Environmental Policies and Procedures, 6739-6794 [2014-00220]

Agencies

• DEPARTMENT OF AGRICULTURE
• Farm Service Agency
• Rural Business-Cooperative Service
• Rural Housing Service
• Rural Utilities Service

[Federal Register Volume 79, Number 23 (Tuesday, February 4, 2014)]
[Proposed Rules]
[Pages 6739-6794]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-00220]



[[Page 6739]]

Vol. 79

Tuesday,

No. 23

February 4, 2014

Part III





Department of Agriculture





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Rural Utilities Service





7 CFR Parts 1703, 1709, et al.





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Rural Business-Cooperative Service





Rural Housing Service





Rural Utilities Service





Farm Service Agency

7 CFR Parts 1924, 1940, et al.





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Rural Housing Service

7 CFR Parts 3550, 3560, et al.





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Rural Business-Cooperative Service





Rural Utilities Service

7 CFR Parts 4274, 4279, et al.





Environmental Policies and Procedures; Proposed Rule

Federal Register / Vol. 79 , No. 23 / Tuesday, February 4, 2014 / 
Proposed Rules

[[Page 6740]]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

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

Rural Business-Cooperative Service

Rural Housing Service

Rural Utilities Service

Farm Service Agency

7 CFR Parts 1924, 1940, 1942, 1944, 1948, 1951, 1955, 1962, 1970, 
and 1980

Rural Housing Service

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

Rural Business-Cooperative Service

Rural Utilities Service

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

RIN 0575-AC56


Environmental Policies and Procedures

AGENCY: Rural Housing Service, Rural Business-Cooperative Service, 
Rural Utilities Service, Farm Service Agency, U.S. Department of 
Agriculture (USDA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: Rural Development, a mission area within the U.S. Department 
of Agriculture comprised of the Rural Housing Service (RHS), Rural 
Business-Cooperative Service (RBS) and Rural Utilities Service (RUS), 
hereafter referred to as the Agency, is proposing to unify and update 
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 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 proposed changes relate to the categorical 
exclusion provisions in the Agency's procedures for implementing NEPA. 
These proposed changes are intended to better align the Agency's 
regulations, particularly for those actions listed as categorical 
exclusions, to the Agency's current activities and recent experiences 
and to the 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, and to consolidate the provisions of the Agency's 
two current NEPA rules at 7 CFR parts 1794 and 1940, subpart G.

DATES: Comments on the proposed rule must be received on or before 
April 7, 2014. Comments on the reporting and recordkeeping aspects of 
this rule in accordance with the Paperwork Reduction Act of 1995 
continue through April 7, 2014.

ADDRESSES: You may submit comments to this rule by any of the following 
methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Submit written comments via the U.S. Postal Service 
to the Branch Chief, Regulations and Paperwork Management Branch, U.S. 
Department of Agriculture, STOP 0742, 1400 Independence Avenue SW., 
Washington, DC 20250-0742.
     Hand Delivery/Courier: Submit written comments via Federal 
Express Mail or other courier service requiring a street address to the 
Branch Chief, Regulations and Paperwork Management Branch, U.S. 
Department of Agriculture, 300 7th Street SW., 7th Floor, Suite 701, 
Washington, DC 20024.
    All written comments will be available for public inspection during 
regular work hours at the 300 7th Street SW., 7th Floor address listed 
above.

FOR FURTHER INFORMATION CONTACT: Mark S. Plank, Director, Environmental 
and Engineering Staff, Rural Utilities Service, Stop 1571, 1400 
Independence Ave. SW., Washington, DC 20250-1571; email: 
Mark.Plank@wdc.usda.gov; telephone: (202) 720-1649.

SUPPLEMENTARY INFORMATION: 

I. Introduction and Background

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

A. National Environmental Policy Act

    NEPA (Pub. L. 91-190, 42 U.S.C. 4321-4370) establishes 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 can be found at 40 CFR 
1500-1508 and are referenced in this proposed rule.
    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, do 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, refinancing of debt; 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. If a CE 
applies, and there are no extraordinary circumstances, the Federal 
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, a Federal 
agency briefly describes the need for the proposal, alternatives to the 
proposal, and the potential environmental

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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 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 financial support 
(including direct loans, grants, 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. 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 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 (2010)). 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 at 
75631).

    The Agency's existing and proposed regulations ensure that the 
Agency's responsible official follows the steps described by CEQ for 
determining whether a CE for a particular proposed action exists. 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, 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 existing and proposed 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 existing and proposed NEPA 
regulations.
    To achieve the Agency's mission and to improve the delivery of its 
programs, the Agency intends to consolidate and update the existing 
environmental regulations to eliminate confusion between the two 
existing NEPA regulations and to facilitate NEPA reviews.

C. Current 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 RHS/RBS 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 currently utilized by RHS 
and RBS 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). RHS and RBS 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 RHS and RBS, and is comprised of Rural Electrification 
Administration (REA) programs combined with the Water and Waste Program 
from the former FmHA. The environmental policies and procedures 
currently 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 need to be 
updated to reflect the Agency's current structure and programs, CEQ 
guidance documents, and Executive orders. In addition, the Agency 
proposes to consolidate the Agency's approach to environmental reviews 
for all assistance programs within the USDA Rural Development mission 
area, rather than having separate NEPA procedures for RHS/RBS and RUS.
    Under the proposed rule, 7 CFR part 1970 will replace 7 CFR part 
1794 for RUS and 7 CFR part 1940, subpart G, for RBS and RHS. While 7 
CFR part 1940, subpart G, will no longer apply to RHS

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and RBS, it will continue to apply to FSA.

II. Purpose of the Proposed Agency NEPA Regulations

    Under 7 CFR part 1970, subparts A through D, the Agency proposes to 
consolidate, simplify, and update the two existing NEPA rules. Although 
some substantive policy changes are being proposed to reflect recent 
environmental policies of Executive Orders and CEQ guidance, the 
Agency's main goal is to update and merge the two sets of existing 
regulations, rather than to promulgate new rules or requirements. The 
Agency believes 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 7 CFR part 1940, 
subpart G, and 7 CFR part 1794 to eliminate redundancy; promote 
consistency among the RHS, RBS, and RUS programs; and reduce confusion 
on the part of applicants for Agency financial assistance and the 
public.
    The proposed changes are intended to (1) better align the Agency's 
regulations with the CEQ NEPA regulations and recent guidance, and (2) 
update the provisions with respect to current technologies (e.g., 
renewable energy) and new and recent regulatory requirements.
    The proposed consolidation encompasses the CEs currently in 7 CFR 
part 1940, subpart G, and in 7 CFR part 1794. In addition, the Agency 
is proposing to modify and add to 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 at 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).

III. Invitation To Comment

    The Agency encourages interested persons and organizations to 
submit written comments, which may include data, suggestions, or 
opinions. Commenters should include their name, address, and other 
appropriate contact information. Comments may be submitted by any of 
the means identified under ADDRESSES. Comments submitted by mail or 
hand delivery should be submitted in an unbound format, no larger than 
letter-size, suitable for copying and electronic filing. If 
confirmation of receipt is requested, a stamped, self-addressed, 
postcard or envelope should be enclosed. The Agency will consider all 
comments received during the comment period and will address comments 
in the preamble to the final regulation. Tribal consultation will be 
conducted during the public comment period for the proposed rule.

IV. Description of the Proposed Changes to the Agency's NEPA 
Regulations

    The Agency is proposing both organizational and substantive changes 
to its NEPA-implementing regulations. These changes are described 
below. A section-by-section analysis of individual changes is provided 
in Section V.

A. Organizational Changes

    Consolidation of the Agency's two existing rules for implementing 
the procedural provisions of NEPA and other applicable environmental 
requirements will simplify program application processes for applicants 
by making environmental requirements more clear and consistent across 
all programs.
    In addition, under the proposed rule, NEPA procedures have been 
reorganized and revised to simplify provisions, as well as to provide 
more concise and comprehensive discussions of specific topics. In some 
cases, detail was removed because it relates primarily to internal 
Agency processes and thus is more appropriately addressed in staff 
instruction for Agency personnel or in separate guidance to applicants. 
For example, the Agency proposes to eliminate Exhibits A-M in 7 CFR 
part 1940, subpart G because these exhibits are internal guidance.
    In other instances, additional clarification and detail were added 
to ensure consistency in NEPA compliance and implementation across all 
Agency programs. For example, additional detail was added to 
discussions of applicant responsibilities, definitions, actions subject 
to NEPA, limitations on actions during the NEPA process, scoping, 
public notices, and interagency cooperation.
    The proposed NEPA regulations, which are intended to supplement the 
CEQ regulations, are organized into four subparts as described below:
    Subpart A--Environmental Policies. This subpart contains the 
environmental policies and procedures of the Agency that integrate 
NEPA, as amended, with the planning, environmental review processes, 
and consultation procedures required by the environmental statutes, 
regulations, and Executive orders applicable to Agency programs.
    Subpart B--NEPA Categorical Exclusions (CE). This subpart contains 
the descriptions of those categories of actions that the Agency has 
determined do not individually or cumulatively have a significant 
effect on the human environment. In consolidating and reorganizing the 
proposed CEs, the Agency grouped them by activity (e.g., routine 
financial actions) rather than by particular Agency program (e.g., 
Water and Waste or Community Facilities). The Agency took this approach 
to make clear that all CEs are applicable to each of the 86 programs 
the Agency currently administers, as long as the conditions within the 
CE are met and there are no extraordinary circumstances.
    Subpart C--NEPA Environmental Assessments (EA). This subpart 
describes actions that require the preparation of an EA to determine 
whether the impacts of a proposed action may be significant and thus 
whether preparation of an EIS is warranted. It also describes the 
requisite components of an EA and FONSI, and includes a provision on 
supplementing an EA.
    Subpart D--NEPA Environmental Impact Statements (EIS). This subpart 
describes actions for which the Agency will prepare an EIS. It also 
describes the contents of an EIS and a Record of Decision (ROD), which 
is the last step in the EIS process.

B. Substantive Changes

    The Agency is also proposing consolidation of and substantive 
changes to its CEs, classification criteria and procedures for 
preparing EAs, and the preparation of EISs by third-party contractors. 
These proposed changes are described below.
1. Categorical Exclusions
    The Agency is proposing to modify and add a number of CEs. In 
addition to combining the existing RHS/RBS and RUS CEs, the Agency is 
proposing some revisions to the existing CEs and is proposing new CEs. 
Further, the Agency recognizes that some CEs have a potential for 
significant environmental impacts because of the possible presence of 
extraordinary circumstances, such as sensitive environmental resources. 
For these CEs, the Agency is proposing to require applicants to submit 
environmental documentation regarding their requests for financial 
assistance. Finally, the Agency is proposing to add several CEs based 
on the experience of the Agency

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and, in accordance with 40 CFR 1507.3(a), other Federal agencies with 
similar programs.
    In addition to modifying existing CEs and adding new CEs, the 
Agency is proposing to eliminate several CEs currently listed in the 
RHS/RBS and RUS NEPA regulations because the Agency no longer 
undertakes those types of actions as a result of the 1994 USDA 
reorganization. These proposed modifications are described in more 
detail below. The section-by-section analysis in Section V.B describes 
the basis for each proposed CE as well as for the elimination of some 
CEs, currently specified in either 7 CFR part 1794 or 7 CFR part 1940, 
subpart G.
    a. New and Revised CEs. Most of the proposed CEs are found in the 
existing Agency NEPA regulations. However, the Agency is proposing to 
revise the language of some existing CEs to reflect current agency 
programs. These revisions clarify, and in some instances, expand the 
applicability of the CEs and make the scope and quantitative aspects of 
the CEs more consistent with those adopted by other Federal agencies 
engaged in similar or identical actions. Such expansion includes the 
re-classification of Class I EAs, currently provided for in the 
existing RHS and RBS regulations as EAs for actions with low potential 
to effect environmental quality (7 CFR 1940.311), as CEs. Based on the 
EAs and FONSIs that have been prepared for these actions since 1984, 
the Agency has concluded that these types of activities, absent the 
presence of extraordinary circumstances, do not individually or 
cumulatively have significant environmental effects and thus are more 
appropriately classified as CEs.
    In addition, the Agency is proposing new CEs to address Agency 
programs that have been enacted since the existing NEPA regulations 
were last updated. The range of Agency activities and programs has 
changed and expanded since the Agency's NEPA regulations were 
promulgated and later amended, growing to more than 86 programs in 
2012.
    In particular, there has been tremendous growth and development in 
the areas of energy efficiency and renewable energy. Over the last 
several years, this growth has given the Agency and other Federal 
agencies (e.g., the Department of Energy (DOE)), extensive experience 
with assessing the potential environmental impacts of these 
technologies. With the increase in development of energy efficiency and 
renewable energy, has come an increase in the number of applications to 
the Agency for financial assistance to promote energy efficiency and 
alternative energy development.
    The Agency's proposal to add CEs based on the Agency's own 
experience as well as that of other Federal agencies is consistent with 
the CEQ CE Guidance. As CEQ noted in that guidance, a Federal agency 
may ``substantiate a categorical exclusion of its own based on another 
agency's experience with a comparable categorical exclusion and the 
administrative record developed when the other agency's categorical 
exclusion was established'' (CEQ CE Guidance, 75 FR at 75634). For 
several of the new CEs being proposed by the Agency, the Agency is 
relying on DOE's extensive experience with energy projects, which DOE 
has used in recent revisions to its own NEPA rule (76 FR 63764 (2011)). 
DOE's revised NEPA rule included several modifications and additions to 
its CEs, particularly relating to energy efficiency and renewable 
energy technologies. The Agency has reviewed DOE's CEs and the basis 
for those CEs, and has determined that many DOE actions eligible for a 
CE are comparable to actions undertaken by the Agency.
    In the text of the proposed CEs, and as is done in the CEs in its 
existing regulations, the Agency uses the terms ``small,'' ``small-
scale,'' ``minimal,'' and ``minor'' to limit the types and potential 
impacts of the activities that are eligible for a CE. While the Agency 
does not intend to define these terms specifically, in determining 
whether a particular proposed action qualifies for a CE, the Agency 
considers those terms in the context of a particular proposal, 
including its proposed size and location.
    In assessing whether these terms apply to a particular proposed 
action, the Agency currently considers and would continue to consider 
factors such as industry norms, the relationship of the proposed action 
to similar types of development in the vicinity of the proposed action, 
and expected outputs of emissions or waste, in addition to the 
magnitude of the proposal. When considering the physical size of a 
proposed facility, for example, Agency environmental staff reviews the 
surrounding land uses, the scale of the proposed facility relative to 
existing development, and the capacity of existing roads and other 
infrastructure to support the proposed action. This approach is similar 
to and consistent with that undertaken by DOE in the application of its 
CEs, as described in its recent NEPA rulemaking (76 FR 63764, 63768 
(2011)).
    The proposed rule also uses the term ``previously disturbed or 
developed'' to limit potential environmental impacts of CEs. The Agency 
has determined, based on experience, that the potential for certain 
actions to have significant impacts on the human environment is 
generally avoided when the action takes place within a previously 
disturbed or previously developed area. ''Previously disturbed or 
developed'' refers to land that has been changed such that its 
functioning ecological processes have been and remain altered by human 
activity. The phrase encompasses areas 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. This approach is similar to and 
consistent with that undertaken by DOE in the application of its CEs, 
as described in its recent NEPA rulemaking (76 FR 63764, 63768 (2011)).
    For some proposed CEs, the Agency proposes the use of quantitative 
limitations or thresholds (acres, miles, feet, megawatts, kilovolts) to 
help further limit the potential for significant environmental impacts. 
These threshold values are based on the Agency's past experience in 
applying its existing CEs and preparing EAs that resulted in FONSIs, 
where actual project sizes could be correlated to impacts. The Agency's 
experience has shown that the proposal size is directly linked to 
impacts, where the greater the potential area affected, the greater the 
potential for significant impacts. In many cases, the threshold values 
are the same as those used in the existing Agency NEPA regulations. In 
other instances, however, changes in thresholds have been proposed to 
promote consistency among Agency programs and with the environmental 
requirements of other Federal agencies' programs that are similar in 
nature.
    The Agency has reviewed and deliberated each proposed CE with 
respect to concept, coverage, applicability, and wording; and carefully 
examined the portion of the administrative record associated with each 
CE to ensure that the proposed CE fulfills the goal of balancing 
increased administrative efficiency with the avoidance of 
misinterpretations and misapplications of exclusionary language that 
could lead to non-compliance with NEPA requirements. The Agency has 
concluded that the proposed CEs encompass activities that have no 
inherent potential for significant impacts. Many of the Agency's 
conclusions regarding specific categorical exclusions are supported by

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other Federal agencies that have established CEs for activities similar 
in nature, scope, and impact to those contemplated by the Agency. Based 
on the Agency's experience and that of other Federal agencies, the 
Agency determined that, in the absence of extraordinary circumstances, 
its proposed CEs will not individually or cumulatively pose significant 
environmental impacts.
    b. Documentation Requirements. The Agency's proposed CEs are 
divided into two sections. The proposed CEs in Sec.  1970.53 involve no 
or minimal construction and generally involve routine financial 
actions, information gathering activities, or modifications to existing 
facilities. For that reason, these CEs, due to their narrow scope, do 
not have the potential for extraordinary circumstances. Therefore, the 
CEs listed in proposed Sec.  1970.53 would not require applicants to 
provide environmental documentation with their applications. 
Nonetheless, applicants may be required to provide environmental 
documentation at the Agency's request.
    The CEs listed in proposed Sec.  1970.54 would require applicants 
to submit environmental documentation with their applications for 
financial assistance. In the Agency's view, these proposed CEs 
involving small-scale development have an increased potential for 
disturbance of sensitive resources. Thus, the Agency proposes to 
require applicants to submit information regarding their proposals, 
including detailed site plans, location maps, and environmental 
surveys, to allow the Agency to determine whether there could be 
extraordinary circumstances.
    An environmental report is currently required for CEs listed in 
RUS's NEPA regulation at 7 CFR 1794.22. Not all of those existing CEs 
would require documentation under the Agency's proposed NEPA rule, 
based on the Agency's conclusion that, for certain actions, 
environmental documentation is not necessary because of the low 
probability for extraordinary circumstances.
    However, the Agency also concluded that some CEs that do not 
currently require an environmental report under the existing 
regulations at 7 CFR 1794.21 do have the potential for extraordinary 
circumstances. Thus, under the proposed rule, those proposed actions 
would require an applicant to submit environmental documentation. It 
should be noted that the environmental documentation required for CEs 
proposed in Sec.  1970.54 is less than the information currently 
required for an environmental report (see 7 CFR 1794.32; RUS Bulletins 
1794A-600 and 1794A-602). For those RHS and RBS Class I EA actions that 
are now proposed as CEs under part 1970, the documentation requirements 
would be similar to that provided in the RD 1940-20 form currently 
required under Sec.  1940.311.
    Differences between the existing and proposed CEs are addressed in 
more detail in the section-by-section analysis in Section V.B.
    c. Multi-Tier Actions. Subpart B also provides that the Agency's 
approval of the initial funding to multi-tier entities (primary 
recipients) would be classified as CEs. Commitments of financial 
assistance to primary recipients who will, in turn, provide financial 
assistance in the future to qualified second tier or ultimate 
recipients under certain terms and conditions (Sec.  1970.55) would be 
subject to further environmental review by the Agency. The Agency will 
conduct its review in accordance with this part and on a case-by-case 
basis at the time when projects and ultimate beneficiaries are defined.
    d. Eliminated CEs. The Agency is proposing to remove several types 
of actions from its list of CEs. Most of these relate to programs that 
are no longer under the purview of the Agency, except as noted below:
    The following existing CEs involving subdivisions are being 
eliminated:
     Sec.  1940.310(b)(2) The approval of an individual 
building lot that is located on a scattered site and either not part of 
a subdivision or within a subdivision not requiring Rural Development's 
approval
     Sec.  1940.310(b)(5) The approval of a subdivision that 
consists of four or fewer lots and is not part of, or associated with, 
building lots or subdivisions
     Sec.  1940.310(b)(8) The financing of housing construction 
or the approval of lots in a previously approved Rural Development 
subdivision. Please note that the financing of the housing construction 
portion of this CE has been incorporated into Sec.  1970.53(c)(4).
    The Agency proposes to eliminate Sec. Sec.  1940.310(c)(3) and 
1794.21(c)(1), which refer to project management actions relating to 
invitation for bids, contract award, and the actual physical 
commencement of construction activities. These actions occur after the 
Agency has completed the NEPA process and has obligated funds for the 
project. Thus, these actions would have already been addressed as part 
of the request for financial assistance, and a separate section is not 
necessary.
    The Agency also proposes to eliminate Sec. Sec.  1940.310(d)(1) 
through 1940.310(d)(11), which are programs administered by FSA and are 
not eligible for Agency financing.
    Finally, the Agency proposes to eliminate Sec.  1794.22(b)(6), 
which refers to previously categorically excluded loan closing and 
servicing activities for which the purpose, operation, location, or 
design may have changed. The Agency recognizes that a previously 
approved action that is later altered would need to be re-examined to 
determine if the original application of the CE was still appropriate 
given the change in purpose, operation, location, or design. If the CE 
was no longer appropriate, the Agency would proceed to prepare an EA, 
or if necessary, an EIS.
    All other CEs that are currently contained in 7 CFR parts 1940, 
subpart G, and 1794 are proposed for inclusion in the proposed CEs in 
Sec.  1970.53 or 1970.54. For example, Sec.  1794.21(b)(26), which 
refers to ``New bulk commodity storage and associated handling 
facilities within existing fossil-fueled generating station boundaries 
for the purpose of co-firing bio-fuels and refuse derived fuels'' is 
now included in proposed Sec.  1970.54(a), ``Small-scale site-specific 
development,'' as long as the conditions of the CE are met and there 
are no extraordinary circumstances. For proposed Sec.  1970.54(a) in 
particular, the Agency intends that proposals for financial assistance 
that fall within the stated parameters of the CE be eligible for a CE 
even though the proposed action may not be specifically listed as an 
example.
2. EA Policy
    The Agency is proposing to eliminate the distinction in the RHS/RBS 
regulations for Class I and Class II EAs and the distinction in the RUS 
regulations for EAs with and without scoping. The Agency is also 
proposing to provide a formal process for the public review of EAs. 
These changes are described below.
    a. Elimination of EA Categories. In the existing regulations, RHS 
and RBS distinguish between Class I and Class II EAs. Class I EAs are 
defined as those actions that are not listed as CEs and that require 
the preparation of an EA to determine if the proposal will have a 
significant impact on the environment (7 CFR 1940.311). Class II EAs 
``have the potential for resulting in more varied and substantial 
environmental impacts'' and thus require a ``more detailed'' EA to 
determine if the proposed action requires the preparation of an EIS (7 
CFR 1940.312). Further, RUS lists proposed actions that will normally 
require an EA (7 CFR 1794.23) and separately lists proposed actions 
that

[[Page 6745]]

require a ``scoping procedure'' in the development of the EA (7 CFR 
1794.24).
    To simplify its EA process and to make its NEPA regulations 
consistent with the CEQ regulations (which do not recognize different 
EA classifications), the Agency is proposing to eliminate these two EA 
classes. Under the proposed rule, the Agency would prepare EAs for all 
forms of financial assistance unless such actions are CEs or require 
the preparation of an EIS (proposed Sec.  1970.101(b)). The proposed 
rule recognizes, however, that ``the amount of information and level of 
analysis provided in the EA must be commensurate with the magnitude of 
the proposal's activities and its potential to affect the quality of 
the human environment'' (proposed Sec.  1970.102(a)).
    As described more fully in the section-by-section analysis in 
Section V.C, several actions that were previously Class I EAs in the 
RHS and RBS regulations are now proposed as CEs because the Agency has 
concluded that those types of actions do not have the potential for 
imposing significant environmental impacts. All but one of these 
actions would require the applicant to submit environmental 
documentation to determine the presence or absence of extraordinary 
circumstances. Other actions that fall under the Class I EA 
classification would be eliminated because those actions are no longer 
undertaken by the Agency (i.e., the actions now fall under FSA's 
jurisdiction).
    Under the existing regulations, at the discretion of the Agency, 
the Agency may require scoping meetings depending on the complexity of 
the proposal. The Agency is now proposing to remove the distinction 
between proposals normally requiring an EA and those requiring an EA 
with scoping. This does not represent a change in procedure, but 
continues to allow the Agency to exercise its discretion. Accordingly, 
the Agency determined that a separate classification is not necessary.
    Except for proposals including electric transmission facilities of 
230 kV or more nominal operating voltage and 20 miles or more in 
length, the remainder of the actions specifically listed in Sec.  
1940.311 and Sec.  1940.312 (for RHS and RBS) and in Sec.  1794.23 and 
Sec.  1794.24 (for RUS) would require the preparation of an EA under 
the proposed NEPA rule. While the existing regulations define the 
specific proposals that require the preparation of an EA, the proposed 
rule simply states that all forms of financial assistance require the 
preparation of an EA unless they are categorically excluded or required 
to be the subject of an EIS. In light of the large number and varying 
types of programs implemented by the Agency, the proposed generic 
approach provides assurance that EAs will be prepared for proposals 
that may not have been previously encountered by the Agency and for 
future Agency programs.
    b. Public Review of EAs. The Agency is proposing to establish a 
formal EA public notice and participation process that is consistent 
with the CEQ regulations and the existing part 1794, recent case law, 
and other Federal agencies' requirements for EAs. The Agency's proposed 
procedures would require EAs to be made available for public review and 
comment prior to completion and issuance of a FONSI, if the Agency 
determines that on the basis of the EA there are no significant 
impacts. Although the CEQ regulations require agencies to involve the 
public in the preparation of EAs ``to the extent practicable'' (40 CFR 
1501.4(b)), there is no formal commenting requirement in those 
regulations. Federal agencies have typically declined to implement a 
public review and comment process similar to that required for EISs. 
Recently, however, courts have held that Federal agencies must permit 
some level of public participation when issuing an EA. Specifically, 
courts have held that a complete failure to involve or inform the 
public about an agency's preparation of an EA would violate NEPA. See, 
e.g., California Trout v. Federal Energy Regulatory Commission, 572 
F.3d 1003 (9th Cir. 2009).
    In keeping with the spirit of NEPA and the CEQ regulations and to 
follow the dictates of case law, the Agency is proposing a formal 
commenting process for EAs similar to that which is currently required 
under part 1794. This process would involve notification of the 
availability of an EA and the establishment of a 14- to 30-day public 
comment period. DOE has a similar provision in its NEPA regulations (10 
CFR 1021.301(d)).
3. Third-Party Contracting
    The Agency is proposing to improve efficiency in the NEPA process 
by revising the manner in which professional services of contractors to 
support the preparation of an EIS are procured. Under the proposed 
rule, applicants for financial assistance under all Agency programs 
would be required to fund EISs. In accordance with the CEQ regulations, 
applicants may undertake the necessary paperwork for the solicitation 
of a field of candidates under the Agency's direction and the Agency 
would select and approve all contractors (see proposed Sec.  1970.152). 
Although funding for an EIS by applicants is currently allowed under 
Sec.  1794.61, there is no similar provision in 7 CFR part 1940, 
subpart G. The proposed rule would allow all Agency programs to use a 
third-party contracting approach for the preparation of EISs.
    Third-party contracting offers a more efficient approach for the 
preparation of an EIS, however it does not change current Agency 
responsibilities. The Agency would also remain responsible for: 
Selecting the EIS contractor; participating in the preparation of the 
EIS; and independently evaluating the scope and content of the EIS. 
This action is proposed to improve both the efficiency and the 
effectiveness of the Agency's environmental review processes and 
represents an important contribution to the Agency's ongoing efforts to 
streamline its operations.

V. Section-by-Section Analysis of the Proposed Agency NEPA Regulation

    This section provides a detailed discussion of the proposed Agency 
NEPA regulation. For each section, the content of the proposed rule is 
briefly described. The Agency then discusses the manner in which the 
proposed rule relates to existing Agency NEPA regulations in part 1970, 
subpart G, and/or in part 1794. In most cases, the proposed rule is the 
same as an existing regulation or has been modified slightly for 
clarity or consistency between the RHS/RBS and RUS NEPA regulations. 
Where the Agency proposes substantive changes to its NEPA regulations, 
an explanation for the change is provided.

A. Subpart A--Environmental Policies

Purpose, Applicability, and Scope (Sec.  1970.1)
    This proposed section describes the purpose of the Agency's 
environmental policies and procedures, which is to ensure compliance 
with NEPA and other applicable environmental requirements. It also 
explains that the Agency's environmental policies and procedures 
supplement the CEQ NEPA regulations (40 CFR parts 1500 through 1508).
    This proposed section is similar to the information found in 
Sec. Sec.  1940.301 and 1794.1 (Purpose); however, it has now been 
consolidated and reorganized into three separate paragraphs relating to 
purpose, applicability, and scope. The applicability paragraph is new 
and clarifies that the proposed rule applies to all Agency programs 
(RHS, RBS, and RUS). It also expands the existing discussion of scope 
to indicate that the Agency will take into account CEQ's

[[Page 6746]]

guidance and memoranda interpreting NEPA to the extent appropriate. In 
addition, this section incorporates and is in conformity with the 
procedures of Section 106 of the National Historic Preservation Act 
(NHPA) and Section 7 of the Endangered Species Act (ESA).
    Some information in the existing regulations has been reorganized. 
Specifically, information relating to authorities, previously contained 
in Sec.  1940.301(c), has been moved to proposed Sec.  1970.3 
(Authority). Information contained in Sec.  1940.301(d) through (h), 
which covered a variety of topics (e.g., objectives and coordination 
with other agencies, responsible officials, covered actions, completion 
of an environmental review, and public involvement), are now captured 
elsewhere in the proposed rule, including: Sec. Sec.  1970.4 
(Policies), 1970.5 (Responsible Parties), 1970.8 (Actions Requiring 
Environmental Review), 1970.11 (Timing of the Environmental Review), 
and 1970.14 (Public Involvement).
    By consolidating the requirements found in the existing 
regulations, this proposed section helps provide for a single, 
consistent, streamlined process that all Agency programs will follow in 
complying with NEPA and other applicable environmental requirements. 
NHPA and ESA are now specifically referenced because these are 
important environmental reviews the Agency completes for its programs 
under the umbrella of NEPA.
Authority (Sec.  1970.3)
    This proposed section describes the many environmental laws, 
regulations, Executive orders, and USDA regulations that comprise the 
authority for the proposed 7 CFR part 1970. The list of authorities 
includes those found in the existing regulations (Sec. Sec.  
1940.301(c) and 1794.2), and has been updated and expanded to reflect 
new requirements that have been enacted since the existing regulations 
were published. These include new statutes, Executive Orders, 
Departmental regulations and a Departmental manual. In addition, two 
statutes referenced in Sec.  1940.301(c) are not proposed for inclusion 
in the proposed rule because they are only applicable to the FSA, which 
is no longer part of the Agency. The implementing regulations of those 
two statutes are: Title 7, Part 658, Code of Federal Regulations, 
Department of Agriculture, Soil Conservation Service, Farmland 
Protection Policy; and Title 7, part 12, Code of Federal Regulations, 
Highly Erodible Land and Wetland Conservation.
Policies (Sec.  1970.4)
    This proposed section states that it is Agency policy that 
applicant proposals must, whenever practicable, avoid or minimize 
adverse environmental impacts, conversion of wetlands and important 
farmlands, and development in floodplains where a practicable 
alternative \1\ exists to meet development needs. Further, it is Agency 
policy to encourage reuse of real property defined as ``brownfields'' 
where possible; lend support to initiatives, resolutions, and programs 
designed to maximize international cooperation in addressing 
environmental problems; and consider opportunities to reduce greenhouse 
gas emissions. This proposed section is a consolidation of Sec. Sec.  
1940.303 (General policy) relating to the Agency decision-making 
process and the need to consider environmental impacts and alternatives 
early in the process; 1940.304 (Special policy) including special 
policies relating to land use and sensitive environmental resources; 
and 1940.305 (Policy implementation) relating to Agency 
responsibilities for environmental impact analysis, natural resource 
management, intergovernmental initiatives, and other protected 
resources. There is no analogous section in part 1794. The proposed 
section has also been updated to reflect new USDA policies, such as 
using the NEPA process, to the extent possible, to identify and 
encourage opportunities to reduce greenhouse gas emissions.
---------------------------------------------------------------------------

    \1\ ``Practicable alternative'' is the term used in Executive 
order 11988, Floodplain Management. NEPA requires consideration of 
``reasonable'' alternatives in EAs and EISs.
---------------------------------------------------------------------------

Responsible Parties (Sec.  1970.5)
    This proposed section describes the responsibilities of the Agency 
and applicants. The Agency is responsible for all environmental 
decisions and findings related to its actions, and for compliance with 
all environmental laws, regulations, and Executive orders. The Agency 
responsibilities described are consistent with those identified in the 
CEQ regulations at 40 CFR 1506.5 (Agency responsibility).
    With respect to the Agency's responsibilities, this proposed 
section is similar to Sec.  1794.5 relating to the Agency's 
responsibility to comply with all environmental laws and Agency 
programs. It also includes the general Agency responsibilities found in 
7 CFR part 1940, subpart G, but does not include most of the specific 
descriptions of Agency responsibilities found in Sec. Sec.  1940.306 
(National Office), 1940.307 (State Office), 1940.308 (District and 
County Office levels), and 1940.316, describing the duties of 
responsible officials specific to the environmental review process. 
These provisions were eliminated because the information concerns 
internal agency policy and procedures.
    In addition, the proposed section highlights specific Agency 
responsibilities relating to mitigation measures. While these are not 
new to Agency NEPA practices, they are more clearly described in the 
proposed rule in order to be consistent with CEQ regulations and 
provide clarity to applicants and Agency staff. These responsibilities 
are consistent with the CEQ regulations (40 CFR 1505.2(c) and 1505.3) 
and with recent CEQ guidance on mitigation and monitoring (Final 
Guidance for Federal Departments and Agencies on the Appropriate Use of 
Mitigation and Monitoring and Clarifying the Appropriate Use of 
Mitigated Findings of No Significant Impact, 76 FR 3843 (2010)). In 
particular, the proposed rule makes it clear that the Agency will 
include mitigation measures, as identified in the environmental review 
documentation, in Agency loan and grant commitment documents and that 
the Agency, guaranteed lender, or multi-tier primary recipients are 
responsible for monitoring and tracking the implementation, 
maintenance, and effectiveness of any required mitigation measures.
    Provisions relating to the Agency's responsibility as a lead or 
cooperating agency are currently found in Sec. Sec.  1940.325 (relating 
to being a cooperating agency), 1940.326 (related to being a lead 
agency), and 1794.14 (related to interagency involvement). Rather than 
repeating the CEQ regulations with regard to the definition and role of 
lead and cooperating agencies, however, the Agency proposes to simply 
reference the CEQ regulations in the proposed rule.
    With respect to applicant responsibilities, most of the provisions 
in Sec. Sec.  1940.309 and 1794.10 relating to an applicant's 
responsibility to prepare applicable environmental documentation are 
included in this proposed section. The Agency also proposes two 
additions. First, the Agency proposes to specify when it is appropriate 
for an applicant to coordinate and consult with state, Federal, and 
tribal agencies under Section 106 of NHPA. The circumstances in which 
an applicant may contact state, Federal, and tribal agencies directly 
is not addressed in the existing regulations and has been the

[[Page 6747]]

source of some confusion among Agency staff and applicants.
    In this section, the Agency also proposes to provide additional 
detail on and clarification of applicant's responsibilities relating to 
the type and adequacy of environmental information that must be 
submitted to the Agency in support of a request for financial 
assistance (e.g., environmental review information, supporting 
technical studies, or an EA). Reference to Agency forms (Request for 
Environmental Information) included in Sec.  1940.309 has been 
eliminated because they will no longer be used.
    The proposed section also describes the obligation of an applicant 
to assist the Agency in preparing an EIS such as conducting public 
involvement activities, issuing notices, and funding third-party 
contractors. Finally, this proposed section specifies that the Agency's 
consideration of a request for financial assistance may be affected by 
the applicant's willingness to cooperate with the Agency on 
environmental compliance.
Definitions and Acronyms (Sec.  1970.6)
    This proposed section includes many, but not all, of the 
definitions found in the existing regulations at Sec. Sec.  1940.302 
and 1794.6. A list of acronyms relevant to the environmental review 
process within the Agency is also proposed to aid readers.
    The existing regulations include some defined terms that have not 
been included in the proposed regulation because they are specific to 
only one Agency program, are no longer needed or used, are not directly 
related to the environmental review process, and/or are already defined 
in the CEQ regulations. The following terms defined in the existing 
regulations are not included in the proposed regulation:
     From 7 CFR 1940.302--``environmental review documents'' 
(refers to Agency forms no longer used), ``flood/flooding,'' (specific 
to one resource and better suited to staff instruction and/or applicant 
guidance), ``floodplains'' (critical action floodplain component is 
proposed for inclusion in the critical action definition), ``indirect 
impacts'' (defined in CEQ regulations under ``effects'' in 40 CFR 
1508.8), ``mitigation measure'' (defined in CEQ regulations under 
``mitigation'' in 40 CFR Sec.  1508.20), ``practicable'' alternative 
(to be consistent with CEQ regulations that address ``reasonable'' 
alternatives at Sec.  1502.14), ``preparer of environmental review 
documents'' (proposed for inclusion in staff instruction), and ``water 
resource project'' (specific to one program).
     From 7 CFR 1794.6--``Environmental Report,'' ``equivalent 
dwelling unit,'' ``important land resources,'' ``load design,'' 
``multiplexing center,'' ``Natural Resource Management Guide,'' 
``Supervisory Control and Data Acquisition System,'' and ``Third-Party 
Consultant.'' ``Third-party consultant'' is addressed under third-party 
contracting in proposed Sec. Sec.  1970.5, 1970.11, and 1970.152. The 
rest of the terms are specific to RUS programs and, in some instances, 
refer to internal documents (Environmental Reports and Natural Resource 
Management Guides) that are not referenced in the proposed regulations. 
Such terms are better placed in staff instruction and/or applicant 
guidance.
    The following definitions have been retained in the proposed rule, 
although some have been modified for additional clarification or to 
ensure applicability to all Agency programs. These are: ``Emergency'' 
(replaces ``emergency situation'') and ``no-action alternative'' in 
Sec.  1940.302; and ``applicant,'' ``construction work plan,'' 
``distributed resources'' (replaces ``distributed generation''), 
``environmental review,'' ``loan/system designs'' (replaces ``loan 
design''), and ``preliminary architect/engineering report'' (replaces 
``preliminary engineering report'') in Sec.  1794.6.
    New definitions are proposed for the following terms: ``Agency,'' 
``critical action,'' ``design professionals,'' ``financial 
assistance,'' ``guaranteed lender'', ``historic property,'' ``Indian 
tribe,'' ``multi-tier recipient,'' and ``loan servicing actions.'' Such 
terms define actions (critical action, loan-servicing action), entities 
(multi-tier recipients, guaranteed lender, design professionals), and 
other terms not previously defined, but that are important to 
environmental policies and procedures within the Agency.
Actions Requiring Environmental Review (Sec.  1970.8)
    This proposed section identifies the types of actions that the 
Agency considers to be major Federal actions subject to the 
requirements of NEPA and other applicable environmental requirements.
    This proposed section is based on and further clarifies information 
found in Sec.  1794.20 regarding parameters that will help Agency staff 
determine whether the applicant has sufficient control over the 
proposal to make the proposal subject to the requirements of NEPA and 
other applicable environmental requirements. Currently, Sec.  1970.8 
reiterates what is stated in Sec.  1794.20 in that actions for which 
the applicant has less than 5 percent ownership control are not 
considered federal actions subject to this part. The agency determined 
that an inconsistency existed in Sec.  1794.21(b)(17) in that a 5 
percent or less ownership control was classified as a CE. The 
requirements in this proposed section are also similar to those in 
existing Sec.  1794.3 and three sections in 7 CR part 1940, subpart G: 
Sec. Sec.  1940.301(h), 1940.311, and 1940.312.
    Section 1970.8(b)(2)(ii) provides that all Loan-servicing actions, 
including all consents or approvals given by an Agency, are major 
Federal actions. The consents and approvals of an Agency to be deemed 
major Federal actions would include, but not be limited to, consents 
and approvals given in connection with an entity that has previously 
received Agency funding and is required to seek Agency consent or 
approval under its existing agreements with the Agency as a 
prerequisite to receiving funding from another source. Under existing 
Sec.  1794.3, RUS's approvals were deemed not to be major Federal 
actions by RUS. However, in order to have a more consistent analytical 
approach among agencies within USDA, under the proposed rule all Agency 
consents and approvals, including all consents and approvals given by 
RUS, will be deemed to be major Federal actions. Although an Agency's 
loan-servicing actions are deemed major Federal actions under Sec.  
1970.8(b)(2), the proposed rule provides that an Agency's loan-
servicing actions may be classified as a CE under Sec.  1970.53(a)(5).
    This proposed section also recognizes the need to address certain 
major Federal actions that occur outside the borders of the United 
States, and identifies the geographic locations where NEPA and other 
applicable environmental requirements apply. NEPA applies not only to 
actions proposed within the United States, but also to actions proposed 
in any other commonwealth, territory, or possession of the U.S. such as 
Guam, Federated States of Micronesia, Republics of the Marshall Islands 
and of Palau, U.S. Virgin Islands, Commonwealth of the Northern Mariana 
Islands, and Puerto Rico. The Republic of Marshall Islands, the 
Federated States of Micronesia, and the Republic of Palau, in 
particular, are subject to Compacts of Free Association with the U.S. 
These compacts are Federal laws and specify that NEPA is generally 
applicable to major Federal actions that are proposed within those 
countries. See https://www.usa.gov/Agencies/State_and_Territories.shtml. This proposed section has been added to clarify 
NEPA's geographic

[[Page 6748]]

applicability outside of the U.S. to territories or associated states 
of the U.S.
Levels of Environmental Review (Sec.  1970.9)
    This proposed section identifies three classes of actions and the 
related levels of environmental review for applicant proposals and 
Agency actions. The proposed section also requires applicants to 
describe their proposals in sufficient detail such that the Agency can 
properly determine the required level of review. The determination of 
the level of environmental review is not itself an action that requires 
NEPA review.
    While the proposed section has no analogous sections in either 7 
CFR parts 1794 or 1940, subpart G, information relating to the three 
levels of review is included in separate sections on CEs, EAs, and EISs 
(Sec. Sec.  1970.310 through 1940.313--CEs, Class I and Class II EAs, 
and EISs, respectively; and Sec. Sec.  1794.21 through 1794.25--CEs 
with and without Environmental Report, EAs with and without scoping, 
and EISs, respectively).
    This proposed section was added (1) to consolidate information 
regarding the three levels of review and to make that information 
consistent with the CEQ regulations; (2) to describe the content and 
organization of the Agency's environmental policies and procedures; (3) 
to recognize that all aspects of a proposed action and proposals that 
are related to each other in such a way as to be a single course of 
action (connected actions) must be evaluated in a single environmental 
document (e.g., an Environmental Questionnaire, an EA, or an EIS), and 
(4) to address multi-year Telecommunication Program Loan/System Designs 
and multi-year Electric Program Construction Work Plans.
Raising the Level of Environmental Review (Sec.  1970.10)
    This proposed section identifies the conditions that could trigger 
the need for a higher level of review than that classified in subparts 
B (CE) or C (EA) of the proposed rule. These conditions include site-
specific environmental conditions or scientific controversy. In such 
situations, the Agency will determine whether extraordinary 
circumstances, as defined in Sec.  1970.52, or the potential for 
significant environmental impacts warrant a higher level of review 
(e.g., a CE action would be raised to the level of an EA review, or an 
EA action would be raised to the level of an EIS review).
    There are no analogous sections in 7 CFR parts 1940, subpart G, or 
1794. While Sec.  1940.319(g) acknowledges the potential for 
controversy and describes how environmental controversy should be 
addressed, it requires completion of a Class II EA in such 
circumstances. As has been noted previously, the distinction between 
Class I and Class II EAs in 7 CFR part 1940 has been eliminated. 
However, this proposed section makes it clear that an action that may 
be a Class I EA under the existing 7 CFR part 1940, subpart G, and that 
is now proposed to be a CE could require the preparation of an EA (or 
an EIS) if there are extraordinary circumstances related to the 
proposal (e.g., presence of sensitive resources or scientific 
controversy). The Agency is solely responsible for making this 
determination.
Timing of the Environmental Review Process (Sec.  1970.11)
    The requirements in this proposed section are similar to Sec. Sec.  
1940.315, 1794.11, 1794.44, 1794.64, and 1794.73. Information relating 
to timing, previously contained in multiple sections in 7 CFR part 
1794, based on the level of environmental review, is proposed for 
consolidation into this proposed section. Much of the detail in 7 CFR 
part 1940 relating to the Agency pre-application process and associated 
forms are proposed for elimination because those programs have been 
transferred to the FSA. This proposed section has also been revised to 
make it clear that the obligation of funds is directly tied to the 
conclusion of the environmental review process. It provides the 
specific steps that must be completed before the environmental review 
process is formally concluded.
    The Agency is also proposing to add a provision relating to third-
party contracting in this proposed section. Consistent with the CEQ 
regulations (40 CFR 1506.5(c)) and the practices of other agencies such 
as the U.S. Department of Energy (10 CFR 1021.215(d) and 1021.310) and 
the U.S. Environmental Protection Agency (40 CFR 6.303), the Agency is 
proposing to require applicants to solicit and procure pro