the current threshold of 10 acres 
currently found in Sec.  1794.21(a)(22), which allows construction of 
facilities and buildings involving no more than 10 acres of physical 
disturbance. The Agency has made no change to the final regulation with 
respect to that threshold value. To eliminate any confusion over the 
15-acre limit for land clearing in CE Sec.  1970.53(c)(9), the Agency 
has revised this CE to clarify that it refers to biomass harvesting and 
has moved the CE to 1970.54(a)(10).
    Comment: A commenter requested that the replacement of existing 
water and sewer lines in the same trench should be considered as a CE 
without documentation, citing reasons that there will be no new 
disturbance of additional area and the new lines are just replacing the 
older existing ones with no new additional connections.
    Response: The Agency agrees and has added a new CE under Sec.  
1970.53(c) (specifically, Sec.  1970.53(c)(6) in the final rule) that 
allows for the replacement of existing water and sewer lines under 
certain conditions. Any improvements or expansion of an existing 
utility network, which could include additional ground disturbance or 
trigger new growth or development, would remain a CE under Sec.  
1970.54(b)(2) but would require the preparation of an environmental 
report.
Proposed CE Sec.  1970.53(c)(7) Related to New Utility Service 
Connections
    Comment: A commenter recommended that the Agency make clear that 
its proposed rules are technology-neutral and include wireless 
technologies. The commenter stated that the proposed rules are 
inconsistent in their treatment of telecommunications facilities and do 
not uniformly track the language of the existing rules, which could 
confuse the interpretation of the new rules. Some examples were 
provided by the commenter (e.g., reference to utility service 
connections), where use of ``utility'' as a substitute for ``power 
lines, substations, or telecommunications facilities'' may introduce 
ambiguity. The commenter also recommended that the Agency consider 
adopting environmental rules that have already proven effective by 
other Federal agencies.
    Response: It is the Agency's intent that wireless 
telecommunications infrastructure be included in the broader term 
``utility'' and that wireless telecommunications infrastructure would 
be eligible for this and other CEs if the criteria are met. The 
proposed rule included a class of CEs relating to energy or 
telecommunication proposals. The Agency has clarified in the final rule 
(see Sec.  1970.53(d)(1)) that telecommunications facilities include 
both wired and wireless telecommunications infrastructure and they 
would also be eligible for CEs, similar to other utilities, as long as 
the criteria were met. In addition, the Agency has included in the new 
Sec.  1970.53(d)(2) additional types of facilities for communication 
purposes as discussed elsewhere in the rule.
CE Sec.  1970.53(c)(2) and Sec.  1970.54(c)(12) Related to Pollution 
Prevention
    Comment: Many commenters requested that these two CEs be amended to 
apply to activities done for purposes of ``pollution control'' in 
addition to ``pollution prevention'' so as to apply to pollution 
control devices more generally. The commenters requested that these CEs 
also apply to decommissioning and shutdown measures, in addition to 
repairs, upgrades, modifications, or enhancement.
    Response: The Agency agrees and has added activities done for 
purposes of ``pollution control.'' However, the Agency disagrees that 
these CEs should be made applicable to decommissioning and shutdown 
measures. Because Agency loans are associated with assets as 
collateral, it is unlikely that the Agency could provide financial 
assistance for an asset with no remaining useful life and that asset 
could not serve as collateral for the Agency, which are the conditions 
which must be met for this CE.
CE Sec.  1970.53(c)(2), Sec.  1970.53(d)(9), and Sec.  1970.54(c)(12)
    Comments: Many commenters requested that the Agency revise ``energy 
efficiency'' to ``energy efficiency, including heat rate efficiency'' 
to ensure that projects to upgrade or modify units to improve heat rate 
efficiencies, or to return those efficiencies to the original design 
rates, are covered in the CE. They stated that improvements to heat 
rate efficiencies allow a generator to generate the same amount of 
electricity using less fuel and thus generate and emit fewer 
pollutants. Therefore, these projects are unlikely to have significant 
environmental effects and should be included in these CEs.
    Response: The Agency agrees and has revised language in the Final 
Rule to add ``heat rate efficiency'' to the phrase ``energy 
efficiency'' as appropriate.
CE Sec.  1970.53(d)(1) Related to Energy or Telecommunication Proposals 
(Pole Replacements)
    Comment: The commenter noted a potential contradiction between 
proposed Sec.  1970.53(d)(1) and Sec.  1794.22(a)(5) in the existing 
RUS regulations. According to the commenter, because some pole 
replacements and uprating projects using phase raisers and associated 
reconductoring involve minimal environmental disturbance or risk, these 
activities should fit within a CE that

[[Page 11015]]

would not require environmental documentation by the applicant.
    Response: The Agency agrees that no documentation would be 
necessary for this CE and has included it within Sec.  1970.53 which 
includes no applicant documentation requirements. This is a change from 
what is currently in Sec.  1794.22(a)(5) which requires an 
environmental report. The renumbered and final Sec.  1970.53(d)(3) uses 
a component of the existing Sec.  1794.22(a)(5) to encompass pole 
replacement (less than 20 percent), which the Agency has determined, 
based on past experience, does not result in significant impact to 
environmental resources. Rather than retain the 20 percent threshold 
reference used in Sec.  1794.22(a)(5), the Agency added provisions 
similar to an existing CE promulgated by the U.S. Bureau of Land 
Management relating to upgrading of existing facilities which involve 
no additional disturbance outside the right-of-way boundary. Such 
provisions help ensure there is no potential for significant impact and 
there is no need for additional documentation.
CE Sec.  1970.53(d)(2) Related to Electric Distribution Lines
    Comment: Commenters requested clarification on the definition of 
``rebuilding'' as used in this CE. They identified various examples of 
types of actions and asked whether the Agency would consider them as 
``rebuilding'' or not, such as: (1) The re-spanning of existing 
overhead line and overhead-to-underground conversions; and (2) 
rebuilding in existing disturbed utility rights-of-way (transmission 
lines, roads, pipelines), and in or adjacent to existing buried utility 
or pipeline rights-of-way.
    Response: The Agency agrees that the term ``rebuilding'' warrants 
further clarification and has revised this CE to describe what 
``rebuilding'' includes, i.e., pole replacements within existing 
rights-of-way similar to an existing CE promulgated by the U.S. Bureau 
of Land Management relating to upgrading of existing facilities which 
involve no additional disturbance outside the right-of-way boundary. 
Such provisions help ensure there is no potential for significant 
impact and there is no need for additional documentation. In addition, 
the CE does not include overhead-to-underground conversions. These 
changes were made to the renumbered and final Sec.  1970.53(d)(4).
CE Sec.  1970.53(d)(9) Related to Environmental Improvements
    Comment: Many commenters stated that the conditions imposed in this 
CE would prevent its use for the installation of most or all pollution 
control devices by stipulating the CE cannot apply if the improvement 
results in an increase in pollutant emissions, effluent discharges, or 
waste products. The commenters provided examples of some pollution 
control devices that reduce emissions of one type of pollutant but 
increase an emission or discharge of another pollutant or waste 
product. They stated that a CE, rather than a longer and more resource-
intensive EA, is appropriate even if installation of a pollution 
control device at a facility allows it to remain in operation longer 
and delays introduction of other sources of electric generation that 
might emit fewer pollutants. They requested that the Agency recognize 
that installation of these pollution control devices usually occurs in 
close coordination with the appropriate permitting authorities and that 
the Agency should defer to these permitting authorities in determining 
whether the activities are unlikely to have significant environmental 
effects or not. The commenters requested that the Agency rewrite the CE 
to encompass pollution control devices more broadly; specifically that 
the CE should apply to the installation of pollution control devices 
consistent with applicable Federal, tribal, state or local requirements 
or that are approved by relevant permitting authorities or consistent 
with existing permits, similar to a Department of Homeland Security CE 
that applies to pollution prevention and pollution control equipment. 
These commenters further recommended that the Agency include as a CE a 
borrower's proposal to shut down, decommission, or remove an asset from 
service in order to meet operational or pollution control targets.
    In contrast, other commenters stated that the Agency's decision to 
fund the addition, replacement, or upgrade of pollution control 
equipment at existing electric generation facilities is environmentally 
significant and should be subject to NEPA review. Specific concerns 
included the effect that such actions can have on extending the working 
life of a facility with environmental impacts that would not otherwise 
be financially viable. These commenters recommended that loans for 
facilities under this CE should entail full environmental review for 
significant actions and, at a minimum, require environmental 
documentation where a CE is applied.
    Response: With respect to the comments suggesting that the 
installation of any pollution control device should be categorically 
excluded without qualification, the Agency has determined that such 
actions could have significant environmental impacts unless limitations 
are in place. While installation of pollution control devices is 
typically done in coordination with permitting agencies, that fact does 
not excuse the Agency from complying with NEPA. In addition, the fact 
that a permitting agency may authorize installation of pollution 
control equipment does not indicate that the action would have no 
significant environmental impacts. Permitting agencies only determine 
whether applicable regulatory standards are met, not whether 
environmental impacts could be significant.
    Although the renumbered and final Sec.  1970.53(d)(11) requires 
that the proposed action not cause an increase in pollutant emissions, 
effluent discharges, or waste products, a CE in Sec.  1970.54(c)(12) 
applies to modifications or enhancements to existing facilities or 
structures that would not substantially change the footprint or 
function of the facility and that are undertaken for the purpose of 
improving energy efficiency, promoting pollution prevention, safety, 
reliability, or security. Thus, installation of a pollution control 
device that would not meet the requirements of Sec.  1970.53(d)(11) 
could still be eligible for a CE under Sec.  1970.54(c)(12). To support 
the application of this CE, the applicant would be required to prepare 
and submit an environmental report. Such documentation would likely 
include waste management plans and required permits to verify proper 
handling and disposal of wastes. The Agency has determined that the 
conditions included in Sec.  1970.53(d)(11) and the documentation 
requirements of Sec.  1970.54(c)(12) provide the Agency with sufficient 
assurance that no significant impact would occur as a result of a 
proposal to install pollution control equipment.
    Regarding the suggestion that Sec.  1970.53(d)(11) include actions 
when the borrower shuts down or decommissions or removes an asset from 
service to meet operational or pollution control targets, the Agency 
does not provide financing for decommissioning as discussed above. For 
this reason, the Agency has not included decommissioning as a CE.
    With respect to the comments suggesting that the addition, 
replacement, or upgrade of pollution control equipment at existing 
electric generation facilities should be the subject of a full 
environmental review, the Agency believes that the conditions included 
in this CE (i.e., proposal does not result in a change to the design 
capacity or function of the facility and

[[Page 11016]]

does not result in an increase in pollutants) are sufficient to ensure 
that such actions would not result in significant environmental 
impacts. There are numerous factors that influence the useful life of a 
facility. It is a complicated issue and also subject to Federal and 
state control and jurisdiction. It would be difficult for the Agency to 
determine whether its financial assistance for an addition, 
replacement, or upgrade of pollution control equipment directly 
contributed to an extension of useful life, or simply was used to meet 
environmental requirements. As such, the Agency does not believe it is 
appropriate to require full environmental review.
Sec.  1970.54 CEs Involving Small-Scale Development With an 
Environmental Report
    Comment: A commenter requested the Agency to provide additional 
guidance for documentation requirements to address CE decisions 
proposed in Sec.  1970.54 and to maintain the current criteria in Sec.  
1794.21 and Sec.  1794.22. This commenter also described how the Agency 
currently requires the applicant to prepare and submit a project 
description or environmental report for projects that meet appropriate 
criteria for a CE; and referred to checklists the Agency had used in 
the past, and guidance previously provided in RUS Bulletin 1974-600 
which documents the categories of projects requiring an environmental 
report. Another commenter identified the CE documentation that should 
be included (a description of proposed action, the rationale for why 
the action fits within a CE, and confirmation that no extraordinary 
circumstances exist), and stated that with respect to the particular 
actions relevant to this commenter, the use of a construction work plan 
is the most efficient means for documentation. Another commenter 
recommended that the Agency develop a NEPA questionnaire, perhaps 
similar to DOE's Smart Grid Investment Grant Program, for submittal 
with construction work plans--allowing Agency staff to determine what 
level of NEPA review will be required, and to satisfy the requirements 
contained in Sec.  1970.9(a); and that environmental documents should 
only be required for projects that are realized. This commenter also 
stated that the use of a questionnaire was mentioned in the preamble 
for the proposed rule but not included in the rule language itself, and 
encouraged the Agency to formalize a NEPA questionnaire or short 
evaluation format that could be used in place of the RUS environmental 
report referred to in the existing RUS regulations.
    Response: The proposed rule suggested the elimination of the use of 
environmental reports in lieu of a form of ``environmental 
documentation'' that had been unnamed at the time; however, in the 
final rule, the Agency recognizes that continued use of an 
environmental report (which was required by RUS in part 1794) will be 
an efficient way to capture the necessary information and serve as the 
required CE documentation. The Agency has developed guidance for 
preparing environmental reports (ERs) for CEs described in Sec.  
1970.54. This guidance is available on the Agency's Web site. The 
information to be captured will be consistent with the documentation 
content requirements identified by the commenter. Program specific 
guides and forms are not published as part of the final rule but will 
be available on agency Web sites as separate guidance to applicants.
CE Sec.  1970.54(b)(1) Related to Small-Scale Corridor Development
    Comment: The commenter recommended that the construction of roads, 
sidewalks, etc., in existing areas should be moved to Sec.  1970.53 as 
a CE without documentation. Similar to the argument for replacing 
existing utility lines in the same trench area, the re-construction or 
overlay of roads in an existing right-of-way does not require the 
disturbance of additional area and thus would not impact the 
environment.
    Response: The construction or repair of roads, streets and 
sidewalks would likely include new ground disturbance with the 
potential for significant environmental impact, depending on what 
resources may be present and potentially affected. The difference 
between Sec.  1970.54(b)(1) and previous CEs that did not require 
documentation is that Sec.  1970.54(b)(1) includes ``construction'' 
while the other CEs included re-construction, replacement or 
restoration activities. Section 1970.53(c)(3) does categorically 
exclude proposals involving minimal external modifications, 
restoration, and replacement in kind. For these reasons, no change has 
been made to this section in response to this comment.
CE Sec.  1970.54(b)(3) Related to Small-Scale Corridor Development
    Comment: A commenter stated that the documentation requirements 
associated with Sec.  1970.54(b)(3), relating to utility line 
replacement required by a non-Agency road re-construction project, will 
hold up road construction for the Agency for at least 2 months and has 
the potential to back up road construction into the next year putting 
budgets at risk given the review requirements, including a minimum 30-
day public comment period. The commenter also pointed out that even if 
a NEPA review were required for the road re-construction activity 
undertaken by non-Agency applicants, the non-Agency applicant is under 
no obligation to share the studies with the utilities that are required 
to move their lines because of the road re-construction. Any additional 
review required by the Agency related to utility replacement or 
relocation would duplicate the NEPA review by the non-Agency lead which 
is the opposite of the intent of proposed part 1970.
    Response: This particular CE envisions that the replacement of 
utility lines is necessitated by road reconstruction activities that 
have been undertaken by others (e.g., state or Federal transportation 
agency). The use of a CE (rather than an EA) for the utility 
replacement portion of the work is expected to shorten the current 
review process such that it should not take two months; as a CE, it 
would not require a 30-day public comment period. Thus, it is unlikely 
that road construction would be delayed by the application of this CE. 
The Agency requirement for an environmental report would ensure that no 
extraordinary circumstances would be present in such projects, given 
that ground disturbing activities would be involved. In the event that 
the associated road reconstruction does include its own separate NEPA 
review, the applicant could further streamline the CE documentation 
process by referencing and providing the documentation prepared by the 
project (road construction) proponent as part of the environmental 
report required by the Agency. No change has been made to this section 
in response to this comment.
    With regard to the commenter's assertion that a non-Agency 
applicant is under no obligation to share the studies with the 
utilities that are required to move their lines because of the road re-
construction, the Agency has never experienced the reluctance to share 
environmental studies, nor has it ever been denied, upon request, 
copies of such studies. In most if not all cases, the environmental 
studies referenced are being prepared for either a state or Federal 
agency and once the studies are submitted to that agency, the study is 
public information (unless the studies contain information that is 
being withheld from disclosure to the public because, for example, it 
contains data about the location, character, or

[[Page 11017]]

ownership of a historic property). If an applicant experiences a 
reluctance to share relevant studies, the applicant is encouraged to 
contact the Agency and Agency staff will request copies from the state 
or Federal agency involved in the activity.
CE Sec.  1970.54(c) Related to Small-Scale Energy Proposals
    Comment: Commenters requested revision and clarification for 
several of the CEs within this category relating to the proposed 
distance limits on small-scale energy proposals (e.g., transmission 
lines). They stated that the Agency is disregarding its own experience 
and instead relying on the experience of another agency (i.e., DOE) in 
determining the threshold distance limits, when there is no evidence 
that there are problems with the limits included in the existing RUS 
regulations, e.g., the existing 25-mile transmission line limit in 
Sec.  1794.22(a)(1) as compared to the 10-mile limit in proposed Sec.  
1970.54(c)(2). Commenters did not agree that the proposed regulations 
needed to be consistent with DOE regulations and did not find 
compelling reasons for changing the existing CE requirements such as 
those contained in Sec.  1794.22(a)(1). The commenters recommended that 
the Agency rely on its own experience and remove the new length 
restrictions.
    Response: In proposing the new limits, the Agency saw merit in 
developing regulations consistent with the DOE regulations on this 
matter, such as benefiting from DOE's experience that transmission 
lines within certain limits have not resulted in significant 
environmental impacts. However, the commenters are correct that the 
Agency's own decades-long experience with several of the CEs justifies 
use of the existing limitations, and the Agency agrees that RUS' 
administrative record provides a lengthy historical context. After 
further consideration, the Agency is reverting to the original language 
and threshold distance values in Sec.  1794.22(a)(1) to replace the 
limits in proposed Sec.  1970.54(c)(2). These limits for new 
construction are also being used, for consistency, to support the 
threshold distance in Sec.  1970.54(c)(3) related to reconstruction. In 
general, reconstruction and minor relocations would have less impact 
than new construction.

F. Specific Comments on Proposed Rule--Subpart C

Section 1970.101 General
    Comment: A commenter stated that the Agency will not have the 
resources available to engage in the level of consultation needed to 
meet the requirements of Sec.  1970.101(c), which requires the Agency 
to determine the proper level of classification of the applicant's 
proposal; and Sec.  1970.103, which requires the Agency to identify any 
unique environmental requirements associated with the applicant's 
proposal. The commenter requests additional guidance on how the Agency 
will determine ``the proper classification of an applicant's 
proposal.''
    Response: The Agency currently expends resources to properly 
classify an applicant's proposal under the existing NEPA regulations. 
The Agency expects the promulgation of the updated NEPA regulations to 
decrease the number of environmental reviews and to streamline the 
reviews that are undertaken. One intent of the revised NEPA regulations 
is to streamline the Agency NEPA process, particularly for CEs; this 
will likely decrease the Agency's paperwork burden and review times and 
conserve Agency resources. Applicants also can help conserve Agency 
resources by fully describing the action for which they are seeking 
financial assistance and by submitting complete information packages, 
as addressed in the final rule. No change has been made to the proposed 
regulation in response to this comment.
Section 1970.102 Preparation of EAs
    Comment: A commenter requested that the Agency clarify the language 
used in the preamble relating to environmental reports and whether 
these categories of reports will still be used by RUS. Under the 
existing RUS regulations, environmental reports are prepared by 
applicants and normally serve as the EA (or CEs if appropriate) 
following RUS review and approval. In addition, the commenter requested 
that the Agency provide guidance regarding when the 14-day or 30-day 
public comment period will be used. In particular, the commenter asked 
why, as in the example provided in the preamble to the draft regulation 
(79 FR at 6755), a 14-day comment period would be needed if ``there is 
no public concern.''
    Response: Under the existing RUS regulations, environmental reports 
are prepared by applicants in support of both CEs and EAs; for EAs, the 
environmental report normally served as the EA following RUS review and 
approval as the commenter described. Under the final rule, the Agency 
has specifically eliminated the requirement for environmental reports 
for EAs. Applicants are required to prepare EAs when an EA is required 
(Sec.  1970.5(b)(3)(iv)(C)). However, under the final rule, the 
environmental documentation that applicants are required to prepare for 
certain CEs are being referred to as environmental reports. A 
definition of environmental report has been added to Sec.  1970.6 to 
clarify this term. With respect to the comment period, the Agency may 
believe that there is ``likely no public concern'' (which would make a 
14-day comment period appropriate), but would not know for sure until 
the EA was made available for public review. The preamble language in 
the proposed rule also provided an example of when a 30-day review 
period would be appropriate (79 FR at 6755). No change has been made to 
the proposed regulation in response to this comment. The Agency has 
developed guidance on effective public involvement that addresses 
review and comment periods on EAs. That guidance will be made available 
on its Web site.
Section 1970.103 Supplementing EAs
    Comment: Many commenters recommended that the Agency revise its 
standards for supplementing an EA to be consistent with CEQ regulations 
and the Agency's standards for supplementing an EIS, by replacing 
inconsistent language in the first sentence with the language used in 
Sec.  1970.155(a)(1) and (2). They stated that 1970.103 strays from the 
CEQ regulation in several ways, including: (1) The proposed 
supplemental EA language omits the word ``significant'' and only uses 
the phrase ``new relevant environmental information''; (2) the proposed 
supplemental EA provision that supplementation may be necessary after 
issuance of an EA or FONSI differs from CEQ regulations, and language 
in Sec.  1970.155 provides that supplementing only occurs before the 
action is taken; and (3) the provision governing supplemental EAs omits 
a key phrase in CEQ regulations where the changes or new information 
(to be considered) are ``relevant to environmental concerns.'' 
Commenters requested that the Agency include exclusions providing that 
a supplemental analysis is not required where new information or new 
circumstances result in a lessening of adverse environmental impacts 
previously evaluated without causing other impacts that are significant 
and were not previously evaluated. One commenter also stated that there 
does not appear to be any definition of what constitutes a substantial 
change, and requested additional guidance on this topic. Of particular 
concern to one commenter was a situation where the

[[Page 11018]]

changes are related to project modifications made at the direction of a 
landowner or a state public utility commission (e.g., as part of 
regulatory process to build new transmission facilities and the 
associated routing considerations).
    Response: The Agency disagrees that there is any inconsistency 
between the cited regulations. The language in Sec.  1970.155 is 
consistent with the CEQ regulations at 40 CFR 1502.9(c). The language 
in Sec.  1970.103 does not need to be consistent with either Sec.  
1970.155 or the CEQ regulations because it addresses supplementing EAs, 
which is not addressed in either the CEQ regulations or in Sec.  
1970.155. Further, Sec.  1970.103 notes that new information may 
require supplementation, but supplementation is not always required. 
The word ``significant'' is used in Sec.  1970.155 because it refers to 
supplementation of EISs and is consistent with the CEQ regulations; 
``substantial'' change is a more appropriate term relating to an EA 
than ``significant.'' Whether a change is considered ``substantial'' 
will depend on the circumstances. In addition, by using the term 
``relevant environmental information,'' the Agency intends that any new 
information must be relevant to the potential environmental impacts of 
the proposal that was the subject of the EA.
    With respect to the suggestion that supplementing an EA not be 
required where new information or new circumstances result in a 
lessening of adverse environmental impacts, the Agency notes that such 
a determination would not be possible unless an evaluation of 
previously evaluated impacts and potential new impacts were conducted. 
In other words, the Agency must prepare a supplemental EA in order to 
evaluate whether new information or circumstances would result in an 
increase or a decrease in environmental impacts as compared to those 
previously evaluated.
    The Agency has clarified Sec.  1970.103 to state that supplementing 
an EA may be required after the issuance of an EA or FONSI, but before 
the action has been implemented. No other changes have been made in the 
final rule relating to Sec.  1970.103 in response to this comment.

G. Specific Comments on Proposed Rule--Subpart D

Section 1970.151 General
    Comment: A commenter disagreed with the exclusion of ``other than 
gas-fired combustion turbines, of more than 50 average MW output, and 
all associated electric transmission facilities'' from ``new electric 
generating facilities'' in the non-exclusive list of Agency actions for 
which an EIS is required. The commenter stated that the impacts from 
natural gas can be significant and points to the emissions of 
greenhouse gases and the recent boom in hydraulic fracturing as 
concerns that should be taken into account.
    Response: In accordance with Sec.  1970.101, the potential impacts 
of natural gas combustion turbines would be evaluated in an EA. If, on 
the basis of the EA, the Agency determines that the environmental 
impacts could be significant, an EIS will be prepared. The preparation 
of an EA is consistent with current RUS regulations at Sec.  
1794.25(a)(1). Because all previous Agency EAs for gas-fired combustion 
turbines of more than 50 average MW output have resulted in FONSIs, an 
EA--not an EIS--is the appropriate level of NEPA review.
    Comment: A commenter stated that proposed Sec.  1970.151 is as 
flawed as proposed Sec.  1970.8(b) in that the Agency has determined an 
EIS is required without any analysis of whether such actions listed are 
a ``major Federal action.'' Rather, the commenter states that the 
Agency should decide on a case-by-case basis as to whether the action 
is a major Federal action before requiring an EIS. With respect to the 
exception for gas-fired turbines in Sec.  1970.151(b)(4), the commenter 
states that ``gas-fired turbine'' may not be an inclusive enough term 
and offers a more appropriate term of ``gas-fired prime movers'' to 
include gas-fired turbines and gas engines.
    Response: The Agency agrees that the use of the term ``gas-fired 
prime movers'' (defined as gas-fired turbines and gas engines) is more 
inclusive and appropriate for this section and has changed the language 
in the final rule (Sec.  1970.151(b)(4)). In addition, the Agency is 
modifying the language in this section to make it clear that the Agency 
will prepare an EIS for new electric generating facilities including 
all new associated electric transmission facilities, except for gas-
fired prime movers. This change is intended to clarify the scope of the 
proposed action to be analyzed in an EIS.
    However, the Agency does not agree to the requested change in 
identifying specific actions that require an EIS. Section 1970.151 
follows the CEQ regulations that require agencies to identify classes 
of action that normally require EISs (40 CFR 1507.3(b)(2)(i)). In 
addition, as noted in the CEQ regulations, ``major reinforces but does 
not have a meaning independent of significantly'' (40 CFR 1508.18). No 
other change has been made to this section in response to this comment.
Section 1970.152 EIS Funding and Professional Services
    Comment: Commenters stated that applicants should be capable of 
securing outside professional environmental services for EISs without 
using the Federal procurement process, and want the rule to be clear 
that Federal Acquisition Regulations do not apply.
    Response: The Agency agrees that applicants may and should secure 
outside environmental professional services for EISs without the use of 
or reliance on the Federal procurement process. The Agency does support 
the use of a third-party contracting process as described in Question 
16 in CEQ's Forty Most Asked Questions Concerning CEQ's National 
Environmental Policy Act Regulations (46 FR 18026) where CEQ stated 
that the ``Federal procurement requirements do not apply to the agency 
because it incurs no obligations or costs under the contract, nor does 
the agency procure anything under the contract.'' While the Agency's 
policy and standard practice is to solicit and procure professional 
services of qualified contractors under a third-party contracting 
process that is consistent with 40 CFR 1506.5(c), the Agency reserves 
the right to consider alternate procurement methods. To avoid any 
conflicts of interest, the Agency maintains responsibility for 
selecting the contractor, in accordance with 40 CFR 1506.5(c), and the 
applicant must not initiate any procurement of professional services 
without written prior approval of the Agency. This has been clarified 
in the final rule.

IV. Section-by-Section Analysis of the Final Agency NEPA Regulation

    This section provides a detailed discussion of the final Agency 
NEPA rule. For each section, the changes made to the final rule are 
briefly described, along with the reason for the change. In most cases, 
the reason for the change is addressed in Section III in response to 
public comments. In a few instances, the Agency has initiated the 
change, such as to include Executive Orders and a Departmental 
Regulation that were either overlooked in the proposed rule or issued 
since publication of the proposed rule, provide further clarification 
of an important point, or correct a previous oversight. Overall, the 
final rule includes the same language as the proposed rule language 
which, in turn, is the same as an existing regulation or includes only 
minor modifications. This section only

[[Page 11019]]

includes those sections of the final rule that have been revised since 
publication of the proposed rule.

A. Subpart A--Environmental Policies

Authority (Sec.  1970.3)
    The Agency has included references to Executive Orders 13653, 
``Preparing the United States for the Impacts of Climate Change'', 
13690, ``Establishing a Federal Flood Risk Management Standard and a 
Process for Further Soliciting and Considering Stakeholder Input'', and 
13693, ``Planning for Federal Sustainability in the Next Decade'' in 
the final rule. Executive Order 13653 was not included in the proposed 
rule, and Orders 13690 and 13693 were issued by the President in 
January 2015 and March 2015, respectively, after publication of the 
proposed rule.
Definitions and Acronyms (Sec.  1970.6)
    The Agency has revised the definitions of applicant, guaranteed 
lender, financial assistance, servicing actions, and previously 
disturbed or developed land in the final rule in order to provide 
further clarification in response to public comments. In particular, a 
definition of servicing actions has been added to clarify what actions 
are included (e.g., consents and approvals). Although not in response 
to public comments, the Agency has changed ``loan-servicing actions'' 
to the more inclusive ``servicing actions'' to cover routine post-
financial assistance actions related to guarantees, grants and 
cooperative agreements too. The Agency has also added definitions in 
the final rule for the following new terms to help clarify commenter 
confusion over their use in the proposed rule: Cooperative agreement, 
environmental report, grant, loan, loan guarantee, lien sharing, and 
lien subordination. The Agency added a definition of substantial 
improvement as this term is used in regard to flood impact evaluations; 
it added a definition of cooperative agreement as these have been added 
as a type of financial assistance; it also added a definition of 
average megawatt to substantiate the use of this term in defining 
classes of actions. The Agency revised the definition of guaranteed 
lender to make it clear that the Federal Financing Bank (FFB) is not a 
guaranteed lender for the purposes of this regulation because RUS 
prepares the appropriate NEPA documentation, performs underwriting, and 
collects and services the loans for FFB, which is unlike the typical 
guarantor role for other Agency programs. Finally, the Agency added two 
significant new programs and three existing programs to the list of 
programs in the definition of multi-tier action; the new programs are 
the Energy Efficiency and Conservation Loan Program and the Rural 
Energy Savings Program, and the existing programs are Section 313A of 
the Rural Electrification Act of 1936, Guarantees for Bonds and Notes 
Issued for Electrification or Telephone Purposes, the Rural 
Microentrepeneur Assistance Program, and the Rural Business Development 
Grant Program.
Actions Requiring Environmental Review (Sec.  1970.8)
    The Agency has revised Sec.  1970.8(a) and (b) to: (1) Delete the 
word ``major'' when referring to a Federal action to avoid confusion; 
and (2) require that requests for lien subordination be the subject of 
NEPA review. The Agency also added new paragraphs (d) and (e) to make 
it clear that lien sharing is not a Federal action for purposes of NEPA 
(unless additional financial assistance is included in the request for 
lien sharing) and that servicing actions do not require separate NEPA 
reviews as discussed above. With respect to servicing actions, the 
Agency has determined that such actions are routine, ministerial or 
administrative actions that occur as part of the monitoring and 
administering of financial assistance. Thus, the Agency determined that 
these subsequent actions fall within the original environmental review 
of the financial assistance application and will not be the subject of 
new or additional NEPA reviews. Accordingly, the Agency revised Sec.  
1970.8(b)(2) to: (1) Eliminate loan-servicing actions and related 
examples of consents and approvals and lien sharing as actions 
requiring NEPA review; (2) further clarify which post-financial 
assistance actions are considered Federal actions (e.g., lien 
subordination); and (3) add one new action requiring NEPA review--one 
that includes a substantial change in scope of projects receiving 
financial assistance not previously considered (Sec.  
1970.8(b)(2)(iii)).
Levels of Environmental Review (Sec.  1970.9)
    In response to public comment, the Agency clarified in the final 
sentence in Sec.  1970.9(d) that any request for additional 
environmental information would occur prior to financial assistance 
being made.
Public Involvement (Sec.  1970.14)
    Text was moved from Sec.  1970.153(a)(2) to Sec.  1970.14(d)(2) 
regarding the applicant's responsibility to obtain proof of publication 
of notices to clarify that this responsibility applies to all levels of 
environmental review.

B. Subpart B--NEPA Categorical Exclusions

Applying CEs (Sec.  1970.51)
    The Agency has clarified the language in Sec.  1970.51(b)(3) to 
better describe the applicability of a CE relative to a cumulative 
action, consistent with 40 CFR 1508.25(a)(2).
Extraordinary Circumstances (Sec.  1970.52)
    The Agency added text to paragraph (b)(4)(iii) to explain the 
circumstances under which an alternatives analysis is or is not 
required.
    The Agency modified paragraph (b)(4)(iv) to delete reference to 
specific executive orders relating to floodplains, consistent with 
Agency rulemaking procedures. Language was also added to this paragraph 
to include a reference to substantial improvements and explain 
requirements related to purchasing structures within floodplains.
CEs Involving No or Minimal Disturbance Without an Environmental Report 
(Sec.  1970.53)
    The Agency added text to the introduction to explain how certain 
actions in this section will be identified by the Agency as requiring 
no further review under Section 106 of the National Historic 
Preservation Act and Section 7 of the Endangered Species Act.
1970.53(a) Routine Financial Actions
    The Agency deleted proposed Sec.  1970.53(a)(1) referring to 
refinancing of debt and significantly modified proposed Sec.  
1970.53(a)(5) to eliminate servicing actions as a CE because they are 
not Federal actions separate from the original Federal financing, so 
they do not need a CE. As explained in Section III, ``refinancing'' of 
debt to change interest rate without additional financing is included 
in the definition of servicing actions in final Sec.  1970.6, and 
servicing actions are routine, ministerial, or administrative 
components of financial assistance and do not require separate NEPA 
review. Language has been added to Sec.  1970.53 (a)(2)(iii) to include 
replacement or conversion of equipment to enable use of renewable 
fuels. Section 1970.53(a)(5) (renumbered in the final rule as Sec.  
1970.53(a)(4)) has been revised so that it relates only to the sale or 
lease of Agency-owned real property.
    The Agency has added back a CE (see Sec.  1970.53(a)(5)) to address 
financial assistance for cost overruns where there is no change to the 
proposal as originally approved. While providing

[[Page 11020]]

additional financial assistance for cost overruns was not specifically 
addressed in the proposed rule, it is included in existing RUS 
regulations at 7 CFR 1794.21(c)(4).
    The Agency has revised the language in Sec.  1970.53(a)(7) to 
clarify that this CE is for a guarantee provided to the Federal 
Financing Bank pursuant to Section 313A(a) of the Rural Electrification 
Act of 1936 for the sole purpose of (a) refinancing existing debt 
instruments of a lender organized on a not-for-profit basis, or (b) for 
the purpose of prepaying outstanding notes or bonds made to or 
guaranteed by the Agency. The Agency reviewed the actions under Section 
313A(a) and determined that these refinancings were the primary types 
of actions taken under this statute. The primary refinancing done under 
Section 313A(a) involves outstanding bonds or notes of the not-for-
profit lender itself. These were issued by the not-for-profit lender 
for projects or facilities already constructed. Prepayment of 
outstanding bonds or notes of the Agency involves projects or 
facilities that previously were reviewed by the Agency for the 
appropriate environmental action when it provided the financial 
assistance. All other types of actions under Section 313A(a) will be a 
multi-tier action under Sec.  1970.55.
1970.53(c) Minor Construction Proposals
    The agency has revised Sec.  1970.53(c)(1) to change ``location'' 
to ``geographic scope'' for clarity and to ensure location includes the 
scope of the minor amendments or revisions.
    The Agency has revised Sec.  1970.53(c)(2) in response to public 
comments to clarify that energy efficiency includes heat rate 
efficiency, and to add activities done for purposes of ``pollution 
control.'' Language was also added to this section to include 
replacement or conversion of equipment to enable use of renewable 
fuels. The Agency also deleted the terms ``fixtures'' and 
``reconstruction'' to account for any potential Section 106 concerns.
    The Agency has added a new CE (Sec.  1970.53(c)(6)), in response to 
public comments, that allows for the replacement of existing water and 
sewer lines under certain conditions. Any improvements or expansion of 
an existing utility network, which could include additional ground 
disturbance or trigger new growth or development, will remain a CE 
under Sec.  1970.54(b)(2) and will require an environmental report. 
Proposed CEs in Sec.  1970.53(c)(6) through (c)(8) have been renumbered 
as Sec.  1970.53(c)(7) through (c)(9).
    The Agency has revised the proposed Sec.  1970.53(c)(9) in response 
to public comments, to clarify that this CE refers to the harvesting of 
no more than 15 acres of vegetative biomass under specific conditions. 
This clarification was made to eliminate any confusion over the 10-acre 
limit for site development in Sec.  1970.54(a). The CE has been moved 
to Sec.  1970.54(a)(10) to account for potential impacts not previously 
considered. Proposed Sec.  1970.53(c)(10) for conversion of pastureland 
to agricultural production was deleted because it was determined not to 
be relevant to Agency programs.
1970.53(d) Energy or Telecommunication Proposals
    The Agency has revised Sec.  1970.53(d)(1), in response to public 
comments, to clarify the Agency's intent that wireless 
telecommunications infrastructure is included in the broader term under 
telecommunications ``facilities'' and that wireless telecommunications 
technologies are eligible for this and other CEs if the criteria are 
met. The term ``changes'' was also revised for clarification to 
``upgrading or rebuilding.'' The addition or attachment of aerial 
cables ``for communication purposes'' to electric power lines also has 
been added to this CE. The phrase was part of Sec.  1970.53(d)(3) in 
the proposed rule. In addition, references to changes to transmission 
lines were revised and moved to the renumbered 1970.53(d)(3).
    Also in response to public comments, the Agency has added a new CE 
(see Sec.  1970.53(d)(5)) for collocation of telecommunications 
equipment on existing infrastructure and deployment of distributed 
antenna systems and small cell networks. The final CE includes certain 
conditions related to the effects on historic properties.
    The Agency also made conforming changes to the remaining CEs in 
Sec.  1970.53(d) as follows:
     Added a new Sec.  1970.53(d)(2) to create a separate CE 
for a portion of the old Sec.  1970.53(d)(1). This was done for 
clarity. Changed the term ``telecommunication cables'' previously used 
in Sec.  1970.53(d)(3) to ``facilities for communication purposes'' in 
Sec.  1970.53(d)(2) to include smartgrid proposals.
     Revised Sec.  1970.53(d)(4) (numbered as Sec.  
1970.53(d)(2) in the proposed rule), in response to public comments, to 
clarify what is meant by ``rebuilding'' of electric distribution lines. 
The final CE describes that ``rebuilding'' includes pole replacements 
within existing ROWs, but not overhead-to-underground conversions. The 
phrase ``telecommunication facilities'' was deleted and those actions 
were added to the final Sec.  1970.53(d)(1). Language was also added to 
specify that actions eligible for this CE must not affect the 
environment beyond the previously developed, existing rights-of-way.
     Added language to Sec.  1970.53(d)(7) (numbered as Sec.  
1970.53(d)(5) in proposed rule) to include installation adjacent to 
existing structures that would not affect the environment beyond the 
previously developed facility area and stated that the CE would not 
apply if there were adverse effects to historic properties.
    The Agency has renumbered the subsequent CEs in Sec.  1970.53(d)(6) 
through (9) as Sec.  1970.53(d)(8) through (11) and made a minor edit 
to Sec.  1970.53(d)(10) (numbered as Sec.  1970.53(d)(8) in the 
proposed rule) for clarity. The term ``power'' was deleted between 
electric and transmission; the Agency determined it was redundant.
1970.53(e) Emergency Actions
    Section 1970.53(e) was added to address actions necessary in 
emergency situations. This CE was inadvertently left out of the 
proposed rule. It was present in Sec.  1794.21(a)(4) and Sec.  
1940.322(b). The subsequent CEs in Sec.  1970.53(e) through (g) have 
been renumbered as Sec.  1970.53(f) through (h).
CEs Involving Small-Scale Development With an Environmental Report 
(Sec.  1970.54)
1970.54(b) Small-Scale Corridor Development
    The Agency deleted Sec.  1970.54(b)(4)(``Construction of new 
distribution lines and associated facilities less than 69 kilovolts 
(kV)'') because it determined that this CE is addressed in Sec.  
1970.54(c)(2).
    The Agency clarified proposed Sec.  1970.54(b)(4)(formerly (b)(5)), 
which requires environmental documentation (i.e., an environmental 
report), to help distinguish it from a similar CE in Sec.  
1970.53(d)(4) that does not require environmental documentation. Both 
CEs involve actions relating to telecommunications facilities. The 
Agency also revised this CE by adding ``new linear'' telecommunication 
facilities to provide more descriptive language and to distinguish it 
from Sec.  1970.53(d)(1) and (d)(2). The previous term ``lines, 
cables'' was changed to ``facilities'' and the phrase ``and 
infrastructure'' was included for clarity.
1970.54(c) Small-Scale Energy Proposals
    The Agency revised proposed Sec.  1970.54 (c)(2) and (c)(3) in 
response to

[[Page 11021]]

public comments relating to the proposed distance limits on small-scale 
energy proposals (e.g., transmission lines). The Agency has reverted to 
the language in the existing regulations and threshold distance values 
in Sec.  1794.22(a)(1) to replace the limits in proposed Sec.  
1970.54(c)(2) and support the limit in final Sec.  1970.54(c)(3).
    The Agency added a new section 1970.54(c)(8) to include Agency 
programs that fund small biomass projects, and established an upper 
threshold for projects to qualify for a CE with report. Similarly, the 
Agency added ``geothermal heating or cooling projects'' to Sec.  
1970.54(c)(9) and (10)(formerly (c)(8) and (9)).
    The Agency revised proposed Sec.  1970.54(c)(13)(formerly (c)(12)) 
in response to public comments to clarify that energy efficiency 
includes heat rate efficiency, and to add activities done for purposes 
of ``pollution control.''

C. Subpart C--NEPA Environmental Assessments

Preparation of EAs (Sec.  1970.102)
    The Agency modified proposed Sec.  1970.102(b)(6)(ii) to include 
online publication of notices.
Supplementing EAs (Sec.  1970.103)
    The Agency clarified proposed Sec.  1970.103 to state that 
supplementing an EA may be required after the issuance of an EA or 
FONSI, but before the action has been implemented. No other changes 
have been made in the final rule relating to Sec.  1970.103.

D. Subpart D--NEPA Environmental Impact Statements

General (Sec.  1970.151)
    The Agency revised Sec.  1970.151(b)(4), in response to public 
comments, to refer to ``gas-fired prime movers,'' which the Agency 
agrees is more inclusive and appropriate for this section. For clarity, 
the Agency also modified the text to make it clear that the scope of an 
EIS prepared for a new electric generating facility would include ``all 
associated electric transmission facilities.'' The Agency also added 
renewable systems (solar, wind, geothermal) as being excluded from this 
section. Commenters generally expressed that the Agency support 
renewable energy and encouraged the Agency to consider the actions that 
would encourage the use of renewable systems.
EIS Funding and Professional Services (Sec.  1970.152)
    The Agency revised proposed Sec.  1970.152(b), in response to 
public comments, to clarify its intent to use a ``third-party 
contracting process'' that is consistent with Question 16 of CEQ's 
``Forty Most Asked Questions Concerning CEQ's National Environmental 
Policy Act Regulations'' (46 FR 18026). Using this process, Federal 
procurement requirements will not apply to the Agency because it will 
incur no obligations or costs under the contract and will not procure 
anything under the contract. While the Agency intends to use the third-
party contracting process, it reserves the right to consider alternate 
procurement methods. The Agency retains the responsibility for 
selecting the contractor, in accordance with 40 CFR 1506.5(c). The 
applicant may not initiate any procurement of professional services 
without written prior approval of the Agency.

Required Determinations

Executive Order 12866, Regulatory Planning and Review

    This final rule has been reviewed under Executive Order (EO) 12866 
and has been determined not significant by the Office of Management and 
Budget. The EO defines a ``significant regulatory action'' as one that 
is likely to result in a rule that may: (1) Have an annual effect on 
the economy of $100 million or more or adversely affect, in a material 
way, the economy, a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local, or 
tribal governments or communities; (2) Create a serious inconsistency 
or otherwise interfere with an action taken or planned by another 
agency; (3) Materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) Raise novel legal or policy issues arising 
out of legal mandates, the President's priorities, or the principles 
set forth in this EO.
    The Agency determined that this regulation involves combining two 
existing intra-Agency regulations that supplement the NEPA procedures 
of the Council on Environmental Quality, the National Historic 
Preservation Act (NHPA) procedures of the Advisory Council on Historic 
Preservation, and the Endangered Species Act that are established 
bodies of technical regulations which the Agency must necessarily 
update routinely to keep the regulations operationally current. The 
Agency has concluded that the net effect of the rule will be beneficial 
due to the streamlining and updated adherence to statutes and, 
therefore, does not warrant preparation of a regulatory evaluation as 
the anticipated impact is positive.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act 1995 (UMRA) of Public 
Law 104-4 establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, the 
Agency generally must prepare a written statement, including a cost-
benefit analysis, for proposed and final rules with ``Federal 
mandates'' that may result in expenditures to State, local, or tribal 
governments, in the aggregate, or to the private sector of $100 million 
or more in any one year. When such a statement is needed for a rule, 
section 205 of the UMRA generally requires the Agency to identify and 
consider a reasonable number of regulatory alternatives and adopt the 
least costly, more cost-effective, or least burdensome alternative that 
achieves the objectives of the rule.
    This final rule would consolidate and update the Agency's existing 
rules governing compliance with NEPA to better align the Agency's 
regulations, particularly its categorical exclusions, with its current 
activities and recent experiences, and update the provisions with 
respect to current programs and regulatory requirements. The final rule 
would result in no Federal mandates (under the regulatory provisions of 
Title II of the UMRA) for State, local, and tribal governments or the 
private sector of $100 million or more in any one year. Accordingly, no 
assessment or analysis is required under the Unfunded Mandates Reform 
Act of 1995.

National Environmental Policy Act

    In this rule, the Agency proposes amendments that modify and 
clarify procedures for considering the environmental effects of the 
Agency's actions within the agencies' decision making process, thereby 
enhancing compliance with the letter and spirit of NEPA. The Agency has 
reviewed 7 CFR part 1940, subpart G, ``Environmental Program'' and part 
1794, ``Environmental Policies and Procedures'' and determined that 
this final rule qualifies for categorical exclusion (CE) under 7 CFR 
1940.310(e)(3) and 7 CFR 1794.21(a)(1), because it is a strictly 
procedural rulemaking and no extraordinary circumstances exist that 
require further environmental analysis. Therefore, the Agency has 
determined that promulgation of this final rule is not a major Federal 
action significantly affecting the quality of the human environment, 
and in accordance with NEPA of 1969, 42 U.S.C. 4321 et seq.,

[[Page 11022]]

an Environmental Impact Statement is not required.

Executive Order 12988, Civil Justice Reform

    This final rule has been reviewed under E.O. 12988, Civil Justice 
Reform. In accordance with this rule: (1) All State and local laws and 
regulations that are in conflict with this rule will be preempted; (2) 
no retroactive effect will be given to this rule; and (3) 
administrative proceedings in accordance with the regulations of the 
Department of Agriculture's National Appeals Division (7 CFR part 11) 
must be exhausted before bringing suit in court challenging action 
taken under this rule unless those regulations specifically allow 
bringing suit at an earlier time.

Executive Order 13132, Federalism

    The Agency has examined this final rule and determined, under E.O. 
13132, ``Federalism,'' that this rule does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment. The provisions contained in this final rule would not 
preempt State law and would not have a substantial direct effect on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. No further action is required by E.O. 
13132.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-602) (RFA) generally 
requires an agency to prepare a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements under the 
Administrative Procedure Act, or any other statute, unless the Agency 
certifies that the rule will not have an economically significant 
impact on a substantial number of small entities. Small entities 
include small businesses, small organizations, and small governmental 
jurisdictions.
    In compliance with the RFA, the Agency has determined that this 
final rule will not have a significant economic impact on a substantial 
number of these small entities for the reasons explained below. 
Consequently, the Agency has not prepared a regulatory flexibility 
analysis. This determination is based on the purpose of this 
regulation, which is to update and streamline the environmental review 
for proposed actions, resulting in a decrease in the burdens associated 
with carrying out such reviews. The revisions included in this rule are 
expected to reduce the aggregate amount of environmental documentation 
required from applicants due primarily to decreased RUS CE 
documentation requirements and decreased numbers of EAs required for 
all programs. This results from: (1) New CEs based upon the Agency's 
extensive experience over many years under both existing Agency NEPA 
rules in completing EAs for those actions resulting in findings of no 
significant effect, and (2) reduction in the amount of information 
required under the RUS existing NEPA rule by applicants for CEs. In 
addition, the only impacts are on those who choose to participate in 
Agency programs, whereby small entity applicants will not be affected 
to a greater extent than individuals or large entity applicants.

Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    The Agency analyzed this rule under Executive Order 13211, Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use. We have determined that it is not a ``significant 
energy action'' under that order because it is not a ``significant 
regulatory action'' under Executive Order 12866 and is not likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy. The Agency has not designated it as a significant energy 
action and therefore, does not require a Statement of Energy Effects 
under Executive Order 13211.

Executive Order 12372, Intergovernmental Review of Federal Programs

    This rule is not subject to the provisions of E.O. 12372, which 
require intergovernmental consultation with State and local officials, 
because this rule provides general guidance on NEPA and related 
environmental reviews of applicants' proposals. Applications for Agency 
programs will be reviewed individually under E.O. 12372 as required by 
program procedures.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, ``Consultation and Coordination with Indian 
Tribal Governments.'' Executive Order 13175 requires Rural Development 
to consult and coordinate with tribes on a government-to-government 
basis on policies that have tribal implications, including regulations, 
legislative comments or proposed legislation, and other policy 
statements or actions that have substantial direct effects on one or 
more Indian tribes, on the relationship between the Federal Government 
and Indian tribes or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.
    In response to the publication of the proposed rule under this 
title, the Agency hosted a combined Tribal consultation webinar/toll-
free teleconference with USDA's Farm Service Agency. The webinar and 
teleconference occurred on December 17, 2013, during the comment period 
of the proposed rule. This was a cost effective way to consult with 
tribes on this rule and allowed maximum participation from tribal 
leaders and/or their designees. This allowed the Agency to gain input 
from elected Tribal officials, or their designees, concerning the 
impact of the proposed rule on Tribal governments, Tribal producers and 
Tribal members. This session was intended to establish a baseline for 
future consultation on individual program actions.
    Changes incorporated into the final rule, do not have any 
additional implications or substantial direct effects on one or more 
Indian Tribes, therefore no further Tribal consultation is necessary on 
the final rule. The policies contained in this rule do not have Tribal 
implications that preempt Tribal law. The Agency will continue to work 
directly with Tribes and Tribal applicants to improve access to Agency 
programs. This includes providing focused outreach to Tribes regarding 
the implementation of this final rule. Additionally, the Agency will 
respond in a timely and meaningful manner to all Tribal government 
requests for consultation concerning this rule. For further information 
on the Agency's Tribal consultation efforts, please contact the 
Agency's Native American Coordinator at [email protected] or 720-544-
2911.

Programs Affected

    The Agency's programs affected by this final rulemaking are shown 
in the Catalog of Federal Domestic Assistance (CFDA) with numbers as 
indicated:

[[Page 11023]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
               CFDA No.                                                                   Program title
--------------------------------------------------------------------------------------------------------------------------------------------------------
10.350................................  Technical Assistance to Cooperatives.
10.352................................  Value-Added Producer Grants.
10.405................................  Farm Labor Housing Loans and Grants.
10.411................................  Rural Housing Site Loans and Self-Help Housing Land Development Loans.
10.415................................  Rural Rental Housing Loans.
10.420................................  Rural Self-Help Housing Technical Assistance.
10.427................................  Rural Rental Assistance Payments.
10.433................................  Rural Housing Preservation Grants.
10.441................................  Technical and Supervisory Assistance Grants.
10.442................................  Housing Application Packaging Grants.
10.446................................  Rural Community Development Initiative.
10.760................................  Water and Waste Disposal Systems for Rural Communities.
10.761................................  Technical Assistance and Training Grants.
10.762................................  Solid Waste Management Grants.
10.763................................  Emergency Community Water Assistance Grants.
10.766................................  Community Facilities Loans and Grants.
10.767................................  Intermediary Relending Program.
10.768................................  Business and Industry Loans.
10.769................................  Rural Business Enterprise Grants.
10.770................................  Water and Waste Disposal Loans and Grants (Section 306C).
10.771................................  Rural Cooperative Development Grants.
10.773................................  Rural Business Opportunity Grants.
10.781................................  Water and Waste Disposal Systems for Rural Communities--ARRA.
10.788................................  Very Low to Moderate Income Housing Loans--Direct.
10.789................................  Very Low to Moderate Income Housing Loans--Guaranteed.
10.850................................  Rural Electrification Loans and loan guarantees.
10.851................................  Rural Telephone Loans and Loan guarantees.
10.854................................  Rural Economic Development Loans and Grants.
10.855................................  Distance Learning and Telemedicine Loans and Grants.
10.856................................  1890 Land Grant Institutions Rural Entrepreneurial Outreach Program.
10.857................................  State Bulk Fuel Revolving Fund Grants.
10.858................................  RUS Denali Commission Grants and Loans.
10.859................................  Assistance to High Energy Cost-Rural Communities.
10.861................................  Public Television Station Digital Transition Grant Program.
10.863................................  Community Connect Grant Program.
10.864................................  Grant Program to Establish a Fund for Financing Water and Wastewater Projects.
10.886................................  Rural Broadband Access Loans and Loan Guarantees.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    All active CDFA programs can be found at www.cdfa.gov under 
Department of Agriculture, Rural Development. Programs not listed in 
this section or not listed on the CDFA Web site but are still being 
serviced by the Agency will nevertheless be covered by the requirements 
of this action.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act, the paperwork 
burden associated with this rule has been approved by the Office of 
Management and Budget (OMB) under the currently approved OMB Control 
Number 0575-0197. The Agency has determined that changes contained in 
this regulatory action do not substantially change current data 
collection.

Review Under E-Government Act Compliance

    The Agency is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

List of Subjects

7 CFR Part 25

    Community development, Indians, Intergovernmental relations, 
Reporting and recordkeeping requirements, Rural areas.

7 CFR Part 1703

    Community development, Grant programs--education, Grant programs--
health, Grant programs--housing and community development, Loan 
programs--housing and community development, Reporting and 
recordkeeping requirements, Rural areas.

7 CFR Part 1709

    Administrative practice and procedure, Electric utilities, Grant 
programs--energy, Rural areas.

7 CFR Part 1710

    Electric power, Electric power rates, Loan programs--energy, 
Reporting and recordkeeping requirements, Rural areas.

7 CFR Part 1717

    Administrative practice and procedure, Electric power, Electric 
utilities, Intergovernmental relations, Investments, Loan programs--
energy, Reporting and recordkeeping requirements, Rural areas.

7 CFR Part 1720

    Electric power, Electric utilities, Loan programs--energy, 
Reporting and recordkeeping requirements, Rural areas.

7 CFR Part 1721

    Electric power, Loan programs--energy, Rural areas.

7 CFR Part 1724

    Electric power, Loan programs--energy, Reporting and recordkeeping 
requirements, Rural areas.

7 CFR Part 1726

    Electric power, Loan programs--energy, Reporting and recordkeeping 
requirements, Rural areas.

[[Page 11024]]

7 CFR Part 1737

    Loan programs--communication, Reporting and recordkeeping 
requirements, Rural areas.

7 CFR Part 1738

    Broadband, Loan programs--communications, Rural areas, 
Telecommunications, Telephone.

7 CFR Part 1739

    Broadband, Grant programs--Communications, Rural areas, 
Telecommunications, Telephone.

7 CFR Part 1740

    Grant programs--Digital televisions, Communications, Rural areas, 
Television.

7 CFR Part 1753

    Communications equipment, Loan programs--communications, Reporting 
and recordkeeping requirements, Rural areas, Telephone.

7 CFR Part 1774

    Community development, Grant programs, Reporting and recordkeeping 
requirements, Rural areas, Waste treatment and disposal, Water supply.

7 CFR Part 1775

    Business and industry, Community development, Community facilities, 
Grant programs--housing and community development, Reporting and 
recordkeeping requirements, Rural areas, Waste treatment and disposal, 
Water supply, Watersheds.

7 CFR Part 1779

    Loan programs--housing and community development, Rural areas, 
Waste treatment and disposal, Water supply.

7 CFR Part 1780

    Community development, Community facilities, Grant programs--
housing and community development, Loan programs--housing and community 
development, Reporting and recordkeeping requirements, Rural areas, 
Waste treatment and disposal, Water supply, Watersheds

7 CFR Part 1781

    Community development, Community facilities, Loan programs--housing 
and community development, Reporting and recordkeeping requirements, 
Rural areas, Waste treatment and disposal, Water supply, Watersheds.

7 CFR Part 1782

    Accounting, Appeal procedures, Auditing, Debts, Delinquency, Grant 
programs--Agriculture, Insurance, Loan programs-- Agriculture, 
Reporting and recordkeeping requirements.

7 CFR Part 1784

    Agriculture, Alaska, Community development, Community facilities, 
Grant programs--housing and community development, Reporting and 
recordkeeping requirements, Rural areas, Sewage disposal, Waste 
treatment and disposal, Water pollution control, Water supply, 
Watersheds.

7 CFR Part 1794

    Environmental impact statements, Reporting and recordkeeping 
requirements.

7 CFR Part 1924

    Agriculture, Construction management, Construction and repair, 
Energy Conservation, Housing, Housing Standards, Loan programs--
Agriculture, Low and moderate income housing, Rural housing.

7 CFR Part 1940

    Administrative practice and procedure, Agriculture, Grant 
programs--Housing and community development, Loan programs--
Agriculture.

7 CFR Part 1942

    Business and industry, Community development, Community facilities, 
Grant programs--Housing and community development, Industrial park, 
Loan programs--Housing and community development, Loan security, Rural 
areas, Waste treatment and disposal--Domestic, Water supply--Domestic.

7 CFR Part 1944

    Administrative practice and procedure, Grant programs--Housing and 
community development, Home improvement, Loan programs--Housing and 
community development, Migrant labor, Nonprofit organizations, 
Reporting requirements, Rural housing.

7 CFR Part 1948

    Business and industry, Coal, Community development, Community 
facilities, Energy, Grant programs--Housing and community development, 
Housing, Planning, Rural areas, Transportation.

7 CFR Part 1951

    Accounting servicing, Grant programs--Housing and community 
development, Reporting requirements, Rural areas.

7 CFR Part 1955

    Government acquired property, Government property management, Sale 
of government acquired property, Surplus government property.

7 CFR Part 1970

    Administrative practice and procedure, Buildings and facilities, 
Environmental impact statements, Environmental protection, Grant 
programs, Housing, Loan programs, Natural resources, Utilities.

7 CFR Part 1980

    Home improvement, Loan programs--Business and industry--Rural 
development assistance, Loan programs--Housing and community 
development, Mortgage insurance, Mortgages, Rural areas.

7 CFR Part 3550

    Administrative practice and procedure, Conflict of interests, Equal 
credit opportunity, Fair housing, Grant programs--Housing and community 
development, Housing.

7 CFR Part 3555

    Administrative practice and procedure, Conflict of interest, 
Credit, Fair housing, Flood insurance, Home improvement, Housing, Loan 
programs--housing and community development, Low and moderate income 
housing, Manufactured homes, Mortgages, Rural areas.

7 CFR Part 3560

    Accounting, Administrative practice and procedure, Aged, Conflict 
of interests, Government property management, Grant programs--Housing 
and community development, Insurance, Loan programs--Agriculture, Loan 
programs--Housing and community development, Low and moderate income 
housing, Migrant labor, Mortgages, Nonprofit organizations, Public 
housing, Rent subsidies, Reporting and recordkeeping requirements, 
Rural areas.

7 CFR Part 3565

    Conflict of interests, Credit, Environmental impact statements, 
Fair housing, Government procurement, Guaranteed loans, Hearing and 
appeal procedures, Housing standards, Lobbying, Low and moderate income 
housing, Manufactured homes, Mortgages.

7 CFR Part 3570

    Accounting, Account servicing, Administrative practice and 
procedure, Conflicts of interests, Debt restructuring, Foreclosure, 
Fair Housing, Government

[[Page 11025]]

property management, Grant programs--Housing and community development, 
Loan programs--Housing and community development, Reporting 
requirements, Rural areas, Sale of government acquired property, 
Subsidies.

7 CFR Part 3575

    Community facilities, Guaranteed loans, Loan programs--Community 
Facilities.

7 CFR Part 4274

    Community development, Economic Development, Loan programs--
Business, Rural areas.

7 CFR Part 4279

    Loan programs--Business and industry, Loan Programs--Rural 
development assistance, Rural areas.

7 CFR Part 4280

    Loan programs--Business and industry, Economic development, Energy, 
Direct loan programs, Grant programs, Guaranteed loan programs, 
Renewable energy systems, Energy efficiency improvements, Rural areas.

7 CFR Part 4284

    Business and industry, Economic development, Community development, 
Community facilities, Grant programs--Housing and community 
development, Loan programs--Housing and community development, Loan 
security, Rural areas,

7 CFR Part 4287

    Loan Programs--Business and industry, Loan Programs--Rural 
development assistance, Rural areas

7 CFR Part 4288

    Administrative practice and procedure, Biobased products, Energy, 
Reporting and recordkeeping requirements.

7 CFR Part 4290

    Community development, Government securities, Grant programs--
business, Reporting and recordkeeping requirements, Rural areas, 
Securities, Small business.
    For the reasons set forth in the preamble, subtitle A, and chapters 
XVII, XVIII, XXXV and XLII of subtitle B, title 7, Code of Federal 
Regulations are amended as follows:

Subtitle A--Office of the Secretary of Agriculture

PART 25--RURAL EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES

0
1. The authority citation for part 25 continues to read as follows:

    Authority:  5 U.S.C. 301; 26 U.S.C. 1391; Pub. L. 103-66, 107 
Stat. 543; Pub L. 105-34, 111 Stat. 885; Sec. 766, Pub. L. 105-277, 
112 Stat. 2681-37; Pub. L. 106-554 [Title I of H.R. 5562], 114 Stat. 
2763.

Subpart G--Round II and Round IIS Grants

0
2. Amend Sec.  25.622 by revising paragraph (b) to read as follows:


Sec.  25.622  Other considerations.

* * * * *
    (b) Environmental review requirements. Grants made under this 
subpart must comply with environmental review requirements in 
accordance with 7 CFR part 1970.
* * * * *

Subtitle B--Regulations of the Department of Agriculture

CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE

PART 1703--RURAL DEVELOPMENT

0
3. The authority citation for part 1703 continues to read as follows:

    Authority:  7 U.S.C. 901 et seq. and 950aaa et seq.

Subpart E--Distance Learning and Telemedicine Grant Program

0
4. Revise Sec.  1703.125(j) to read as follows:


Sec.  1703.125  Completed application.

* * * * *
    (j) Environmental review requirements. (1) The applicant must 
provide details of the project's impact on the human environment and 
historic properties, in accordance with 7 CFR part 1970. The 
application must contain a separate section entitled ``Environmental 
Impact of the Project.''
    (2) The applicant should use the ``Programmatic Environmental 
Assessment'', available from RUS, to assist in complying with the 
requirements of this section.
* * * * *

Subpart F--Distance Learning and Telemedicine Combination Loan and 
Grant Program

0
5. Revise Sec.  1703.134 (h) to read as follows:


Sec.  1703.134  Completed application.

* * * * *
    (h) Environmental review requirements. (1) The applicant must 
provide details of the project's impact on the human environment and 
historic properties, in accordance with 7 CFR part 1970. The 
application must contain a separate section entitled ``Environmental 
Impact of the Project.''
    (2) The applicant should use the ``Programmatic Environmental 
Assessment'', available from RUS, to assist in complying with the 
requirements of this section.
* * * * *

Subpart G--Distance Learning and Telemedicine Loan Program

0
6. Revise Sec.  1703.144 (h) to read as follows:


Sec.  1703.144  Completed application.

* * * * *
    (h) Environmental review requirements. (1) The applicant must 
provide details of the project's impact on the environment and historic 
properties, in accordance with 7 CFR part 1970. The application must 
contain a separate section entitled ``Environmental Impact of the 
Project.''
    (2) The applicant should use the ``Programmatic Environmental 
Assessment'', available from RUS, to assist in complying with the 
requirements of this section.
* * * * *

PART 1709--ASSISTANCE TO HIGH ENERGY COST COMMUNITIES

0
7. The authority citation for part 1709 continues to read as follows:

    Authority:  5 U.S.C. 301, 7 U.S.C. 901 et seq.

Subpart A--General Requirements

0
8. Revise Sec.  1709.17(a) and (c) to read as follows:


Sec.  1709.17  Environmental review.

    (a) Grants made under this subpart must comply with the 
environmental review requirements in accordance with 7 CFR part 1970.
* * * * *
    (c) Projects that are selected for grant awards by the 
Administrator will be reviewed by the Agency in accordance with 7 CFR 
part 1970 prior to final

[[Page 11026]]

award approval. The Agency may require the selected applicant to submit 
additional information, as may be required, concerning the proposed 
project in order to complete the required reviews and to develop any 
project-specific conditions for the final grant agreement.
* * * * *

Subpart B--RUS High Cost Energy Grant Program

0
9. Revise Sec.  1709.117(b)(12) to read as follows:


Sec.  1709.117  Application requirements.

* * * * *
    (b) * * *
    (12) Environmental review requirements. Grants made under this 
subpart must comply with the environmental review requirements in 
accordance with 7 CFR part 1970.
* * * * *

0
10. Revise Sec.  1709.124(a) to read as follows:


Sec.  1709.124  Grant award procedures.

    (a) Notification of applicants. The Agency will notify all 
applicants in writing whether they have been selected for a grant 
award. Applicants that have been selected as finalists for a 
competitive grant award will be notified in writing of their selection 
and advised that the Agency may request additional information in order 
to complete environmental review requirements in accordance with 7 CFR 
part 1970, and to meet other pre-award conditions.
* * * * *

PART 1710--GENERAL AND PRE-LOAN POLICIES AND PROCEDURES COMMON TO 
ELECTRIC LOANS AND GUARANTEES

0
11. The authority citation for part 1710 continues to read as follows:

    Authority:  7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

Subpart C--Loan Purposes and Basic Policies

0
12. Revise Sec.  1710.117 to read as follows:


Sec.  1710.117  Environmental review requirements.

    Borrowers are required to comply with the environmental review 
requirements in accordance with 7 CFR part 1970, and other applicable 
environmental laws, regulations and Executive orders.

Subpart D--Basic Requirements for Loan Approval

0
13. Revise Sec.  1710.152(d) to read as follows:


Sec.  1710.152  Primary support documents.

* * * * *
    (d) Environmental review requirements. A borrower must comply with 
the environmental review requirements in accordance with 7 CFR part 
1970.

Subpart F--Construction Work Plans and Related Studies

0
14. Revise Sec.  1710.250(i) to read as follows:


Sec.  1710.250  General.

* * * * *
    (i) A borrower's CWP or special engineering studies must be 
supported by the appropriate level of environmental review 
documentation, in accordance with 7 CFR part 1970.

Subpart I--Application Requirements and Procedures for Loans

0
15. Revise Sec.  1710.501(c)(2)(iii) to read as follows:


Sec.  1710.501  Loan application documents.

* * * * *
    (c) * * *
    (2) * * *
    (iii) Environmental review documentation in accordance with 7 CFR 
part 1970.
* * * * *

PART 1717--POST-LOAN POLICIES AND PROCEDURES COMMON TO INSURED AND 
GUARANTEED ELECTRIC LOANS

0
16. The authority citation for part 1717 continues to read as follows:

    Authority:  7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

Subpart R--Lien Accommodations and Subordinations for 100 Percent 
Private Financing

0
17. Revise Sec.  1717.850(d) to read as follows:


Sec.  1717.850  General.

* * * * *
    (d) Environmental review requirements. The environmental review 
requirements of 7 CFR part 1970 apply to applications for 
subordinations.
* * * * *

0
18. Revise Sec.  1717.855(f) to read as follows:


Sec.  1717.855  Application contents: Advance approval--100 percent 
private financing of distribution, subtransmission and headquarters 
facilities and certain other community infrastructure.

* * * * *
    (f) Environmental documentation, in accordance with 7 CFR part 
1970;
* * * * *

PART 1720--GUARANTEES FOR BONDS AND NOTES ISSUED FOR 
ELECTRIFICATION OR TELEPHONE PURPOSES

0
19. The authority citation for part 1720 continues to read as follows:

    Authority:  7 U.S.C. 901 et seq.; 7 U.S.C. 940C.

0
20. Add Sec.  1720.16 to read as follows:


Sec.  1720.16  Environmental review requirements.

    Guarantees made under this subpart are subject to the environmental 
review requirements in accordance with 7 CFR part 1970.

PART 1721--POST-LOAN POLICIES AND PROCEDURES FOR INSURED ELECTRIC 
LOANS

0
21. The authority citation for part 1721 continues to read as follows:

    Authority:  7 U.S.C. 901 et seq.; 1921 et seq.; and 6941 et seq.

Subpart A--Advance of Funds

0
22. Revise Sec.  1721.1(c) to read as follows:


Sec.  1721.1  Advances.

* * * * *
    (c) Certification. Pursuant to the applicable provisions of the RUS 
loan contract, borrowers must certify with each request for funds to be 
approved for advance that such funds are for projects in compliance 
with this section and shall also provide for those that cost in excess 
of $100,000, a contract or work order number as applicable and a CWP 
cross-reference project coded identification number. For a minor 
project not included in a RUS approved borrower's CWP or CWP amendment, 
the Borrower shall describe the project and do one of the following to 
satisfy RUS' environmental review requirements in accordance with 7 CFR 
part 1970:
    (1) If applicable, state that the project is a categorical 
exclusion of a type described in Sec.  1970.53 of this title; or
    (2) If applicable, state that the project is a categorical 
exclusion of a type that normally requires the preparation of an 
environmental report (see Sec.  1970.54 of this title) and then submit 
the

[[Page 11027]]

environmental report with the request for funds to be approved for 
advance.
* * * * *

PART 1724--ELECTRIC ENGINEERING, ARCHITECTURAL SERVICES AND DESIGN 
POLICIES AND PROCEDURES

0
23. The authority citation for part 1724 continues to read as follows:

    Authority:  7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

Subpart A--General

0
24. Revise Sec.  1724.9 to read as follows:


Sec.  1724.9  Environmental review requirements.

    Borrowers must comply with the environmental review requirements in 
accordance with 7 CFR part 1970.

PART 1726--ELECTRIC SYSTEM CONSTRUCTION POLICIES AND PROCEDURES

0
25. The authority citation for part 1726 continues to read as follows:

    Authority:  7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

Subpart A--General

0
26. Amend Sec.  1726.14 to revise the definition of approval of 
proposed construction to read as follows:


Sec.  1726.14  Definitions.

* * * * *
    Approval of proposed construction means RUS approval of a 
construction work plan or other appropriate engineering study and RUS 
approval, for purposes of system financing, of the completion of all 
appropriate environmental review requirements in accordance with 7 CFR 
part 1970.
* * * * *

0
27. Revise Sec.  1726.18 to read as follows:


Sec.  1726.18  Pre-loan contracting.

    Borrowers must consult with RUS prior to entering into any contract 
for material, equipment, or construction if a construction work plan, 
general funds, loan or loan guarantee for the proposed work has not 
been approved. While the RUS staff will work with the borrower in such 
circumstances, nothing contained in this part is to be construed as 
authorizing borrowers to enter into any contract before the 
availability of funds has been ascertained by the borrower and all 
environmental review requirements in accordance with 7 CFR part 1970, 
have been met.

PART 1737--PRE-LOAN POLICIES AND PROCEDURES COMMON TO INSURED AND 
GUARANTEED TELECOMMUNICATIONS LOANS

0
28. The authority citation for part 1737 continues to read as follows:

    Authority:  7 U.S.C. 901 et seq., 1921 et seq.; Pub. L. 103-354, 
108 Stat. 3178 (7 U.S.C. 6941 et seq.).

Subpart C--The Loan Application

0
29. Revise Sec.  1737.22(b)(4) to read as follows:


Sec.  1737.22  Supplementary information.

* * * * *
    (b) * * *
    (4) Environmental review documentation in accordance with 7 CFR 
part 1970.
* * * * *

Subpart E--Interim Financing of Construction of Telephone 
Facilities

0
30. Revise Sec.  1737.41(b)(2)(iii) to read as follows:


Sec.  1737.41  Procedure for obtaining approval.

* * * * *
    (b) * * *
    (2) * * *
    (iii) Evidence that the borrower has complied with the 
environmental review requirements in accordance with 7 CFR part 1970.
* * * * *

Subpart J--Financial Loan Approval Procedures

0
31. Revise Sec.  1737.90(a)(6) to read as follows:


Sec.  1737.90  Loan approval requirements.

    (a) * * *
    (6) All environmental review requirements must be met in accordance 
with 7 CFR part 1970.
* * * * *

PART 1738--RURAL BROADBAND ACCESS LOANS AND LOAN GUARANTEES

0
32. The authority citation for part 1738 continues to read as follows:

    Authority:  7 U.S.C. 901 et seq.

Subpart D--Direct Loan Terms

0
33. Revise Sec.  1738.156(a)(8) to read as follows:


Sec.  1738.156  Other Federal requirements.

    (a) * * *
    (8) 7 CFR part 1970;
* * * * *

Subpart E--Application Review and Underwriting

0
34. Revise Sec.  1738.212(a)(8) to read as follows:


Sec.  1738.212  Network design.

    (a) * * *
    (8) Environmental review documentation prepared in accordance with 
7 CFR part 1970; and
* * * * *

Subpart F--Closing, Servicing, and Reporting

0
35. Revise Sec.  1738.252(a) to read as follows:


Sec.  1738.252  Construction.

    (a) Construction paid for with broadband loan funds must comply 
with 7 CFR part 1788, the environmental review requirements in 
accordance with 7 CFR part 1970, RUS Bulletin 1738-2, and any other 
guidance from the Agency.
* * * * *

PART 1739--BROADBAND GRANT PROGRAM

0
36. The authority citation for part 1739 continues to read as follows:

    Authority:  Title III, Pub. L. 108-199, 118 Stat. 3.

Subpart A--Community Connect Grant Program

0
37. Revise Sec.  1739.15(d) and (l)(8) to read as follows:


Sec.  1739.15  Completed application.

* * * * *
    (d) System design. A system design of the Project that is 
economical and practical, including a detailed description of the 
facilities to be funded, technical specifications, data rates, and 
costs. In addition, a network diagram detailing the proposed system 
must be provided. The system design must also comply with the 
environmental review requirements in accordance with 7 CFR part 1970;
* * * * *
    (l) * * *
    (8) Environmental review documentation prepared in accordance with 
7 CFR part 1970.
* * * * *

PART 1740--PUBLIC TELEVISION STATION DIGITAL TRANSITION GRANT 
PROGRAM

0
38. The authority citation for part 1740 continues to read as follows:


[[Page 11028]]


    Authority:  Consolidated Appropriations Act, 2005; Title III: 
Rural Development Programs; Rural Utilities Service; Distance 
Learning, Telemedicine, and Broadband Program; Pub. L. 108-447.

Subpart A--Public Television Station Digital Transition Grant 
Program

0
39. Revise Sec.  1740.9(k) to read as follows:


Sec.  1740.9  Grant application.

* * * * *
    (k) Environmental review requirements. The applicant must provide 
details of the digital transition's impact on the human environment and 
historic properties, and comply with the environmental review 
requirements in accordance with 7 CFR part 1970.

PART 1753--TELECOMMUNICATIONS SYSTEM CONSTRUCTION POLICIES AND 
PROCEDURES

0
40. The authority citation for part 1753 continues to read as follows:

    Authority:  5 U.S.C. 501, 7 U.S.C. 901 et seq.

Subpart D--Construction of Buildings

0
41. Revise Sec.  1753.25(f)(3) to read as follows:


Sec.  1753.25  General.

* * * * *
    (f) * * *
    (3) 7 CFR part 1970.
* * * * *

PART 1774--SPECIAL EVALUATION ASSISTANCE FOR RURAL COMMUNITIES AND 
HOUSEHOLDS PROGRAM (SEARCH)

0
42. The authority citation for part 1774 continues to read as follows:

    Authority:  7 U.S.C. 1926(a)(2)(C).

Subpart A--General Provisions

0
43. Revise Sec.  1774.7 to read as follows:


Sec.  1774.7  Environmental requirements.

    Grants made under this part must comply with the environmental 
review requirements in accordance with 7 CFR part 1970.

0
44. Revise Sec.  1774.8(d) to read as follows:


Sec.  1774.8  Other Federal Statutes.

* * * * *
    (d) 7 CFR part 1970.
* * * * *

PART 1775--TECHNICAL ASSISTANCE GRANTS

0
45. The authority citation for part 1775 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.

Subpart A--General Provisions

0
46. Revise Sec.  1775.7 to read as follows:


Sec.  1775.7  Environmental requirements.

    Grants made for the purposes in Sec. Sec.  1775.36 and 1775.66 must 
comply with the environmental review requirements in accordance with 7 
CFR part 1970.

0
47. Revise Sec.  1775.8(d) to read as follows:


Sec.  1775.8  Other Federal statutes.

* * * * *
    (d) 7 CFR part 1970.
* * * * *

PART 1779--WATER AND WASTE DISPOSAL PROGRAMS GUARANTEED LOANS

0
48. The authority citation for part 1779 continues to read as follows:

    Authority:  5 U.S.C. 301, 7 U.S.C. 1989, 16 U.S.C. 1005.


0
49. Revise Sec.  1779.9 to read as follows:


Sec.  1779.9  Environmental review requirements.

    Facilities financed under this part must comply with the 
environmental review requirements in accordance with 7 CFR part 1970. 
In accordance with Agency guidance documents, the environmental review 
requirements shall be performed by the applicant simultaneously and 
concurrently with the project's engineering planning and design. The 
lender must assist the Agency in ensuring that the borrower complies 
with the Agency's environmental review requirements and implements any 
mitigation measure identified in the environmental review document or 
Conditional Commitment for Guarantee.

0
50. Revise Sec.  1779.52(b)(3) to read as follows:


Sec.  1779.52  Processing.

* * * * *
    (b) * * *
    (3) Environmental review documentation in accordance with 7 CFR 
part 1970.
* * * * *

PART 1780--WATER AND WASTE LOANS AND GRANTS

0
51. The authority citation for part 1780 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.

Subpart B--Loan and Grant Application Processing

0
52. Revise Sec.  1780.31(e) to read as follows:


Sec.  1780.31  General.

* * * * *
    (e) During the earliest discussion with prospective applicants, the 
Agency will advise prospective applicants on environmental review 
requirements and evaluation of potential environmental impacts of the 
proposal. In accordance with 7 CFR part 1970, environmental review 
requirements shall be performed by the applicant simultaneously and 
concurrently with the proposal's engineering planning and design.
0
53. Revise Sec.  1780.33(f) introductory text to read as follows:


Sec.  1780.33  Application requirements.

* * * * *
    (f) Environmental review requirements. The applicant must comply 
with the environmental review requirements in accordance with 7 CFR 
part 1970.
* * * * *

Subpart C--Planning, Designing, Bidding, Contracting, Construction 
and Inspection

0
54. Revise Sec.  1780.55 to read as follows:


Sec.  1780.55  Preliminary engineering reports and environmental review 
documentation.

    Preliminary engineering reports (PERs) must conform to customary 
professional standards. PER guidelines for water, sanitary sewer, solid 
waste, and storm sewer are available from the Agency. Environmental 
review documentation must comply with the environmental review 
requirements in accordance with 7 CFR part 1970.

PART 1781 RESOURCE CONSERVATION AND DEVELOPMENT (RCD) LOANS AND 
WATERSHED (WS) LOANS AND ADVANCES

0
55. The authority citation for part 1781 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989; 16 U.S.C. 1005.


0
56. Revise Sec.  1781.11(g) to read as follows:

[[Page 11029]]

Sec.  1781.11  Other considerations.

* * * * *
    (g) Environmental review requirements. Actions will be taken to 
comply with the environmental review requirements in accordance with 7 
CFR part 1970. When environmental assessments and environmental impact 
statements have been prepared on WS plans or RCD area plans by NRCS, a 
separate environmental impact statement or assessment on WS works of 
improvement or RCD measures for which a WS loan, WS advance, or RCD 
loan is requested will not be necessary unless the NRCS environmental 
review fails to meet the requirements of 7 CFR part 1970. If the 
environmental impact statement or environmental assessment is 
satisfactory, the Agency should formally adopt the document in 
accordance with 7 CFR part 1970. If a determination is made that 
further analysis of the environmental impact is needed, the Agency will 
make necessary arrangements with the NRCS State Conservationist for 
such action to be taken before a loan is made.
* * * * *

PART 1782--SERVICING OF WATER AND WASTE PROGRAMS

0
57. The authority citation for part 1782 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1981; 16 U.S.C. 1005.


0
58. Revise Sec.  1782.9 to read as follows:


Sec.  1782.9  Environmental review requirements.

    Servicing actions involving lease or sale of Agency-owned property 
must comply with the environmental review requirements in accordance 
with 7 CFR part 1970.

PART 1784--RURAL ALASKAN VILLAGE GRANTS

0
59. The authority citation for part 1784 continues to read as follows:

    Authority:  7 U.S.C. 1926d.

Subpart C--Application Processing

0
60. Revise Sec.  1784.22(d) and (n) to read as follows:


Sec.  1784.22  Other requirements.

* * * * *
    (d) 7 CFR part 1970.
* * * * *
    (n) Project planning, including engineering reports and 
environmental review documentation, to the maximum extent feasible, 
must address all water or waste disposal needs for a community in a 
coordinated manner with other community development projects and take 
into consideration information presented in available community 
strategic and comprehensive plans. Any reports or designs completed 
with funds must be consistent with sound engineering practices and USDA 
regulations, including 7 CFR part 1970.

0
61. Revise Sec.  1784.23(c), (d), and (f)(1) to read as follows:


Sec.  1784.23  Lead Agency Environmental Review.

* * * * *
    (c) RUS will, to the extent possible and in accordance with 40 CFR 
1506.2 and 7 CFR part 1970, participate with DEC, IHS, and ANTHC to 
cooperatively or jointly prepare environmental review documents so that 
one document will comply with all applicable laws.
    (d) For projects administered by DEC and ANTHC, RUS agrees to 
participate as a cooperating agency in accordance with 40 CFR 1501.6 
and 7 CFR part 1970, and relies upon those agencies' procedures for 
implementing NEPA as further described below.
* * * * *
    (f) * * *
    (1) Rural Utilities Service Lead Agency. If RUS is the lead agency, 
the environmental review process, including all findings and 
determinations, will be completed in accordance with 7 CFR part 1970.
* * * * *

PART 1794--[REMOVED AND RESERVED]

0
62. Under 7 U.S.C 6941 et seq., 42 U.S.C. 4231 et seq.; 40 CFR parts 
1500-1508, and as discussed in the Preamble, the Department of 
Agriculture amends 7 CFR chapter XVII by removing and reserving part 
1794.

CHAPTER XVIII--RURAL HOUSING SERVICE, RURAL BUSINESS-COOPERATIVE 
SERVICE, RURAL UTILITIES SERVICE, AND FARM SERVICE AGENCY, DEPARTMENT 
OF AGRICULTURE

SUBCHAPTER H--PROGRAM REGULATIONS

PART 1924--CONSTRUCTION AND REPAIR

0
63. The authority citation for part 1924 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

Subpart A--Planning and Performing Construction and Other 
Development

0
64. Revise Sec.  1924.6(a)(9) to read as follows:


Sec.  1924.6  Performing development work.

* * * * *
    (a) * * *
    (9) National Environmental Policy Act. Loans and grants, including 
those being assisted under the HUD section 8 housing assistance payment 
program for new construction, must comply with the environmental review 
requirements in accordance with 7 CFR part 1970.
* * * * *

Exhibit I To Subpart A of Part 1924--[Amended]

0
65. Amend section 300-1 of Exhibit I To Subpart A by removing ``subpart 
G of part 1940 of this chapter'' and adding in its place ``7 CFR part 
1970''.

0
66. In Exhibit J to Subpart A:
0
a. In Part A--Introduction, revise the introductory text of the third 
paragraph of section II, and section V.B.3 to read as follows:
0
b. In Part B, revise paragraph (C) and (D) of section I, the 
introductory text of section II, and the introductory text of section 
III to read as follows:

Exhibit J to Subpart A of Part 1924--Manufactured Home Sites, Rental 
Projects and Subdivisions: Development, Installation, and Set-Up

* * * * *

Part A--Introduction

* * * * *
    II. * * *
    7 CFR part 1970 applies on scattered sites, in subdivisions and 
rental projects with regard to the development, installation and 
set-up of manufactured homes. To determine the level of 
environmental analysis required for a particular application, each 
manufactured home or lot involved will be considered as equivalent 
to one housing unit or lot. Because the development, installation 
and set-up of manufactured home communities, including scattered 
sites, rental projects, and subdivisions, differ in some 
requirements from conventional site and subdivision development, two 
of the purposes of this exhibit are to:
* * * * *
    V. * * *
    B. * * *
    3. 7 CFR part 1970.
* * * * *

Part B--Construction and Land Development

    I. * * *
    C. The finished grade elevation beneath the manufactured home or 
the first floor elevation of the habitable space, whichever is 
lower, must be above the 100-year flood elevation. This requirement 
applies wherever manufactured homes may be installed, not just in 
locations designated by the National Flood Insurance Program as 
areas of special flood hazards. The use of fill to accomplish this 
is a last resort. As is stated in EO 11988 and 7 CFR part 1970, it 
is the Agency's policy not to approve or fund any proposal in a 100-

[[Page 11030]]

year floodplain area unless there is no practicable alternative to 
such a floodplain location.
    D. Essential services such as employment centers, shopping, 
schools, recreation areas, police and fire protection, and garbage 
and trash removal shall be convenient to the development and any 
site, community, or subdivision must comply with the environmental 
review requirements in accordance with 7 CFR part 1970.
* * * * *
    II. Development on Scattered Sites and in Subdivisions.--A. 
General. Scattered sites and subdivision developments will be 
planned and constructed in accordance with specific requirements of 
this subpart, subpart C of part 1924, and 7 CFR part 1970, and the 
applicable Agency/MPS or Model Building Codes acceptable to the 
Agency. Manufactured homes for development in a manufactured home 
community shall:
* * * * *
    III. Rental Housing Project Development. A. General. 
Manufactured housing rental developments shall be planned and 
constructed in accordance with requirements of subpart C of part 
1924; this subpart; 7 CFR part 1970, the Agency/MPS; and the 
requirements of subpart E of part 1944 of this chapter.
* * * * *

Subpart C--Planning and Performing Site Development Work

0
67. Revise Sec.  1924.106(a) introductory text and (a)(2) to read as 
follows:


Sec.  1924.106  Location.

    (a) General. It is RHS's policy to promote compact community 
development and to finance projects that avoid or minimize conversion 
of wetlands or important farmlands, avoid unwarranted alterations or 
encroachment on floodplains, and avoid unwarranted adverse effects to 
historic properties (including those listed or eligible for listing on 
the National Register of Historic Places), when practicable 
alternatives exist to meet development needs; RHS is prohibited from 
financing development within the Coastal Barrier Resource System, or on 
a barrier island. A complete listing of the environmental review 
requirements is found in 7 CFR part 1970. In order to be eligible for 
RHS participation:
* * * * *
    (2) The site must comply with the environmental review requirements 
in accordance with 7 CFR part 1970.
* * * * *

0
68. In Exhibit C to subpart C, revise section I(A) to read as follows:

Exhibit C to Subpart C of Part 1924--Checklist of Visual Exhibits and 
Documentation for RRH, RCH and LH Proposals

* * * * *
    I. * * *
    A. Environmental review requirements. As requested by the 
Agency, the applicant is responsible for providing details of the 
project's potential impact on the human environment and historic 
properties, in accordance with 7 CFR part 1970. Guidance concerning 
the environmental review requirements is available at any Agency 
office or on the Agency's Web site.
* * * * *

SUBCHAPTER H--PROGRAM REGULATIONS

PART 1940--GENERAL

0
69. The authority citation for Part 1940 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989; and 42 U.S.C. 1480.

Subpart G--Environmental Program

0
70. Revise Sec.  1940.301(a) to read as follows:
* * * * *


Sec.  1940.301  Purpose.

    (a) This subpart contains the major environmental policies of the 
Farmers Home Administration (FmHA) or its successor agency under Public 
Law 103-354. It also provides the procedures and guidelines for 
preparing the environmental impact analyses required for a series of 
Federal laws, regulations, and Executive orders within one 
environmental document. The timing and use of this environmental 
document within the FmHA or its successor agency under Public Law 103-
354 decision-making process is also outlined. This subpart does not 
apply to programs administered by the Rural Housing Service or the 
Rural Business-Cooperative Service, which are subject to 7 CFR part 
1970.
* * * * *

Subpart T--System for Delivery of Certain Rural Development 
Programs

0
71. Revise Sec.  1940.968(h)(2) to read as follows:


Sec.  1940.968  Rural Economic Development Review Panel Grant (Panel 
Grant).

* * * * *
    (h)* * *
    (2) Environmental review requirements. Grants made under this 
subpart must comply with the environmental review requirements in 
accordance with 7 CFR part 1970.
* * * * *

PART 1942--ASSOCIATIONS

0
72. The authority citation for Part 1942 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989.

Subpart A--Community Facility Loans

0
73. Revise Sec.  1942.2(b) to read as follows:


Sec.  1942.2  Processing applications.

* * * * *
    (b) Environmental review requirements. Loans made under this 
subpart must comply with the environmental review requirements in 
accordance with 7 CFR part 1970. Starting with the earliest discussions 
with prospective applicants or review of pre-applications and 
continuing through application processing, environmental issues must be 
considered.
* * * * *

0
74. Revise Sec.  1942.17(j)(7) to read as follows:


Sec.  1942.17  Community facilities.

* * * * *
    (j) * * *
    (7) Environmental review requirements. Loans made under this 
subpart must comply with the environmental review requirements in 
accordance with 7 CFR part 1970.
* * * * *

0
75. Revise Sec.  1942.18(d)(1) and (2) to read as follows:


Sec.  1942.18  Community facilities--Planning, bidding, contracting, 
constructing.

* * * * *
    (d) * * *
    (1) Natural resources. Facility planning should be responsive to 
the owner's needs and should consider the long-term economic, social 
and environmental needs as set forth in this section. The Agency's 
environmental review requirements are found at 7 CFR part 1970.
    (2) Historic preservation. Facilities should be designed and 
constructed in a manner which will contribute to the preservation and 
enhancement of sites, structures, and objects of historical, 
architectural, and archaeological significance. All facilities must 
comply with Section 106 of the National Historic Preservation Act of 
1966 (16 U.S.C 470), as implemented by 36 CFR part 800, and Executive 
Order 11593, ``Protection and Enhancement of the Cultural 
Environment.'' 7 CFR part 1970 sets forth procedures for the protection 
of historic and archaeological properties.
* * * * *

[[Page 11031]]

Subpart C--Fire and Rescue and Other Small Community Facilities 
Projects

0
76. Revise Sec.  1942.105 to read as follows:


Sec.  1942.105  Environmental review requirements.

    Loans made under this subpart must be in compliance with the 
environmental review requirements in accordance with 7 CFR part 1970.

0
77. Revise Sec.  1942.126(l)(6)(i)(E) to read as follows:


Sec.  1942.126  Planning, bidding, contracting, constructing, 
procuring.

* * * * *
    (l) * * *
    (6) * * *
    (i) * * *
    (E) Any applicable requirements of 7 CFR part 1970 have been met.
* * * * *

PART 1944--HOUSING

0
78. The authority citation for Part 1944 continues to read as follows:

    Authority:  5 U.S.C 301; 42 U.S.C. 1480.

Subpart B--Housing Application Packaging Grants

0
79. Revise Sec.  1944.66(c) to read as follows:


Sec.  1944.66  Administrative requirements.

* * * * *
    (c) Grants made under the subpart must be in compliance with the 
environmental review requirements in accordance with 7 CFR part 1970.
* * * * *

Subpart I--Self-Help Technical Assistance Grants

0
80. Revise Sec.  1944.410(b)(1)(ii) and (c)(1) to read as follows:


Sec.  1944.410  Processing preapplications, applications, and 
completing grant dockets.

* * * * *
    (b) * * *
    (1) * * *
    (ii) Documentation required in accordance with 7 CFR part 1970.
* * * * *
    (c) * * *
    (1) If the applicant is eligible and after the State Director has 
returned the pre-application information and, as appropriate, the 
environmental review documentation required in 7 CFR part 1970 to the 
Area Office, the Area Director will, within 10 days, prepare and issue 
Form AD-622. The original Form AD-622 will be signed and delivered to 
the applicant along with the letter of conditions, a copy to the 
applicant's case file, a copy to the County Supervisor, and a copy to 
the State Director.
* * * * *

Subpart K--Technical and Supervisory Assistance Grants

0
81. Revise Sec.  1944.523 to read as follows:


Sec.  1944.523  Other administrative requirements.

    The policies of 7 CFR part 1970 apply to grants made under this 
subpart regarding historic properties and environmental compliance.

0
82. Revise Sec.  1944.526(a)(5), (b)(1)(i), (b)(1)(ii), (c)(1)(i), and 
(c)(1)(ii) to read as follows:


Sec.  1944.526  Preapplication procedures.

    (a) * * *
    (5) Environmental review documentation in accordance with 7 CFR 
part 1970.
    (b) * * *
    (1) * * *
    (i) Complete any required environmental review documentation in 
accordance with 7 CFR part 1970, and attach to the application.
    (ii) Complete an historical and archaeological review in accordance 
with 7 CFR part 1970, and attach to the application.
* * * * *
    (c) * * *
    (1) * * *
    (i) Make a determination regarding the appropriate level of 
environmental review in accordance with 7 CFR part 1970.
    (ii) Complete an historical and archaeological review in accordance 
with 7 CFR part 1970, and attach to the application.
* * * * *

0
83. Amend Sec.  1944.531 to revise paragraph (c)(10), remove paragraphs 
(c)(11) and (c)(12), and redesignate paragraph (c)(13) as (c)(11), to 
read as follows:


Sec.  1944.531  Applications submission.

* * * * *
    (c) * * *
    (10) Environmental review documentation and historical and 
archaeological review in accordance with 7 CFR part 1970.
* * * * *

0
84. Amend Exhibit B to Subpart K to revise paragraph A.4. to read as 
follows:

Exhibit B to Subpart K of Part 1944--Administrative Instructions for 
State Offices Regarding Their Responsibilities in the Administration of 
the Technical and Supervisory Assistance Grant Program

    A. * * *
    4. Environmental review documentation in accordance with 7 CFR 
part 1970.
* * * * *

0
85. Amend Exhibit C to Subpart K to revise paragraph A.4. to read as 
follows:

Exhibit C to Subpart K OF Part 1944--Instructions for District Offices 
Regarding Their Responsibilities in the Administration of the Technical 
and Supervisory Assistance Grant Program

    A. * * *
    4. Environmental review documentation in accordance with 7 CFR 
part 1970.
* * * * *

Subpart N--Housing Preservation Grants

0
86. Revise the section heading, introductory text, and paragraphs (a) 
and (d) of Sec.  1944.672 to read as follows:


Sec.  1944.672  Environmental review requirements.

    Grants made under this subpart must comply with the environmental 
review requirements in accordance with 7 CFR part 1970.
    (a) The approval of an HPG grant for the repair, rehabilitation, or 
replacement of dwellings is classified as a Categorical Exclusion, 
pursuant to Sec.  1970.53. As part of their pre-application materials, 
applicants shall submit environmental documentation in accordance with 
7 CFR part 1970, for the geographical areas proposed to be served by 
the program. The applicant shall refer to Part 1944 Subpart N Exhibit 
F-1.
* * * * *
    (d) When an HPG proposal does not qualify as a categorical 
exclusion under Sec.  1970.53 and may require either an environmental 
report under Sec.  1970.54 or an environmental assessment, the 
applicant will immediately contact the RHS office designated to service 
the HPG grant. Prior to approval of HPG assistance to the recipient by 
the applicant, RHS must complete the environmental review process in 
accordance with 7 CFR part 1970, with the assistance of the applicant, 
as necessary.
* * * * *

0
87. Revise Sec.  1944.676(c) to read as follows:


Sec.  1944.676  Preapplication procedures.

* * * * *

[[Page 11032]]

    (c) Grants made under this subpart must be in compliance with the 
environmental review requirements in accordance with 7 CFR part 1970.
* * * * *

PART 1948--RURAL DEVELOPMENT

Subpart B--Section 601 Energy Impacted Area Development Assistance 
Program

0
88. The authority citation for Part 1948, subpart B continues to read 
as follows:

    Authority:  Sec. 601, Pub. L. 95-620, delegation of authority by 
the Sec. of Agri., 7 CFR 2.23; delegation of authority by the Asst. 
Sec. for Rural Development, 7 CFR 2.70.


0
89. Revise Sec.  1948.62(a) to read as follows:


Sec.  1948.62  Environmental review requirements.

    (a) Issuance of grants and other actions taken under this subpart 
must comply with the environmental review requirements in accordance 
with 7 CFR part 1970.
* * * * *

0
90. Amend Sec.  1948.84 by:
0
a. Revising paragraphs (d)(8), (e)(2), and (i)(13);
0
b. Removing paragraph (i)(14); and
0
c. Redesignating paragraphs (i)(15), (i)(16), and (i)(17) as (i)(14), 
(i)(15), and (i)(16) respectively.
    The revisions read as follows:


Sec.  1948.84  Application procedure for site development and 
acquisition grants.

* * * * *
    (d) * * *
    (8) Grants made under this subpart must comply with the 
environmental review requirements in accordance with 7 CFR part 1970.
* * * * *
    (e) * * *
    (2) Comply with environmental review requirements in accordance 
with 7 CFR part 1970;
* * * * *
    (i) * * *
    (13) Environmental review documentation in accordance with 7 CFR 
part 1970.
* * * * *

PART 1951--SERVICING AND COLLECTIONS

0
91. The authority citation for part 1951 is revised to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C 1932 note; 7 U.S.C. 1989; 31 
U.S.C. 3716; 42 U.S.C. 1480.

Subpart E--Servicing of Community and Direct Business Programs 
Loans and Grants

0
92. Revise Sec.  1951.210 to read as follows:


Sec.  1951.210  Environmental requirements.

    Servicing actions as defined in Sec.  1970.6 of this chapter are 
part of the financial assistance already provided and do not require 
additional NEPA review. Actions such as lien subordinations, sale or 
lease of Agency-owned real property, or approval of a substantial 
change in the scope of a project, as defined in Sec.  1970.8, must 
comply with the environmental review requirements in accordance with 7 
CFR part 1970.

Subpart R--Rural Development Loan Servicing

0
93. Revise Sec.  1951.900 to read as follows:


Sec.  1951.900  OMB control number.

    The information collection requirement obtained for this part is 
pending OMB approval at the time of this rule's publication in the 
Federal Register.

PART 1955--PROPERTY MANAGEMENT

0
94. The authority citation for part 1955 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

Subpart C--Disposal of Inventory Property--Consolidated Farm and 
Rural Development Act (CONACT) Real Property.

0
95. Revise Sec.  1955.136(a) introductory text to read as follows:


Sec.  1955.136  Environmental review requirements.

    (a) Prior to a final decision on some disposal actions, the action 
must comply with the environmental review requirements in accordance 
with each agency's environmental policies and procedures. For Farm 
Service Agency actions the environmental policies and procedures are 
found in Subpart G of Part 1940 of this chapter and for Rural 
Development programs the environmental policies and procedures are 
found in 7 CFR part 1970.
* * * * *

0
96. Revise Sec.  1955.137(a)(3)(i) to read as follows:


Sec.  1955.137  Real property located in special areas or having 
special characteristics.

    (a) * * *
    (3) Limitations placed on financial assistance. (i) Financial 
assistance is limited to property located in areas where flood 
insurance is available. Flood insurance must be provided at closing of 
loans on program-eligible and non-program (NP)-ineligible terms. 
Appraisals of property in flood or mudslide hazard areas will reflect 
this condition and any restrictions on use. Financial assistance for 
substantial improvement or repair of property located in a flood or 
mudslide hazard area is subject to the limitations outlined, for farm 
loan program actions, in, paragraph 3b(1) and (2) of Exhibit C of 
subpart G of part 1940 for Farm Service Agency Programs and in 7 CFR 
part 1970, for Rural Development programs.
* * * * *

0
97. Revise Sec.  1955.140(a) to read as follows:


Sec.  1955.140  Sale in parcels.

    (a) Individual property subdivided. An individual property, other 
than Farm Loan Programs property, may be offered for sale as a whole or 
subdivided into parcels as determined by the State Director. For MFH 
property, guidance will be requested from the National Office for all 
properties other than RHS projects. When farm inventory property is 
larger than a family-size farm, the county official will subdivide the 
property into one or more tracts to be sold in accordance with Sec.  
1955.107. Division of the land or separate sales of portions of the 
property, such as timber, growing crops, inventory for small business 
enterprises, buildings, facilities, and similar items may be permitted 
if a better total price for the property can be obtained in this 
manner. Environmental effects related to Farm Service Agency program 
actions should also be considered pursuant to subpart G of part 1940 of 
this chapter. For Rural Development program actions, environmental 
review requirements must comply with 7 CFR part 1970. Any applicable 
State laws will be set forth in a State supplement and will be complied 
with in connection with the division of land. Subdivision of acquired 
property will be reported on Form RD 1955-3C, ``Acquired Property--
Subdivision,'' in accordance with the FMI.
* * * * *

0
98. Add part 1970 to read as follows:

PART 1970--ENVIRONMENTAL POLICIES AND PROCEDURES

Subpart A--Environmental Policies
Sec.

[[Page 11033]]

1970.1 Purpose, applicability, and scope.
1970.2 [Reserved]
1970.3 Authority.
1970.4 Policies.
1970.5 Responsible parties.
1970.6 Definitions and acronyms.
1970.7 [Reserved]
1970.8 Actions requiring environmental review.
1970.9 Levels of environmental review.
1970.10 Raising the level of environmental review.
1970.11 Timing of the environmental review process.
1970.12 Limitations on actions during the NEPA process.
1970.13 Consideration of alternatives.
1970.14 Public involvement.
1970.15 Interagency cooperation.
1970.16 Mitigation.
1970.17 Programmatic analysis and tiering.
1970.18 Emergencies.
1970.19--1970.50 [Reserved]
Subpart B--NEPA Categorical Exclusions
1970.51 Applying CEs.
1970.52 Extraordinary circumstances.
1970.53 CEs involving no or minimal disturbance without an 
environmental report.
1970.54 CEs involving small-scale development with an environmental 
report.
1970.55 CEs for multi-tier actions.
1970.56--1970.100 [Reserved]
Subpart C--NEPA Environmental Assessments
1970.101 General.
1970.102 Preparation of EAs.
1970.103 Supplementing EAs.
1970.104 Finding of No Significant Impact.
1970.105--1970.150 [Reserved]
Subpart D--NEPA Environmental Impact Statements
1970.151 General.
1970.152 EIS funding and professional services.
1970.153 Notice of Intent and scoping.
1970.154 Preparation of the EIS.
1970.155 Supplementing EISs.
1970.156 Record of decision.
1970.157--1970.200 [Reserved]

    Authority:  7 U.S.C. 6941 et seq., 42 U.S.C. 4241 et seq.; 40 
CFR parts 1500-1508; 5 U.S.C. 301; 7 U.S.C. 1989; and 42 U.S.C. 
1480.

Subpart A--Environmental Policies


Sec.  1970.1  Purpose, applicability, and scope.

    (a) Purpose. The purpose of this part is to ensure that the Agency 
complies with the National Environmental Policy Act of 1969, as amended 
(NEPA) (42 U.S.C. 4321, et seq.), and other applicable environmental 
requirements in order to make better decisions based on an 
understanding of the environmental consequences of proposed actions, 
and take actions that protect, restore, and enhance the quality of the 
human environment.
    (b) Applicability. The environmental policies and procedures 
contained in this part are applicable to programs administered by the 
Rural Business-Cooperative Service (RBS), Rural Housing Service (RHS), 
and Rural Utilities Service (RUS); herein referred to as ``the 
Agency.''
    (c) Scope. This part integrates NEPA with other planning, 
environmental review processes, and consultation procedures required by 
other Federal laws, regulations, and Executive Orders applicable to 
Agency programs. This part also supplements the Council on 
Environmental Quality (CEQ) regulations implementing the procedural 
provisions of NEPA, 40 CFR parts 1500 through 1508. To the extent 
appropriate, the Agency will take into account CEQ guidance and 
memoranda. This part also incorporates and complies with the procedures 
of Section 106 (36 CFR part 800) of the National Historic Preservation 
Act (NHPA) and Section 7 (50 CFR part 402) of the Endangered Species 
Act (ESA).


Sec.  1970.2  [Reserved]


Sec.  1970.3  Authority.

    This part derives its authority from a number of statutes, 
Executive Orders, and regulations, including but not limited to those 
listed in this section. Both the Agency and the applicant, as 
appropriate, must comply with these statutes, Executive Orders, and 
regulations, as well as any future statutes, Executive Orders, and 
regulations that affect the Agency's implementation of this part.
    (a) National Environmental Policy Act of 1969 (42 U.S.C. 4321 et 
seq.);
    (b) Council on Environmental Quality Regulations Implementing the 
Procedural Provisions of the National Environmental Policy Act (40 CFR 
parts 1500 through 1508);
    (c) U. S. Department of Agriculture, NEPA Policies and Procedures 
(7 CFR part 1b).
    (d) Department of Agriculture, Enhancement, Protection and 
Management of the Cultural Environment (7 CFR parts 3100 through 3199);
    (e) Archaeological and Historic Preservation Act of 1960, as 
amended, (16 U.S.C. 469 et seq.);
    (f) Archaeological Resources Protection Act of 1979 (16 U.S.C. 
470aa et seq.);
    (g) Bald and Golden Eagle Protection Act (16 U.S.C. 668 et seq.);
    (h) Clean Air Act (42 U.S.C. 7401 et seq.);
    (i) Clean Water Act (Federal Water Pollution Control Act, 33 U.S.C. 
1251 et seq.);
    (j) Coastal Barrier Resources Act (16 U.S.C. 3501 et seq.);
    (k) Coastal Barrier Improvement Act (42 U.S.C. 4028 et seq.);
    (l) Coastal Zone Management Act (16 U.S.C. 1456);
    (m) Comprehensive Environmental Response, Compensation, and 
Liability Act (42 U.S.C. 103) (CERCLA);
    (n) Consolidated Farm and Rural Development Act, Sections 
307(a)(6)(A) (7 U.S.C. 1927(a)(6)(A)) and 363 (7 U.S.C. 2006e);
    (o) Endangered Species Act of 1973 (16 U.S.C. 1531 et seq.);
    (p) Farmland Protection Policy Act (7 U.S.C. 4201 et seq.);
    (q) Historic Sites, Buildings and Antiquities Act (16 U.S.C. 461 et 
seq.);
    (r) Housing and Community Development Act of 1992 (42 U.S.C. 
542(c)(9));
    (s) Migratory Bird Treaty Act (16 U.S.C. 703-711);
    (t) National Historic Preservation Act (16 U.S.C. 470 et seq.);
    (u) National Trails System Act (16 U.S.C. 1241 et seq.);
    (v) Native American Graves Protection and Repatriation Act (25 
U.S.C. 3001 et seq.);
    (w) Noise Control Act (42 U.S.C. 4901 et seq.);
    (x) Pollution Prevention Act of 1990 (42 U.S.C. 13101 et seq.);
    (y) Resource Conservation and Recovery Act (42 U.S.C. 6901);
    (z) Safe Drinking Water Act--(42 U.S.C. 300f et seq.);
    (aa) Wild and Scenic Rivers Act (16 U.S.C. 1271 et seq.);
    (bb) Wilderness Act (16 U.S.C. 1131 et seq.);
    (cc) Compact of Free Association between the United States and the 
Republic of the Marshall Islands and between the United States and the 
Federated States of Micronesia (Public Law 108-188);
    (dd) Compact of Free Association between the United States and the 
Republic of Palau (Public Law 99-658);
    (ee) Executive Order 11514, Protection and Enhancement of 
Environmental Quality;
    (ff) Executive Order 11593, Protection and Enhancement of the 
Cultural Environment;
    (gg) Executive Order 11988, Floodplain Management;
    (hh) Executive Order 11990, Protection of Wetlands;
    (ii) Executive Order 12898, Federal Actions to Address 
Environmental Justice in Minority Populations and Low Income 
Populations;
    (jj) Executive Order 12372, Intergovernmental Review;
    (kk) Executive Order 13112, Invasive Species;

[[Page 11034]]

    (ll) Executive Order 13175, Consultation and Coordination with 
Indian Tribal Governments;
    (mm) Executive Order 13287, Preserve America;
    (nn) Executive Order 13016, Federal Support of Community Efforts 
along American Heritage Rivers;
    (oo) Executive Order 13352, Facilitation of Cooperative 
Conservation;
    (pp) Executive Order 13423, Strengthening Federal Environmental, 
Energy, and Transportation Management;
    (qq) Executive Order 13653, Preparing the United States for the 
Impacts of Climate Change;
    (rr) Executive Order 13690, Establishing a Federal Flood Risk 
Management Standard and a Process for Further Soliciting and 
Considering Stakeholder Input;
    (ss) Executive Order 13693, Planning for Federal Sustainability in 
the Next Decade;
    (tt) Agriculture Departmental Regulation (DR) 5600-2, Environmental 
Justice;
    (uu) Agriculture Departmental Regulation (DR) 9500-3, Land Use 
Policy;
    (vv) Agriculture Departmental Regulation (DR) 9500-4, Fish and 
Wildlife Policy;
    (ww) Agriculture Departmental Regulation (DR) 1070-001, U.S. 
Department of Agriculture (USDA) Policy Statement on Climate Change 
Adaptation; and
    (xx) Agriculture Departmental Manual (DM) 5600-001, Environmental 
Pollution Prevention, Control, and Abatement Manual.


Sec.  1970.4  Policies.

    (a) Applicants' proposals must, whenever practicable, avoid or 
minimize adverse environmental impacts; avoid or minimize conversion of 
wetlands or important farmlands (as defined in the Farmland Protection 
Policy Act and its implementing regulations issued by the USDA Natural 
Resources Conservation Service) when practicable alternatives exist to 
meet development needs; avoid unwarranted alterations or encroachment 
on floodplains when practicable alternatives exist to meet 
developmental needs; and avoid or minimize potentially disproportionate 
and adverse impacts to minority or low-income populations within the 
proposed action's area of impact. Avoiding development in floodplains 
includes avoiding development in the 500-year floodplain, as shown on 
the Federal Emergency Management Agency's (FEMA) Flood Insurance Rate 
Maps, where the proposed actions and facilities are defined as critical 
actions in Sec.  1970.6. The Agency shall not fund the proposal unless 
there is a demonstrated, significant need for the proposal and no 
practicable alternative exists to the proposed conversion of the above 
resources.
    (b) The Agency encourages the reuse of real property defined as 
brownfields per Section 101 of the Comprehensive Environmental 
Response, Compensation, and Liability Act (CERCLA) where the reuse of 
such property is complicated by the presence or potential presence of a 
hazardous substance, pollutant, or other contaminant, provided that the 
level of such presence does not threaten human health and the 
environment for the proposed land use. The Agency will defer to the 
agency with regulatory authority under the appropriate law in 
determining the appropriate level of contaminant for a specific 
proposed land use. The Agency will evaluate the risk based upon the 
applicable regulatory agency's review and concurrence with the 
proposal.
    (c) The Agency and applicant will involve other Federal agencies 
with jurisdiction by law or special expertise, state and local 
governments, Indian tribes and Alaska Native organizations, Native 
Hawaiian organizations, and the public, early in the Agency's 
environmental review process to the fullest extent practicable. To 
accomplish this objective, the Agency and applicant will:
    (1) Ensure that environmental amenities and values be given 
appropriate consideration in decision making along with economic and 
technical considerations;
    (2) At the earliest possible time, advise interested parties of the 
Agency's environmental policies and procedures and required 
environmental impact analyses during early project planning and design; 
and
    (3) Make environmental assessments (EA) and environmental impact 
statements (EIS) available to the public for review and comment in a 
timely manner.
    (d) The Agency and applicant will ensure the completion of the 
environmental review process prior to the irreversible and 
irretrievable commitment of Agency resources in accordance with Sec.  
1970.11. The environmental review process is concluded when the Agency 
approves the applicability of a Categorical Exclusion (CE), issues a 
Finding of No Significant Impact (FONSI), or issues a Record of 
Decision (ROD).
    (e) If an applicant's proposal does not comply with Agency 
environmental policies and procedures, the Agency will defer further 
consideration of the application until compliance can be demonstrated, 
or the application may be rejected. Any applicant that is directly and 
adversely affected by an administrative decision made by the Agency 
under this part may appeal that decision, to the extent permissible 
under 7 CFR part 11.
    (f) The Agency recognizes the worldwide and long-range character of 
environmental problems and, where consistent with the foreign policy of 
the United States, will lend appropriate support to initiatives, 
resolutions, and programs designed to maximize international 
cooperation in anticipating and preventing a decline in the quality of 
humankind's world environment in accordance with NEPA, 42 U.S.C. 4321 
et seq.
    (g) The Agency will use the NEPA process, to the maximum extent 
feasible, to identify and encourage opportunities to reduce greenhouse 
gas (GHG) emissions caused by proposed Federal actions that would 
otherwise result in the emission of substantial quantities of GHG.


Sec.  1970.5  Responsible parties.

    (a) Agency. The following paragraphs identify the general 
responsibilities of the Agency.
    (1) The Agency is responsible for all environmental decisions and 
findings related to its actions and will encourage applicants to design 
proposals to protect, restore, and enhance the environment.
    (2) If the Agency requires an applicant to submit environmental 
information, the Agency will outline the types of information and 
analyses required in guidance documents. This guidance is available on 
the Agency's Web site. The Agency will independently evaluate the 
information submitted.
    (3) The Agency will advise applicants and applicable lenders of 
their responsibilities to consider environmental issues during early 
project planning and that specific actions listed in Sec.  1970.12, 
such as initiation of construction, cannot occur prior to completion of 
the environmental review process or it could result in a denial of 
financial assistance.
    (4) The Agency may act as either a lead agency or a cooperating 
agency in the preparation of an environmental review document. If the 
Agency acts as a cooperating agency, the Agency will fulfill the 
cooperating agency

[[Page 11035]]

responsibilities outlined in 40 CFR 1501.6.
    (5) Mitigation measures described in the environmental review and 
decision documents must be included as conditions in Agency financial 
commitment documents, such as a conditional commitment letter.
    (6) The Agency, guaranteed lender, or multi-tier recipients will 
monitor and track the implementation, maintenance, and effectiveness of 
any required mitigation measures.
    (b) Applicants. Applicants must comply with provisions found in 
paragraphs (b)(1) through (8) of this section.
    (1) Consult with Agency staff to determine the appropriate level of 
environmental review and to obtain publicly available resources at the 
earliest possible time for guidance in identifying all relevant 
environmental issues that must be addressed and considered during early 
project planning and design throughout the process.
    (2) Where appropriate, contact state and Federal agencies to 
initiate consultation on matters affected by this part. This part 
authorizes applicants to coordinate with state and Federal agencies on 
behalf of the Agency. However, applicants are not authorized to 
initiate consultation in accordance with Section 106 of the National 
Historic Preservation Act with Indian tribes on behalf of the Agency. 
In those cases, applicants need the express written authority of the 
Agency and consent of Indian tribes in order to initiate consultation.
    (3) Provide information to the Agency that the Agency deems 
necessary to evaluate the proposal's potential environmental impacts 
and alternatives.
    (i) Applicants must ensure that all required materials are current, 
sufficiently detailed and complete, and are submitted directly to the 
Agency office processing the application. Incomplete materials or 
delayed submittals may jeopardize consideration of the applicant's 
proposal by the Agency and may result in no award of financial 
assistance.
    (ii) Applicants must clearly define the purpose and need for the 
proposal and inform the Agency promptly if any other Federal, state, or 
local agencies are involved in financing, permitting, or approving the 
proposal, so that the Agency may coordinate and consider participation 
in joint environmental reviews.
    (iii) As necessary, applicants must develop and document reasonable 
alternatives that meet their purpose and need while improving 
environmental outcomes.
    (iv) Applicants must prepare environmental review documents 
according to the format and standards provided by the Agency. The 
Agency will independently evaluate the final documents submitted. All 
environmental review documents must be objective, complete, and 
accurate in order for them to be finally accepted by the Agency. 
Applicants may employ a design or environmental professional or 
technical service provider to assist them in the preparation of their 
environmental review documents.
    (A) Applicants are not generally required to prepare environmental 
documentation for proposals that involve Agency activities with no or 
minimal disturbance listed in Sec.  1970.53. However, the Agency may 
request additional environmental documentation from the applicant at 
any time, specifically if the Agency determines that extraordinary 
circumstances may exist.
    (B) For CEs listed in Sec.  1970.54, applicants must prepare 
environmental documentation as required by the Agency; the 
environmental documentation required for CEs is referred to as an 
environmental report(ER).
    (C) When an EA is required, the applicant must prepare an EA that 
meets the requirements in subpart C of this part, including, but not 
limited to, information and data collection and public involvement 
activities. When the applicant prepares the EA, the Agency will make 
its own independent evaluation of the environmental issues and take 
responsibility for the scope and content of the EA.
    (D) Applicants must cooperate with and assist the Agency in all 
aspects of preparing an EIS that meets the requirements specified in 
subpart D of this part, including, but not limited to, information and 
data collection and public involvement activities. Once authorized by 
the Agency in writing, applicants are responsible for funding all 
third-party contractors used to prepare the EIS.
    (4) Applicants must provide any additional studies, data, and 
document revisions requested by the Agency during the environmental 
review and decision-making process. The studies, data, and documents 
required will vary depending upon the specific project and its impacts. 
Examples of studies that the Agency may require an applicant to provide 
are biological assessments under the ESA, archeological surveys under 
the NHPA, wetland delineations, surveys to determine the floodplain 
elevation on a site, air quality conformity analysis, or other such 
information needed to adequately assess impacts.
    (5) Applicants must ensure that no actions are taken (such as any 
demolition, land clearing, initiation of construction, or advance of 
interim construction funds from a guaranteed lender), including 
incurring any obligations with respect to their proposal, that may have 
an adverse impact on the quality of the human environment or that may 
limit the choice of reasonable alternatives during the environmental 
review process. Limitations on actions by an applicant prior to the 
completion of the Agency environmental review process are defined in 
CEQ regulations at 40 CFR 1506.1 and 7 CFR 1970.12.
    (6) Applicants must promptly notify the Agency processing official 
when changes are made to their proposal so that the environmental 
review and documentation may be supplemented or otherwise revised as 
necessary.
    (7) Applicants must incorporate any mitigation measures identified 
and any required monitoring in the environmental review process into 
the plans and specifications and construction contracts for the 
proposals. Applicants must provide such mitigation measures to 
consultants responsible for preparing design and construction 
documents, or provide other mitigation action plans. Applicants must 
maintain, as applicable, mitigation measures for the life of the loans 
or refund term for grants.
    (8) Applicants must cooperate with the Agency on achieving 
environmental policy goals. If an applicant is unwilling to cooperate 
with the Agency on environmental compliance, the Agency will deny the 
requested financial assistance.


Sec.  1970.6  Definitions and acronyms.

    (a) Definitions. Terms used in this part are defined in 40 CFR part 
1508, 36 CFR 800.16, and this section. If a term is defined in this 
section and in one or both of the other referenced regulations, such 
term will have the meaning as defined in this subpart.
    Agency. USDA Rural Development, which includes RBS, RHS, and RUS, 
and any successor agencies.
    Applicant. An individual or entity requesting financial assistance 
including but not limited to loan recipients, grantees, guaranteed 
lenders, or licensees.
    Average megawatt. The equivalent capacity rating of a generating 
facility based on the gross energy output

[[Page 11036]]

generated over a 12-month period or one year.
    Construction work plan. An engineering planning study that is used 
in the Electric Program to determine and document a borrower's 2- to 4-
year capital construction investments that are needed to provide and 
maintain adequate and reliable electric service to a borrower's new and 
existing members.
    Cooperative agreement. For the purposes of this part, a cooperative 
agreement is a form of financial assistance in which the Agency 
provides funding that is authorized by public statute, not to be 
repaid, and for a purpose that includes substantial involvement and a 
mutual interest of both the Agency and the cooperator.
    Critical action. Any activity for which even a slight chance of 
flooding would be hazardous as determined by the Agency. Critical 
actions include activities that create, maintain, or extend the useful 
life of structures or facilities that produce, use, or store highly 
volatile, flammable, explosive, toxic, or water-reactive materials; 
maintain irreplaceable records; or provide essential utility or 
emergency services (such as data storage centers, electric generating 
facilities, water treatment facilities, wastewater treatment 
facilities, large pump stations, emergency operations centers including 
fire and police stations, and roadways providing sole egress from 
flood-prone areas); or facilities that are likely to contain occupants 
who may not be sufficiently mobile to avoid death or serious injury in 
a flood.
    Design professional. An engineer or architect providing 
professional design services to applicants during the planning, design, 
and construction phases of proposals submitted to the Agency for 
financial assistance.
    Distributed resources. Sources of electrical power that are not 
directly connected to a bulk power transmission system, having an 
installed capacity of not more than 10 Mega volt-amperes (MVA), 
connected to an electric power system through a point of common 
coupling. Distributed resources include both generators (distributed 
generation) and energy storage technologies.
    Emergency. A disaster or a situation that involves an immediate or 
imminent threat to public health or safety as determined by the Agency.
    Environmental report. The environmental documentation that is 
required of applicants for proposed actions eligible for a CE under 
Sec.  1970.54.
    Environmental review. Any or all of the levels of environmental 
analysis described under this part.
    Financial assistance. A loan, grant, cooperative agreement, or loan 
guarantee that provides financial assistance, provided by the Agency to 
an applicant. In accordance with 40 CFR 1505.1(b), the Agency defines 
the major decision point at which NEPA must be complete, as the 
approval of financial assistance.
    Grant. A form of financial assistance for a specified purpose 
without scheduled repayment.
    Guaranteed lender. The organization making, servicing, or 
collecting the loan which is guaranteed by the Agency under applicable 
regulations, excluding the Federal Financing Bank.
    Historic property. Any prehistoric or historic district, site, 
building, structure, or object included in, or eligible for inclusion 
in, the National Register of Historic Places maintained by the 
Secretary of the Interior. This term includes artifacts, records, and 
remains that are related to and located within such properties. The 
term includes properties of traditional religious and cultural 
importance to an Indian tribe or Native Hawaiian organization and that 
meet the National Register criteria. (See 36 CFR 800.16(l)).
    Indian tribe. An Indian tribe, band, nation, or other organized 
group or community, including a native village, regional corporation or 
village corporation, as those terms are defined in Section 3 of the 
Alaska Native Claims Settlement Act (43 U.S.C. 1602), which is 
recognized as eligible for the special programs and services provided 
by the United States to Indians because of their status as Indians (see 
36 CFR 800.16(m)).
    Lien sharing. Agreement to pro rata payment on shared secured 
collateral without priority preference.
    Lien subordination. The circumstance in which the Agency, as a 
first lien holder, provides a creditor with a priority security 
interest in secured collateral.
    Loan. The provision of funds by the Agency directly to an applicant 
in exchange for repayment with interest and collateral to secure 
repayment.
    Loan guarantee. The circumstance in which the Agency guarantees all 
or a portion of payment of a debt obligation to a lender.
    Loan/System design. An engineering study, prepared to support a 
loan application under this part, demonstrating that a system design 
provides telecommunication services most efficiently to proposed 
subscribers in a proposed service area, in accordance with the 
Telecommunications Program guidance.
    Multi-tier action. Financial assistance provided by specific 
programs administered by the Agency, that provides financial assistance 
to eligible recipients, including but not limited to: Intermediaries; 
community-based organizations, such as housing or community development 
non-profit organizations; rural electric cooperatives; or other 
organizations with similar financial arrangements who, in turn, provide 
financial assistance to eligible recipients. The entities or 
organizations receiving the initial Agency financial assistance are 
considered ``primary recipients.'' As the direct recipient of this 
financial assistance, ``primary recipients'' provide the financial 
assistance to other parties, referred to as ``secondary recipients'' or 
``ultimate recipients.'' The multi-tier action programs include Housing 
Preservation Grants (42 U.S.C. 1490m), Multi-Family Housing 
Preservation Revolving Loan Fund (7 CFR part 3560), Intermediary 
Relending Program (7 U.S.C. 1932 note and 42 U.S.C. 9812), Rural 
Business Development Grant Program (7 U.S.C. 940c and 7 U.S.C. 
1932(c)), Rural Economic Development Loan and Grant Program (7 U.S.C. 
940c), Rural Microentrepreneur Assistance Program (7 U.S.C. 1989(a), 7 
U.S.C. 2008s), Household Water Well System Grant Program (7 U.S.C. 
1926e), Revolving Funds for Financing Water and Wastewater Projects 
(Revolving Fund Program) (7 U.S.C. 1926(a)(2)(B)), Energy Efficiency 
and Conservation Loan Program (7 U.S.C. 901), Section 313A, Guarantees 
for Bonds and Notes Issued for Electrification or Telephone Purposes (7 
U.S.C. 940c-1), Rural Energy Savings Program (7 U.S.C. 8107a), and any 
other such programs or similar financial assistance actions to primary 
recipients as described above.
    No action alternative. An alternative that describes the reasonably 
foreseeable future environment in the event a proposed Federal action 
is not taken. This forms the baseline condition against which the 
impacts of the proposed action and other alternatives are compared and 
evaluated.
    Preliminary Architectural/Engineering Report. Documents prepared by 
the applicant's design professional in accordance with applicable 
Agency guidance for Preliminary Architectural Reports for housing, 
business, and community facilities proposals and for Preliminary 
Engineering Reports for water and wastewater proposals.
    Previously disturbed or developed land. Land that has been changed 
such that its functioning ecological processes have been and remain 
altered by human activity. The phrase encompasses areas

[[Page 11037]]

that have been transformed from natural cover to non-native species or 
a managed state, including, but not limited to, utility and electric 
power transmission corridors and rights-of-way, and other areas where 
active utilities and currently used roads are readily available.
    Servicing actions. All routine, ministerial, or administrative 
actions for Agency-provided financial assistance that do not involve 
new financial assistance, including, but not limited to:
    (1) Advancing of funds, billing, processing payments, transfers, 
assumptions, refinancing involving only a change in an interest rate, 
and accepting prepayments;
    (2) Monitoring collateral; foreclosure; compromising, adjusting, 
reducing, or charging off debts or claims; and modifying or releasing 
the terms of security instruments, leases, contracts, and agreements; 
and
    (3) Consents or approvals provided pursuant to loan contracts, 
agreements, and security instruments.
    Substantial improvement. Any repair, reconstruction or other 
improvement of a structure or facility, which has been damaged in 
excess of, or the cost of which equals or exceeds, 50% of the market 
value of the structure or replacement cost of the facility (including 
all ``public facilities'' as defined in the Disaster Relief Act of 
1974) before the repair or improvement is started, or, if the structure 
or facility has been damaged and is proposed to be restored, before the 
damage occurred. If a facility is an essential link in a larger system, 
the percentage of damage will be based on the relative cost of 
repairing the damaged facility to the replacement cost of the portion 
of the system which is operationally dependent on the facility. The 
term ``substantial improvement'' does not include any alteration of a 
structure or facility listed on the National Register of Historic 
Places or a State Inventory of Historic Places. (See 44 CFR 59.1.)
    Third-party contractor. Contractors for the preparation of EISs, 
under the Agency's direction, and paid by the applicant. Under the 
Agency's direction and in compliance with 40 CFR 1506.5(c), the 
applicant may undertake the necessary paperwork for the solicitation of 
a field of candidates. Federal procurement requirements do not apply to 
the Agency because it incurs no obligations or costs under the 
contract, nor does the Agency procure anything under the contract.
    (b) Acronyms.

aMW--Average megawatt
CE--Categorical Exclusion
CERCLA--Comprehensive Environmental Response, Compensation, and 
Liability Act
CEQ--Council on Environmental Quality
EA--Environmental Assessment
ER--Environmental Report
EIS--Environmental Impact Statement
EPA--United States Environmental Protection Agency
ESA--Endangered Species Act
FEMA--Federal Emergency Management Agency
FONSI--Finding of No Significant Impact
GHG--Greenhouse Gas
kV--kilovolt (kV)
kW--kilowatt (kW)
MW--megawatt
MVA--Mega volt-amperes
NEPA--National Environmental Policy Act
NHPA--National Historic Preservation Act
NOI--Notice of Intent
RBIC--Rural Business Investment Company
RBS--Rural Business-Cooperative Service
RHS--Rural Housing Service
RUS--Rural Utilities Service
ROD--Record of Decision
SEPA--State Environmental Policy Act
USDA--United States Department of Agriculture
USGS--United States Geological Survey


Sec.  1970.7  [Reserved]


Sec.  1970.8  Actions requiring environmental review.

    (a) The Agency must comply with the requirements of NEPA for all 
Federal actions within the:
    (1) United States borders and any other commonwealth, territory or 
possession of the United States such as Guam, American Samoa, U.S. 
Virgin Islands, the Commonwealth of the Northern Mariana Islands, and 
the Commonwealth of Puerto Rico; and
    (2) Republic of the Marshall Islands, the Federated States of 
Micronesia and the Republic of Palau, subject to applicable Compacts of 
Free Association.
    (b) Except as provided in paragraphs (c), (d), and (e) of this 
section, the provisions of this part apply to administrative actions by 
the Agency with regard to the following to be Federal actions:
    (1) Providing financial assistance;
    (2) Certain post-financial assistance actions with the potential to 
have an effect on the environment, including:
    (i) The sale or lease of Agency-owned real property;
    (ii) Lien subordination; and
    (iii) Approval of a substantial change in the scope of a project 
receiving financial assistance not previously considered.
    (3) Promulgation of procedures or regulations for new or 
significantly revised programs; and
    (4) Legislative proposals (see 40 CFR 1506.8).
    (c) For environmental review purposes, the Agency has identified 
and established categories of proposed actions (Sec. Sec.  1970.53 
through 1970.55, 1970.101, and 1970.151). An applicant may propose to 
participate with other parties in the ownership of a project. In such a 
case, the Agency will determine whether the applicant participants have 
sufficient control and responsibility to alter the development of the 
proposed project prior to determining its classification. Only if there 
is such control and responsibility as described below will the Agency 
consider its action with regard to the project to be a Federal action 
for purposes of this part. Where the applicant proposes to participate 
with other parties in the ownership of a proposed project and all 
applicants cumulatively own:
    (1) Five percent (5%) or less, the project is not considered a 
Federal action subject to this part;
    (2) Thirty-three and one-third percent (33\1/3\%) or more, the 
project shall be considered a Federal action subject to this part;
    (3) More than five percent (5%) but less than thirty-three and one-
third percent (33\1/3\%), the Agency will determine whether the 
applicant participants have sufficient control and responsibility to 
alter the development of the proposal such that the Agency's action 
will be considered a Federal action subject to this part. In making 
this determination, the Agency will consider such factors as:
    (i) Whether construction would be completed regardless of the 
Agency's financial assistance or approval;
    (ii) The stage of planning and construction;
    (iii) Total participation of the applicant;
    (iv) Participation percentage of each participant; and
    (v) Managerial arrangements and contractual provisions.
    (d) Lien sharing is not an action for the purposes of this part.
    (e) Servicing actions are directly related to financial assistance 
already provided, do not require separate NEPA review, and are not 
actions for the purposes of this part.


Sec.  1970.9  Levels of environmental review.

    (a) The Agency has identified classes of actions and the level of

[[Page 11038]]

environmental review required for applicant proposals and Agency 
actions in subparts B (CEs), C (EAs), and D (EISs) of this part. An 
applicant seeking financial assistance from the Agency must 
sufficiently describe its proposal so that the Agency can properly 
classify the proposal for the purposes of this part.
    (b) If an action is not identified in the classes of actions listed 
in subparts B, C, or D of this part, the Agency will determine what 
level of environmental review is appropriate.
    (c) A single environmental document will evaluate an applicant's 
proposal and any other activities that are connected, interdependent, 
or likely to have significant cumulative effects. When a proposal 
represents one segment of a larger interdependent proposal being funded 
jointly by various entities, the level of environmental review will 
normally include the entire proposal.
    (d) Upon submission of multi-year planning documents, such as 
Telecommunications Program Loan/System Designs or multi-year Electric 
Program Construction Work Plans, the Agency will identify the 
appropriate classification for all proposals listed in the applicable 
design or work plan and may request any additional environmental 
information prior to the time of loan approval.


Sec.  1970.10  Raising the level of environmental review.

    Environmental conditions, scientific controversy, or other 
characteristics unique to a specific proposal can trigger the need for 
a higher level of environmental review than described in subparts B or 
C of this part. As appropriate, the Agency will determine whether 
extraordinary circumstances (see Sec.  1970.52) or the potential for 
significant environmental impacts warrant a higher level of review. The 
Agency is solely responsible for determining the level of environmental 
review to be conducted and the adequacy of environmental review that 
has been performed.


Sec.  1970.11  Timing of the environmental review process.

    (a) Once an applicant decides to request Agency financial 
assistance, the applicant must initiate the environmental review 
process at the earliest possible time to ensure that planning, design, 
and other decisions reflect environmental policies and values, avoid 
delays, and minimize potential conflicts. This includes early 
coordination with the Agency, all funding partners, and regulatory 
agencies, in order to minimize duplication of effort.
    (b) The environmental review process must be concluded before 
completion of the obligation of funds.
    (c) The environmental review process is formally concluded when all 
of the following have occurred:
    (1) The Agency has reviewed the appropriate environmental review 
document for completeness;
    (2) All required public notices have been published and public 
comment periods have elapsed;
    (3) All comments received during any established comment period 
have been considered and addressed, as appropriate by the Agency;
    (4) The environmental review documents have been approved by the 
Agency; and
    (5) The appropriate environmental decision document has been 
executed by the Agency after paragraphs (c)(1) through (4) of this 
section have been concluded.
    (d) For proposed actions listed in Sec.  1970.151 and to ensure 
Agency compliance with the conflict of interest provisions in 40 CFR 
1506.5(c), the Agency is responsible for selecting any third-party EIS 
contractor and participating in the EIS preparation. For more 
information regarding acquisition of professional services and funding 
of a third-party contractor, refer to Sec.  1970.152.


Sec.  1970.12  Limitations on actions during the NEPA process.

    (a) Limitations on actions. Applicants must not take actions 
concerning a proposal that may potentially have an environmental impact 
or would otherwise limit or affect the Agency's decision until the 
Agency's environmental review process is concluded. If such actions are 
taken prior to the conclusion of the environmental review process, the 
Agency may deny the request for financial assistance.
    (b) Anticipatory demolition. If the Agency determines that an 
applicant has intentionally significantly adversely affected a historic 
property with the intent to avoid the requirements of Section 106 of 
the NHPA (such as demolition or removal of all or part of the property) 
the Agency may deny the request for financial assistance in accordance 
with section 110(k) of the NHPA.
    (c) Recent construction. When construction is in progress or has 
recently been completed by applicants who can demonstrate no prior 
intent to seek Agency assistance at the time of application submittal 
to the Agency, the following requirements apply:
    (1) In cases where construction commenced within 6 months prior to 
the date of application, the Agency will determine and document whether 
the applicant initiated construction to avoid environmental compliance 
requirements. If any evidence to that effect exists, the Agency may 
deny the request for financial assistance.
    (2) If there is no evidence that an applicant is attempting to 
avoid environmental compliance requirements, the application is subject 
to the following additional requirements:
    (i) The Agency will promptly provide written notice to the 
applicant that the applicant must halt construction if it is ongoing 
and fulfill all environmental compliance responsibilities before the 
requested financing will be provided;
    (ii) The applicant must take immediate steps to identify any 
environmental resources affected by the construction and protect the 
affected resources; and
    (iii) With assistance from the applicant and to the extent 
practicable, the Agency will determine whether environmental resources 
have been adversely affected by any construction and this information 
will be included in the environmental document.
    (d) Minimal expenditures. In accordance with 40 CFR 1506.1(d), the 
Agency will not be precluded from approving minimal expenditures by the 
applicant not affecting the environment (e.g., long lead-time 
equipment, purchase options, or environmental or technical 
documentation needed for Agency environmental review). To be minimal, 
the expenditure must not exceed the amount of loss which the applicant 
could absorb without jeopardizing the Government's security interest in 
the event the proposed action is not approved by the Agency, and must 
not compromise the objectivity of the Agency's environmental review 
process.


Sec.  1970.13  Consideration of alternatives.

    The purpose of considering alternatives to a proposed action is to 
explore and evaluate whether there may be reasonable alternatives to 
that action that may have fewer or less significant negative 
environmental impacts. When considering whether the alternatives are 
reasonable, the Agency will take into account factors such as economic 
and technical feasibility. The extent of the analysis on each 
alternative will depend on the nature and complexity of the proposal. 
Environmental review

[[Page 11039]]

documents must discuss the consideration of alternatives as follows:
    (a) For proposals subject to subpart C of this part, the 
environmental effects of the ``No Action'' alternative must be 
evaluated. All EAs must evaluate other reasonable alternatives whenever 
the proposal involves potential adverse effects to environmental 
resources.
    (b) For proposals subject to subpart D of this part, the Agency 
will follow the requirements in 40 CFR part 1502.


Sec.  1970.14  Public involvement.

    (a) Goal. The goal of public involvement is to engage affected or 
interested parties and share information and solicit input regarding 
environmental impacts of proposals. This helps the Agency to better 
identify potential environmental impacts and mitigation measures and 
allows the public to review and comment on proposals under 
consideration by the Agency. The nature and extent of public 
involvement will depend upon the public interest and the complexity, 
sensitivity, and potential for significant environmental impacts of the 
proposal.
    (b) Responsibility to involve the public. The Agency will require 
applicant assistance throughout the environmental review process, as 
appropriate, to involve the public as required under 40 CFR 1506.6. 
These activities may include, but are not limited to:
    (1) Coordination with Federal, state, and local agencies; Federally 
recognized American Indian tribes; Alaska Native organizations; Native 
Hawaiian organizations; and the public;
    (2) Providing meaningful opportunities for involvement of affected 
minority or low-income populations, which may include special outreach 
efforts, so that potential disproportionate effects on minority or low-
income populations are reduced to the maximum extent practicable;
    (3) Publication of notices;
    (4) Organizing and conducting meetings; and
    (5) Providing translators, posting information on electronic media, 
or any other additional means needed that will successfully inform the 
public.
    (c) Scoping. In accordance with 40 CFR 1501.7, scoping is an early 
and open process to identify significant environmental issues deserving 
of study, de-emphasize insignificant issues, and determine the scope of 
the environmental review process.
    (1) Public scoping meetings allow the public to obtain information 
about a proposal and to express their concerns directly to the parties 
involved and help determine what issues are to be addressed and what 
kinds of expertise, analysis, and consultation are needed. For 
proposals classified in Sec. Sec.  1970.101 and 1970.151, scoping 
meetings may be required at the Agency's discretion. The Agency may 
require a scoping meeting whenever the proposal has substantial 
controversy, scale, or complexity.
    (2) If required, scoping meetings will be held at reasonable times, 
in accessible locations, and in the geographical area of the proposal 
at a location the Agency determines would best afford an opportunity 
for public involvement.
    (3) When held, applicants must attend and participate in all 
scoping meetings. When requested by the Agency, the applicant must 
organize and arrange meeting locations, publish public notices, provide 
translation, provide for any equipment needs such as those needed to 
allow for remote participation, present information on their proposal, 
and fulfill any related activities.
    (d) Public notices. (1) The Agency is responsible for meeting the 
public notice requirements in 40 CFR 1506.6, but will require the 
applicant to provide public notices of the availability of 
environmental documents and of public meetings so as to inform those 
persons and agencies who may be interested in or affected by an 
applicant's proposal. The Agency will provide applicants with guidance 
as to specific notice content, publication frequencies, and 
distribution requirements. Public notices issued by the Agency or the 
applicant must describe the nature, location, and extent of the 
applicant's proposal and the Agency's proposed action; notices must 
also indicate the availability and location of pertinent information.
    (2) Notices generally must be published in a newspaper(s) of 
general circulation (both in print and online) within the proposal's 
affected areas and other places as determined by the Agency. The notice 
must be published in the non-classified section of the newspaper. If 
the affected area is largely non-English speaking or bilingual, the 
notice must be published in both English and non-English language 
newspapers serving the affected area, if both are available. The Agency 
will determine the use of other distribution methods for communicating 
information to affected individuals and communities if those are more 
likely to be effective. The applicant must obtain an ``affidavit of 
publication'' or other such evidence from all publications (or 
equivalent verification if other distribution methods were used) and 
must submit such evidence to the Agency to be made a part of the 
Agency's Administrative Record.
    (3) The number of times notices regarding EAs must be published is 
specified in Sec.  1970.102(b)(6)(ii). Other distribution methods may 
be used in special circumstances when a newspaper notice is not 
available or is not adequate. Additional distribution methods may 
include, but are not limited to, direct public notices to adjacent 
property owners or occupants, mass mailings, radio broadcasts, internet 
postings, posters, or some other combination of public announcements.
    (4) Formal notices required for EIS-level proposals pursuant to 40 
CFR part 1500 will be published by the Agency in the Federal Register.
    (e) Public availability. Documents associated with the 
environmental review process will be made available to the public at 
convenient locations specified in public notices and, where 
appropriate, on the Agency's internet site. Environmental documents 
that are voluminous or contain hard-to-reproduce graphics or maps 
should be made available for viewing at one or more locations, such as 
an Agency field office, public library, or the applicant's place of 
business. Upon request, the Agency will promptly provide interested 
parties copies of environmental review documents without charge to the 
extent practicable, or at a fee not to exceed the cost of reproducing 
and shipping the copies.
    (f) Public comments. All comments should be directed to the Agency. 
Comments received by applicants must be forwarded to the Agency in a 
timely manner. The Agency will assess and consider all comments 
received.


Sec.  1970.15  Interagency cooperation.

    In order to reduce delay and paperwork, the Agency will, when 
practicable, eliminate duplication of Federal, state, and local 
procedures by participating in joint environmental document 
preparation, adopting appropriate environmental documents prepared for 
or by other Federal agencies, and incorporating by reference other 
environmental documents in accordance with 40 CFR 1506.2 and 1506.3.
    (a) Coordination with other Federal agencies. When other Federal 
agencies are involved in an Agency action listed in Sec.  1970.101 or 
Sec.  1970.151, the Agency will coordinate with these agencies to 
determine cooperating agency relationships as appropriate in the 
preparation of a joint environmental review document. The criteria for 
making this determination can be found at 40 CFR 1501.5.

[[Page 11040]]

    (b) Adoption of documents prepared for or by other Federal 
agencies. The Agency may adopt EAs or EISs prepared for or by other 
Federal agencies if the proposed actions and site conditions addressed 
in the environmental document are substantially the same as those 
associated with the proposal being considered by the Agency. The Agency 
will consider age, location, and other reasonable factors in 
determining the usefulness of the other Federal documents. The Agency 
will complete an independent evaluation of the environmental document 
to ensure it meets the requirements of this part. If any environmental 
document does not meet all Agency requirements, it will be supplemented 
prior to adoption. Where there is a conflict in the two agencies' 
classes of action, the Agency may adopt the document provided that it 
meets the Agency's requirements.
    (c) Cooperation with state and local governments. In accordance 
with 40 CFR 1500.5 and 1506.2, the Agency will cooperate with state and 
local agencies to the fullest extent possible to reduce delay and 
duplication between NEPA and comparable state and local requirements.
    (1) Joint environmental documents. To the extent practicable, the 
Agency will participate in the preparation of a joint document to 
ensure that all of the requirements of this part are met. Applicants 
that request Agency assistance for specific proposals must contact the 
Agency at the earliest possible date to determine if joint 
environmental documents can be effectively prepared. In order to 
prepare joint documents the following conditions must be met:
    (i) Applicants must also be seeking financial, technical, or other 
assistance such as permitting or approvals from a state or local agency 
that has responsibility to complete an environmental review for the 
applicant's proposal; and
    (ii) The Agency and the state or local agency may agree to be joint 
lead agencies where practicable. When state laws or local ordinances 
have environmental requirements in addition to, but not in conflict 
with those of the Agency, the Agency will cooperate in fulfilling these 
requirements.
    (2) Incorporating other documents. The Agency cannot adopt a non-
Federal environmental document under NEPA. However, if an environmental 
document is not jointly prepared as described in paragraph (c)(1) of 
this section (e.g., prepared in accordance with a state environmental 
policy act [SEPA]), the Agency will evaluate the document as reference 
or supporting material for the Agency's environmental document.


Sec.  1970.16  Mitigation.

    (a) The goal of mitigation is to avoid, minimize, rectify, reduce, 
or compensate for the adverse environmental impacts of an action. The 
Agency will seek to mitigate potential adverse environmental impacts 
resulting from Agency actions. All mitigation measures will be included 
in Agency commitment or decision documents.
    (b) Mitigation measures, where necessary for a FONSI or a ROD, will 
be discussed with the applicant and with any other relevant agency and, 
to the extent practicable, incorporated into Agency commitment 
documents, plans and specifications, and construction contracts so as 
to be legally binding.
    (c) The Agency, applicable lenders, or any intermediaries will 
monitor implementation of all mitigation measures during development of 
design, final plans, inspections during the construction phase of 
projects, as well as in future servicing visits. The Agency will direct 
applicants to take necessary measures to bring the project into 
compliance. If the applicant fails to achieve compliance, all 
advancement of funds and the approval of cost reimbursements will be 
suspended. Other measures may be taken by the Agency to redress the 
failed mitigation as appropriate.


Sec.  1970.17  Programmatic analyses and tiering.

    In accordance with 40 CFR 1502.20 and to foster better decision 
making, the Agency may consider preparing programmatic-level NEPA 
analyses and tiering to eliminate repetitive discussions of the same 
issues and to focus on the actual issues ripe for decision at each 
level of environmental review.


Sec.  1970.18  Emergencies.

    When an emergency exists and the Agency determines that it is 
necessary to take emergency action before preparing a NEPA analysis and 
any required documentation, the provisions of this section apply.
    (a) Urgent response. The Agency and the applicant, as appropriate, 
may take actions necessary to control the immediate impacts of an 
emergency (see Sec.  1970.53(e)). Emergency actions include those that 
are urgently needed to restore services and to mitigate harm to life, 
property, or important natural or cultural resources. When taking such 
actions, the Agency and the applicant, when applicable, will take into 
account the probable environmental consequences of the emergency action 
and mitigate foreseeable adverse environmental effects to the extent 
practicable.
    (b) CE- and EA-level actions. If the Agency proposes longer-term 
emergency actions other than those actions described in paragraph (a) 
of this section, and such actions are not likely to have significant 
environmental impacts, the Agency will document that determination in a 
finding for a CE or in a FONSI for an EA prepared in accordance with 
this part. If the Agency finds that the nature and scope of proposed 
emergency actions are such that they must be undertaken prior to 
preparing any NEPA analysis and documentation associated with a CE or 
EA, the Agency will identify alternative arrangements for compliance 
with this part with the appropriate agencies.
    (1) Alternative arrangements for environmental compliance are 
limited to actions necessary to control the immediate impacts of the 
emergency.
    (2) Alternative arrangements will, to the extent practicable, 
attempt to achieve the substantive requirements of this part.
    (c) EIS-level actions. If the Agency proposes emergency actions 
other than those actions described in paragraphs (a) or (b) of this 
section and such actions are likely to have significant environmental 
impacts, then the Agency will consult with the CEQ about alternative 
arrangements in accordance with CEQ regulations at 40 CFR 1506.11 as 
soon as possible.


Sec. Sec.  1970.19-1970.50  [Reserved]

Subpart B--NEPA Categorical Exclusions


Sec.  1970.51  Applying CEs.

    (a) The actions listed in Sec. Sec.  1970.53 through 1970.55 are 
classes of actions that the Agency has determined do not individually 
or cumulatively have a significant effect on the human environment 
(referred to as ``categorical exclusions'' or CEs).
    (1) Actions listed in Sec.  1970.53 do not normally require 
applicants to submit environmental documentation with their 
applications. However, these applicants may be required to provide 
environmental information at the Agency's request.
    (2) Actions listed in Sec.  1970.54 normally require the submission 
of an environmental report (ER) by an applicant to allow the Agency to 
determine whether extraordinary circumstances (as defined in Sec.  
1970.52(a)) exist. When the Agency

[[Page 11041]]

determines that extraordinary circumstances exist, an EA or EIS, as 
appropriate, will be required and, in such instances, applicants may be 
required to provide additional environmental information later at the 
Agency's request.
    (3) Actions listed in Sec.  1970.55 relate to financial assistance 
whereby the applicant is a primary recipient of a multi-tier program 
providing financial assistance to secondary or ultimate recipients 
without specifying the use of such funds for eligible actions at the 
time of initial application and approval. The decision to approve or 
fund such initial proposals has no discernible environmental effects 
and is therefore categorically excluded provided the primary recipient 
enters into an agreement with the Agency for future reviews. The 
primary recipient is limited to making the Agency's financial 
assistance available to secondary recipients for the types of projects 
specified in the primary recipient's application. Second-tier funding 
of proposals to secondary or ultimate recipients will be screened for 
extraordinary circumstances by the primary recipient and monitored by 
the Agency. If the primary recipient determines that extraordinary 
circumstances exist on any second-tier proposal, it must be referred to 
the Agency for the appropriate level of review under this part in 
accordance with subparts C and D.
    (b) To find that a proposal is categorically excluded, the Agency 
must determine the following:
    (1) The proposal fits within a class of actions that is listed in 
Sec. Sec.  1970.53 through 1970.55;
    (2) There are no extraordinary circumstances related to the 
proposal (see Sec.  1970.52); and
    (3) The proposal is not ``connected'' to other actions with 
potentially significant impacts (see 40 CFR 1508.25(a)(1)) or is not 
considered a ``cumulative action'' (see 40 CFR 1508.25(a)(2)), and is 
not precluded by 40 CFR 1506.1.
    (c) A proposal that consists of more than one action may be 
categorically excluded only if all components of the proposed action 
are eligible for a CE.
    (d) If, at any time during the environmental review process, the 
Agency determines that the proposal does not meet the criteria listed 
in Sec. Sec.  1970.53 through 1970.55, an EA or EIS, as appropriate, 
will be required.
    (e) Failure to achieve compliance with this part will postpone 
further consideration of an applicant's proposal until such compliance 
is achieved or the applicant withdraws the proposal. If compliance is 
not achieved, the Agency will deny the request for financial 
assistance.


Sec.  1970.52  Extraordinary circumstances.

    (a) Extraordinary circumstances are unique situations presented by 
specific proposals, such as characteristics of the geographic area 
affected by the proposal, scientific controversy about the 
environmental effects of the proposal, uncertain effects or effects 
involving unique or unknown risks, and unresolved conflicts concerning 
alternate uses of available resources within the meaning of section 
102(2)(E) of NEPA. In the event of extraordinary circumstances, a 
normally excluded action will be the subject of an additional 
environmental review by the Agency to determine the potential of the 
Agency action to cause any significant adverse environmental effect, 
and could, at the Agency's sole discretion, require an EA or an EIS, 
prepared in accordance with subparts C or D of this part, respectively.
    (b) Significant adverse environmental effects that the Agency 
considers to be extraordinary circumstances include, but are not 
limited to:
    (1) Any violation of applicable Federal, state, or local statutory, 
regulatory, or permit requirements for environment, safety, and health.
    (2) Siting, construction, or major expansion of Resource 
Conservation and Recovery Act permitted waste storage, disposal, 
recovery, or treatment facilities (including incinerators), even if the 
proposal includes categorically excluded waste storage, disposal, 
recovery, or treatment actions.
    (3) Any proposal that is likely to cause uncontrolled or 
unpermitted releases of hazardous substances, pollutants, contaminants, 
or petroleum and natural gas products.
    (4) An adverse effect on the following environmental resources:
    (i) Historic properties;
    (ii) Federally listed threatened or endangered species, critical 
habitat, Federally proposed or candidate species;
    (iii) Wetlands (Those actions that propose to convert or propose 
new construction in wetlands will require consideration of alternatives 
to avoid adverse effects and unwarranted conversions of wetlands. For 
actions involving linear utility infrastructure where utilities are 
proposed to be installed in existing, previously disturbed rights-of-
way or that are authorized under applicable Clean Water Act, Section 
404 nationwide permits will not require the consideration of 
alternatives. Those actions that require Section 404 individual permits 
would create an extraordinary circumstance);
    (iv) Floodplains (those actions that introduce fill or structures 
into a floodplain or propose substantial improvements to structures 
within a floodplain will require consideration of alternatives to avoid 
adverse effects and incompatible development in floodplains. Actions 
that do not adversely affect the hydrologic character of a floodplain, 
such as buried utility lines or subsurface pump stations, would not 
create an extraordinary circumstance; or purchase of existing 
structures within the floodplain will not create an extraordinary 
circumstance but may require consideration of alternatives to avoid 
adverse effects and incompatible development in floodplains when 
determined appropriate by the Agency);
    (v) Areas having formal Federal or state designations such as 
wilderness areas, parks, or wildlife refuges; wild and scenic rivers; 
or marine sanctuaries;
    (vi) Special sources of water (such as sole source aquifers, 
wellhead protection areas, and other water sources that are vital in a 
region);
    (vii) Coastal barrier resources or, unless exempt, coastal zone 
management areas; and
    (viii) Coral reefs.
    (5) The existence of controversy based on effects to the human 
environment brought to the Agency's attention by a Federal, tribal, 
state, or local government agency.


Sec.  1970.53  CEs involving no or minimal disturbance without an 
environmental report.

    The CEs in this section are for proposals for financial assistance 
that involve no or minimal alterations in the physical environment and 
typically occur on previously disturbed land. These actions normally do 
not require an applicant to submit environmental documentation with the 
application. However, based on the review of the project description, 
the Agency may request additional environmental documentation from the 
applicant at any time, specifically if the Agency determines that 
extraordinary circumstances may exist. In accordance with Section 106 
of the National Historic Preservation Act (54 U.S.C. 300101 et seq.) 
and its implementing regulations under 36 CFR 800.3(a), the Agency has 
determined that the actions in this section are undertakings, and in 
accordance with 36 CFR 800.3(a)(1) has identified those undertakings 
for which no further review under 36 CFR part 800 is required because 
they have no

[[Page 11042]]

potential to cause effects to historic properties. In accordance with 
section 7 of the Endangered Species Act (16 U.S.C. 1531 et seq.) and 
its implementing regulations at 50 CFR part 402, the Agency has 
determined that the actions in this section are actions for purposes of 
the Endangered Species Act, and in accordance with 50 CFR 402.06 has 
identified those actions for which no further review under 50 CFR part 
402 is required because they will have no effect to listed threatened 
and endangered species.
    (a) Routine financial actions. The following are routine financial 
actions and, as such, are classified as categorical exclusions 
identified in paragraphs (a)(1) through (7) of this section.
    (1) Financial assistance for the purchase, transfer, lease, or 
other acquisition of real property when no or minimal change in use is 
reasonably foreseeable.
    (i) Real property includes land and any existing permanent or 
affixed structures.
    (ii) ``No or minimal change in use is reasonably foreseeable'' 
means no or only a small change in use, capacity, purpose, operation, 
or design is expected where the foreseeable type and magnitude of 
impacts would remain essentially the same.
    (2) Financial assistance for the purchase, transfer, or lease of 
personal property or fixtures where no or minimal change in operations 
is reasonably foreseeable. These include:
    (i) Approval of minimal expenditures not affecting the environment 
such as contracts for long lead-time equipment and purchase options by 
applicants under the terms of 40 CFR 1506.1(d) and 7 CFR 1970.12;
    (ii) Acquisition of end-user equipment and programming for 
telecommunication distance learning;
    (iii) Purchase, replacement, or installation of equipment necessary 
for the operation of an existing facility (such as Supervisory Control 
and Data Acquisition Systems (SCADA), energy management or efficiency 
improvement systems (including heat rate efficiency), replacement or 
conversion to enable use of renewable fuels, standby internal 
combustion electric generators, battery energy storage systems, and 
associated facilities for the primary purpose of providing emergency 
power);
    (iv) Purchase of vehicles (such as those used in business, utility, 
community, or emergency services operations);
    (v) Purchase of existing water rights where no associated 
construction is involved;
    (vi) Purchase of livestock and essential farm equipment, including 
crop storing and drying equipment; and
    (vii) Purchase of stock in an existing enterprise to obtain an 
ownership interest in that enterprise.
    (3) Financial assistance for operating (working) capital for an 
existing operation to support day-to-day expenses.
    (4) Sale or lease of Agency-owned real property, if the sale or 
lease of Agency-owned real property will have no or minimal 
construction or change in current operations in the foreseeable future.
    (5) The provision of additional financial assistance for cost 
overruns where the purpose, operation, location, and design of the 
proposal as originally approved has not been substantially changed.
    (6) Rural Business Investment Program (7 U.S.C. 1989 and 2009cc et 
seq.) actions as follows:
    (i) Non-leveraged program actions that include licensing by USDA of 
Rural Business Investment Companies (RBIC); or
    (ii) Leveraged program actions that include licensing by USDA of 
RBIC and Federal financial assistance in the form of technical grants 
or guarantees of debentures of an RBIC, unless such Federal assistance 
is used to finance construction or development of land.
    (7) A guarantee provided to a guaranteed lender for the sole 
purpose of refinancing outstanding bonds or notes or a guarantee 
provided to the Federal Financing Bank pursuant to Section 313A(a) of 
the Rural Electrification Act of 1936 for the purpose of:
    (i) Refinancing existing debt instruments of a lender organized on 
a not-for-profit basis; or
    (ii) Prepaying outstanding notes or bonds made to or guaranteed by 
the Agency.
    (b) Information gathering and technical assistance. The following 
are CEs for financial assistance, identified in paragraphs (b)(1) 
through (3) of this section.
    (1) Information gathering, data analysis, document preparation, 
real estate appraisals, environmental site assessments, and information 
dissemination. Examples of these actions are:
    (i) Information gathering such as research, literature surveys, 
inventories, and audits;
    (ii) Data analysis such as computer modeling;
    (iii) Document preparation such as strategic plans; conceptual 
designs; management, economic, planning, or feasibility studies; energy 
audits or assessments; environmental analyses; and survey and analyses 
of accounts and business practices; and
    (iv) Information dissemination such as document mailings, 
publication, and distribution; and classroom training and informational 
programs.
    (2) Technical advice, training, planning assistance, and capacity 
building. Examples of these actions are:
    (i) Technical advice, training, planning assistance such as 
guidance for cooperatives and self-help housing group planning; and
    (ii) Capacity building such as leadership training, strategic 
planning, and community development training.
    (3) Site characterization, environmental testing, and monitoring 
where no significant alteration of existing ambient conditions would 
occur. This includes, but is not limited to, air, surface water, 
groundwater, wind, soil, or rock core sampling; installation of 
monitoring wells; and installation of small-scale air, water, or 
weather monitoring equipment.
    (c) Minor construction proposals. The following are CEs that apply 
to financial assistance for minor construction proposals:
    (1) Minor amendments or revisions to previously approved projects 
provided such activities do not alter the purpose, operation, 
geographic scope, or design of the project as originally approved;
    (2) Repair, upgrade, or replacement of equipment in existing 
structures for such purposes as improving habitability, energy 
efficiency (including heat rate efficiency), replacement or conversion 
to enable use of renewable fuels, pollution prevention, or pollution 
control;
    (3) Any internal modification or minimal external modification, 
restoration, renovation, maintenance, and replacement in-kind to an 
existing facility or structure;
    (4) Construction of or substantial improvement to a single-family 
dwelling, or a Rural Housing Site Loan project or multi-family housing 
project serving up to four families and affecting less than 10 acres of 
land;
    (5) Siting, construction, and operation of new or additional water 
supply wells for residential, farm, or livestock use;
    (6) Replacement of existing water and sewer lines within the 
existing right-of-way and as long as the size of pipe is either no 
larger than the inner diameter of the existing pipe or is an increased 
diameter as required by Federal or state requirements. If a larger pipe 
size is required, applicants must provide a copy of written 
administrative requirements mandating a minimum

[[Page 11043]]

pipe diameter from the regulatory agency with jurisdiction;
    (7) Modifications of an existing water supply well to restore 
production in existing commercial well fields, if there would be no 
drawdown other than in the immediate vicinity of the pumping well, no 
resulting long-term decline of the water table, and no degradation of 
the aquifer from the replacement well;
    (8) New utility service connections to individual users or 
construction of utility lines or associated components where the 
applicant has no control over the placement of the utility facilities; 
and
    (9) Conversion of land in agricultural production to pastureland or 
forests, or conversion of pastureland to forest.
    (d) Energy or telecommunication proposals. The following are CEs 
that apply to financial assistance for energy or telecommunication 
proposals:
    (1) Upgrading or rebuilding existing telecommunication facilities 
(both wired and wireless) or addition of aerial cables for 
communication purposes to electric power lines that would not affect 
the environment beyond the previously-developed, existing rights-of-
way;
    (2) Burying new facilities for communication purposes in previously 
developed, existing rights-of-way and in areas already in or committed 
to urbanized development or rural settlements whether incorporated or 
unincorporated that are characterized by high human densities and 
within contiguous, highly disturbed environments with human-built 
features. Covered actions include associated vaults and pulling and 
tensioning sites outside rights-of-way in nearby previously disturbed 
or developed land;
    (3) Changes to electric transmission lines that involve pole 
replacement or structural components only where either the same or 
substantially equivalent support structures at the approximate existing 
support structure locations are used;
    (4) Phase or voltage conversions, reconductoring, upgrading, or 
rebuilding of existing electric distribution lines that would not 
affect the environment beyond the previously developed, existing 
rights-of-way. Includes pole replacements but does not include 
overhead-to-underground conversions;
    (5) Collocation of telecommunications equipment on existing 
infrastructure and deployment of distributed antenna systems and small 
cell networks provided the latter technologies are not attached to and 
will not cause adverse effects to historic properties;
    (6) Siting, construction, and operation of small, ground source 
heat pump systems that would be located on previously developed land;
    (7) Siting, construction, and operation of small solar electric 
projects or solar thermal projects to be installed on or adjacent to an 
existing structure and that would not affect the environment beyond the 
previously developed facility area and are not attached to and will not 
cause adverse effects to historic properties;
    (8) Siting, construction, and operation of small biomass projects, 
such as animal waste anaerobic digesters or gasifiers, that would use 
feedstock produced on site (such as a farm where the site has been 
previously disturbed) and supply gas or electricity for the site's own 
energy needs with no or only incidental export of energy;
    (9) Construction of small standby electric generating facilities 
with a rating of one average megawatt (MW) or less, and associated 
facilities, for the purpose of providing emergency power for or startup 
of an existing facility;
    (10) Additions or modifications to electric transmission facilities 
that would not affect the environment beyond the previously developed 
facility area including, but not limited to, switchyard rock, grounding 
upgrades, secondary containment projects, paving projects, seismic 
upgrading, tower modifications, changing insulators, and replacement of 
poles, circuit breakers, conductors, transformers, and crossarms; and
    (11) Safety, environmental, or energy efficiency (including heat 
rate efficiency) improvements within an existing electric generation 
facility, including addition, replacement, or upgrade of facility 
components (such as precipitator, baghouse, or scrubber installations), 
that do not result in a change to the design capacity or function of 
the facility and do not result in an increase in pollutant emissions, 
effluent discharges, or waste products.
    (e) Emergency situations. Repairs made because of an emergency 
situation to return to service damaged facilities of an applicant's 
utility system or other actions necessary to preserve life and control 
the immediate impacts of the emergency.
    (f) Promulgation of rules or formal notices. The promulgation of 
rules or formal notices for policies or programs that are 
administrative or financial procedures for implementing Agency 
assistance activities.
    (g) Agency proposals for legislation. Agency proposals for 
legislation that have no potential for significant environmental 
impacts because they would allow for no or minimal construction or 
change in operations.
    (h) Administrative actions. Agency procurement activities for goods 
and services; routine facility operations; personnel actions, including 
but not limited to, reduction in force or employee transfers resulting 
from workload adjustments, and reduced personnel or funding levels; and 
other such management actions related to the operation of the Agency.


Sec.  1970.54  CEs involving small-scale development with an 
environmental report.

    The CEs in this section are for proposals for financial assistance 
that require an applicant to submit an ER with their application to 
facilitate Agency determination of extraordinary circumstances. At a 
minimum, the ER will include a complete description of all components 
of the applicant's proposal and any connected actions, including its 
specific location on detailed site plans as well as location maps 
equivalent to a U.S. Geological Survey (USGS) quadrangle map; and 
information from authoritative sources acceptable to the Agency 
confirming the presence or absence of sensitive environmental resources 
in the area that could be affected by the applicant's proposal. The ER 
submitted must be accurate, complete, and capable of verification. The 
Agency may request additional information as needed to make an 
environmental determination. Failure to submit the required 
environmental report will postpone further consideration of the 
applicant's proposal until the ER is submitted, or the Agency may deny 
the request for financial assistance. The Agency will review the ER and 
determine if extraordinary circumstances exist. The Agency's review may 
determine that classification as an EA or an EIS is more appropriate 
than a CE classification.
    (a) Small-scale site-specific development. The following CEs apply 
to proposals where site development activities (including construction, 
expansion, repair, rehabilitation, or other improvements) for rural 
development purposes would impact not more than 10 acres of real 
property and would not cause a substantial increase in traffic. These 
CEs are identified in paragraphs (a)(1) through (a)(9) of this section. 
This paragraph does not apply to new industrial proposals (such as 
ethanol and biodiesel production facilities) or those classes of action 
listed in Sec. Sec.  1970.53, 1970.101, or 1970.151.
    (1) Multi-family housing and Rural Housing Site Loans.
    (2) Business development.

[[Page 11044]]

    (3) Community facilities such as municipal buildings, libraries, 
security services, fire protection, schools, and health and recreation 
facilities.
    (4) Infrastructure to support utility systems such as water or 
wastewater facilities; headquarters, maintenance, equipment storage, or 
microwave facilities; and energy management systems. This does not 
include proposals that either create a new or relocate an existing 
discharge to or a withdrawal from surface or ground waters, or cause 
substantial increase in a withdrawal or discharge at an existing site.
    (5) Installation of new, commercial-scale water supply wells and 
associated pipelines or water storage facilities that are required by a 
regulatory authority or standard engineering practice as a backup to 
existing production well(s) or as reserve for fire protection.
    (6) Construction of telecommunications towers and associated 
facilities, if the towers and associated facilities are 450 feet or 
less in height and would not be in or visible from an area of 
documented scenic value.
    (7) Repair, rehabilitation, or restoration of water control, flood 
control, or water impoundment facilities, such as dams, dikes, levees, 
detention reservoirs, and drainage ditches, with minimal change in use, 
size, capacity, purpose, operation, location, or design from the 
original facility.
    (8) Installation or enlargement of irrigation facilities on an 
applicant's land, including storage reservoirs, diversion dams, wells, 
pumping plants, canals, pipelines, and sprinklers designed to irrigate 
less than 80 acres.
    (9) Replacement or restoration of irrigation facilities, including 
storage reservoirs, diversion dams, wells, pumping plants, canals, 
pipelines, and sprinklers, with no or minimal change in use, size, 
capacity, or location from the original facility(s).
    (10) Vegetative biomass harvesting operations of no more than 15 
acres, provided any amount of land involved in harvesting is to be 
conducted managed on a sustainable basis and according to a Federal, 
state, or other governmental unit approved management plan.
    (b) Small-scale corridor development. The following CEs apply to 
financial assistance for:
    (1) Construction or repair of roads, streets, and sidewalks, 
including related structures such as curbs, gutters, storm drains, and 
bridges, in an existing right-of-way with minimal change in use, size, 
capacity, purpose, or location from the original infrastructure;
    (2) Improvement and expansion of existing water, waste water, and 
gas utility systems:
    (i) Within one mile of currently served areas irrespective of the 
percent of increase in new capacity, or
    (ii) Increasing capacity not more than 30 percent of the existing 
user population;
    (3) Replacement of utility lines where road reconstruction 
undertaken by non-Agency applicants requires the relocation of lines 
either within or immediately adjacent to the new road easement or 
right-of-way; and
    (4) Installation of new linear telecommunications facilities and 
related equipment and infrastructure.
    (c) Small-scale energy proposals. The following CEs apply to 
financial assistance for:
    (1) Construction of electric power substations (including switching 
stations and support facilities) or modification of existing 
substations, switchyards, and support facilities;
    (2) Construction of electric power lines and associated facilities 
designed for or capable of operation at a nominal voltage of either:
    (i) Less than 69 kilovolts (kV);
    (ii) Less than 230 kV if no more than 25 miles of line are 
involved; or
    (iii) 230 kV or greater involving no more than three miles of line, 
but not for the integration of major new generation resources into a 
bulk transmission system;
    (3) Reconstruction (upgrading or rebuilding) or minor relocation of 
existing electric transmission lines (230 kV or less) 25 miles in 
length or less to enhance environmental and land use values or to 
improve reliability or access. Such actions include relocations to 
avoid right-of-way encroachments, resolve conflict with property 
development, accommodate road/highway construction, allow for the 
construction of facilities such as canals and pipelines, or reduce 
existing impacts to environmentally sensitive areas;
    (4) Repowering or uprating modifications or expansion of an 
existing unit(s) up to a rating of 50 average MW at electric generating 
facilities in order to maintain or improve the efficiency, capacity, or 
energy output of the facility. Any air emissions from such activities 
must be within the limits of an existing air permit;
    (5) Installation of new generating units or replacement of existing 
generating units at an existing hydroelectric facility or dam which 
results in no change in the normal maximum surface area or normal 
maximum surface elevation of the existing impoundment. All supporting 
facilities and new related electric transmission lines 10 miles in 
length or less are included;
    (6) Installation of a heat recovery steam generator and steam 
turbine with a rating of 200 average MW or less on an existing electric 
generation site for the purpose of combined cycle operations. All 
supporting facilities and new related electric transmission lines 10 
miles in length or less are included;
    (7) Construction of small electric generating facilities (except 
geothermal and solar electric projects), including those fueled with 
wind or biomass, with a rating of 10 average MW or less. All supporting 
facilities and new related electric transmission lines 10 miles in 
length or less are included;
    (8) Siting, construction, and operation of small biomass projects 
(except small electric generating facilities projects fueled with 
biomass) producing not more than 3 million gallons of liquid fuel or 
300,000 million british thermal units annually, developed on up 10 
acres of land;
    (9) Geothermal electric power projects or geothermal heating or 
cooling projects developed on up to 10 acres of land and including 
installation of one geothermal well for the production of geothermal 
fluids for direct use application (such as space or water heating/
cooling) or for power generation. All supporting facilities and new 
related electric transmission lines 10 miles in length or less are 
included;
    (10) Solar electric projects or solar thermal projects developed on 
up to 10 acres of land including all supporting facilities and new 
related electric transmission lines 10 miles in length or less;
    (11) Distributed resources of any capacity located at or adjacent 
to an existing landfill site or wastewater treatment facility that is 
powered by refuse-derived fuel. All supporting facilities and new 
related electric transmission lines 10 miles in length or less are 
included;
    (12) Small conduit hydroelectric facilities having a total 
installed capacity of not more than 5 average MW using an existing 
conduit such as an irrigation ditch or a pipe into which a turbine 
would be placed for the purpose of electric generation. All supporting 
facilities and new related electric transmission lines 10 miles in 
length or less are included; and
    (13) Modifications or enhancements to existing facilities or 
structures that would not substantially change the

[[Page 11045]]

footprint or function of the facility or structure and that are 
undertaken for the purpose of improving energy efficiency (including 
heat rate efficiency), promoting pollution prevention or control, 
safety, reliability, or security. This includes, but is not limited to, 
retrofitting existing facilities to produce biofuels and replacing 
fossil fuels used to produce heat or power in biorefineries with 
renewable biomass. This also includes installation of fuel blender 
pumps and associated changes within an existing fuel facility.


Sec.  1970.55  CEs for multi-tier actions.

    The CEs in this section apply solely to providing financial 
assistance to primary recipients in multi-tier action programs.
    (a) The Agency's approval of financial assistance to a primary 
recipient in a multi-tier action program is categorically excluded 
under this section only if the primary recipient agrees in writing to:
    (1) Conduct a screening of all proposed uses of funds to determine 
whether each proposal that would be funded or financed falls within 
Sec.  1970.53 or Sec.  1970.54 as a categorical exclusion;
    (2) Obtain sufficient information to make an evaluation of those 
proposals listed in Sec.  1970.53 and prepare an ER for proposals under 
Sec.  1970.54 to determine if extraordinary circumstances (as described 
in Sec.  1970.52) are present;
    (3) Document and maintain its conclusions regarding the 
applicability of a CE in its official records for Agency verification; 
and
    (4) Refer all proposals that do not meet listed CEs in Sec.  
1970.53 or Sec.  1970.54, and proposals that may have extraordinary 
circumstances (as described in Sec.  1970.52) to the Agency for further 
review in accordance with this part.
    (b) The primary recipient's compliance with this section will be 
monitored and verified in Agency compliance reviews and other required 
audits. Failure by a primary recipient to meet the requirements of this 
section will result in penalties that may include written warnings, 
withdrawal of Agency financial assistance, suspension from 
participation in Agency programs, or other appropriate action.
    (c) Nothing in this section is intended to delegate the Agency's 
responsibility for compliance with this part. The Agency will continue 
to maintain ultimate responsibility for and control over the 
environmental review process in accordance with this part.


Sec. Sec.  1970.56-1970.100  [Reserved]

Subpart C--NEPA Environmental Assessments


Sec.  1970.101  General.

    (a) An EA is a concise public document used by the Agency to 
determine whether to issue a FONSI or prepare an EIS, as specified in 
subpart D of this part. If, at any point during the preparation of an 
EA, it is determined that the proposal will have a potentially 
significant impact on the quality of the human environment, an EIS will 
be prepared.
    (b) Unless otherwise determined by the Agency, EAs will be prepared 
for all ``Federal actions'' as described in Sec.  1970.8, unless such 
actions are categorically excluded, as determined under subpart B of 
this part, or require an EIS, as provided under subpart D of this part;
    (c) Preparation of an EA will begin as soon as the Agency has 
determined the proper classification of the applicant's proposal. 
Applicants should consult as early as possible with the Agency to 
determine the environmental review requirements of their proposals. The 
EA must be prepared concurrently with the early planning and design 
phase of the proposal. The EA will not be considered complete until it 
is in compliance with this part.
    (d) Failure to achieve compliance with this part will postpone 
further consideration of the applicant's proposal until such compliance 
is achieved or the applicant withdraws the application. If compliance 
is not achieved, the Agency will deny the request for financial 
assistance.


Sec.  1970.102  Preparation of EAs.

    The EA must focus on resources that might be affected and any 
environmental issues that are of public concern.
    (a) The amount of information and level of analysis provided in the 
EA should be commensurate with the magnitude of the proposal's 
activities and its potential to affect the quality of the human 
environment. At a minimum, the EA must discuss the following:
    (1) The purpose and need for the proposed action;
    (2) The affected environment, including baseline conditions that 
may be impacted by the proposed action and alternatives;
    (3) The environmental impacts of the proposed action including the 
No Action alternative, and, if a specific project element is likely to 
adversely affect a resource, at least one alternative to that project 
element;
    (4) Any applicable environmental laws and Executive Orders;
    (5) Any required coordination undertaken with any Federal, state, 
or local agencies or Indian tribes regarding compliance with applicable 
laws and Executive Orders;
    (6) Mitigation measures considered, including those measures that 
must be adopted to ensure the action will not have significant impacts;
    (7) Any documents incorporated by reference, if appropriate, 
including information provided by the applicant for the proposed 
action; and
    (8) A listing of persons and agencies consulted.
    (b) The following describes the normal processing of an EA under 
this subpart:
    (1) The Agency advises the applicant of its responsibilities as 
described in subpart A of this part. These responsibilities include 
preparation of the EA as discussed in Sec.  1970.5(b)(3)(iv)(B).
    (2) The applicant provides a detailed project description including 
connected actions.
    (3) The Agency verifies that the applicant's proposal should be the 
subject of an EA under Sec.  1970.101. In addition, the Agency 
identifies any unique environmental requirements associated with the 
applicant's proposal.
    (4) The Agency or the applicant, as appropriate, coordinates with 
Federal, state, and local agencies with jurisdiction by law or special 
expertise; tribes; and interested parties during EA preparation.
    (5) Upon receipt of the EA from the applicant, the Agency evaluates 
the completeness and accuracy of the documentation. If necessary, the 
Agency will require the applicant to correct any deficiencies and 
resubmit the EA prior to its review.
    (6) The Agency reviews the EA and supporting documentation to 
determine whether the environmental review is acceptable.
    (i) If the Agency finds the EA unacceptable, the Agency will notify 
the applicant, as necessary, and work to resolve any outstanding 
issues.
    (ii) If the Agency finds the EA acceptable, the Agency will prepare 
or review a ``Notice of Availability of the EA'' and direct the 
applicant to publish the notice in local newspapers or through other 
distribution methods as approved by the Agency. The notice must be 
published for three consecutive issues (including online) in a daily 
newspaper, or two consecutive weeks in a weekly newspaper. If other 
distribution methods are approved, the

[[Page 11046]]

Agency will identify equivalent requirements. The public review and 
comment period will begin on the day of the first publication date or 
equivalent if other distribution methods are used. A 14- to 30-day 
public review and comment period, as determined by the Agency, will be 
provided for all Agency EAs.
    (7) After reviewing and evaluating all public comments, the Agency 
determines whether to modify the EA, prepare a FONSI, or prepare an EIS 
that conforms with subpart D of this part.
    (8) If the Agency determines that a FONSI is appropriate, and after 
preparation of the FONSI, the Agency will prepare or review a public 
notice announcing the availability of the FONSI and direct the 
applicant to publish the public notice in a newspaper(s) of general 
circulation, as described in Sec.  1970.14(d)(2). In such case, the 
applicant must obtain an ``affidavit of publication'' or other such 
proof from all publications (or equivalent verification if other media 
were used) and must submit the affidavits and verifications to the 
Agency.


Sec.  1970.103  Supplementing EAs.

    If the applicant makes substantial changes to a proposal or if new 
relevant environmental information is brought to the attention of the 
Agency after the issuance of an EA or FONSI, supplementing an EA may be 
necessary before the action has been implemented. Depending on the 
nature of the changes, the EA will be supplemented by revising the 
applicable section(s) or by appending the information to address 
potential impacts not previously considered. If an EA is supplemented, 
public notification will be required in accordance with Sec.  
1970.102(b)(7) and (8).


Sec.  1970.104  Finding of No Significant Impact.

    The Agency may issue a FONSI or a revised FONSI only if the EA or 
supplemental EA supports the finding that the proposed action will not 
have a significant effect on the human environment. If the EA does not 
support a FONSI, the Agency will follow the requirements of subpart D 
of this part before taking action on the proposal.
    (a) A FONSI must include:
    (1) A summary of the supporting EA consisting of a brief 
description of the proposed action, the alternatives considered, and 
the proposal's impacts;
    (2) A notation of any other EAs or EISs that are being or will be 
prepared and that are related to the EA;
    (3) A brief discussion of why there would be no significant 
impacts;
    (4) Any mitigation essential to finding that the impacts of the 
proposed action would not be significant;
    (5) The date issued; and
    (6) The signature of the appropriate Agency approval official.
    (b) The Agency must ensure that the applicant has committed to any 
mitigation that is necessary to support a FONSI and possesses the 
authority and ability to fulfill those commitments. The Agency must 
ensure that mitigation, and, if appropriate, a mitigation plan that is 
necessary to support a FONSI, is made a condition of financial 
assistance.
    (c) The Agency must make a FONSI available to the public as 
provided at 40 CFR 1501.4(e) and 1506.6.
    (d) The Agency may revise a FONSI at any time provided that the 
revision is supported by an EA or a supplemental EA. A revised FONSI is 
subject to all provisions of this section.


Sec. Sec.  1970.105--1970.150  [Reserved]

Subpart D--NEPA Environmental Impact Statements


Sec.  1970.151  General.

    (a) The purpose of an EIS is to provide a full and fair discussion 
of significant environmental impacts and to inform the appropriate 
Agency decision maker and the public of reasonable alternatives to the 
applicant's proposal, the Agency's proposed action, and any measures 
that would avoid or minimize adverse impacts.
    (b) Agency actions for which an EIS is required include, but are 
not limited to:
    (1) Proposals for which an EA was initially prepared and that may 
result in significant impacts that cannot be mitigated;
    (2) Siting, construction (or expansion), and decommissioning of 
major treatment, storage, and disposal facilities for hazardous wastes 
as designated in 40 CFR part 261;
    (3) Proposals that change or convert the land use of an area 
greater than 640 contiguous acres;
    (4) New electric generating facilities, other than gas-fired prime 
movers (gas-fired turbines and gas engines) or renewable systems 
(solar, wind, geothermal), with a rating greater than 50 average MW, 
and all new associated electric transmission facilities;
    (5) New mining operations when the applicant has effective control 
(i.e., applicant's dedicated mine or purchase of a substantial portion 
of the mining equipment); and
    (6) Agency proposals for legislation that may have a significant 
environmental impact.
    (c) Failure to achieve compliance with this part will postpone 
further consideration of the applicant's proposal until the Agency 
determines that such compliance has been achieved or the applicant 
withdraws the application. If compliance is not achieved, the Agency 
will deny the request for financial assistance.


Sec.  1970.152  EIS funding and professional services.

    (a) Funding for EISs. Unless otherwise approved by the Agency, an 
applicant must fund an EIS and any supplemental documentation prepared 
in support of an applicant's proposal.
    (b) Acquisition of professional services. Applicants shall solicit 
and procure professional services in accordance with and through the 
third-party contractor methods specified in 40 CFR 1506.5(c), and in 
compliance with applicable state or local laws or regulations. 
Applicants and their officers, employees, or agents shall not engage in 
contract awards or contract administration if there is a conflict of 
interest or receipt of gratuities, favors or any form of monetary value 
from contractors, subcontractors, potential contractors or 
subcontractors, or other parties performing or to perform work on an 
EIS. To avoid any conflicts of interest, the Agency is responsible for 
selecting the EIS contractor and the applicant must not initiate any 
procurement of professional services to prepare an EIS without prior 
written approval from the Agency. The Agency reserves the right to 
consider alternate procurement methods.
    (c) EIS scope and content. The Agency will prepare the scope of 
work for the preparation of the EIS and will be responsible for the 
scope, content and development of the EIS prepared by the contractor(s) 
hired or selected by the Agency.
    (d) Agreement Outlining Party Roles and Responsibilities. For each 
EIS, an agreement will be executed by the Agency, the applicant, and 
each third-party contractor, which describes each party's roles and 
responsibilities during the EIS process.
    (e) Disclosure statement. The Agency will ensure that a disclosure 
statement is executed by each EIS contractor. The disclosure statement 
will specify that the contractor has no financial or other interest in 
the outcome of the proposal.


Sec.  1970.153  Notice of Intent and scoping.

    (a) Notice of Intent. The Agency will publish a Notice of Intent 
(NOI) in the

[[Page 11047]]

Federal Register that an EIS will be prepared and, if public scoping 
meetings are required, the notice will be published at least 14 days 
prior to the public scoping meeting(s).
    (1) The NOI will include a description of the following: the 
applicant's proposal and possible alternatives; the Agency's scoping 
process including plans for possible public scoping meetings with time 
and locations; background information if available; and contact 
information for Agency staff who can answer questions regarding the 
proposal and the EIS.
    (2) The applicant must publish a notice similar to the NOI, as 
directed and approved by the Agency, in one or more newspapers of local 
circulation, or provide similar information through other distribution 
methods as approved by the Agency. If public scoping meetings are 
required, such notices must be published at least 14 days prior to each 
public scoping meeting.
    (b) Scoping. In addition to the Agency and applicant 
responsibilities for public involvement identified in Sec.  1970.14 and 
as part of early planning for the proposal, the Agency and the 
applicant must invite affected Federal, state, and local agencies and 
tribes to inform them of the proposal and identify the permits and 
approvals that must be obtained and the administrative procedures that 
must be followed.
    (c) Significant issues. For each scoping meeting held, the Agency 
will determine, as soon as practicable after the meeting, the 
significant issues to be analyzed in depth and identify and eliminate 
from detailed study the issues that are not significant, have been 
covered by prior environmental review, or are not determined to be 
reasonable alternatives.


Sec.  1970.154  Preparation of the EIS.

    (a) The EIS must be prepared in accordance with the format outlined 
at 40 CFR 1502.10.
    (b) The EIS must be prepared using an interdisciplinary approach 
that will ensure the integrated use of the natural and social sciences 
and the environmental design arts. The disciplines of the preparers 
must be appropriate to address the potential environmental impacts 
associated with the proposal. This can be accomplished both in the 
information collection stage and the analysis stage by communication 
and coordination with environmental experts such as those at 
universities; local, state, and Federal agencies; and Indian tribes.
    (c) The Agency will file the draft and final EIS with the U. S. 
Environmental Protection Agency's (EPA) Office of Federal Activities.
    (d) The Agency will publish in the Federal Register a Notice of 
Availability announcing that either the draft or final EIS is available 
for review and comment. The applicant must concurrently publish a 
similar announcement using one or more distribution methods as approved 
by the Agency in accordance with Sec.  1970.14.
    (e) Minimum public comment time periods are calculated from the 
date on which EPA's Notice of Availability is published in the Federal 
Register. The Agency has the discretion to extend any public review and 
comment period if warranted. Notification of any extensions will occur 
through the Federal Register and other media outlets.
    (f) When comments are received on a draft EIS, the Agency will 
assess and consider comments both individually and collectively. With 
support from the third-party contractor and the applicant, the Agency 
will develop responses to the comments received. Possible responses to 
public comments include: Modifying the alternatives considered; 
negotiating with the applicant to modify or mitigate specific project 
elements of the original proposal; developing and evaluating 
alternatives not previously given serious consideration; supplementing 
or modifying the analysis; making factual corrections; or explaining 
why the comments do not warrant further response.
    (g) If the final EIS requires only minor changes from the draft 
EIS, the Agency may document and incorporate such minor changes through 
errata sheets, insertion pages, or revised sections to be incorporated 
into the draft EIS. In such cases, the Agency will circulate such 
changes together with comments on the draft EIS, responses to comments, 
and other appropriate information as the final EIS. The Agency will not 
circulate the draft EIS again; although, if requested, a copy of the 
draft EIS may be provided in a timely fashion to any interested party.


Sec.  1970.155  Supplementing EISs.

    (a) A supplement to a draft or final EIS will be announced, 
prepared, and circulated in the same manner (exclusive of meetings held 
during the scoping process) as a draft and final EIS (see 7 CFR 
1970.154). Supplements to a draft or final EIS will be prepared if:
    (1) There are substantial changes in the proposed action that are 
relevant to environmental concerns; or
    (2) Significant new circumstances or information pertaining to the 
proposal arise which are relevant to environmental concerns and the 
proposal or its impacts.
    (b) The Agency will publish an NOI to prepare a supplement to a 
draft or final EIS.
    (c) The Agency, at its discretion, may issue an information 
supplement to a final EIS where the Agency determines that the purposes 
of NEPA are furthered by doing so even though such supplement is not 
required by 40 CFR 1502.9(c)(1). The Agency and the applicant must 
concurrently have separate notices of availability published. The 
notice requirements must be the same as for a final EIS and the 
information supplement must be circulated in the same manner as a final 
EIS. The Agency will take no final action on any proposed modification 
discussed in the information supplement until 30 days after the 
Agency's notice of availability or the applicant's notice is published, 
whichever occurs later.


Sec.  1970.156  Record of Decision.

    (a) The ROD is a concise public record of the Agency's decision. 
The required information and format of the ROD will be consistent with 
40 CFR 1505.2.
    (b) Once a ROD has been executed by the Agency, the Agency will 
issue a Federal Register notice indicating its availability to the 
public.
    (c) The ROD may be signed no sooner than 30 days after the 
publication of EPA's Notice of Availability of the final EIS in the 
Federal Register.


Sec.  Sec.  1970.157--1970.200  [Reserved]

PART 1980--GENERAL

0
99. The authority citation for part 1980 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989.

Subpart E--Business and Industrial Loan Program

0
100. Revise Sec.  1980.432 to read as follows:


Sec.  1980.432  Environmental review requirements.

    [See subpart A, Sec.  1980.40 and 7 CFR part 1970.] Administrative
    Loans made under this part must be in compliance with the 
environmental review requirements in accordance with 7 CFR part 1970.

0
101. Amend Sec.  1980.451 to revise paragraphs (h)(3) and 
Administrative, B. Miscellaneous Administrative Provisions 7. 
Par(i)(table) to read as follows:


Sec.  1980.451  Filing and processing applications.

* * * * *

[[Page 11048]]

    (h) * * *
    (3) Environmental review documentation as required in accordance 
with 7 CFR part 1970.
* * * * *

Administrative

    B. Miscellaneous Administrative provisions:
    7. Par (i) * * *

             Description of Record or Form Number and Title
------------------------------------------------------------------------
                                                              Filing
                                                             position
------------------------------------------------------------------------
AD-425.....................  Contractor's Affirmative                  1
                              Action Plan For Equal
                              Employment Opportunity.
RD 400-1...................  Equal Opportunity Agreement               6
RD 400-3...................  Notice to Contractors and                 6
                              Applicants.
RD 400-4...................  Assurance Agreement........               3
RD 400-6...................  Compliance Statement.......               6
RD 410-8...................  Applicant Reference Letter.               3
RD 410-9...................  Statement Required by the                 3
                              Privacy Act.
RD 410-10..................  Privacy Act Statement to                  3
                              References.
RD 424-12..................  Inspection Report..........               6
RD 1940-3..................  Request for Obligation of                 2
                              Funds--Guaranteed Loans;
                              Filing Position 2.
RD 1970-1..................  Environmental Checklist for               3
                              Categorical Exclusions.
                             Environmental Reports......               3
                             Environmental Assessments..               3
                             Environmental Impact                      3
                              Statements.
RD 440-57..................  Acknowledgement of                        2
                              Obligated Funds/Check
                              Request.
RD 449-1...................  Application for Loan and                  3
                              Guarantee.
RD 449-2...................  Statement of Collateral....               5
RD 449-4...................  Statement of Personal                     3
                              History.
                             Loan Closing Opinion of      ..............
                              Lender's Legal Counsel.
------------------------------------------------------------------------

* * * * *

0
102. Revise Sec.  1980.490(p)(8) to read as follows:


Sec.  1980.490  Business and industry buydown loans.

* * * * *
    (p) * * *
    (8) Sodbuster and swampbuster requirements. The requirements found 
in 7 CFR part 1970 will apply to loans made to enterprises engaged in 
agricultural production.

0
103. Revise Sec.  1980.49 (m)(9) to read as follows:


Sec.  1980.498  Business and Industry Disaster Loans.

* * * * *
    (m) * * *
    (9) Sodbuster and swampbuster requirements. The requirements found 
in 7 CFR part 1970 will apply to loans made to enterprises engaged in 
agricultural production.

0
104. In Appendix K to Subpart E, revise the introductory text of 
section K. and paragraph C.12. of section IX. Servicing to read as 
follows:

Appendix K to Subpart E of Part 1980--Regulations for Loan Guarantees 
for Disaster Assistance For Rural Business Enterprises

* * * * *

K. Sodbuster and Swampbuster requirements

    The provisions of 7 CFR part 1970 will apply to loans made to 
rural business enterprises engaged in agricultural production.
* * * * *

IX. Servicing.

* * * * *
    C. * * *
    12. Monitoring the use of loan funds to assure they will not be 
used for any purpose that will contribute to excessive erosion of 
highly erodible land or to the conversion of wetlands to produce an 
agricultural commodity, or otherwise are in compliance with 7 CFR 
part 1970.
* * * * *

CHAPTER XXXV--RURAL HOUSING SERVICE, DEPARTMENT OF AGRICULTURE

PART 3550--DIRECT SINGLE FAMILY HOUSING LOANS AND GRANTS

0
105. The authority citation for part 3550 continues to read as follows:

    Authority:  5 U.S.C. 301; 42 U.S.C. 1480.

Subpart A--General

0
106. Revise Sec.  3550.5(b) to read as follows:


Sec.  3550.5  Environmental review requirements.

* * * * *
    (b) Regulatory references. Processing or servicing actions taken 
under this part must comply with the environmental review requirements 
in accordance with 7 CFR part 1970, and 7 CFR part 1924, which 
addresses lead-based paint.

Subpart D--Regular Servicing

0
107. Revise Sec.  3550.159(c)(5) to read as follows:


Sec.  3550.159  Borrower actions requiring RHS approval.

* * * * *
    (c) * * *
    (5) Environmental requirements are met and environmental 
documentation is submitted in accordance with 7 CFR part 1970.
* * * * *

PART 3555--GUARANTEED RURAL HOUSING PROGRAM

0
108. The authority citation for part 3555 continues to read as follows:

    Authority:  5 U.S.C. 301; 42 U.S.C. 1471 et seq.

Subpart A--General

0
109. Revise Sec.  3555.5(b) to read as follows:


Sec.  3555.5  Environmental review requirements.

* * * * *
    (b) Regulatory references. Loan processing or servicing actions 
taken under this part must comply with the environmental review 
requirements in accordance with 7 CFR part 1970, and 7 CFR part 1924, 
which addresses lead-based paint.
* * * * *

[[Page 11049]]

PART 3560--DIRECT MULTI-FAMILY HOUSING LOANS AND GRANTS

0
110. The authority citation for part 3560 continues to read as follows:

    Authority:  42 U.S.C. 1480.

Subpart A--General Provisions and Definitions

0
111. Revise Sec.  3560.3 to read as follows:


Sec.  3560.3  Environmental review requirements.

    RHS will consider environmental impacts of proposed housing as 
equal with economic, social, and other factors. By working with 
applicants, Federal agencies, Indian tribes, state and local 
governments, interested citizens, and organizations, RHS will formulate 
actions that advance program goals in a manner that protects, enhances, 
and restores environmental quality. Actions taken under this part must 
comply with the environmental review requirements in accordance with 7 
CFR part 1970. Servicing actions as defined in Sec.  1970.6 of this 
title are part of financial assistance already provided and do not 
require additional NEPA review. However, certain post-financial 
assistance actions that have the potential to have an effect on the 
environment, such as lien subordinations, sale or lease of Agency-owned 
real property, or approval of a substantial change in the scope of a 
project, as defined in Sec.  1970.8 of this title, are actions for the 
purposes of this part.

Subpart B--Direct Loan and Grant Origination

0
112. Revise Sec.  3560.54(b)(4) to read as follows:


Sec.  3560.54  Restriction on the use of funds.

* * * * *
    (b) * * *
    (4) The completion of environmental review requirements in 
accordance with 7 CFR part 1970.

0
113. Revise Sec.  3560.56(d)(7) to read as follows:


Sec.  3560.56  Processing section 515 housing proposals.

* * * * *
    (d) * * *
    (7) Completion of environmental review requirements in accordance 
with 7 CFR part 1970.
* * * * *
0
114. Revise Sec.  3560.59 to read as follows:


Sec.  3560.59  Environmental review requirements.

    Under the National Environmental Policy Act, the Agency is required 
to assess the potential impact of the proposed action on protected 
environmental resources. Measures to avoid or mitigate adverse impacts 
to protected resources may require a change in the site or project 
design. Therefore, a site cannot be approved until the Agency has 
completed the environmental review requirements in accordance with 7 
CFR part 1970. Likewise, the applicant should be informed that the 
environmental review must be completed and approved before the Agency 
can make a commitment of resources to the project.

0
115. Revise Sec.  3560.71(b)(4) to read as follows:


Sec.  3560.71  Construction financing.

* * * * *
    (b) * * *
    (4) An environmental review in accordance with 7 CFR part 1970 must 
be completed prior to issuance of the interim financing letter.
* * * * *

0
116. Revise Sec.  3560.73(e) to read as follows:


Sec.  3560.73  Subsequent loans.

* * * * *
    (e) Environmental review requirements. Actions taken under this 
part must comply with the environmental review requirements in 
accordance with 7 CFR part 1970.
* * * * *

Subpart I--Servicing

0
117. Revise Sec.  3560.406(d)(4) to read as follows:


Sec.  3560.406  MFH ownership transfers or sales.

* * * * *
    (d) * * *
    (4) Prior to Agency approval of an ownership transfer or sale, the 
appropriate level of environmental review in accordance with 7 CFR part 
1970 must be completed by the Agency on all property related to the 
ownership transfer or sale. If releases of or contamination from 
hazardous substances or petroleum products is found on the property, 
the finding must be disclosed to the Agency and the transferee or buyer 
and must be taken into consideration in the determination of the 
housing project's value.
* * * * *

0
118. Revise Sec.  3560.407(a) to read as follows:


Sec.  3560.407  Sales or other disposition of security property.

    (a) General. Borrowers must obtain Agency approval prior to selling 
or exchanging all or a part of, or an interest in, property serving as 
security for Agency loans. Agency approval also must be requested and 
received prior to the granting or conveyance of rights-of-way through 
property serving as security property. Agency approvals of sales or 
other dispositions of security property are not subject to the 
requirements outlined in 7 CFR part 1970.
* * * * *

0
119. Revise Sec.  3560.408(a) to read as follows:


Sec.  3560.408  Lease of security property.

    (a) General. Borrowers must obtain Agency approval prior to 
entering into a lease agreement related to any property serving as 
security for Agency loans. Agency approvals of lease agreements are 
considered loan servicing actions under 7 CFR part 1970, and as such do 
not require additional NEPA analysis and documentation.
* * * * *

0
120. Revise Sec.  3560.409(a) introductory text to read as follows:


Sec.  3560.409  Subordinations or junior liens against security 
property.

    (a) General. Borrowers must obtain Agency consent prior to entering 
into any financial transaction that will require a subordination of the 
Agency security interest in the property, or lien subordination, (i.e., 
granting of a prior interest to another lender.) Prior to Agency 
consent, environmental review requirements must be completed in 
accordance with 7 CFR part 1970. Borrowers must use an Agency approved 
lien subordination agreement.
* * * * *

Subpart J--Special Servicing, Enforcement, Liquidation, and Other 
Actions

0
121. Revise Sec.  3560.458(d) to read as follows:


Sec.  3560.458  Special property circumstances.

* * * * *
    (d) Due diligence. When the Agency has completed an environmental 
site assessment in accordance with 7 CFR part 1970, and decides not to 
acquire security property through liquidation action or chooses to 
abandon its security interest in real property, whether due in whole or 
in part, to releases of or the presence of contamination from hazardous 
substances, hazardous

[[Page 11050]]

wastes, or petroleum products, the Agency will provide the appropriate 
environmental authorities with a copy of its environmental site 
assessment.

PART 3565--GUARANTEED RURAL RENTAL HOUSING PROGRAM

0
122. The authority citation for part 3565 continues to read as follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989; 42 U.S.C. 1480.

Subpart A--General Provisions

0
123. Revise Sec.  3565.7 to read as follows:


Sec.  3565.7  Environmental review requirements.

    The Agency will take into account potential environmental impacts 
of proposed projects by working with applicants, other federal 
agencies, Indian tribes, State and local governments, and interested 
citizens and organizations in order to formulate actions that advance 
the program goals in a manner that will protect, enhance, and restore 
environmental quality. Actions taken under this part must comply with 
the environmental review requirements in accordance with 7 CFR part 
1970.

Subpart E--Loan Requirements

0
124. Revise Sec.  3565.205(b) to read as follows:


Sec.  3565.205  Eligible uses of loan proceeds.

* * * * *
    (b) Rehabilitation requirements. Rehabilitation work must be 
classified as either moderate or substantial as defined in exhibit K of 
7 CFR part 1924, subpart A or a successor document. In all cases, the 
building or project must be structurally sound, and improvements must 
be necessary to meet the requirements of decent, safe, and sanitary 
living units. Applications must include a structural analysis, along 
with plans and specifications describing the type and amount of planned 
rehabilitation. The project as rehabilitated must meet the applicable 
development standards contained in 7 CFR part 1924, subpart A, as well 
as any applicable historic preservation and environmental review 
requirements in accordance with 7 CFR part 1970.

Subpart F--Property Requirements

0
125. Revise Sec.  3565.255 to read as follows:


Sec.  3565.255  Environmental review requirements.

    Under the National Environmental Policy Act, the Agency is required 
to assess the potential impact of the proposed actions on protected 
environmental resources. Measures to avoid or mitigate adverse impacts 
to protected resources may require a change in site or project design. 
A site will not be approved by the Agency until the Agency has 
completed the environmental review process in accordance with 7 CFR 
part 1970.

Subpart G--Processing Requirements

0
126. Revise Sec.  3565.303(b)(1) to read as follows:


Sec.  3565.303  Issuance of loan guarantee.

* * * * *
    (b) * * *
    (1) Completion of environmental review requirements in accordance 
with 7 CFR part 1970; and
* * * * *

Subpart J--Assignment, Conveyance, and Claims

0
127. Revise Sec.  3565.451(c) to read as follows:


Sec.  3565.451  Preclaim requirements.

* * * * *
    (c) Environmental review. The Agency is required to complete an 
environmental review under the National Environmental Policy Act, in 
accordance with 7 CFR part 1970. Servicing actions as defined in Sec.  
1970.6 are part of financial assistance already provided and do not 
require additional NEPA review. However, certain post-financial 
assistance actions that have the potential to have an effect on the 
environment, such as lien subordinations, sale or lease of Agency-owned 
real property, or approval of a substantial change in the scope of a 
project, as defined in Sec.  1970.8, are subject to a NEPA analysis in 
accordance with 7 CFR part 1970.

PART 3570--COMMUNITY PROGRAMS

0
128. The authority citation for part 3570 continues to read as follows:

    Authority: 5 U.S.C. 301; 7 U.S.C. 1989.

Subpart B--Community Facilities Grant Program

0
129. Revise Sec.  3570.69 to read as follows:


Sec.  3570.69  Environmental review requirements, intergovernmental 
review, and public notification.

    Grants awarded under this subpart, including grant-only awards, 
must be in compliance with the environmental review requirements in 
accordance with 7 CFR part 1970, to the intergovernmental review 
requirements of 7 CFR 3015, subpart V and RD Instruction 1970-I, 
``Intergovernmental Review,'' and the public information process in 7 
CFR 1942.17(j)(9).

PART 3575--GENERAL

0
130. The authority citation for part 3575 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989.

Subpart A--Community Programs Guaranteed Loans

0
131. Revise Sec.  3575.9 to read as follows:


Sec.  3575.9  Environmental review requirements.

    Actions taken under this subpart must comply with the environmental 
review requirements in accordance with 7 CFR part 1970. The lender must 
assist the Agency to ensure that the lender's applicant complies with 
any mitigation measures required by the Agency's environmental review 
for the purpose of avoiding or reducing adverse environmental impacts 
of construction or operation of the facility financed with the 
guaranteed loan. This assistance includes ensuring that the lender's 
applicant is to take no actions (for example, initiation of 
construction) or incur any obligations with respect to their proposed 
undertaking that would either limit the range of alternatives to be 
considered during the Agency's environmental review process or which 
would have an adverse effect on the environment. If construction is 
started prior to completion of the environmental review and the Agency 
is deprived of its opportunity to fulfill its obligation to comply with 
applicable environmental requirements, the application for financial 
assistance may be denied. Satisfactory completion of the environmental 
review process must occur prior to Agency approval of the applicant's 
request or any commitment of Agency resources.

[[Page 11051]]

CHAPTER XLII--RURAL BUSINESS-COOPERATIVE SERVICE AND RURAL UTILITIES 
SERVICE, DEPARTMENT OF AGRICULTURE

PART 4274--DIRECT AND INSURED LOANMAKING

0
132. The authority citation for part 4274 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1932 note; 7 U.S.C. 1989.

Subpart D--Intermediary Relending Program (IRP)

0
133. Amend Sec.  4274.337 by revising paragraph (b) to read as follows:


Sec.  4274.337  Other regulatory requirements.

* * * * *
    (b) Environmental requirements. Actions taken under this subpart 
must comply with 7 CFR part 1970, as specified in Sec.  1970.51(a)(3) 
for multi-tier actions. Intermediaries and ultimate recipients must 
consider the potential environmental impacts of their projects at the 
earliest planning stages and develop plans to minimize the potential to 
adversely impact the environment. Intermediaries must cooperate and 
furnish such information and assistance as the Agency needs to make any 
of its environmental determinations.
* * * * *

0
134. Revise Sec.  4274.343(a)(3) to read as follows:


Sec.  4274.343  Application.

    (a) * * *
    (3) Except for 7 CFR 1970.53 actions that are determined by the 
primary recipients to not have extraordinary circumstances, an 
agreement in writing to the environmental requirements in accordance 
with 7 CFR part 1970.
* * * * *

0
135. Revise Sec.  4274.361(b)(2) to read as follows:


Sec.  4274.361  Requests to make loans to ultimate recipients.

* * * * *
    (b) * * *
    (2) Except for 7 CFR 1970.53 actions that are determined by the 
primary recipients to not have extraordinary circumstances, required 
environmental documentation in accordance with 7 CFR part 1970.
* * * * *

PART 4279--GUARANTEED LOANMAKING

0
136. The authority citation for part 4279 continues to read as follows:

    Authority:  5 U.S.C. 301; and 7 U.S.C. 1989.

Subpart A--General

0
137. Revise Sec.  4279.30(c) to read as follows:


Sec.  4279.30  Lenders' functions and responsibilities.

* * * * *
    (c) Environmental responsibilities. Lenders are responsible for 
becoming familiar with Federal environmental requirements; considering, 
in consultation with the prospective borrower, the potential 
environmental impacts of their proposals at the earliest planning 
stages; and developing proposals that minimize the potential to 
adversely impact the environment.
    (1) Lenders must assist the borrower in providing details of the 
projects impact on the environment and historic properties, in 
accordance with 7 CFR part 1970, when applicable; assist in the 
collection of additional data when the Agency needs such data to 
complete its environmental review of the proposal; and assist in the 
resolution of environmental problems.
    (2) Lenders must ensure the borrower has:
    (i) Provided the necessary environmental information to enable the 
Agency to approve the environmental review in accordance with 7 CFR 
part 1970, including the provision of all required Federal, State, and 
local permits;
    (ii) Complied with any mitigation measures required by the Agency; 
and
    (iii) Not taken any actions or incurred any obligations with 
respect to the proposed project that will either limit the range of 
alternatives to be considered during the Agency's environmental review 
process or that will have an adverse effect on the environment.
    (3) Lenders must alert the Agency to any controversial 
environmental issues related to a proposed project or items that may 
require extensive environmental review.
0
138. Revise Sec.  4279.43(g)(1)(iii) and (g)(2) to read as follows:


Sec.  4279.43  Certified Lender Program.

* * * * *
    (g) * * *
    (1) * * *
    (iii) Environmental documentation in accordance with 7 CFR part 
1970.
* * * * *
    (2) The Agency will make the final credit decision based primarily 
on a review of the credit analysis submitted by the lender and, in 
accordance with 7 CFR part 1970, approval of the environmental 
documentation, except that refinancing of existing lender debt in 
accordance with Sec.  4279.113(q) will not be approved without a credit 
analysis by the Agency of the borrower's complete financial statement. 
The Agency may request such additional information as it determines is 
needed to make a decision.
* * * * *

Subpart B--Business and Industry Loans

0
139. Revise Sec.  4279.161(b)(3) to read as follows:


Sec.  4279.161  Filing preapplications and applications.

* * * * *
    (b) * * *
    (3) Environmental documentation in accordance with 7 CFR part 1970.
* * * * *

0
140. Revise Sec.  4279.165(b) to read as follows:


Sec.  4279.165  Evaluation of application.

* * * * *
    (b) Environmental requirements. The environmental review process 
must be completed in accordance with 7 CFR part 1970 prior to the 
issuance of the conditional commitment, loan approval, or obligation of 
funds, whichever occurs first.

Subpart C--Biorefinery, Renewable Chemical, and Biobased Product 
Manufacturing Assistance Loans Lender Functions and 
Responsibilities

0
141. Revise Sec.  4279.216(b)(1) to read as follows:


Sec.  4279.216  Environmental responsibilities.

* * * * *
    (b) * * *
    (1) Provided the necessary environmental documentation to enable 
the Agency to undertake its environmental review process in accordance 
with 7 CFR part 1970, including the provision of all required Federal, 
State, and local permits.
* * * * *

0
142. Revise Sec.  4279.261(k)(4) and (k)(8)(iv)(B)(2) to read as 
follows:


Sec.  4279.261  Application for loan guarantee content.

* * * * *
    (k) * * *
    (4) Environmental documentation in accordance with 7 CFR part 1970.
* * * * *
    (8) * * *
    (iv) * * *
    (B) * * *
    (2) Environmental documentation in accordance with 7 CFR part 1970.
* * * * *

[[Page 11052]]

PART 4280--LOANS AND GRANTS

0
143. The authority citation for part 4280 continues to read as follows:

    Authority:  5 U.S.C. 301: 7 U.S.C. 940c and 7 U.S.C. 1932(c).

Subpart A--Rural Economic Development Loan and Grant Programs

0
144. Revise Sec.  4280.36(k) to read as follows:


Sec.  4280.36  Other laws that contain compliance requirements for 
these Programs.

* * * * *
    (k) Environmental requirements. Actions taken under this subpart, 
including the loans made from the revolving loan fund using Agency 
funds, must comply with 7 CFR part 1970. However, revolving loan funds 
derived from repayments by third parties are not considered Federal 
financial assistance for the purposes of 7 CFR part 1970.
* * * * *

0
145. Revise Sec.  4280.39(a)(9) to read as follows:


Sec.  4280.39  Contents of an application.

* * * * *
    (a) * * *
    (9) Environmental documentation in accordance with 7 CFR part 1970.
* * * * *

0
146. Revise Sec.  4280.41 to read as follows:


Sec.  4280.41  Environmental review of the application.

    The Agency will review the environmental documentation in 
accordance with 7 CFR part 1970. Intermediaries will be informed by the 
Agency if additional information is required from the intermediary to 
complete the environmental review process. The environmental review 
process must be completed before the application can be considered for 
approval by the Agency.

Subpart B--Rural Energy for America Program General

0
147. Amend Sec.  4280.108 by revising the introductory text of 
paragraph (d) to read as follows:


Sec.  4280.108  U.S. Department of Agriculture Departmental Regulations 
and laws that contain other compliance requirements.

* * * * *
    (d) Environmental requirements. Actions taken under this subpart 
must comply with 7 CFR part 1970. Prospective applicants are advised to 
contact the Agency to determine environmental requirements as soon as 
practicable after they decide to pursue any form of financial 
assistance directly or indirectly available through the Agency.
* * * * *

0
148. Revise Sec.  4280.110(h)(2) to read as follows:


Sec.  4280.110  General Applicant, application, and funding provisions.

* * * * *
    (h) * * *
    (2) Technical report modifications. If a technical report is 
prepared prior to the Applicant's selection of a final design, 
equipment vendor, or contractor, or other significant decision, it may 
be modified and resubmitted to the Agency, provided that the overall 
scope of the project is not materially changed as determined by the 
Agency. Changes in the technical report may require additional 
environmental documentation in accordance with 7 CFR part 1970.
* * * * *

0
149. Revise Sec.  4280.117(a)(5) to read as follows:


Sec.  4280.117  Grant applications for RES and EEI projects with total 
project costs of $200,000 and greater.

* * * * *
    (a) * * *
    (5) Environmental documentation in accordance with 7 CFR part 1970. 
The Applicant should contact the Agency to determine what documentation 
is required to be provided.
* * * * *

0
150. Revise Sec.  4280.119(b)(1)(v) to read as follows:


Sec.  4280.119  Grant applications for RES and EEI projects with total 
project costs of $80,000 or less.

* * * * *
    (b) * * *
    (1) * * *
    (v) Environmental documentation in accordance with 7 CFR part 1970. 
The Applicant should contact the Agency to determine what documentation 
is required to be provided.
* * * * *

0
151. Revise Sec.  4280.124(d)(1) to read as follows:


Sec.  4280.124  Construction planning and performing development.

* * * * *
    (d) * * *
    (1) Environmental requirements. Actions taken under this subpart 
must comply with the environmental review requirements in accordance 
with 7 CFR part 1970. Project planning and design must not only be 
responsive to the grantee's needs but must consider the environmental 
consequences of the proposed project. Project design must incorporate 
and integrate, where practicable, mitigation measures that avoid or 
minimize adverse environmental impacts. Environmental reviews serve as 
a means of assessing environmental impacts of project proposals, rather 
than justifying decisions already made. Applicants may not take any 
action on a project proposal that will have an adverse environmental 
impact or limit the choice of reasonable project alternatives being 
reviewed prior to the completion of the Agency's environmental review. 
If such actions are taken, the Agency has the right to withdraw and 
discontinue processing the application.
* * * * *

0
152. Revise Sec.  4280.137 (b)(2)(ii) to read as follows:


Sec.  4280.137  Application and documentation.

* * * * *
    (b) * * *
    (2) * * *
    (ii) Environmental documentation in accordance with 7 CFR part 
1970.
* * * * *

Subpart E--Rural Business Development Grants General

0
153. Amend Sec.  4280.408 by revising paragraph (d) introductory text, 
and paragraph (d)(4) to read as follows:


Sec.  4280.408  U.S. Department of Agriculture departmental regulations 
and laws that contain other compliance requirements.

* * * * *
    (d) Environmental requirements. Actions taken under this subpart 
must comply with 7 CFR part 1970. Prospective applicants are advised to 
contact the Agency to determine environmental requirements as soon as 
practicable after they decide to pursue any form of financial 
assistance directly or indirectly available through the Agency.
* * * * *
    (4) Applications for Technical Assistance or Planning Projects are 
generally excluded from the environmental review process by 7 CFR 
1970.53 provided the assistance is not related to the development of a 
specific site. However, as further specified in 7 CFR 1970.53, the 
grantee for a Technical Assistance grant, in the process of providing 
Technical Assistance, must consider the potential environmental impacts 
of the recommendations

[[Page 11053]]

provided to the recipient of the Technical Assistance as requested by 
the Agency and in accordance with 7 CFR part 1970.
* * * * *

PART 4284--GRANTS

0
154. The authority citation for part 4284 continues to read as follows:

    Authority:  5 U.S.C. 301 and 7 U.S.C. 1989.

Subpart A--General Requirements for Cooperative Services Grant 
Programs

0
155. Amend Sec.  4284.16 by revising paragraph (a) to read as follows:


Sec.  4284.16  Other considerations.

    (a) Environmental requirements. Grants made under this subpart must 
comply with 7 CFR part 1970. Applications for technical assistance or 
planning projects are generally excluded from the environmental review 
process by Sec.  1970.53, provided the assistance is not related to the 
development of a specific site. Applicants for grant funds must 
consider and document within their plans the important environmental 
factors within the planning area and the potential environmental 
impacts of the plan on the planning area, as well as the alternative 
planning strategies that were reviewed.
* * * * *

Subpart J--Value-Added Producer Grant Program

0
156. Revise Sec.  4284.907 to read as follows:


Sec.  4284.907  Environmental requirements.

    Grants made under this subpart must comply with 7 CFR part 1970. 
Applications for both Planning and Working Capital grants are generally 
excluded from the environmental review process by Sec.  1970.53.

PART 4287--SERVICING

0
157. The authority citation for part 4287 continues to read as follows:

    Authority:  5 U.S.C. 301 and 7 U.S.C. 1989.

Subpart B--Servicing Business and Industry Guaranteed Loans

0
158. Revise Sec.  4287.157(j) introductory text to read as follows:


Sec.  4287.157  Liquidation.

* * * * *
    (j) Abandonment of collateral. There may be instances when the cost 
of liquidation would exceed the potential recovery value of the 
collection. The lender, with proper documentation and concurrence of 
the Agency, may abandon the collateral in lieu of liquidation. A 
proposed abandonment by the lender of non-Agency owned property will be 
considered a servicing action under 7 CFR 1970.8(e), and will not 
require separate NEPA review. Examples where abandonment may be 
considered include, but are not limited to:
* * * * *

Subpart D--Servicing Biorefinery, Renewable Chemical, and Biobased 
Manufacturing Assistance Guaranteed Loans

0
159. Revise Sec.  4287.357(i) to read as follows:


Sec.  4287.357  Liquidation.

* * * * *
    (i) Abandonment of collateral. When the Lender adequately documents 
that the cost of liquidation would exceed the potential recovery value 
of certain Collateral and receives Agency concurrence, the Lender may 
abandon that Collateral. When the Lender makes a recommendation for 
abandonment of Collateral, it will be considered a servicing action 
under 7 CFR 1970.8(e), and will not require separate NEPA review.
* * * * *

PART 4288--PAYMENT PROGRAMS

0
160. The authority citation for part 4288 continues to read as follows:

    Authority:  5 U.S.C. 301; 7 U.S.C. 1989.

Subpart A--Repowering Assistance Payments to Eligible Biorefineries

0
161. Revise Sec.  4288.20(b)(5) to read as follows:


Sec.  4288.20  Submittal of applications.

* * * * *
    (b) * * *
    (5) Environmental documentation in accordance with 7 CFR part 1970.
* * * * *

PART 4290--RURAL BUSINESS INVESTMENT COMPANY (RBIC) PROGRAM

0
162. The authority citation for part 4290 continues to read as follows:

    Authority:  7 U.S.C. 1989 and 2009cc et seq.

Subpart M--Miscellaneous

0
163. Revise Sec.  4290.1940(h) to read as follows:


Sec.  4290.1940  Integration of this part with other regulations 
application to USDA's programs.

* * * * *
    (h) Environmental requirements. To the extent applicable to this 
part, the Secretary will comply with 7 CFR part 1970. The Secretary has 
not delegated this responsibility to SBA pursuant to Sec.  4290.45.
* * * * *

    Dated: February 11, 2016.
Lisa Mensah,
Under Secretary, Rural Development.
    Dated: February 12, 2016.
Michael Scuse,
Under Secretary, Farm and Foreign Agricultural Services.

[FR Doc. 2016-03433 Filed 3-1-16; 8:45 am]
 BILLING CODE 3410-XV-P