Environmental Policies and Procedures

SUMMARY: The Rural Utilities Service (RUS) hereby revises its existing

environmental regulations, Environmental Policies and Procedures, which

have served as RUS implementation of the National Environmental Policy

Act (NEPA) (42 U.S.C. 4321 et seq.) in compliance with the Council on

Environmental Quality (CEQ) Regulations for Implementing the Procedural

Provisions of the NEPA. Based on new Congressional mandates, changes in

the electric industry, and RUS experience and review of its existing

procedures, RUS has determined that several changes are necessary for

its environmental review process to operate in a smooth, efficient, and

effective manner.

The implementation of this rule has required that certain changes

be made to 7 CFR part 1780 regarding environmental compliance. The

amendments published in this document consist of those necessary to

make the provisions of Part 1780 subject to the environmental

requirements of this rule.

EFFECTIVE DATE: December 11, 1998.

FOR FURTHER INFORMATION CONTACT: Gary J. Morgan, Director, or Lawrence

R. Wolfe, Senior Environmental Protection Specialist, Engineering and

Environmental Staff; Rural Utilities Service, Stop 1571, 1400

Independence Ave., SW., Washington, DC 20250-1571. Telephone (202) 720-

1784. E-mail address [email protected] or [email protected].

This rule and the guidance bulletins described in this rule will be

available on the Internet via the RUS home page at www.usda.gov/rus/.

SUPPLEMENTARY INFORMATION:

Classification

This rule has been determined to be significant and was reviewed by

the Office of Management and Budget (OMB) under Executive Order 12866.

Civil Justice Reform

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. RUS has determined that this proposed rule meets the

applicable standards provided in sec. 3 of the Executive Order.

In accordance with the Executive Order and the rule; (1) all state

and local laws and regulations that are in conflict with this rule will

be preempted; (2) no retro-active effect will be given to the rule; and

(3) administrative proceedings are required to be exhausted prior to

initial litigation against the Department (7 U.S.C. 6912).

Regulatory Flexibility Act Certification

Pursuant to section 605(b) of the Regulatory Flexibility Act, 5

U.S.C. 605(b), RUS certifies that this rule will not have a significant

economic impact on a substantial number of small entities. If a rule

has a significant economic impact on a substantial number of small

entities, the Regulatory Flexibility Act requires agencies to analyze

regulatory options that would minimize any significant impact of a rule

on small entities. The application for financial assistance under the

RUS Electric and Telecommunications programs and the application for

loans and grants under the RUS Water and Waste program are

discretionary; regulatory requirements will, therefore, apply only to

those entities which choose to apply for financial assistance or

funding.

Information Collection and Recordkeeping Requirements

The recordkeeping and reporting burdens contained in this rule were

approved by the Office of Management and Budget (OMB) pursuant to the

Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35,) under control

number 0572-0117.

National Performance Review

This regulatory action is being taken as part of the National

Performance Review to eliminate unnecessary regulations and improve

those that remain in force.

Environmental Justice

This rule is subject to the requirements of Executive Order 12898,

Federal Actions to Address Environmental Justice in Minority

Populations and Low-Income Populations. Implementation of these

requirements will occur at the time of actions performed hereunder.

National Environmental Policy Act Certification

The Administrator of RUS has determined that this rule will not

significantly affect the quality of the human environment as defined by

the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.)

Therefore, this action does not require an environmental impact

statement or assessment.

Catalog of Federal Domestic Assistance

The programs described by this proposed rule are listed in the

Catalog of Federal Domestic Assistance programs under numbers 10.850,

Rural Electrification Loans and Loan Guarantees, 10.851, Rural

Telephone Loans and Loan Guarantees, 10.760, Water and Waste Disposal

System for Rural Communities, 10.764, Resource Conservation Development

Loans, and 10.765, Watershed Protection and Flood Prevention Loans.

This catalog is available on a subscription basis from the

Superintendent of Documents, the U.S. Government Printing Office,

Washington, DC 20402.

Intergovernmental Review

This rule excludes the Electric and Telecommunications Programs

from the scope of Executive Order 12372, Intergovernmental

Consultation, which may require consultation with State and local

officials. A final rule related notice entitled, ``Department Program

and Activities Excluded from Executive Order 12372,'' (50 FR 47034)

determined that RUS loans and loan guarantees, and RTB bank loans, were

not covered by Executive Order 12372. The Water and Waste Program is

subject to the provisions of Executive Order 12372. Consultation will

be completed at the time of actions performed hereunder.

Unfunded Mandates

This rule contains no Federal mandates (under the regulatory

provision of Title II of the Unfunded Mandates Reform Act) for State,

local, and tribal governments or the private sector. Thus this rule is

not subject to the requirements of section 202 and 205 of the Unfunded

Mandates Reform Act.

Background

On March 13, 1984, the Rural Electrification Administration

(predecessor of RUS) published 7 CFR Part 1794, Environmental Policies

and Procedures, as a final rule in the Federal Register (49 FR 9544)

covering the actions of the Electric and Telecommunications programs.

Based on new congressional mandates, changes in the electric industry,

and RUS experience and review of its existing procedures, RUS has

determined that several changes are necessary for its environmental

review process to operate in a smooth, efficient, and effective manner.

[[Page 68649]]

The existing 7 CFR part 1794 was designed to implement the

requirements of NEPA and the CEQ regulations for RUS Electric and

Telecommunications programs. As a result of the Federal Crop Insurance

Reform and Department of Agriculture Reorganization Act of 1994 (Pub.

L. 103-354, 108 Stat. 3178), the programs of the Rural Electrification

Administration, were combined with the Water and Waste program from the

former Farmers Home Administration (FmHA) into RUS. Most changes

proposed to 7 CFR part 1794 result from the addition of the Water and

Waste program to RUS.

For further guidance in the preparation of public notices and

environmental documents, RUS has prepared a series of guidance

bulletins. Three program specific bulletins are available which provide

guidance in preparing the Environmental Report (ER) for proposed

actions classified as categorical exclusions and proposed actions which

require an Environmental Assessment (EA). Further information on these

bulletins is provided in Sec. 1794.7.

This final rule contains a variety of substantive and procedural

changes from the provisions of the current rule. Some of these

revisions are minor (Sec. 1794.4, Trivial Violations was deleted) or

are merely intended to clarify existing RUS policies and procedures

(Sec. 1794.6, Definitions, was added). Other revisions reflect changes

in RUS implementation of the CEQ regulations as outlined below.

The relationship between RUS and its Electric and

Telecommunications applicants has changed substantially since RUS

issued the final rule in March of 1984. Changes that have occurred in

the last 4 years have been particularly dramatic. Historically, RUS

provided substantially all of its applicants' capital needs and

established a lending relationship reflecting that dominant lending

role. However, because of limited annual loan authorization levels, RUS

no longer serves such a role. Moreover, in a 1993 amendment to section

306E of the Rural Electrification Act of 1936 (RE Act), as amended (7

U.S.C. 936e), Congress required RUS to abandon its close hands-on

control of its applicants and instead follow the practices of private

market lenders. RUS has done so through the development of new forms of

loan agreements and security instruments and the publication of 7 CFR

Part 1717, subpart M, Operational Controls, which reduce or eliminate

much of the oversight and control historically exercised by RUS over

its Electric applicants.

Reflecting these changes and reforms, RUS has revised Sec. 1794.3

of the rule. Environmental reviews will continue to be required in

connection with the approval of financial assistance for applicants and

the issuance of rules, regulations, and bulletins by RUS. However, no

reviews will be required in connection with approvals provided by RUS

pursuant to its loan contracts and security instruments with applicants

such as approvals of lien accommodations or the use of general funds by

applicants. These approvals are not major Federal actions significantly

affecting the quality of the human environment.

Within subpart C of this rule, a classification system defines the

level of environmental review required for RUS and applicant proposed

actions. In Section 1794.20 RUS has clarified its position for

determining circumstances under which an applicant's participation in a

project results in a Federal action. Sections 1794.21 through 1794.25

of this subpart are further subdivided when appropriate to

differentiate between actions being proposed by RUS and actions

proposed by Electric, Telecommunications, and Water and Waste program

applicants.

A number of classification changes have been made within subpart C

of this rule. These reclassifications involve minor actions proposed by

applicants which rarely, if ever, result in significant environmental

impact or public interest. RUS believes this rule includes adequate

safeguards to identify any unusual circumstances that may require

additional agency scrutiny.

RUS has modified the thresholds for acreage (facility sites), and

capacity (generation facilities) within Sec. 1794.22(a). In addition to

modifying the thresholds for acreage and capacity, RUS has imposed

different thresholds for construction of electric generating capacity

at new sites versus existing sites within Sec. 1794.23(c). Acreage and

capacity threshold changes within Sec. 1794.24, and a capacity

threshold change within Sec. 1794.25 reflect changes that have been

made in Secs. 1794.22(a), and 1794.23(c). No changes were made to the

existing thresholds for transmission line length. Capacity thresholds

have been eliminated for hydroelectric proposals in Secs. 1794.22 and

1794.23. RUS will normally adopt the NEPA document prepared by the

Federal licensing agency of hydroelectric projects in which RUS

applicants participate.

The thresholds for proposed actions in the Water and Waste program

are classified in Secs. 1794.21(c) and 1794.22(b). Based on historical

experience and a survey of the thresholds established by the

Environmental Protection Agency which administers similar programs, RUS

has eliminated the two tiered classification for EAs that is contained

in 7 CFR Part 1940, Subpart G, the environmental regulation of the

former FmHA, and adopted the more traditional classification scheme as

outlined in 40 CFR 1508.9. Because RUS co-funds a significant portion

of its projects with other Federal and state agencies, a more

traditional classification and documentation scheme is thought to be

more conducive to minimizing duplicative environmental review efforts.

RUS has modified its procedures in subparts D through G of this

part. The EA will be the subject document of the notice of availability

requirements in Sec. 1794.42, where previously, the applicant's ER was

the subject document. By this change, the notice requirements for all

three programs will be consistent for both EA proposals and EA with

scoping proposals. This change will encourage more public involvement

by allowing public review of EA proposals prior to the issuance of a

Finding of No Significant Impact (FONSI).

RUS has also changed its notice requirements for Electric program

projects requiring scoping. The timing of RUS Federal Register notice

for public scoping meetings in Sec. 1794.52(b) has been reduced from 30

days to 14 days prior to the meeting. No appreciable benefit resulted

from an earlier notice requirement. The existing regulation allows RUS

to adopt the applicant's ER as its EA but requires RUS to prepare its

own EA from the applicant's Environmental Analysis (EVAL) where a

proposed action requires scoping. RUS has changed this requirement by

allowing the EVAL to serve as its EA (see Sec. 1794.53) consistent with

40 CFR Sec. 1506.5(b).

RUS has modified its policy regarding the use of contractor

prepared EISs. Under the existing regulation, RUS was required to use

agency funds when an independent contractor was chosen by RUS to

prepare the EIS. In accordance with the provisions of 7 CFR Part 1789,

``Use of Consultants Funded by Applicants'' and Section 759A of the

Federal Agriculture Improvement and Reform Act of 1996, the draft and

final EIS may be prepared by a consultant selected by RUS and funded by

the applicant. A new requirement, publication of a notice of

availability by RUS and the applicant for a Record of Decision is

established in Sec. 1794.63.

[[Page 68650]]

Preparation of the Rulemaking

The proposed rule (7 CFR part 1794) was published in the Federal

Register on November 24, 1997 (62 FR 62527). Public comment was invited

for a 60-day period, ending on January 23, 1998.

Eighty-nine written comments were received representing 32 specific

organizations and individuals. These included two Federal agencies,

eight Federal agency state offices, one regional commission, two

electric cooperative associations, and seventeen rural electric

cooperatives. All comments were fully considered when revising the

proposed rule for publication as a final rulemaking.

Every effort has been made to respond in detail in the preamble to

every question raised or suggestion offered. Where commenters pointed

out errors in spelling, syntax, and minor technical errors these errors

were corrected and not mentioned further in the preamble. In addition,

many commenters made similar suggestions or raised similar issues. In

the interest of clarity, comments that were similar in nature were

grouped and discussed in the most relevant section in the preamble.

Some comments pointed out vague and unclear language. Clarifying and

explanatory language was added to the rule and preamble as appropriate.

The discussion under General Comments responds to general comments and

clarification of misunderstandings as to RUS's intent. The statements

under Comments on Specific Sections address the more significant

comments received on particular provisions and how RUS responded to

them.

General Comments

Several comments focused on the background discussion of the

preamble to the proposed rule regarding the proposed renumbered

Sec. 1794.3, entitled ``Actions requiring environmental review.'' The

background discussion explained that, because of changes in law and

reforms in the Electric and Telecommunications industry, RUS proposed

to revise that section to reflect that RUS would no longer treat as

Federal actions subject to environmental reviews, approvals provided by

RUS pursuant to its loan contracts and security instruments. The

preamble explained that these approvals are ``ministerial'' and not

major Federal actions for the purposes of NEPA. The commenters, who

uniformly supported the proposed revision, asked that RUS identify all

approvals that would no longer be subject to environmental review or

clarify that only the approval of loans and loan guarantees will

require an environmental review.

Agency Response: The proposed revision to Sec. 1794.3 deletes

reference to ``lien accommodations, and approvals provided pursuant to

loan contracts and security instruments (e.g., approvals of the use of

general funds).'' In pertinent part, the revised section identifies as

actions requiring environmental review, ``the approval of financial

assistance pursuant to the Electric, Telecommunications, and Water and

Waste Programs.'' In response to the comments, RUS has added a

clarifying sentence to Sec. 1794.3 stating that, ``Approvals provided

by RUS pursuant to loan contracts and security instruments, including

approvals of lien accommodations, are not actions for the purpose of

this part and the provisions of this part shall not apply to the

exercise of such approvals.'' RUS believes that, while it is

principally the approvals of loans and loan guarantees to which

environmental reviews attach, it is possible that other types of

discretionary financial assistance could be available under the RUS

program, which would trigger environmental reviews. Examples include

lien subordinations under Sec. 306 of the RE Act (7 U.S.C. 936). The

regulatory text should not limit those actions requiring environmental

review to the approval of loans and loan guarantees. Consequently, no

other change has been made in response to the comments.

Ten commenters expressed concern about the two-tier classification

that was created for ``categorically excluded'' proposals in

Secs. 1794.21 and 1794.22, which they believe is overly burdensome and

confusing. They further believe that many of the size, voltage,

distance, and acreage thresholds have been arbitrarily determined and

need to be reevaluated.

Agency Response: RUS established the two-tier classification system

for categorically excluded proposals specifically to reduce the burden

on applicants without compromising the requirements of NEPA and the CEQ

regulations. Categorically excluded proposals listed in Sec. 1794.21

normally do not significantly impact the quality of the human

environment. Therefore the submittal of an ER is not required. An ER is

required for categorically excluded proposals listed in Sec. 1794.22 to

provide for circumstances in which a normally excluded action may have

a significant impact (see 40 CFR 1508.4). Prior to issuing the proposed

rule, RUS reevaluated the thresholds established in the existing

regulation and determined that the revised thresholds included in the

proposed rule represent a reasonable delineation consistent with 40 CFR

1508.4.

The commenters also questioned why an environmental report should

be required for a proposal that is normally categorically excluded and

recommend that where appropriate, proposals listed in Sec. 1794.22 be

incorporated into Sec. 1794.21.

Agency Response: The changes proposed by these comments are not

consistent with the definition of categorical exclusion in 40 CFR

1508.4. In order to ensure that a proposed action does not

significantly affect the quality of the human environment, RUS must

conduct an environmental review. The two-tiered classification system

for Categorical Exclusions establishes the level of information that

must be provided by the applicant for proposals listed in each tier.

This information is necessary so RUS can identify extraordinary

circumstances in which a normally excluded action may have significant

environmental effects.

One commenter recommended incorporating language into Sec. 1794.21

by which RUS could increase the level of environmental review for any

categorically excluded project, which had a significant environmental

effect. Other commenters point out that proposals in these two

categories already must meet the requirements of Sec. 1794.31.

Therefore a safeguard already exists whereby RUS can evaluate each

project and determine if further environmental review is appropriate.

Agency Response: This rule includes a requirement in

Sec. 1794.22(a) by which RUS reserves the right to request

environmental documentation for proposals listed in Sec. 1794.21(b) and

(c) if significant environmental effects result from the implementation

of the proposal. RUS believes that determining whether an ER should be

prepared for all categorically excluded proposals on a case-by-case

basis would be inconsistent with the CEQ regulations (40 CFR 1508.4)

and would extend the RUS environmental review process.

Three commenters assert that the thresholds established to

differentiate between projects that require an environmental assessment

(EA) with and without scoping (Secs. 1794.23 and 1794.24) were also

arbitrarily determined and point out that a 1 MW increase in capacity

can increase the level of review. The commenters recommend that all

Sec. 1794.24 proposals which normally require scoping be incorporated

into Sec. 1794.23 and that RUS adopt language allowing the agency to

require scoping for projects which are expected to have significant

impacts.

[[Page 68651]]

Agency Response: RUS has reevaluated the thresholds that were

established in the existing regulation for proposed actions listed in

Secs. 1794.23 and 1794.24. The thresholds accurately delineate the

difference between proposed actions which can be adequately reviewed

with an EA and those actions which have a higher potential for needing

an EIS. The latter required the preparation of an EVAL by the

applicant. The EVAL will serve as the RUS EA, (40 CFR 1506.5(b)).

Instead of establishing a single classification system for actions

normally requiring an EA and determining the need for scoping on an

individual basis, RUS agrees some flexibility is needed and has

included a provision to modify or waive scoping requirements in

Sec. 1794.52 for actions that normally require an EA with scoping.

Two commenters expressed concern with the provisions of the

proposed rule that allow the applicant or its consultant to prepare the

environmental report (ER) which normally serves as RUS'' EA for Water

and Waste proposals. These commenters assert that there may be an

appearance of a conflict of interest.

Agency Response: Agency responsibility is addressed in 40 CFR

1506.5. The CEQ regulations allow an agency to require an applicant to

submit environmental information for possible use by that agency (40

CFR 1506.5(a)). The agency should assist the applicant by outlining the

types of information required. The agency shall independently evaluate

the information provided by the applicant and accept responsible for

its accuracy. RUS has developed guidance Bulletin 1794A-602 for that

purpose. An agency can permit an applicant to prepare an EA provided

the agency makes its own evaluation of the environmental issues and

takes responsibility for the scope and content of the EA (40 CFR

1506.5(b)).

One commenter recommends that the procedures defined in 7 CFR 1940-

G under which RUS reviews information submitted by the applicant and

completes the assessment should be used for Water and Waste proposals.

Agency Response: This rule provides for an agency-prepared EA.

Section 1794.41 states that the ER will normally serve as the RUS EA.

The decision of whether RUS uses the applicant's ER as its EA or

prepares the EA from information provided in the ER will be made by the

State Environmental Coordinator (SEC).

Another commenter noted that by not allowing RUS employees to

complete EAs, the agency is limiting the ability of its employees to

provide technical assistance to rural areas.

Agency Response: RUS does not agree with this statement. By

improving the efficiency of document preparation, Rural Development

staff will have more time to provide meaningful guidance and technical

assistance to applicants.

Comments on Specific Sections

Background: One commenter requested clarification of paragraph 9 of

the proposed rules Background section that discusses exempting from

review approvals provided by RUS pursuant to its loan contracts and

security instruments.

Agency Response: This comment is addressed in the response to the

first general comment.

Section 1794.2: One commenter questioned whether the item (d) in

this section correctly characterized the roles RUS and the applicant

play under NEPA and the CEQ regulations. He asserts that the applicant

should be responsible for the accuracy of the information contained in

environmental documents and the agency should be responsible for

compliance with appropriate regulations.

Agency Response: RUS agrees. The text of item (d) has been changed

to clarify the role of the applicant. RUS is responsible for compliance

with NEPA, including verifying the accuracy of the information it uses

in its environmental review (40 CFR 1506.5). The applicant is

responsible for compliance with all applicable RUS requirements.

Section 1794.3: Six commenters recommended that this section

clearly state that the rule applies only to direct loans and loan

guarantee approvals.

Agency Response: This comment is addressed in the response to the

first general comment.

Section 1794.5 (now Sec. 1794.4): Two commenters support the

proposed format of placing metric units in parentheses following the

non-metric equivalents which is the reverse of the current format.

Another commenter questioned whether the change in metric system format

would be contrary to the national effort to convert to the metric

system and not in compliance with Executive Order 12770.

Agency Response: It has been RUS experience that the current format

in which metric units are followed by the non-metric equivalents in

parentheses has been impractical and has confused readers. This rule's

provisions for the use of metric units comply with Executive Order

12770.

Section 1794.7 (now Sec. 1794.6): One commenter suggested adding

``the environment'' to the definition of Emergency Situation to account

for threats to the environment and including a definition of

``multiplexing sites.''

Agency Response: The words ``or to the human environment'' have

been added to the end of the definition of Emergency Situation and a

definition has been included in this section for multiplexing sites.

Another commenter suggested deleting the words ``document and''

from the definition of ER.

Agency Response: RUS recognizes that the amount of documentation

that can be included in an ER can vary for the types of proposals

listed in Secs. 1794.22 and 1794.23 from a few pages to 100 pages or

more. Since the word ``document'' does not add any significance to the

definition of ER, the word has been deleted.

A third commenter thought that the terms ER, EA and Environmental

Impact Assessment were confusing and needed further explanation.

Agency Response: RUS agrees and has reverted to the terminology

used in the existing rule. RUS has in the past and proposes to continue

to differentiate between the documentation submitted by the applicant

for proposals that normally require an EA (Sec. 1794.23) and proposals

that normally require an EA with scoping (Sec. 1794. 24) by titling the

former an ER and the later an EVAL. The agency prepared document for

proposals listed in Secs. 1794.23 and 1794.24 is still titled an EA (40

CFR 1508.9).

One commenter requested that this section be modified so the ER and

EA can be stand-alone documents and not a mandatory part of the

Preliminary Engineering Report (PER) for Water and Waste proposals.

This commenter asserts that such a restriction precludes the use of

other resources to complete the preparation of the environmental

documentation.

Agency Response: Although RUS intends for the ER to be submitted

with the PER for Water and Waste proposals, there is no requirement

that the ER be prepared exclusively by the engineering consultant that

prepares the PER. The key issue is that environmental concerns be

considered at the earliest planning stage of a proposal to ensure that

environmental values are given appropriate consideration. The earliest

planning stage of a proposal is the PER.

Section 1794.8 (now Sec. 1794.7): Two commenters noted that RUS

Bulletin 1780-26 already has been designated for guidance for another

purpose.

Agency Response: The designations for the guidance documents

referenced in this section have been corrected.

[[Page 68652]]

One commenter recommended that a standard format be developed for

applicants to follow in the preparation of an ER or EA.

Agency Response: The appropriate bulletins referenced in this

section will contain a standard format for preparing an ER; the

applicant does not prepare an EA.

The same commenter further recommended that State Directors be able

to issue supplements with less than approval by the Administrator.

Agency Response: State Directors have the ability to issue

supplements. However, to ensure compliance with environmental laws and

regulations and maintain uniformity with neighboring states and within

a region, requires Administrator review and approval of supplements.

Six commenters urged RUS to consult with interested parties

regarding the referenced electric and telecommunications guidance

documents prior to taking final action on this rule.

Agency Response: RUS has considered all comments received on the

current versions of Bulletins 1794A-600 and 1794A-601 in preparing the

revisions to these two Bulletins. Both Bulletins will be made available

to applicants via the Internet prior to the effective date of this

final rule.

Two commenters believe that the referenced Water and Waste bulletin

(RUS Bulletin 1794A-602) should be published for comment and one

commenter requested a 60-day extension to the comment period on the

proposed rule following the release of that draft bulletin.

Agency Response: RUS Bulletin 1794A-602 was reviewed by Rural

Development staff prior to the effective date of this final rule. RUS

does not agree that the comment period on the proposed rule should be

extended subject to the release of the draft bulletin.

Section 1794.10: One commenter recommended replacing ``under RUS

direct guidance and supervision'' with ``with advise from RUS''

instead.

Agency Response: The referenced language has been revised. RUS will

assist applicants by outlining the types of information required and

provide guidance and oversight in the development of the documentation

(40 CFR 1506.5).

This commenter also recommended that the language in Secs. 1794.10

and 1794.31(b) be consistent and refer to the SEC or neither.

Agency Response: The language in Sec. 1794.10 applies to all three

RUS programs. Therefore, a specific agency official is only identified

in Sec. 1794.31(b), which is specific to the Water and Waste program.

Section 1794.13: One commenter recommended that in (a)(3) all

comments on Water and Waste proposals be sent directly to the RUS State

Office instead of through the applicant.

Agency Response: Applicant notices must state that comments should

be sent to the RUS appropriate office for Water and Waste proposals and

to the Washington, DC, office for Electric and Telecommunications

proposals. However, RUS recognizes that both verbal and written

comments on a proposal are sometimes directed to the applicant. This

subsection accounts for this possibility by requiring the applicant to

submit comments to RUS.

Seven commenters were concerned that the requirement in

Sec. 1794.13(a)(4) making all environmental documents and documentation

related to the proposed action available in specific locations was too

broad and created an overly burdensome and onerous responsibility for

the applicant. They recommended that RUS narrow the scope of

information that the applicant is required to make available in a

public setting and require the applicant to designate a contact person

to respond to requests for additional and supporting information.

Agency Response: RUS agrees that the requirement making all

environmental documents and documentation available in specific

locations creates an overly burdensome and onerous responsibility for

the applicant and does not enhance public participation in the

environmental process. The language in Sec. 1794.13(a)(4) has been

revised. RUS will determine which project related environmental

documents will be made available for review at locations convenient for

the public. To ensure full public disclosure, a list of all documents

not provided for public review will be included. Documents not provided

will be available for inspection through a designated RUS or applicant

contact person.

Two commenters requested that Sec. 1794.13(a)(5) be expanded to

note that public hearings are to be confined to the environmental

aspects of a proposed action.

Agency Response: RUS believes that the purpose of the public

hearings or meetings has been adequately identified in this section.

One commenter requested that RUS coordinate its meetings with

meetings, hearings, and environmental reviews, which may be held and/or

required by others.

Agency Response: RUS agrees with this comment and has revised

Sec. 1794.13(a)(5) to include coordination of its meetings with the

requirements of other interested agencies and groups.

Six commenters questioned why RUS has established differing

thresholds for publication of notices in the Federal Register with

respect to the Electric and Telecommunications programs in

Sec. 1794.13(b) and the Water and Waste program in Sec. 1794.13(c).

They recommended that the language in Sec. 1794.13(c) be consistent for

all three programs.

Agency Response: RUS agrees and has decided to revise the language

in Secs. 1794.13(b) and 1794.42(b) thereby making the thresholds for

publication of notices consistent for all three programs. RUS will

provide interested agencies with notification of its FONSI

determinations through direct mailings or, at its option, the Federal

Register, when appropriate.

Section 1794.14: One commenter endorsed the flexibility provided in

this section and recommended that this flexibility be more clearly

stated. The commenter also suggested that the duties of a cooperating

agency are unclear and a brief list should be included.

Agency Response: The duties of a cooperating agency are described

in 40 CFR 1501.6 and are incorporated by reference.

Section 1794.17: One commenter questioned whether the mitigative

measures would be discussed in the FONSI memo to the file in addition

to the FONSI public notice. Two commenters noted that the provisions of

(b)(3) appear to expand the responsibilities of field staff beyond that

of development specialists. One commenter suggested that a better role

for the agency would be to notify the appropriate regulatory agency to

enforce the mitigative measures.

Agency Response: Mitigation measures shall be discussed in both the

FONSI memo and public notice. The responsibilities of field staff have

not been expanded. In the routine process of checking on-site

conditions for compliance with relevant loan or grant provisions, it is

appropriate for staff to document the applicant's compliance status

with regard to mitigation measures that were agreed upon as part of the

conditions for the loan/grant. If discrepancies are noted, the agency

may need to notify the appropriate regulatory agency for action.

Section 1794.21(a): Six commenters recommended that in addition to

defining ``emergency situation'' this

[[Page 68653]]

section be expanded to account for such situations.

Agency Response: RUS has added action (4) to account for emergency

situations.

Section 1794.21(b): One commenter questioned why a ``detailed

description'' was required for 12 actions in this category when all

actions in this category had to be sufficiently described. That

commenter recommended this requirement be deleted.

Agency Response: RUS has determined through experience that the

types of proposals contained in this section normally do not

significantly affect the quality of the human environment. Thus the

submission of an ER is not normally required. However, in order to

waive the ER requirement for the 12 actions in this category so

designated, the RUS reviewer must have a complete description of what

is being proposed, how it will be constructed, and the setting in which

the proposed project will be located. Evaluating these 12 actions on a

case-by-case basis is more effective than uniformly requiring the

mandatory submittal of an ER.

Another commenter was concerned that the submittal of an

environmental document was not required for proposed actions described

in Sec. 1794.21(b) (4), (8), (14), (15) and (16), which could under

certain circumstances provide a hazard to birds.

Agency Response: RUS agrees that under certain circumstances

actions described in Sec. 1794.21(b) (4), (8), (14), (15), and (16)

could result in significant effects to the human environment, such as

presenting a hazard to birds. The description of the facilities to be

constructed that must be provided for these actions and others so noted

in Sec. 1794.21(b) is used by RUS to determine whether the current

level of review is adequate or a higher level of review is warranted.

One commenter expressed concern over the provision in action

Sec. 1794.21(b)(18) which require the applicant obtain certification

from the utility owner that the facilities to be purchased are in

compliance with applicable environmental laws and regulations. This

commenter believes that the normal environmental review process should

be sufficient to identify and resolve issues that may be encountered.

Agency Response: RUS agrees that obtaining a certification of

compliance for the purchase of existing facilities is not the

appropriate form of documentation. Upon further review, RUS has

determined that establishing two separate levels of review for the

purchase of existing facilities, specifically action (18) in

Sec. 1794.21(b) and action (7) in Sec. 1794.23(b), is not warranted.

Both references to these actions have been deleted from the final rule

and replaced by new action (11) in Sec. 1794.22(a). Under the new

requirement applicants will have the option of submitting an ER or the

results of a facility environmental audit. A higher level of review may

be required before RUS approves an applicant's purchase of facilities

that are determined to be in violation of Federal, state, or local

environmental laws or regulations.

One commenter recommended that the threshold for action described

in Sec. 1794.21(b)(21), standby diesel generators, be increased from 1

megawatt (MW) to 2 MW and also be utilized for load management purposes

in addition to emergency power.

Agency Response: RUS does not agree. The purpose of this category

is to exclude standby diesel generators that would be subject to

limited use (i.e. emergency outages). Utilizing such facilities for

load management purposes increases the hours of usage and thus increase

potential effects to the quality of the human environment.

A commenter asserts that the action described in

Sec. 1794.21(b)(24) could create a major change in local air quality.

Agency Response: RUS agrees that wording describing action (24)

could be misinterpreted and has added the following statement:

``Repowering or uprating that results in an increased fuel consumption

or the substitution of one fuel combustion technology with another is

excluded from this classification.'' Because this action does not

include an increase in fuel consumption, no change in local air quality

is anticipated.

This commenter further recommended that the type of customer

facilities covered in Sec. 1794.21(b)(24) include commercial and

agricultural.

Agency Response: RUS agrees to add commercial and agriculture

facilities to item (24).

Section 1794.22: Three commenters noted that proposals identified

in Sec. 1794.22(a)(11) and Sec. 1794.21(b)(20) which discuss facilities

that will reduce the amount of pollutants released into the environment

are redundant and the reference in Sec. 1794.22 should be deleted.

Agency Response: RUS agrees that the requirements of

Sec. 1794.22(a)(11) and Sec. 1794.21(b)(20) are redundant. Accordingly,

action #11 in Sec. 1794.22(a) of the proposed rule has been deleted.

One commenter asserted that proposals listed in Sec. 1794.22(b)(3)

and (4) have the potential to impact important resources but will be

excluded from environmental review.

Agency Response: Applicants are required to prepare and submit an

ER for all proposed actions listed in Sec. 1794.22(b). RUS will review

the ER to determine whether a normally categorically excluded action

may have a significant environmental effect (40 CFR 1508.4).

One commenter suggested that Sec. 1794.22(c) belongs in

Sec. 1794.23 which describes EA proposals.

Agency Response: Proposals listed in Sec. 1794.22(c) were so

designated to parallel the level of documentation required by the EPA

in 40 CFR 6.505(c) for similar proposals. Agencies with similar

programs are encouraged by CEQ to consult with each other to coordinate

their procedures, especially for programs requesting similar

information from applicants (40 CFR 1507.3(a)). RUS believes that these

actions are correctly described in Sec. 1794.22(c).

One commenter noted that Sec. 1794.22(c)(1) and (2) only apply to

discharges and need to be expanded to include water withdrawals.

Agency Response: RUS agrees and has expanded the discussion in

Sec. 1794.22(c) to clarify this issue.

Two commenters requested that ``substantial increases'' in

Sec. 1794.22 (c)(2) be defined and one commenter also questioned how

this term applied to a new facility.

Agency Response: The term ``substantial increases'' has not been

defined because its interpretation depends on local conditions and

regulatory requirements. RUS agrees that this action should not include

new facilities and has revised the language accordingly.

One commenter noted that Sec. 1794.22 (c)(3) stipulates no greater

than a 30 percent growth factor whereas Sec. 1794.22 (b)(3) stipulates

a modest growth potential and requests consistency within the rule.

Agency Response: The 30 percent growth factor is an established

threshold, whereas the term ``modest growth'' applies to local

conditions and regulatory requirements.

Another commenter asserts that the thresholds in Sec. 1794.22(c)(3)

need to be changed because it appears that a small system (20-30 EDU's)

could be expanded up to 500 EDU's and still be a categorically excluded

proposal.

Agency Response: RUS believes the capacity criteria as stated is

sufficient for the purposes of classifying an action

[[Page 68654]]

as a categorical exclusion. Two other provisions may be applicable to

the commenter's point. First, the ER would provide sufficient

information to determine if there are any extraordinary circumstances

in which a normally categorically excluded action may have a

significant environmental effect (see 40 CFR 1508.4). Second, under

Sec. 1794.22(b)(2), RUS could determine that the facility improvements

are not modest in use, size, capacity, purpose, or location and would

require an EA.

Section 1794.23: One commenter recommended that for consistency,

this section be titled ``Proposals normally requiring an EA without

scoping.''

Agency Response: RUS disagrees. Early public involvement may be

appropriate for any level of environmental review and should not be

explicitly dismissed by excluding scoping for certain thresholds.

Section 1794.31: One commenter stated that RUS should not be

supervising or giving direct guidance to the applicant. He suggested

modifying the wording in (b) to ``with advice from RUS.''

Agency Response: This issue is addressed in the response to the

comment on Sec. 1794.10.

Another commenter noted that the SEC would be unable to devote the

time necessary to supervise all applicants.

Agency Response: High volume states have been provided additional

environmental specialist positions in anticipation of the increased

workload.

Section 1794.32: One commenter wanted clarification in (b) on the

criteria used to determine when public notice would be required if

important land resources are affected. Another commenter suggested that

in (b) reference should be made to Sec. 1794.7 or the RUS Bulletin

1794A-602.

Agency Response: RUS agrees with this suggestion and has referenced

the two bulletins that provide guidance in preparing an ER.

Section 1794.33: One commenter noted that this section allows RUS

to act on an application without any environmental review.

Agency Response: The commenter's interpretation of Sec. 1794.33 is

incorrect. RUS shall conduct an environmental review for all proposed

actions covered by this section. Proposals listed in Sec. 1794.21(b)

and (c) normally require the submittal of a project description.

Whereas, proposals listed in Sec. 1794.22(a) and (b) normally require

the submittal of an ER. RUS reserves the right to require additional

environmental information on any proposal the agency believes may have

significant effects on the quality of the human environment

(Sec. 1794.30).

Section 1794.41: One commenter noted that the typical applicant

would need assistance from their consulting engineer in preparing the

ER, resulting in a fee increase to the applicant. If the SEC retains

approval authority for the ER, another layer of review is added before

the ER is accepted.

Agency Response: RUS anticipates that the applicant's engineer will

prepare the ER at the same time that project planning is done. RUS

further anticipates that any increase in the engineering fee should be

modest since the engineer in most projects has been preparing the

applicant's environmental information for the agency. The SEC should be

the only agency approval official for the ER.

Section 1794.44: Two commenters noted that it appears RUS will take

final action on proposals covered by this section without waiting for

public input.

Agency Response: Actions listed in Sec. 1794.23 are subject to

public input when the EA is made available for review through applicant

notice. Normally there is no provision for additional public input when

RUS makes a FONSI determination for actions listed in Sec. 1794.23.

These commenters also noted that draft RUS Bulletin 1794A-602 calls

for a 15-day review period if significant comments are received on the

draft EA.

Agency Response: The reference to the 15-day review period was

inadvertently omitted from the proposed rule. Section 1794.44 has been

modified to include an opportunity for the public to review the RUS

FONSI determination if substantive comments are received on the EA.

Section 1794.51: One commenter noted that no mention is made in (a)

where the applicant's notice will be published.

Agency Response: The commenter is correct that Sec. 1794.51 does

not state where the applicant's notice will be published. That

information is provided in Sec. 1794.13(a)(1) and (2).

Section 1794.61: Two commenters asserted that the cost of an EIS

would be prohibitive for nearly all Water and Waste applicants which

could result in even high priority projects being canceled due to the

inability of the applicant to fund the EIS.

Agency Response: RUS agrees that an EIS can be an expensive

document to prepare and has identified certain methods of funding an

EIS in Sec. 1794.61(a).

Section 1794.70: One commenter recommends that this section be

expanded to allow the adoption of environmental documents prepared by

state or local agencies or other parties in accordance with the

provisions of Sec. 1794.84 of the existing regulation.

Agency Response: The CEQ regulations in 40 CFR 1506.3 only permit a

Federal agency to adopt documents prepared by or for another Federal

Agency. In 40 CFR 1506.2, Federal agencies are required to cooperate

with state and local agencies to the fullest extent possible to reduce

duplication between NEPA and state and local requirements by jointly

preparing EAs and EISs. RUS acknowledges that its policy on the

incorporation of environmental documents prepared by others was omitted

from the proposed rule. This omission has been corrected with the

addition of Sec. 1794.74.

One commenter suggested that RUS be more flexible in its adoption

procedures and not duplicate another agency's public notice and comment

period.

Agency Response: RUS believes that its decisions must be subject to

public notification regardless of who prepares the environmental

documentation. The preferred strategy to avoid duplication of effort

would be for RUS to participate with other agencies in the preparation

of the initial environmental documents as stated in Sec. 1794.14.

This commenter also recommended that RUS accept environmental

documents prepared by states under the State Revolving Fund (SRF)

programs as its own documents or at a minimum adopt the subject

documents.

Agency Response: RUS may adopt environmental documents prepared by

state agencies administering SRF programs under the Clean Water Act (32

U.S.C. 1251) and the Safe Drinking Water Act (42 U.S.C. 300). Where

appropriate, the State Director will enter into an agreement with

appropriate state agencies to establish the necessary procedures.

Any environmental document accepted or prepared by RUS prior to the

effective date of these regulations may be developed in accordance with

RUS environmental requirements in effect at the time the document was

accepted or prepared by RUS.

List of Subjects in 7 CFR Part 1780

Business and industry, Community development, Community facilities,

Grant programs--housing and community development, Reporting and

recordkeeping requirements, Rural areas, Waste treatment and disposal,

Water supply, Watersheds.

[[Page 68655]]

List of Subjects in 7 CFR Part 1794

Environmental impact statements, Reporting and recordkeeping

requirements.

Therefore RUS amends chapter XVII of title 7 of the Code of Federal

Regulations as follows:

PART 1780--WATER AND WASTE LOANS AND GRANTS

Subpart B--Loan and Grant Application Processing

1. Section 1780.31 is amended by revising paragraph (e) to read as

follows:

Sec. 1780.31 General.

* * * * *

(e) Starting with the earliest discussion with prospective

applicants, the State Environmental Coordinator shall discuss with

prospective applicants and be available for consultation during the

application process the environmental review requirements for

evaluating the potential environmental consequences of the project.

Pursuant to 7 CFR part 1794 and guidance in RUS Bulletin 1794A-602, the

environmental review requirements shall be performed by the applicant

simultaneously and concurrently with the project's engineering planning

and design. This should provide flexibility to consider reasonable

alternatives to the project and development methods to mitigate

identified adverse environmental effects. Mitigation measures necessary

to avoid or minimize any adverse environmental effects must be

integrated into project design.

2. Section 1780.33 is amended by revising paragraphs (c)(3), and

(f) to read as follows:

Sec. 1780.33 Application requirements.

* * * * *

(c) * * *

(3) The State staff engineer will consult with the applicant's

engineer as appropriate to resolve any questions concerning the PER.

Written comments will be provided by the State staff engineer to the

processing office to meet eligibility determination time lines.

* * * * *

(f) Environmental Report. For those actions listed in

Secs. 1794.22(b) and 1794.23(b), the applicant shall submit, in

accordance with RUS Bulletin 1794A-602, two copies of the completed

Environmental Report.

(1) Upon receipt of the Environmental Report, the processing office

shall forward one copy of the report with comments and recommendation

to the State Environmental Coordinator for review.

(2) The State Environmental Coordinator will consult with the

applicant as appropriate to resolve any environmental concerns. Written

comments will be provided by the State Environmental Coordinator to the

processing office to meet eligibility determination time lines.

* * * * *

3. Section 1780.39 is amended by revising paragraph (b)

introductory text and removing and revising paragraph (h).

Sec. 1780.39 Application processing.

* * * * *

(b) Professional services and contracts related to the facility.

Fees provided for in contracts or agreements shall be reasonable. The

Agency shall consider fees to be reasonable if they are not in excess

of those ordinarily charged by the profession as a whole for similar

work when RUS financing is not involved. Applicants will be responsible

for providing the services necessary to plan projects including design

of facilities, environmental review and documentation requirements,

preparation of cost and income estimates, development of proposals for

organization and financing, and overall operation and maintenance of

the facility. Applicants should negotiate for procurement of

professional services, whereby competitors' qualifications are

evaluated and the most qualified competitor is selected, subject to

negotiations of fair and reasonable compensation. Contracts or other

forms of agreement between the applicant and its professional and

technical representatives are required and are subject to RUS

concurrence.

* * * * *

4. Section 1780.41 is amended by revising paragraph (a)(8) to read

as follows:

Sec. 1780.41 Loan or grant approval.

(a) * * *

(8) Completed environmental review documents including copies of

public notices and appropriate proof of publication, if applicable; and

* * * * *

SUBPART C--PLANNING, DESIGN, BIDDING, CONTRACTING, CONSTRUCTING AND

INSPECTIONS

5. Section 1780.55 is revised to read as follows:

Sec. 1780.55 Preliminary engineering reports.

Preliminary engineering reports and Environmental Reports.

Preliminary engineering reports (PERs) must conform to customary

professional standards. PER guidelines for water, sanitary sewer, solid

waste, and storm sewer are available from the Agency. Environmental

Reports must meet the policies and intent of the National Environmental

Policy Act and RUS procedures. Guidelines for preparing Environmental

Reports are available in RUS Bulletin 1794A-602.

6. Section 1780.57 is amended by revising paragraph (a) to read as

follows:

Sec. 1780.57 Design policies.

* * * * *

(a) Environmental review. Facilities financed by the Agency must

undergo an environmental impact analysis in accordance with the

National Environmental Policy Act and RUS procedures. Facility planning

and design must not only be responsive to the owner's needs but must

consider the environmental consequences of the proposed project.

Facility design shall incorporate and integrate, where practicable,

mitigation measures that avoid or minimize adverse environmental

impacts. Environmental reviews serve as a means of assessing

environmental impacts of project proposals, rather than justifying

decisions already made. Applicants may not take any action on a project

proposal that will have an adverse environmental impact or limit the

choice of reasonable project alternatives being reviewed prior to the

completion of the Agency's environmental review.

* * * * *

7. Part 1794 is revised to read as follows:

PART 1794--ENVIRONMENTAL POLICIES AND PROCEDURES

Subpart A--General

Sec.

1794.1 Purpose.

1794.2 Authority.

1794.3 Actions requiring environmental review.

1794.4 Metric units.

1794.5 Responsible officials.

1794.6 Definitions.

1794.7 Guidance.

1794.8-1794.9 [Reserved]

Subpart B--Implementation of the National Environmental Policy Act

1794.10 Applicant responsibilities.

1794.11 Apply NEPA early in the planning process.

1794.12 Consideration of alternatives.

1794.13 Public involvement.

1794.14 Interagency involvement and coordination.

1794.15 Limitations on actions during the NEPA process.

1794.16 Tiering.

[[Page 68656]]

1794.17 Mitigation.

1794.18-1794.19 [Reserved]

Subpart C--Classification of Proposals

1794.20 Control.

1794.21 Categorically excluded proposals without an ER.

1794.22 Categorically excluded proposals requiring an ER.

1794.23 Proposals normally requiring an EA.

1794.24 Proposals normally requiring an EA with scoping.

1794.25 Proposals normally requiring an EIS.

1794.26-1794.29 [Reserved]

Subpart D--Procedure for Categorical Exclusions

1794.30 General.

1794.31 Classification.

1794.32 Environmental report.

1794.33 Agency action.

1794.34-1794.39 [Reserved]

Subpart E--Procedure for Environmental Assessments

1794.40 General.

1794.41 Document requirements.

1794.42 Notice of availability.

1794.43 Agency finding.

1794.44 Timing of agency action.

1794.45-1794.49 [Reserved]

Subpart F--Procedure for Environmental Assessments With Scoping

1794.50 Normal sequence.

1794.51 Preparation for scoping.

1794.52 Scoping meetings.

1794.53 Environmental analysis.

1794.54 Agency determination.

1794.55-1794.59 [Reserved]

Subpart G--Procedure for Environmental Impact Statements

1794.60 Normal sequence.

1794.61 Environmental impact statement.

1794.62 Supplemental EIS.

1794.63 Record of decision.

1794.64 Timing of agency action.

1794.65-1794.69 [Reserved]

Subpart H--Adoption of Environmental Documents

1794.70 General.

1794.71 Adoption of an EA.

1794.72 Adoption of an EIS.

1794.73 Timing of agency action.

1794.74 Incorporation of environmental materials.

1794.75-1794.79 [Reserved]

Authority: 7 U.S.C. 6941 et seq., 42 U.S.C. 4321 et seq.; 40 CFR

Parts 1500-1508.

Subpart A--General

Sec. 1794.1 Purpose.

(a) This part contains the policies and procedures of the Rural

Utilities Service (RUS) for implementing the requirements of the

National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C.

4321-4346); the Council on Environmental Quality (CEQ) Regulations for

Implementing the Procedural Provisions of NEPA (40 CFR parts 1500

through 1508) and certain related Federal environmental laws, statutes,

regulations, and Executive Orders (EO) that apply to RUS programs and

administrative actions.

(b) The policies and procedures contained in this part are intended

to help RUS officials make decisions that are based on an understanding

of environmental consequences, and take actions that protect, restore,

and enhance the environment. In assessing the potential environmental

impacts of its actions, RUS will consult early with appropriate

Federal, State, and local agencies and other organizations to provide

decision-makers with information on the issues that are truly

significant to the action in question.

Sec. 1794.2 Authority.

(a) This part derives its authority from and is intended to be

compliant with NEPA, CEQ Regulations for Implementing the Procedural

Provisions of NEPA, and other RUS regulations.

(b) Where practicable, RUS will use NEPA analysis and documents and

review procedures to integrate the requirements of related

environmental statutes, regulations, and orders.

(c) This part integrates the requirements of NEPA with other

planning and environmental review procedures required by law, or by RUS

practice including but not limited to:

(1) Endangered Species Act of 1973 (16 U.S.C. 1531 et seq.);

(2) The National Historic Preservation Act (16 U.S.C. 470 et seq.);

(3) Farmland Protection Policy Act (7 U.S.C. 4201 et seq.);

(4) E.O. 11593, Protection and Enhancement of the Cultural

Environment (3 CFR, 1971 Comp., p. 154);

(5) E.O. 11514, Protection and Enhancement of Environmental Quality

(3 CFR, 1970 Comp., p. 104);

(6) E.O. 11988, Floodplain Management (3 CFR, 1977 Comp., p. 117);

(7) E.O. 11990, Protection of Wetlands (3 CFR, 1977 Comp., p. 121);

and

(8) E.O. 12898, Federal Actions to Address Environmental Justice in

Minority Populations and Low-Income Populations (3 CFR, 1994 Comp., p.

859).

(d) Applicants are responsible for ensuring that proposed actions

are in compliance with all appropriate RUS requirements. Environmental

documents submitted by the applicant shall be prepared under the

oversight and guidance of RUS. RUS will evaluate and be responsible for

the accuracy of all information contained therein.

Sec. 1794.3 Actions requiring environmental review.

The provisions of this part apply to actions by RUS including the

approval of financial assistance pursuant to the Electric,

Telecommunications, and Water and Waste Programs, the disposal of

property held by RUS pursuant to such programs, and the issuance of new

or revised rules, regulations, and bulletins. Approvals provided by RUS

pursuant to loan contracts and security instruments, including

approvals of lien accommodations, are not actions for the purposes of

this part and the provisions of this part shall not apply to the

exercise of such approvals.

Sec. 1794.4 Metric units.

RUS normally will prepare environmental documents using non-metric

equivalents with one of the following two options; metric units in

parentheses immediately following the non-metric equivalents or a

metric conversion table as an appendix. Environmental documents

prepared by or for a RUS applicant should follow the same format.

Sec. 1794.5 Responsible officials.

The Administrator of RUS has the responsibility for Agency

compliance with all environmental laws, regulations, and EOs that apply

to RUS programs and administrative actions. Responsibility for ensuring

environmental compliance for actions taken by RUS has been delegated as

follows:

(a) Electric and Telecommunications Programs. The appropriate

Assistant Administrator is responsible for ensuring compliance with

this part for the respective programs.

(b) Water and Waste Program. The Assistant Administrator for this

program is responsible for ensuring compliance with this part at the

national level. The State Director is the responsible official for

ensuring compliance with this part for actions taken at the State

Office level.

Sec. 1794.6 Definitions.

The following definitions, as well as the definitions contained in

40 CFR part 1508 of the CEQ regulations, apply to the implementation of

this part:

Applicant. The organization applying for financial assistance or

other approval from either the Electric or Telecommunications programs

or the organization applying for a loan or grant from the Water and

Waste program.

Construction Work Plan (CWP). The document required by 7 CFR part

1710.

Emergency Situation. A natural disaster or system failure that may

[[Page 68657]]

involve an immediate or imminent threat to public health, safety, or

the human environment.

Environmental Analysis (EVAL). The document submitted by the

applicant for proposed actions subject to compliance with Sec. 1794.24

and under special circumstances Sec. 1794.25.

Environmental Report (ER). The environmental documentation normally

submitted by applicants for proposed actions subject to compliance with

Secs. 1794.22 and 1794.23. An ER for the Water and Waste Program refers

to the environmental review documentation normally included as part of

the Preliminary Engineering Report.

Environmental review. Any one or all of the levels of environmental

analysis described under subpart C of this part.

Equivalent Dwelling Unit (EDU). Level of water or waste service

provided to a typical rural residential dwelling.

Important Land Resources. Defined pursuant to the U.S. Department

of Agriculture's Departmental Regulation 9500-3, Land Use Policy, as

important farmland, prime forestland, prime rangeland, wetlands, and

floodplains. Copies of this Departmental Regulation are available from

USDA, Rural Utilities Service, Washington, DC 20250.

Loan Design. Document required by 7 CFR part 1737.

Multiplexing Center. A field site where a telecommunications

provider houses a device that combines individual subscriber circuits

onto a single system for economical connection with a switching center.

The combiner, or ``multiplexer,'' may be mounted on a pole, on a

concrete pad, or in a partial or full enclosure such as a shelter, or

small building.

Natural Resource Management Guide. Inventory of natural resources,

land uses, and environmental factors specified by Federal, State, and

local authorities as deserving some degree of protection or special

consideration. The guide describes the standards or types of protection

that apply.

Preliminary Engineering Report (PER). Document required by 7 CFR

part 1780 for Water and Waste Programs. A PER is prepared by an

applicant's engineering consultant documenting a proposed action's

preliminary engineering plan and design and the applicable

environmental review activities as required in this part. Upon approval

by RUS, the PER, or a portion thereof, shall serve as the RUS

environmental document.

Supervisory Control and Data Acquisition System (SCADA). Electronic

monitoring and control equipment installed at electric substations and

switching stations.

Third party Consultant. A party selected by RUS to prepare the EIS

for proposed actions described in Sec. 1794.25 where the applicant

initiating the proposal agrees to fund preparation of the document in

accordance with the provisions of 7 CFR Part 1789, ``Use of Consultants

Funded by Borrowers'' and Section 759A of the Federal Agriculture

Improvement and Reform Act of 1996 (7 U.S.C. 2204b(b)).

Sec. 1794.7 Guidance.

(a) Electric and Telecommunications Programs. For further guidance

in the preparation of public notices and environmental documents, RUS

has prepared a series of program specific guidance bulletins. RUS

Bulletin 1794A-600 provides guidance in preparing the ER for proposed

actions classified as categorical exclusions (CEs) (Sec. 1794.22(a))

and RUS Bulletin 1794A-601 provides guidance in preparing the ER for

proposed actions which require EAs (Sec. 1794.23(b) Telecommunications

only and (c));. Copies of these bulletins are available upon request by

contacting Rural Utilities Service, Publications Office, PDRA, Stop

1522; 1400 Independence Avenue, SW; Washington, DC 20250-1522.

(b) Water and Waste Program. RUS Bulletin 1794A-602 provides

guidance in preparing the ER for proposed actions classified as CEs

(Sec. 1794.22(b)) and EAs (Sec. 1794.23(b)). A copy of this bulletin is

available upon request by contacting the appropriate State Director.

State Directors may provide supplemental guidance to meet state and

local laws and regulations and to provide for orderly application

procedures and efficient service to applicants. State Directors shall

obtain the Administrator's approval for all supplements to RUS Bulletin

1794A-602. Each State Office shall maintain an updated Natural Resource

Management Guide and provide applicants with pertinent sections or a

copy of the current edition thereof.

Secs. 1794.8-1794.9 [Reserved]

Subpart B--Implementation of the National Environmental Policy Act

Sec. 1794.10 Applicant responsibilities.

As described in subpart C of this part, applicants shall prepare

the applicable environmental documentation concurrent with a proposed

action's engineering, planning, and design activities. RUS shall assist

applicants by outlining the types of information required and shall

provide guidance and oversight in the development of the documentation.

Documentation shall not be considered complete until all public review

periods, as applicable, have expired and RUS concurrence, as set forth

in the appropriate decision document and associated public notice, has

been issued.

Sec. 1794.11 Apply NEPA early in the planning process.

The environmental review process requires early coordination with

and involvement of RUS. Applicants should consult with RUS at the

earliest stages of planning for any proposal that may require RUS

action. For proposed actions that normally require an EIS, applicants

shall consult with RUS prior to obtaining the services of an

environmental consultant.

Sec. 1794.12 Consideration of alternatives.

In determining what are reasonable alternatives, RUS considers a

number of factors. These factors may include, but are not limited to,

the proposed action's size and scope, state of the technology, economic

considerations, legal and socioeconomic concerns, availability of

resources, and the timeframe in which the identified need must be

fulfilled.

Sec. 1794.13 Public involvement.

(a) In carrying out its responsibilities under NEPA, RUS shall make

diligent efforts to involve the public in the environmental review

process through public notices and public hearings and meetings.

(1) All public notices required by this part shall describe the

nature, location, and extent of the proposed action and indicate the

availability and location of additional information. They shall be

published in newspaper(s) of general circulation within the proposed

action's area of environmental impact and the county(s) in which the

proposed action will take place or such other places as RUS determines.

(2) The number of editions in which the notices should be published

will be specified in the Bulletins referenced in Sec. 1794.7 or

established on a project-by-project basis. Alternative forms of notice

may also be necessary to ensure that residents located in the area

affected by the proposed action are notified. The applicant should not

publish notices for compliance with this part until so notified by RUS.

(3) A copy of all comments received by the applicant concerning

environmental aspects of the proposed action shall be provided to RUS

in a timely manner. RUS and applicants shall assess and consider public

comments both individually and collectively. Responses to public

comments will be appended to the applicable environmental document.

[[Page 68658]]

(4) RUS and applicants shall make available to the public those

project related environmental documents that RUS determines will

enhance public participation in the environmental process. These

materials shall be placed in locations convenient for the public as

determined by RUS in consultation with applicants. Included with the

documentation shall be a list of other project-related information that

shall be available for inspection through a designated RUS or applicant

contact person.

(5) Public hearings or meetings shall be held at reasonable times

and locations concerning environmental aspects of a proposed action in

all cases where, in the opinion of RUS, the need for hearings or

meetings is indicated in order to develop adequate information on the

environmental implications of the proposed action. Public hearings or

meetings conducted by RUS will be coordinated to the extent practicable

with other meetings, hearings, and environmental reviews which may be

held or required by other Federal, state and local agencies. Applicants

shall, as necessary, participate in all RUS conducted public hearings

or meeting.

(6) Scoping procedures, in accordance with 40 CFR 1501.7, are

required for proposed actions normally requiring an EA with scoping

(Sec. 1794.24) or an EIS (Sec. 1794.25). RUS may require scoping

procedures to be followed for other proposed actions where appropriate

to achieve the purposes of NEPA.

(b) The applicant shall have public notices described in this

section published in a newspaper(s). Applicants shall obtain proof of

publication from the newspaper(s) for inclusion into the applicable

environmental document. Where the proposed action requires an EIS RUS

shall, in addition to applicant published notices, publish notice in

the Federal Register. In all cases, RUS may publish notices in the

Federal Register as appropriate.

Sec. 1794.14 Interagency involvement and coordination.

In an attempt to reduce or eliminate duplication of effort with

state or local procedures, RUS will, to the extent possible and in

accordance with 40 CFR 1506.2, actively participate with any

governmental agency to cooperatively or jointly prepare environmental

documents so that one document will comply with all applicable laws.

Where RUS has agreed to participate as a cooperating agency, in

accordance with 40 CFR 1501.6, RUS may rely upon the lead agency's

procedures for implementing NEPA procedures. In addition, RUS shall

request that:

(a) The lead agency indicates that RUS is a cooperating agency in

all NEPA-related notices published for the proposed action;

(b) The scope and content of the EA or EIS satisfies the statutory

and regulatory requirements applicable to RUS; and

(c) The applicant shall inform RUS in a timely manner of its

involvement in a proposed action where another Federal agency is

preparing an environmental document so as to permit RUS to adequately

fulfill its duties as a cooperating agency.

Sec. 1794.15 Limitations on actions during the NEPA process.

(a) General. Until RUS concludes its environmental review process,

the applicant shall take no action concerning the proposed action which

would have an adverse environmental impact or limit the choice of

reasonable alternatives being considered in the environmental review

process (40 CFR 1506.1).

(b) Electric Program. In determining which applicant activities

related to a proposed action can proceed prior to completion of the

environmental review process, RUS must determine, among other matters

that:

(1) The activity shall not have an adverse environmental impact and

shall not preclude the search for other alternatives. For example,

purchase of water rights, optioning or transfer of land title, or

continued use of land as historically employed will not have an adverse

environmental impact. However, site preparation or construction at or

near the proposed site (e.g. rail spur) or development of a related

facility (e.g. opening a captive mine) normally will have an adverse

environmental impact.

(2) Expenditures are minimal. To be minimal, the expenditure must

not exceed the amount of loss which the applicant could absorb without

jeopardizing the Government's security interest in the event the

proposed action is not approved by the Administrator, and must not

compromise the objectivity of RUS environmental review. Not

withstanding other considerations, expenditures equivalent to up to 10

percent of the proposed action's cost normally will not compromise RUS

objectivity. Expenditures for the purpose of producing documentation

required for RUS environmental review are excluded from this

limitation.

Sec. 1794.16 Tiering.

It is the policy of RUS to prepare programmatic level analysis in

order to tier an EIS and an EA where:

(a) It is practicable, and

(b) There will be a reduction of delay and paperwork, or where

better decision making will be fostered (40 CFR 1502.20).

Sec. 1794.17 Mitigation.

(a) General. In addition to complying with the requirements of 40

CFR 1502.14(f), it is RUS policy that a discussion of mitigative

measures essential to render the impacts of the proposed action not

significant will be included in or referenced in the Finding of No

Significant Impact (FONSI) and the Record of Decision (ROD).

(b) Water and Waste Program. (1) Mitigation measures which involve

protective measures for environmental resources cited in this part or

restrictions or limitations on real property located in the service

areas of the proposed action shall be negotiated with applicants and

any relevant regulatory agency so as to be enforceable. All mitigation

measures incorporating land use issues shall recognize the rights and

responsibilities of landholders in making private land use decisions

and recognize the responsibility of governments in influencing how land

may be used to meet public needs.

(2) Mitigation measures shall be included in the letter of

conditions.

(3) RUS has the responsibility for the post approval construction

or security inspections or monitoring to ensure that all mitigation

measures included in the environmental documents have been implemented

as specified in the letter of conditions.

Secs. 1794.18-1794.19 [Reserved]

Subpart C--Classification of Proposals

Sec. 1794.20 Control.

Electric and Telecommunications Programs. For environmental review

purposes, RUS has identified and established categories of proposed

actions (Secs. 1794.21 through 1794.25). An applicant may propose to

participate with other parties in the ownership of a project where the

applicant(s) does not have sufficient control to alter the development

of the project. In such a case, RUS shall determine whether the

applicant participants have sufficient control and responsibility to

alter the development of the proposed project prior to determining its

classification. Where the applicant proposes to participate with other

parties in the

[[Page 68659]]

ownership of a proposed project and all applicants cumulatively own:

(a) Five percent or less of a project is not considered a Federal

action subject to this part;

(b) Thirty-three and one-third percent or more of a project shall

be treated in its usual category;

(c) More than five percent but less than 33\1/3\ percent of a

project, RUS shall determine whether the applicant participants have

sufficient control and responsibility to alter the development of the

proposal such that RUS's action will be considered a Federal action

subject to this part. Consideration shall be given to such factors as:

(1) Whether construction would be completed regardless of RUS

financial assistance or approval;

(2) The stage of planning and construction;

(3) Total participation of the applicant;

(4) Participation percentage of each utility; and

(5) Managerial arrangements and contractual provisions.

Sec. 1794.21 Categorically excluded proposals without an ER.

(a) General. Certain types of actions taken by RUS do not normally

require an ER. Proposed actions within this classification are:

(1) The issuance of bulletins and information publications that do

not concern environmental matters or substantial facility design,

construction, or maintenance practices;

(2) Procurement activities related to the operation of RUS;

(3) Personnel and administrative actions; and

(4) Repairs made because of an emergency situation to return to

service damaged facilities of an applicant's system.

(b) Electric and Telecommunications Programs. Applications for

financial assistance for the types of proposed actions listed in this

paragraph (b) normally do not require the submission of an ER. These

types of actions are subject to the requirements of Sec. 1794.31.

Applicants shall sufficiently identify all proposed actions so their

proper classification can be determined. Detailed descriptions shall be

provided for each proposal noted in this section. RUS normally requires

additional information in addition to a description of what is being

proposed, to ensure that proposals are properly classified. In order to

provide for extraordinary circumstances, RUS may require development of

an ER for proposals listed in this section. Proposed actions within

this classification are:

(1) Purchase of land where use shall remain unchanged, or the

purchase of existing water rights where no associated construction is

involved;

(2) Additional or substitute financial assistance for proposed

actions which have previously received environmental review and

approval from RUS, provided the scope of the proposal and environmental

considerations have not changed;

(3) Rehabilitation or reconstruction of transportation facilities

within existing rights-of-way (ROW) or generating facility sites. A

description of the rehabilitation or reconstruction shall be provided

to RUS;

(4) Changes or additions to microwave sites, substations, switching

stations, telecommunications switching or multiplexing centers,

buildings, or small structures requiring new physical disturbance or

fencing of less than one acre (0.4 hectare). A description of the

additions or changes and the area to be impacted by the expansion shall

be provided to RUS;

(5) Internal modifications or equipment additions (e.g., computer

facilities, relocating interior walls) to structures or buildings;

(6) Internal or minor external changes to electric generating or

fuel processing facilities and related support structures where there

is negligible impact on the outside environment. A description of the

changes shall be provided to RUS;

(7) Ordinary maintenance or replacement of equipment or small

structures (e.g., line support structures, line transformers, microwave

facilities, telecommunications remote switching and multiplexing

sites);

(8) The construction of telecommunications facilities within the

fenced area of an existing substation, switching station, or within the

boundaries of an existing electric generating facility site. A

description of the facilities to be constructed shall be provided to

RUS;

(9) SCADA and energy management systems involving no new external

construction;

(10) Testing or monitoring work (e.g., soil or rock core sampling,

monitoring wells, air monitoring);

(11) Studies and engineering undertaken to define proposed actions

or alternatives sufficiently so that environmental effects can be

assessed;

(12) Construction of electric power lines within the fenced area of

an existing substation, switching station, or within the boundaries of

an electric generating facility site;

(13) Contracts for certain items of equipment which are part of a

proposed action for which RUS is preparing an EA or EIS, and which meet

the limitations on actions during the NEPA process as established in 40

CFR 1506.1(d) and contained in Sec. 1794.15(b)(2);

(14) Rebuilding of power lines or telecommunications cables where

road or highway reconstruction requires the applicant to relocate the

lines either within or adjacent to the new road or highway easement or

right-of-way. A description of the facilities to be constructed shall

be provided to RUS;

(15) Phase or voltage conversions, reconductoring or upgrading of

existing electric distribution lines, or telecommunication facilities.

A description of the facilities to be constructed shall be provided to

RUS;

(16) Construction of new power lines, substations, or

telecommunications facilities on industrial or commercial sites, where

the applicant has no control over the location of the new facilities.

Related off-site facilities would be treated in their normal category.

A description of the facilities to be constructed shall be provided to

RUS;

(17) Participation by an applicant(s) in any proposed action where

total applicant financial participation will be five percent or less;

(18) Construction of a battery energy storage system at an existing

generating station or substation site. A description of the facilities

to be constructed shall be provided to RUS.

(19) Additional bulk commodity storage (e.g., coal, fuel oil,

limestone) within existing generating station boundaries. A

certification attesting to the current state of compliance of the

existing facilities and a description of the facilities to be added

shall be provided to RUS;

(20) Proposals designed to reduce the amount of pollutants released

into the environment (e.g., precipitators, baghouse or scrubber

installations, and coal washing equipment) which will have no other

environmental impact outside the existing facility site. A description

of the facilities to be constructed shall be provided to RUS;

(21) Construction of standby diesel electric generators (one

megawatt or less total capacity) and associated facilities, for the

primary purpose of providing emergency power, at an existing applicant

headquarters or district office, telecommunications switching or

multiplexing site, or at an industrial, commercial or agricultural

facility served by the applicant. A description of the facilities to be

constructed shall be provided to RUS;

(22) Construction of onsite facilities designed for the transfer of

ash, scrubber wastes, and other byproducts from coal-

[[Page 68660]]

fired electric generating stations for recycling or storage at an

existing coal mine (surface or underground). A description of the

facilities to be constructed shall be provided to RUS;

(23) Changes or additions to an existing water well system,

including new water supply wells and associated pipelines within the

boundaries of an existing well field or generating station site. A

description of the changes or additions shall be provided; and

(24) Repowering or uprating of an existing unit(s) at a fossil-

fueled generating station in order to improve the efficiency or the

energy output of the facility. Repowering or uprating that results in

increased fuel consumption or the substitution of one fuel combustion

technology with another is excluded from this classification.

(c) Water and Waste Program. Applications for financial assistance

for certain proposed actions do not normally require the submission of

an ER. Applicants shall sufficiently identify all proposed actions so

their proper classification can be determined. These types of actions

are subject to the requirements of Sec. 1794.31. In order to provide

for extraordinary circumstances, RUS may require development of an ER

for proposals listed in this section. Proposed actions within this

classification are:

(1) Management actions relating to invitation for bids, award of

contracts, and the actual physical commencement of construction

activities;

(2) Proposed actions that primarily involve the purchase and

installation of office equipment or motorized vehicles;

(3) The award of financial assistance for technical assistance,

planning purposes, environmental analysis, management studies, or

feasibility studies; and

(4) Loan closing and servicing activities that do not alter the

purpose, operation, location, or design of the proposal as originally

approved, such as subordinations, amendments and revisions to approved

actions, and the provision of additional financial assistance for cost

overruns.

Sec. 1794.22 Categorically excluded proposals requiring an ER.

(a) Electric and Telecommunications Programs. Applications for

financial assistance for the types of proposed actions listed in this

section normally require the submission of an ER and are subject to the

requirements of Sec. 1794.32. Proposed actions within this

classification are:

(1) Construction of electric power lines and associated facilities

designed for or capable of operation at a nominal voltage of either:

(i) Less that 69 kilovolts (kV);

(ii) Less than 230 kV if no more than 25 miles (40.2 kilometers) of

line are involved; or

(iii) 230 kV or greater involving no more than three miles (4.8

kilometers) of line;

(2) Construction of buried and aerial telecommunications lines,

cables, and related facilities;

(3) Construction of microwave facilities, SCADA, and energy

management systems involving no more than five acres (2 hectares) of

physical disturbance at any single site;

(4) Construction of cooperative or company headquarters,

maintenance facilities, or other buildings involving no more than 10

acres (4 hectares) of physical disturbance or fenced property;

(5) Changes to existing transmission lines that involve less than

20 percent pole replacement, or the complete rebuilding of existing

distribution lines within the same ROW. Changes to existing

transmission lines that require 20 percent or greater pole replacement

will be considered the same as new construction;

(6) Changes or additions to existing substations, switching

stations, telecommunications switching or multiplexing centers, or

external changes to buildings or small structures requiring one acre

(0.4 hectare) or more but no more than five acres (2 hectares) of new

physically disturbed land or fenced property;

(7) Construction of substations, switching stations, or

telecommunications switching or multiplexing centers requiring no more

than five acres (2 hectares) of new physically disturbed land or fenced

property;

(8) Construction of diesel electric generating facilities of five

megawatts (MW) (nameplate rating) or less either at an existing

generation or substation sites. This category also applies to a diesel

electric generating facility of five MW or less that is located at or

adjacent to an existing landfill site and supplied with refuse derived

fuel. All new associated facilities and related electric power lines

shall be covered in the ER;

(9) Additions to or the replacement of existing generating units at

a hydroelectric facility or dam which result in no change in the normal

maximum surface area or normal maximum surface elevation of the

existing impoundment. All new associated facilities and related

electric power lines shall be covered in the ER;

(10) Construction of new water supply wells and associated

pipelines not located within the boundaries of an existing well field

or generating station site; and

(11) Purchase of existing facilities or a portion thereof where use

or operation will remain unchanged. The results of a facility

environmental audit can be substituted for the ER.

(b) Water and Waste Program. For certain proposed actions,

applications for financial assistance normally require the submittal of

an ER as part of the PER. These types of actions are subject to the

requirements of Sec. 1794.32. Proposed actions within this

classification are:

(1) Rehabilitation of existing facilities, functional replacement

or rehabilitation of equipment, or the construction of new ancillary

facilities adjacent or appurtenant to existing facilities, including

but not limited to, replacement of utilities such as water or sewer

lines and appurtenances for existing users with modest or moderate

growth potential, reconstruction of curbs and sidewalks, street

repaving, and building modifications, renovations, and improvements;

(2) Facility improvements to meet current needs with a modest

change in use, size, capacity, purpose or location from the original

facility. The proposed action must be designed for predominantly

residential use with other new or expanded users being small-scale,

commercial enterprises having limited secondary impacts;

(3) Construction of new facilities that are designed to serve not

more than 500 EDUs and with modest growth potential. The proposed

action must be designed for predominantly residential use with other

users being small-scale, commercial enterprises having limited

secondary impacts;

(4) The extension, enlargement or construction of interceptors,

collection, transmission or distribution lines within a one-mile (1.6-

kilometer) limit from existing service areas estimated from any

boundary listed as follows:

(i) The corporate limits of the community being served;

(ii) If there are developed areas immediately contiguous to the

corporate limits of a community, the limits of these developed areas;

or

(iii) If an unincorporated area is to be served, the limits of the

developed areas;

(5) Installation of new water supply wells or water storage

facilities that are required by a regulatory authority or standard

engineering practice as a backup to existing production well(s) or as

reserve for fire protection;

(6) Actions described in Sec. 1794.21(c)(4) which alter the

purpose,

[[Page 68661]]

operation, location, or design of the proposed action as originally

approved, and such alteration is equivalent in magnitude or type as

described in paragraphs (b)(1) through (b)(5) of this section; and

(7) The lease or disposal of real property by RUS, which may result

in a change in use of the real property in the reasonably foreseeable

future and such change, is equivalent in magnitude or type as described

in paragraphs (b)(1) through (b)(5).

(c) Specialized criteria for not granting a CE for Water and Waste

Projects. An EA must be prepared if a proposed action normally

classified as a CE meets any of the following:

(1) Will either create a new or relocate an existing discharge to

or a withdrawal from surface or ground waters;

(2) Will result in substantial increases in the volume or the

loading of pollutants from an existing discharge to receiving waters;

(3) Will cause a substantial increase in the volume of withdrawal

from surface or ground waters at an existing site; or

(4) Would provide capacity to serve more than 500 EDUs or a 30

percent increase in the existing population whichever is larger.

Sec. 1794.23 Proposals normally requiring an EA.

RUS will normally prepare an EA for all proposed actions which are

neither categorical exclusions (Secs. 1794.21 and 1794.22) nor normally

requiring an EIS (Sec. 1794.25). For certain actions within this class,

scoping and document procedures contained in Secs. 1794.50 through

1794.54 shall be followed (see Sec. 1794.24). The following are

proposed actions which normally require an EA and shall be subject to

the requirements of Secs. 1794.40 through 1794.44.

(a) General. Issuance or modification of RUS regulations concerning

environmental matters.

(b) Telecommunications and Water and Waste Programs. An EA shall be

prepared for applications for financial assistance for all proposed

actions not specifically defined as a CE or otherwise specifically

categorized by the Administrator on a case-by-case basis.

(c) Electric Program. Applications for financial assistance for

certain proposed actions normally require the preparation of an EA.

Proposed actions falling within this classification are:

(1) Construction of combustion turbine or diesel generating

facilities of 50 MW (nameplate rating) or less at a new site (no

existing generating capacity) except for items covered by

Sec. 1794.22(a)(8). All new associated facilities and related electric

power lines shall be covered in the EA;

(2) Construction of combustion turbine or diesel generating

facilities of 100 MW (nameplate rating) or less at an existing

generating site, except for items covered by Sec. 1794.22(a)(8). All

new associated facilities and related electric power lines shall be

covered in the EA;

(3) Construction of any other type of new electric generating

facilities of 10 MW (nameplate rating) or less. All new associated

facilities and related electric power lines shall be covered in the EA;

(4) Repowering or uprating of an existing unit(s) at a fossil-

fueled generating station where the existing fuel combustion technology

of the affected unit(s) is substituted for another (e.g. coal or oil-

fired boiler is converted to a fluidized bed boiler or replaced with a

combustion turbine unit);

(5) Installation of new generating units at an existing

hydroelectric facility or dam, or the replacement of existing

generating units at a hydroelectric facility or dam which will result

in a change in the normal maximum surface area or normal maximum

surface elevation of the existing impoundment. All new associated

facilities and related electric power lines shall be covered in the EA;

(6) A new drilling operation or the expansion of a mining or

drilling operation;

(7) Construction of cooperative headquarters, maintenance, and

equipment storage facilities involving more than 10 acres (4 hectares)

of physical disturbance or fenced property;

(8) The construction of electric power lines and related facilities

designed for and capable of operation at a nominal voltage of 230 kV or

more involving more than three miles (4.8 kilometers) but not more than

25 miles (40 kilometers) of line;

(9) The construction of electric power lines and related facilities

designed for or capable of operation at a nominal voltage of 69 kV or

more but less than 230 kV where more than 25 miles (40 kilometers) of

power line are involved;

(10) The construction of substations or switching stations

requiring greater than five acres (2 hectares) of new physical

disturbance at a single site; and

(11) Construction of facilities designed for the transfer and

storage of ash, scrubber wastes, and other byproducts from coal-fired

electric generating stations that will be located beyond the existing

facility site boundaries.

Sec. 1794.24 Proposals normally requiring an EA with scoping.

(a) General. Applications for financial assistance for certain

proposed actions require the use of a scoping procedure in the

development of the EA. These types of actions are subject to the

requirements of Secs. 1794.50 through 1794.54. RUS has the discretion

to modify or waive the requirements listed in Sec. 1794.52 for a

proposed action in this category.

(b) Electric Program. Proposed actions falling within this

classification are:

(1) The construction of electric power lines and related facilities

designed for and capable of operation at a nominal voltage of 230 kV or

more where more than 25 miles (40 kilometers) of power line are

involved;

(2) Construction of combustion turbines and diesel generators of

more than 50 MW at a new site or more than 100 MW at an existing site;

and the construction of any other type of electric generating facility

of more than 10 MW but not more than 50 MW (nameplate rating). All new

associated facilities and related electric power lines shall be covered

in any EA or EIS that is prepared.

(c) Telecommunications and Water and Waste Programs. There are no

actions normally falling within this classification.

Sec. 1794.25 Proposals normally requiring an EIS.

Applications for financial assistance for certain proposed actions

that may significantly affect the quality of the human environment

shall require the preparation of an EIS.

(a) Electric Program. An EIS will normally be required in

connection with proposed actions involving the following types of

facilities:

(1) New electric generating facilities of more than 50 MW

(nameplate rating) other than diesel generators or combustion turbines.

All new associated facilities and related electric power lines shall be

covered in the EIS; and

(2) A new mining operation when the applicants have effective

control (e.g., dedicated mine or purchase of a substantial portion of

the mining equipment).

(b) Proposals listed above are subject to the requirements of

Secs. 1794.60, 1794.61, 1794.63, and 1794.64. Preparation of a

supplemental draft or final EIS in accordance with 40 CFR 1502.9 shall

be subject to the requirements of Secs. 1794.62 and 1794.64.

(c) Telecommunications and Water and Waste Programs. No groups or

sets of proposed actions normally require the preparation of an EIS.

The

[[Page 68662]]

environmental review process, as described in this part, shall be used

to identify those proposed actions for which the preparation of an EIS

is necessary. If an EIS is required, RUS shall proceed directly to its

preparation. Prior completion of an EA is not mandatory.

Secs. 1794.26-1794.29 [Reserved]

Subpart D--Procedure for Categorical Exclusions

Sec. 1794.30 General.

The procedures of this subpart which apply to proposed actions

classified as CEs in Secs. 1794.21 and 1794.22 provide RUS with

information necessary to determine if the proposed action meets the

criteria for a CE. Where, because of extraordinary circumstances, a

normally categorically excluded action may have a significant effect on

the quality of the human environment, RUS may require additional

environmental documentation.

Sec. 1794.31 Classification.

(a) Electric and Telecommunications Programs. RUS will normally

determine the proper environmental classification of projects based on

its evaluation of the project description set forth in the construction

work plan or loan design which the applicant is required to submit with

its application for financial assistance. Each project must be

sufficiently described to ensure its proper classification. RUS may

require the applicant to provide additional information on a project

where appropriate.

(b) Water and Waste Program. RUS will normally determine the proper

environmental classification for projects based on its evaluation of

the preliminary planning and design information.

Sec. 1794.32 Environmental report.

(a) For proposed actions listed in Sec. 1794.21(b) and (c), the

applicant is normally not required to submit an ER.

(b) For proposed actions listed in Sec. 1794.22(a) and (b), the

applicant shall normally submit an ER. Guidance in preparing the ER for

Electric and Telecommunication proposals is contained in RUS Bulletin

1794A-600. Guidance in preparing the ER for Water and Waste proposals

is contained in RUS Bulletin 1794A-602. The applicant may be required

to publish public notices and provide evidence of such if the proposed

action is located in, impacts, or converts important land resources.

Sec. 1794.33 Agency action.

RUS may act on an application for financial assistance upon

determining, based on the review of documents as set forth in

Sec. 1794.32 and such additional information as RUS deems necessary,

that the project is categorically excluded.

Secs. 1794.34-1794.39 [Reserved]

Subpart E--Procedure for Environmental Assessments

Sec. 1794.40 General.

This subpart applies to proposed actions described in Sec. 1794.23.

Where appropriate to carry out the purposes of NEPA, RUS may impose, on

a case-by-case basis, additional requirements associated with the

preparation of an EA. If at any point in the preparation of an EA, RUS

determines that the proposed action will have a significant effect on

the quality of the human environment, the preparation of an EIS shall

be required and the procedures in subpart G of this part shall be

followed.

Sec. 1794.41 Document requirements.

Applicants will provide an ER in accordance with the appropriate

guidance documents referenced in Sec. 1794.7. After RUS has evaluated

the ER and has determined the ER adequately addresses all applicable

environmental issues, the ER will normally serve as RUS' EA. However,

RUS reserves the right to prepare its own EA from the information

provided in the ER. RUS will take responsibility for the scope and

content of an EA.

Sec. 1794.42 Notice of availability.

Prior to RUS making a finding in accordance with Sec. 1794.43 and

upon RUS authorization and guidance, the applicant shall have a notice

published which announces the availability of the EA and solicits

public comments on the EA.

Sec. 1794.43 Agency finding.

(a) General. If RUS finds, based on an EA that the proposed action

will not have a significant effect on the quality of the human

environment, RUS will prepare a FONSI. Upon authorization of RUS, the

applicant shall have a notice published which informs the public of the

RUS finding and the availability of the EA and FONSI. The notice shall

be prepared and published in accordance with RUS guidance.

(b) Electric and Telecommunications Programs. RUS shall have a

notice published in the Federal Register that announces the

availability of the EA and FONSI.

Sec. 1794.44 Timing of agency action.

RUS may take its final action on proposed actions requiring an EA

(Sec. 1794.23) at any time after publication of the RUS and applicant

notices that a FONSI has been made and any required review period has

expired. When substantive comments are received on the EA, RUS may

provide an additional period (15 days) for public review following the

publication of its FONSI determination. Final action shall not be taken

until this review period has expired.

Secs. 1794.45-1794.49 [Reserved]

Subpart F--Procedure for Environmental Assessments With Scoping

Sec. 1794.50 Normal sequence.

For proposed actions covered by Sec. 1794.24 and other actions

determined by the Administrator to require an EA with Scoping, RUS and

the applicant will follow the same procedures for scoping and the

requirements for notices and documents as for proposed actions normally

requiring an EIS through the point at which the Environmental Analysis

(EVAL) is submitted (see Sec. 1794.54). After the EVAL has been

submitted, RUS will make a judgment to utilize the EVAL as its EA and

issue a FONSI or prepare an EIS.

Sec. 1794.51 Preparation for scoping.

(a) As soon as practicable after RUS and the applicant have

developed a schedule for the environmental review process, RUS shall

have its notice of intent to prepare an EA or EIS (Sec. 1794.13)

published in the Federal Register (see 40 CFR 1508.22). The applicant

shall have published, in a timely manner, a notice similar to RUS'

notice.

(b) As part of the early planning, the applicant should consult

with appropriate Federal, state, and local agencies to inform them of

the proposed action, identify permits and approvals which must be

obtained, and administrative procedures which must be followed.

(c) Before formal scoping is initiated, RUS will require the

applicant to submit an Alternative Evaluation Study and either a Siting

Study (generation) or a Macro-Corridor Study (transmission lines).

(d) The applicant is encouraged to hold public information meetings

in the general location of the proposed action and any reasonable

alternatives when such applicant meetings will make the scoping process

more meaningful. A written summary of the comments made

[[Page 68663]]

at such meetings must be submitted to RUS as soon as practicable after

the meetings.

Sec. 1794.52 Scoping meetings.

(a) Both RUS and the applicant shall have a notice published which

announces a public scoping meeting is to be conducted, either in

conjunction with the notice of intent or as a separate notice.

(b) The RUS notice shall be published in the Federal Register at

least 14 days prior to the meeting(s). The applicant's notice shall be

published in a newspaper at least 10 days prior to the meeting(s).

Other forms of media may also be used by the applicant to notice the

meetings.

(c) Where an environmental document is the subject of the hearing

or meeting, that document will be made available to the public at least

10 days in advance of the meeting.

(d) The scoping meeting(s) will be held in the area of the proposed

action at such place(s) as RUS determines will best afford an

opportunity for public involvement. Any person or representative of an

organization, or government body desiring to make a statement at the

meeting may make such statement in writing or orally. The format of the

meeting may be one of two styles. It can either be of the traditional

style which features formal presentations followed by a comment period,

or the open house style in which attendees are able to individually

obtain information on topics or issues of interest within an

established time period. A transcript will be made of the scoping

meeting.

(e) As soon as practicable after the scoping meeting(s), RUS, as

lead agency, shall determine the significant issues to be analyzed in

depth and identify and eliminate from detailed study the issues which

are not significant or which have been covered by prior environmental

review. RUS will develop a proposed scope for further environmental

study and review. RUS shall send a copy of this proposed scope to

cooperating agencies and the applicant, and allow recipients 30 days to

comment on the scope's adequacy and emphasis. After expiration of the

30-day period, RUS shall provide written guidance to the applicant

concerning the scope of environmental study to be performed and

information to be gathered.

Sec. 1794.53 Environmental analysis.

(a) After scoping procedures have been completed, RUS shall require

the applicant to develop and submit an EVAL. The EVAL shall be prepared

under the supervision and guidance of RUS staff and RUS shall evaluate

and be responsible for the accuracy of all information contained

therein.

(b) The EVAL will normally serve as the RUS EA. The EVAL can also

serve as the basis for an EIS, and under such circumstances will be

made an appendix to the EIS. After RUS has reviewed and found the EVAL

to be satisfactory, the applicant shall provide RUS with a sufficient

number of copies of the EVAL to satisfy the RUS distribution plan.

(c) The EVAL shall include a summary of the construction and

operation monitoring and mitigation measures for the proposed action.

These measures may be revised as appropriate in response to comments

and other information. and shall be incorporated by summary or

reference into the FONSI or ROD.

Sec. 1794.54 Agency determination.

Following the scoping process and the development of a satisfactory

EA, RUS shall determine whether the proposed action is a major Federal

action significantly affecting the quality of the human environment. If

RUS determines the action is significant, RUS will continue with the

procedures in subpart G of this part. If RUS determines the action is

not significant, RUS will proceed in accordance with Secs. 1794.42

through 1794.44.

Secs. 1794.55-1794.59 [Reserved]

Subpart G--Procedure for Environmental Impact Statements

Sec. 1794.60 Normal sequence.

For proposed actions requiring an EIS (see Sec. 1794.25), the NEPA

process shall proceed in the same manner as for proposed actions

requiring an EA with scoping through the point at which the scoping

process is completed (see Sec. 1794.52).

Sec. 1794.61 Environmental impact statement.

(a) General. An EIS shall be prepared in accordance with 40 CFR

part 1502. Funding, in whole or in part, for an EIS can be obtained

from any lawful source (e.g., cooperative agreements developed in

accordance with Section 759A, Federal Agricultural Improvement and

Reform Act of 1996, Pub. L. 104-127 and 31 U.S.C. 6301). A third-party

consultant selected by RUS and funded by the applicant (7 CFR part

1789) may prepare the EIS.

(1) After a draft or final EIS has been prepared, RUS and the

applicant shall concurrently have a notice of availability for the

document published. The time period allowed for review will be a

minimum of 45 days for a draft EIS and 30 days for a final EIS. This

period is measured from the date that the U.S. Environmental Protection

Agency (EPA) publishes a notice in the Federal Register in accordance

with 40 CFR 1506.10.

(2) In addition to circulation required by 40 CFR 1502.19, the

draft and final EIS (or summaries thereof, at RUS discretion) shall be

circulated to the appropriate state, regional, and metropolitan

clearinghouses.

(3) Where a final EIS does not require substantial changes from the

draft EIS, RUS may document required changes through errata sheets,

insertion pages, and revised sections to be incorporated into the draft

EIS. In such cases, RUS shall circulate such changes together with

comments on the draft EIS, responses to comments, and other appropriate

information as its final EIS. RUS will not circulate the draft EIS

again, although RUS will provide the draft EIS if requested within 30

days of publication of notice of availability of the final EIS.

(b) Electric Program. Where the applicant or its consultant has

prepared an EVAL, RUS will develop its draft and final EIS from the

EVAL. An EVAL will not be required if a third-party consultant prepares

the draft and final EIS.

Sec. 1794.62 Supplemental EIS.

(a) A supplement to a draft or final EIS shall be prepared,

circulated, and given notice by RUS and the applicant in the same

manner (exclusive of scoping) as a draft and final EIS (see

Sec. 1794.61).

(b) Normally RUS and the applicant will have published notices of

intent to prepare a supplement to a final EIS in those cases where a

ROD has already been issued.

(c) RUS, at its discretion, may issue an information supplement to

a final EIS where RUS determines that the purposes of NEPA are

furthered by doing so even though such supplement is not required by 40

CFR 1502.9(c)(1). RUS and the applicant shall concurrently have a

notice of availability published. The notice requirements shall be the

same as for a final EIS and the information supplement shall be

circulated in the same manner as a final EIS. RUS shall take no final

action on any proposed modification discussed in the information

supplement until 30 days after the RUS notice of availability or the

applicant's notice is published, whichever occurs later.

[[Page 68664]]

Sec. 1794.63 Record of decision.

(a) Upon completion of the review period for a final EIS, RUS will

have its ROD prepared in accordance with 40 CFR 1505.2.

(b) Separate RUS and applicant notices of availability shall be

published concurrently. The notices shall summarize the RUS decision

and announce the availability of the ROD. Copies of the ROD will be

made available upon request from the point of contact identified in the

notice.

Sec. 1794.64 Timing of agency action.

(a) RUS may take its final action or execute commitments on

proposed actions requiring an EIS or Supplemental EIS at any time after

the ROD has been published.

(b) For budgetary purposes some financial assistance may be

approved conditionally with a stipulation that no funds shall be

advanced until a ROD has been prepared.

Secs. 1794.65-1794.69 [Reserved]

Subpart H--Adoption of Environmental Documents

Sec. 1794.70 General.

This subpart covers the adoption of environmental documents

prepared by other Federal agencies. Where applicants participate in

proposed actions for which an EA or EIS has been prepared by or for

another Federal agency, RUS may adopt the existing EA or EIS in

accordance with 40 CFR 1506.3.

Sec. 1794.71 Adoption of an EA.

RUS may adopt a Federal EA or EIS or a portion thereof as its EA.

RUS shall make the EA available and assure that notice is provided in

the same manner as if RUS had prepared the EA.

Sec. 1794.72 Adoption of an EIS.

(a) Where RUS determines that an existing Federal EIS requires

additional information to meet the standards for an adequate statement

for RUS proposed action, RUS may adopt all or a portion of the EIS as a

part of its draft EIS. The circulation and notice provisions for a

draft and final EIS (see Sec. 1794.61) apply.

(b) If RUS was not a cooperating agency but determines that another

Federal agency's EIS is adequate, RUS shall adopt that agency's EIS as

its final EIS. RUS and the applicant shall have separate notices

published advising of RUS adoption of the EIS and independent

determination of its adequacy.

(c) If the adopted EIS is generally available and meets RUS

standards, RUS shall have a public notice published informing the

public of its action and availability of the EIS to interested parties

upon request. If the adopted EIS is not generally available, RUS shall

have a public notice published informing the public of its action and

will circulate copies of the EIS in accordance with 40 CFR 1502.19 and

40 CFR 1506.3.

Sec. 1794.73 Timing of agency action.

Where RUS has adopted another agency's environmental documents, the

timing of the action shall be subject to the same requirements as if

RUS had prepared the required EA or EIS.

Sec. 1794.74 Incorporation of environmental materials.

RUS may incorporate into its environmental documents, environmental

documents or portions thereof prepared by state, or local agencies or

other parties for purposes other than compliance with the requirements

of NEPA. RUS will circulate the incorporated documents as a part of its

EA or draft and final EIS in the same manner as if prepared by RUS.

Sec. 1794.75-1794.79 [Reserved]

Dated: December 7, 1998.

Jill Long Thompson,

Under Secretary, Rural Development.

[FR Doc. 98-32882 Filed 12-10-98; 8:45 am]

BILLING CODE 3410-15-P