[Federal Register Volume 84, Number 184 (Monday, September 23, 2019)]
[Rules and Regulations]
[Pages 49644-49648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20342]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1970

[RUS-18-Agency-0005, RBS-18-None-0029, RHS-18-None-0026]
RIN 0572-AC44


Rural Development Environmental Regulation for Rural 
Infrastructure

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule.

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SUMMARY: The United States Department of Agriculture (USDA) Rural 
Development (RD), comprised of the Rural Business-Cooperative Service

[[Page 49645]]

(RBS), Rural Housing Service (RHS), and Rural Utilities Service (RUS), 
hereafter referred to as the Agency, is issuing a final rule to update 
the Agency's Environmental Policies and Procedures regulation (7 CFR 
1970) to allow the Agency Administrators limited flexibility to 
obligate federal funds for infrastructure projects prior to completion 
of the environmental review while ensuring full compliance with 
National Environmental Policy Act (NEPA) procedures, prior to project 
construction and disbursement of any RD funding. This change will allow 
RD to more fully meet the Administration's goals to speed the 
initiation of infrastructure projects and encourage planned community 
economic development without additional cost to taxpayers or change to 
environmental review requirements.

DATES: Effective September 23, 2019.

FOR FURTHER INFORMATION CONTACT: Edna Primrose, Assistant 
Administrator, Water and Environmental Programs, Rural Utilities 
Service, USDA Rural Development, 1400 Independence Ave. SW, Washington, 
DC 20250-1570, Telephone (202) 720-0986, Email address: 
[email protected].

SUPPLEMENTARY INFORMATION: 

Executive Order 12866, Regulatory Planning and Review

    This final rule has been determined to be not significant for 
purposes of Executive Order 12866, Regulatory Planning and Review and 
therefore has not been reviewed by the Office of Management and Budget 
(OMB).

Congressional Rulemaking Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a major rule, as defined by 5 U.S.C. 804(2).

Executive Order 12372, Intergovernmental Review of Federal Programs

    The Programs listed in the Catalog of Federal Domestic Assistance 
under the following numbers are subject to the provisions of Executive 
Order 12372 which requires Intergovernmental Consultation with state 
and local officials:

10.760--Water & Waste Disposal System Systems for Rural Communities.
10.763--Emergency Community Water Assistance Grants.
10.766--Community Facilities Loans.
10.770--Water & Waste Disposal Loan and Grants (Section 306C).
10.855--Distance Learning & Telemedicine Grants and Grants.

Executive Order 12988, Civil Justice Reform

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. RUS has determined that this final rule meets the 
applicable standards provided in section 3 of the Executive Order. In 
addition, all state and local laws and regulations that are in conflict 
with this rule will be preempted, no retroactive effect will be given 
to this rule, and, in accordance with Sec 212(e) of the Department of 
Agriculture Reorganization Act of 1994 (7 U.S.C. 6912(e)), if any, must 
be exhausted before an action against the Department or its agencies 
may be initiated.

Executive Order 13132, Federalism

    The policies contained in this final rule do not have any 
substantial direct effect on 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. Nor does this 
final rule impose substantial direct compliance costs on state and 
local governments. Therefore, consultation with states is not required.

Regulatory Flexibility Certification

    The Agency has determined that this final rule will not have a 
significant economic impact on a substantial number of small entities, 
as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), 
given that the amendment is only an administrative, procedural change 
on the government's part with respect to obligation of funds.

National Environmental Policy Act

    In this final rule, the Agency proposes to create limited 
flexibility for the timing of obligation of funds relative to the 
completion of environmental review. The Council on Environmental 
Quality (CEQ) does not direct agencies to prepare a NEPA analysis 
before establishing agency procedures that supplement the CEQ 
regulations for implementing NEPA. The requirements for establishing 
agency NEPA procedures are set forth at 40 CFR 1505.1 and 1507.3. The 
determination that establishing agency NEPA procedures does not require 
NEPA analysis and documentation has been upheld in Heartwood, Inc. v. 
U.S. Forest Service, 73 F. Supp. 2d 962, 972-73 (S.D. III. 1999), 
aff'd, 230 F.3d 947, 954-55 (7th Cir. 2000).

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance (CFDA) numbers assigned 
to the RD Programs affected by this rulemaking are as follows:

10.760--Water & Waste Disposal System Systems for Rural Communities.
10.761--Technical Assistance and Training Grants.
10.762--Solid Waste Management Grants.
10.763--Emergency Community Water Assistance Grants.
10.770--Water & Waste Disposal Loan and Grants (Section 306C).
10.766--Community Facilities Loans and Grants.
10.850--Rural Electrification Loans and Loan Guarantees.
10.851--Rural Telephone Loans and Loan Guarantees.
10.855--Distance Learning & Telemedicine Grants.
10.857--State Bulk Fuel Revolving Loan Fund.
10.858--Assistance to High Energy Cost-Rural Communities.
10.863--Community Connect Grants.
10.865--Biorefinery, Renewable Chemical, & Biobased Product 
Manufacturing Assistance Program.
10.866--Repowering Assistance Program.
10.867--Advanced Biofuel Payment Program.
10.868--Rural Energy for America Program.
10.886--Rural Broadband Access Loan and Loan Guarantee Program.
10.752--ReConnect Program.

    All active CFDA programs and the CFDA Catalog can be found at the 
following website: https://beta.sam.gov/. The website also contains a 
PDF file version of the Catalog that, when printed, has the same layout 
as the printed document that the Government Publishing Office (GPO) 
provides. GPO prints and sells the CFDA to interested buyers. For 
information about purchasing the Catalog of Federal Domestic Assistance 
from GPO, call the Superintendent of Documents at 202- 512-1800 or toll 
free at 866-512-1800, or access GPO's online bookstore at http://bookstore.gpo.gov. Rural Development infrastructure programs not listed 
in this section nor on the CFDA website, but which are enacted pursuant 
to the Rural Electrification Act of 1936, 7 U.S.C. 901 et seq., the 
Consolidated Farm and Rural Development Act of 1972, 7 U.S.C. 1921 et 
seq., or any other Congressional act for Rural Development, will be 
covered by the requirements of this action when enacted.

Unfunded Mandates

    This final rule contains no Federal mandates (under the regulatory

[[Page 49646]]

provision of Title II of the Unfunded Mandates Reform Act of 1995) for 
State, local, and tribal governments or the private sector. Therefore, 
this final rule is not subject to the requirements of sections 202 and 
205 of the Unfunded Mandates Reform Act of 1995.

Information Collection and Recordkeeping Requirements

    This final rule contains no new reporting or recordkeeping burdens 
under OMB control number 0572-0127 that would require approval under 
the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

Background

    The United States Department of Agriculture (USDA) Rural 
Development (RD) programs provide loans, grants and loan guarantees to 
support investment in rural infrastructure to spur rural economic 
development, create jobs, improve the quality of life, and address the 
health and safety needs of rural residents. Infrastructure investment 
is an important national policy priority. As directed by E.O. 13807, 
Establishing Discipline and Accountability in the Environmental Review 
and Permitting Process for Infrastructure Projects, in 2017, USDA as a 
member of the Federal Permitting Improvement Steering Council has 
reviewed its NEPA implementing regulations and policies to identify 
impediments to efficient and effective environmental reviews and 
authorizations for infrastructure projects. This final rule is part of 
that effort to improve the efficiency and effectiveness of RD's 
environmental reviews and authorizations for infrastructure projects in 
rural America. On April 25, 2017, the President created the Interagency 
Task Force on Agriculture and Rural Prosperity (Task Force) through 
E.O. 13790 and appointed the Secretary of Agriculture as the Task 
Force's Chair. Among the purposes and functions of the Task Force was 
to, ``. . . identify legislative, regulatory, and policy changes to 
promote in rural America agriculture, economic development, job growth, 
infrastructure improvements, technological innovation, energy security, 
and quality of life, including changes that remove barriers to economic 
prosperity and quality of life in rural America.'' The Task Force 
Report issued on October 21, 2017, included calls to action on 
achieving e-Connectivity for Rural America, improving rural quality of 
life, harnessing technological innovation and developing the rural 
economy.
    On November 28, 2018 the Agency concurrently published a proposed 
and final rule as a direct final rule without prior proposal because 
the Agency viewed this change as a non-controversial action and 
anticipated no adverse comments. The purpose of the proposed and direct 
final rule was to update the Agency's Environmental Policies and 
Procedures regulation (7 CFR 1970) to allow the Agency Administrators 
limited flexibility to obligate federal funds for infrastructure 
projects prior to completion of the environmental review while ensuring 
full compliance with National Environmental Policy Act (NEPA) 
procedures prior to project construction and disbursement of any RD 
funding. The public comment period for the rule change ended on 
December 24, 2018. The rule was to be effective January 7, 2019, 
without further action, unless the Agency received significant adverse 
comments or, an intent to submit a significant adverse comment, by 
December 24, 2018. The Agency proposed to publish a a timely Federal 
Register document withdrawing the rule if significant adverse comments 
were received.
    Due to the lapse in funding that occurred from December 23, 2018 
through January 25, 2019, the Agency was unable to publish a Federal 
Register notice withdrawing the rule by January 7, 2019. However, the 
Agency has not placed the rule into effect, nor taken any final actions 
with respect to the rule and is responding to public comments in this 
final rule. The Agency received four (4) comments in support of the 
rule from Daniel Spatz, Dave Anderson, Bly Community Action Team, and 
National Rural Electric Cooperative Association. The Agency also 
received a total of six letters with adverse comments from the 
following fifteen (15) organizations and three (3) individuals: Robert 
Ukeiley, Dinah Bear, Patricia Gerrodette, Center for Biological 
Diversity (2 separate commenters), Earth Justice, Environmental Law and 
Policy Center, Environmental Information Protection Center, Grand 
Canyon Trust, House/Citizens for Environmental Justice, International 
Fund for Animal Welfare, Klamath Forest Alliance, Natural Resources 
Defense Council (2 separate commenters), San Juan Citizens Alliance, 
Save EPA, Sierra Club, Southern Environmental Law Center, Western 
Environmental Law Center, Western Watersheds.

Purpose of the Regulatory Action

    This rulemaking fulfills the mandate of E.O. 13807 as well as the 
goals of the President's Interagency Task Force on Agriculture and 
Rural Prosperity by identifying regulatory changes that promote 
economic development and improve the quality of life in rural America. 
The RD infrastructure projects impacted by this rule are often critical 
to the health and safety and quality of life in rural communities. In 
some cases, funding decisions made by Rural Development are the first 
step upon which a much larger process of community economic development 
depends. This amendment to existing regulation will allow the Agency to 
obligate funding conditioned upon the full and satisfactory completion 
of environmental review for infrastructure projects. This change will 
give applicants, and often the distressed communities they represent, 
some comfort to proceed with an economic development strategy, 
including the planning process associated with NEPA, without fear that 
funds may be rescinded before the NEPA process is completed. With this 
change in place, RD can more fully meet the government's goals of 
speeding up the initiation of infrastructure projects, encouraging 
planned community economic development, and leveraging investment 
without additional cost to taxpayers or any change in environmental 
review requirements. Infrastructure projects covered by this final rule 
include those, such as broadband, telecommunications, electric, energy 
efficiency, smart grid, water, sewer, transportation, and energy 
capital investments in physical plant and equipment.

Changes to the Current Regulation.

    This final rule adopts the changes to 7 CFR 1970 from the proposed 
and direct final rules concurrently published in the Federal Register 
on November 23, 2018. It revises 7 CFR 1970.11(b) to change the point 
at which the environmental review must be completed prior to obligation 
in all cases. The rule change requires the environmental review process 
to be completed prior to obligation except in cases where the 
Administrator deems it necessary to allow for the environmental review 
to occur after obligation, contingent upon the conclusion of the 
environmental review process prior to any action that would have an 
adverse effect on the environment or limit the choices of any 
reasonable alternatives. In instances where the environmental review is 
not completed by the end of the fiscal year after the funds were 
obligated or when findings of the environmental review do not support 
the decision to proceed with a proposed action, the Agency will rescind 
funds and reverse the decision to proceed. Nothing in this final rule

[[Page 49647]]

reduces RD's obligation to complete the NEPA planning process prior to 
foreclosing reasonable alternatives to the federal action.

Comments

    Issue 1: Two individuals and two organizations expressed support 
for the proposed rule citing that the ability to obligate funds prior 
to completion of the NEPA process will allow borrowers to more easily 
secure financing for projects. They also commented that the rule change 
to expedite the timeframe for completing the NEPA process will provide 
an ability to more quickly initiate projects.
    RUS Response: The Agency agrees that allowing obligation of funds 
prior to completion of the NEPA process will allow greater certainty 
for borrowers in securing funding for the projects. In reviewing the 
final regulation, to ensure conformity with NEPA regulations, the 
Agency wants to be clear what it means by providing ``certainty'' or 
``comfort'' to a loan applicant. Due to the Departmental financial 
processes, even funds that are ``available until expended'' are swept 
at the end of the fiscal year and sometimes not returned to the 
programs for use for several months. That situation creates a period of 
time where projects cannot move forward even if the environmental 
review is completed because funds are not available to be obligated to 
a project. What the Agency means by ``comfort'' is that the funds will 
be available for the project once the environmental review is 
completed. The purpose of the change is not to extend the NEPA time 
frame but to allow obligation prior to completing all requirements of 
NEPA.
    Issue 2: Three individuals and fifteen organizations commented that 
the application of the direct to final rule in this instance is 
inconsistent with the Administrative Procedures Act because the changes 
to the regulations are major and substantive.
    RUS Response: This rule was published concurrently with Proposed 
Rule 83 FR 59318 (November 23, 2018). Because adverse comments were 
received on the rule, RD did not allow the final rule with comment to 
go into effect. It has, instead, considered all comments received 
during the comment period and is addressing these in this notice in 
accordance with the Administrative Procedures Act. Unfortunately, due 
to the lapse in government funding in January 2019, the Agency was 
unable to notify the public that the final rule did not go into effect.
    Issue 3: Two individuals and fifteen organizations commented that 
the Agency did not provide support and documentation to its decision to 
allow completion of environmental reviews after the decision to 
obligate funds to a project, and that the preamble of the proposed rule 
is notably silent on examples of how the process that has existed since 
1970 is problematic for either applicants or agencies. They state that 
there is no record showing the problem this rule is trying to address 
and no data or record of the scope of the issue.
    RUS Response: The Agency has been hearing about the effect of the 
timing of NEPA reviews and the inability of potential applicants to 
secure additional financing for a very long time. Despite this public 
perception, the agency has no data to support this contention. To the 
contrary, the agency has no evidence that its environmental reviews 
impede projects or the attainment of outside funding. Because the 
agency believes there were needed rural development projects that were 
never submitted for application because of the perceived delay in 
processing, the agency has undertaken to change the rule. As stated in 
the final rule with comment, and the proposed rule, the agency is 
attempting to give applicants ``comfort'' with the extended timing. It 
does not anticipate environmental reviews to change in any manner. In 
reviewing the final regulation, to ensure conformity with NEPA 
regulations, the Agency wants to be clear what it means by providing 
``certainty'' or ``comfort'' to a loan applicant. Due to the 
Departmental financial processes, even funds that are ``available until 
expended'' are swept at the end of the fiscal year and sometimes not 
returned to the programs for use for several months. That situation 
creates a period of time where projects cannot move forward even if the 
environmental review is completed because funds are not available to be 
obligated to a project. What the Agency means by ``comfort'' is that 
the funds will be available for the project once the environmental 
review is completed. The purpose of the change is not to extend the 
NEPA time frame but to allow obligation prior to completing all 
requirements of NEPA. The agency notes that four individuals responded 
to the proposed rule supporting the change on this basis.
    Issue 4: Fifteen organizations commented that allowing an agency to 
proceed with a decision prior to completing the required environmental 
review under NEPA disregards the agency's responsibility to inform the 
public and meaningfully consider public comments prior to decisions. 
They contend that deferring public input to a late, post-decisional 
stage of the decision-making process undermines the meaningfulness of 
public input and, as a result, will have a chilling effect on the 
willingness of the public to weigh in on decisions impacting their 
communities.
    RUS Response: The Agency will continue to provide the same 
opportunity for public notice and comment and anticipates that the 
public input on proposed projects will not be significantly altered, if 
at all. Over 93 percent of all required reviews are already performed 
within 10 days. As stated above, public perception of this process and 
the actual time for reviews are not in sync. As a result, the Agency 
does not believe that the public's input into agency decision-making 
will be impacted.
    Issue 5: Three individuals and fifteen organizations stated that 
the Agency's plan to allow post-decisional completion of the 
environmental review does not fulfill its responsibility to incorporate 
environmental impacts into the decision-making process. Because, they 
argue, evaluation of alternatives would take place after the decision 
to proceed, the proposal would prejudice the selection of the 
reasonable alternatives. CEQ's regulations explicitly state that 
agencies shall not commit resources prejudicing selection of 
alternatives. The NEPA statute does not permit an agency to act first 
and comply later, nor does it permit an agency to condition performance 
of its obligation of a showing of irreparable harm. Furthermore, the 
courts have held that ``it is far easier to influence an initial choice 
that to change a mind already made up.'' One commenter noted that the 
proposed rule would up-end guidance issued in 2017 and revised in 2018 
that instructs RD agencies that environmental review must be completed 
and issued prior to agency issuance of any conditional commitment.
    RUS Response: The Agency believes that completing the NEPA process 
post-obligation will continue to allow consideration of alternatives 
because it will rescind funds should the outcome of the NEPA process 
require any significant changes to the project. As a result, the public 
will have the same due consideration and public notice and comment 
requirements will not change.
    Issue 6: One organization stated that the proposed rule conflicts 
with Council on Environmental Quality (CEQ) regulations of 40 CFR 1500 
which require that environmental analysis be completed at the earliest 
possible time. Section 1501.2 of the CEQ regulations, is aptly named 
``Apply NEPA early in the process.'' This section provides that

[[Page 49648]]

agencies shall integrate the NEPA process ``at the earliest possible 
time to ensure that planning and decisions reflect environmental 
values, to avoid delays later in the process, and to head off potential 
conflicts.''
    RUS Response: The Agency believes that the proposed timing of the 
environmental process is still early enough in the planning stage to 
ensure decisions will reflect environmental values. Furthermore, the 
Agency believe that this process will result in fewer project delays, 
and will in fact, expedite the review process.
    Issue 7: Three individuals and fifteen organizations commented that 
allowing rescission of funds if the results of an environmental review 
do not ultimately support to the Agency's decision to obligate, does 
not undo the harm, error, or fatal bias that has already been 
introduced and tainted the process. Allowing agencies to reconsider and 
rescind a decision to obligate funds after review in no way corrects 
otherwise clearly unlawful application of NEPA. They argue that this 
approach would also leave the responsible agency official in the 
position of either taking away funding from an outside entity or 
pressuring the environmental review staff to expedite the process. The 
most likely, they argue, is shortchanging the environmental review 
process. The public commenting on such reviews will understand the 
initial decision has already been made, that bias has irrevocably 
attached, and that they are essentially asking the agency to ``re-
decide'' the decision to obligate funds. Making a commitment 
prematurely may also cause harm to the applicant because the commitment 
may not be met, pending the outcome of the NEPA process.
    RUS Response: The Agency believes that it will continue to make 
unbiased decisions on its environmental reviews, and that since 93 
percent of reviews are finished before 10 days, the agency's decision-
making process will not be influenced.
    Issue 8: Fifteen organizations commented that the arbitrary time 
limit for completion of the environmental review prior to the end of 
following fiscal year after obligation, conflicts with CEQ regulations 
that state that prescribed universal time limit for entire NEPA process 
is too inflexible and should be appropriate to individual actions. 
Therefore, they argue, the proposed time limits would result in rushed 
reviews to avoid rescinding funds.
    RUS Response: The Agency does not believe that the completion 
deadline for the environmental review is arbitrary. As mentioned 
earlier, it was selected as a time that would give applicants 
confidence in going forward with projects. In addition, the agency 
would not rush reviews to avoid rescinding, as its current rate of 
processing is already extremely efficient. Those projects that would 
require more time, are already the result of reviews outside of the 
Agency.

List of Subjects in 7 CFR Part 1970

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

    Accordingly, for reasons set forth in the preamble, part 1970, 
title 7, Code of Federal Regulations is amended as follows:

PART 1970--ENVIRONMENTAL POLICIES AND PROCEDURES

0
1. The authority citation for part 1970 continues to read as follows:

     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.


0
2. In Sec.  1970.11, revise paragraph (b) to read as follow:


Sec.  1970.11  Timing of the environmental review process.

* * * * *
    (b) The environmental review process must be concluded before the 
obligation of funds; except for infrastructure projects where the 
assurance that funds will be available for community health, safety, or 
economic development has been determined as necessary by the Agency 
Administrator. At the discretion of the Agency Administrator, funds may 
be obligated contingent upon the conclusion of the environmental review 
process prior to any action that would have an adverse effect on the 
environment or limit the choices of any reasonable alternatives. Funds 
so obligated shall be rescinded if the Agency cannot conclude the 
environmental review process before the end of the fiscal year after 
the year in which the funds were obligated, or if the Agency determines 
that it cannot proceed with approval based on findings in the 
environmental review process. For the purposes of this section, 
infrastructure projects shall include projects such as broadband, 
telecommunications, electric, energy efficiency, smart grid, water, 
sewer, transportation, and energy capital investments in physical plant 
and equipment, but not investments authorized in the Housing Act of 
1949.
* * * * *

    Dated: September 16, 2019.
Misty Giles,
Chief of Staff, Rural Development.
Bill Northey,
Under Secretary, Farm Production and Conservation.
[FR Doc. 2019-20342 Filed 9-20-19; 8:45 am]
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