Chapter 4: Environmental Review

This Chapter describes the Environmental Review. For information on the Section 106 Review process, please see the previous chapter (Chapter 3). The various Environmental Review chapter components include: 

• Overview
• Preparing to Conduct an Environmental Review
• Determining the Level of Environmental Review

Overview

The National Environmental Policy Act of 1969 (NEPA) establishes national policies, goals, and procedures for protecting, restoring, and enhancing environmental quality. CDBG recipients must comply with this law and with related federal regulations, which are referenced in 24 CFR Part 58. CDBG recipients must evaluate how projects will affect the environment by complying with the requirements set out in 24 CFR Part 58. The requirements are complex and are only summarized below. For a definitive description of environmental requirements, please consult the regulations, which are found at: https://www.ecfr.gov/current/title-24/subtitle-A/part-58?toc=1

CDBG recipients assume the responsibility for environmental review, decision-making, and action that would otherwise apply to HUD under NEPA and other provisions of law that further the purposes of NEPA, as specified in Sec. 58.5

If another federal agency has funds invested in your project, this agency will also be conducting an environmental review. Recipients are encouraged to coordinate your CDBG environmental review with that agency.

However, recipients must ensure the agency’s review is adequate to meet responsibilities under 24 CFR Part 58. An environmental review completed by a federal agency does not replace the environmental review required under the CDBG program. While recipients may concur with and incorporate the finding and any assessments conducted by another agency, recipients must ensure the contents of the CDBG environmental review record (discussed later in this section) is complete. Recipients must fulfill the publication and comment requirements outlined in this section.

Recipients should note that regardless of approval from another federal agency, until approval under HUD regulations at 24 CFR Part 58 has been obtained from IEDA, recipients may not commit CDBG or non CDBG funds to the project OR undertake “choice limiting activities.” Choice limiting actions include but are not limited to: going out to bid, property acquisition or transfer, site clearing activities, rehabilitation, conversion, lease, repair, construction or demolition.

Incurring Costs (24 CFR Part 58.22) and Submitting Draw Requests

Completion of the environmental review process is mandatory before taking any action on a specific site or making a commitment or expenditure of HUD or any other non-HUD project funds for property acquisition or transfer, rehabilitation, conversion, lease, repair construction or demolition activities. Note: 24 CFR Part 58.22 has limitations on activities pending clearance. “(a) neither a recipient nor any participant in the development process, including public or private nonprofit or for-profit entities, or any of their contractors, may commit HUD assistance under a program listed in 58.1(b) on an activity or project until HUD or the State has approved the recipient’s RROF (Request for Release of Funds) and the related certification from the responsible entity. In addition, until the RROF and the related certification has been approved, neither a recipient nor any participant in the development process may commit non-HUD funds on or undertake an activity or project under a program listed in 58.1(b) if the activity or project would have an adverse environmental impact or limit the choice of reasonable alternatives.”

Recipients can be reimbursed for certain costs incurred prior to the Release of Funds. These costs include: 

• Administration costs
• Design costs including architectural and engineering
• Costs associated with the environmental process

These costs must have been incurred after the contract effective date.

For all other project activities, recipients cannot incur costs or draw down funds until the environmental review requirements are satisfied and the IEDA has released funds for the project. If any construction activities, including going out to bid, signing of the construction contract and/or acquiring property are started before IEDA’s approval of the Request for Release of Funds, it will result in all construction costs becoming ineligible for reimbursement.

Steps to Conducting an Environmental Review

1. Define the complete project activities 2
2. Determine what level of review is required:
   1. Exempt
   2. Categorical Exclusions Not Subject to §58.5 (CENST)
   3. Categorical Exclusions Subject to §58.5 (CEST)
   4. Environmental Assessment (EA)
   5. Environmental Impact Statement
3. Initiate contacts with outside sources, e.g., Tribes, IEDA’s Historic Preservation Specialist, etc. 4
4. Collect data
5. Complete applicable review format, i.e., Statutory Checklist or Environmental Assessment
6. Make environmental determination (i.e., compliance with NEPA-related laws and authorities), or finding of no significant impact, or finding of significant impact (sign Level of Determination form)
7. Publish or disseminate public notices (unless Exempt or CENST)
8. Submit ERR including the “Request for Release of Funds and Certification” form to IEDA via IowaGrants and also “snail mail” a hard copy of the RROF, Affidavit of Publication, and Level of Determination to the Environmental Officer
9. Wait for release of funds letter to be uploaded to IowaGrants from IEDA
10. Start project – commit funds

Preparing to Conduct an Environmental Review

Defining Project Activities

Defining the project activity is a crucial step in the environmental review process. This step is crucial to determining the level of environmental review and thus sets out the correct path for documenting compliance with 24 CFR Part 58. “Project” means an activity, or a group of integrally related activities, designed by the recipient to accomplish, in whole or in part, a specific objective. When determining the scope of the project one should be sure to include both HUD and non-HUD funds. For example, if non-HUD funds are proposed to acquire property for a community center and HUD funds are planned for construction of the building, both the land acquisition and construction are subject to the environmental review. Likewise, if CDBG funds are being used to acquire a building or site, and non-CDBG funds are used to improve the project or otherwise affect the building or site, all changes to the building and site are reviewed within the same environmental process.

Project Aggregation (24 CFR Part 58.32)

Recipients must group together and evaluate as a single project all individual activities which are related on either a geographical or a functional basis or are logical parts of a composite of contemplated actions. When grouping activities, the recipient should be aware that several sites, each requiring some degree of environmental review, might be considered for one project (e.g., 40 units being rehabilitated within a target area). The recipient is well served by grouping activities by projects, common locations and functions, and by activity phasing.

Please note that some projects can be considered on an activity-wide basis, while others require site-by-site or (Tier II) analysis. Tier II analysis is appropriate when evaluating a proposal at the early stages of development or, most commonly, when site-specific analysis is not yet feasible (i.e., at project onset). Tier IIs are generally used with CEST-level reviews and involve specific addresses or locations. No additional public notice or RROF are required unless unanticipated impacts or impacts not adequately addressed in the prior Tier I review are discovered during the Tier II process.

Project Activities Taking Place in Floodplains

When project activities take place in floodplains, the RE must go through the “Eight-Step Decision Making Process” and consider “practicable alternatives” to the proposed action (Executive Order 11988 / 24 CFR Part 55). Please refer to Appendix 4 for links to a step-by-step list of items that need to be addressed. Be sure to pay close attention to steps 2) and 7) because these call for two separate publications. There is an early notice followed by a final notice that can be published simultaneously with the RROF and FONSI.

The Environmental Review Record (24 CFR Part 58.38)

Each CDBG project must have a written record of the environmental review process. This is the “Environmental Review Record” (ERR), which must be available for public review and comment. The ERR must contain a description of the project and all of its activities (including non-HUD assisted activities); a detailed map of the project area showing the project limits; documentation of compliance with environmental laws; other relevant documents, required notices or information; and public comments on the recipient’s environmental review. Public comments and your responses to those comments are extremely important and must be documented in the ERR. 

The ERR will vary in length and content by project. Some projects are exempt from NEPA review, categorically excluded from NEPA, found to have no significant impact on the environment, or may require a full environmental impact statement. The steps to comply with NEPA and other applicable laws and regulations are outlined below. 

Recipients are required to upload the entire ERR into IowaGrants for IEDA review.

All projects will need to submit the ERR to IEDA prior to a release of funds being issued.

Determine the Level of Environmental Review

Every CDBG project requires some level of environmental review. The level of effort needed to prepare a review and the depth of analysis within should be proportional to the size and complexity of the proposed project. The following are the five levels of environmental review: 

• Exempt
• Categorical Exclusions Not Subject to §58.5
• Categorical Exclusions Subject to §58.5
• Environmental Assessment
• Environmental Impact Statement

Exempt Activities (24 CFR Part 58.34)

Few activities funded by the IEDA will be exempt from NEPA requirements and other environmental reviews. For exempt activities, a recipient does not have to submit a RROF and certification, and no further approval from IEDA will be needed by the recipient for the drawdown of funds to carry out exempt activities and projects. However, the responsible entity must document in writing its determination (i.e., “Environmental Determination of Level of Review” form) that each activity or project is exempt and meet the conditions specified for such exemption under this section. The following activities are Exempt under §58.34:

1. Environmental and other studies, resource identification and the development of plans and strategies
2. Information and financial services
3. Administrative and management activities
4. Public services that will not have a physical impact or result in any physical changes, including but not limited to services concerned with employment, crime prevention, child care, health, drug abuse, education, counseling, energy conservation and welfare or recreational needs;
5. Inspections and testing of properties for hazards or defects
6. Purchase of insurance
7. Purchase of tools
8. Engineering or design costs
9. Technical assistance and training
10. Assistance for temporary or permanent improvements that do not alter environmental conditions and are limited to protection, repair, or restoration activities necessary only to control or arrest the effects from disasters or imminent threats to public safety including those resulting from physical deterioration
11. Payment of principal and interest on loans made or obligations guaranteed by HUD

Categorical Exclusions (24 CFR Part 58.35)

Categorical Exclusions are those activities that are not exempt and require no environmental assessment. There are two types of Categorical Exclusions, §58.35 (a) Subject to §58.5 and §58.35 (b) Not Subject to §58.5:

§58.35 (b) Categorical exclusion not subject to Sec. 58.5

• Tenant-based rental assistance
• Supportive services including, but not limited to, health care, housing services, permanent housing placement, day care, nutritional services, short-term payments for rent/mortgage/utility costs, and assistance in gaining access to local, State, and Federal government benefits and services
• Operating costs including maintenance, security, operation, utilities, furnishings, equipment, supplies, staff training and recruitment and other incidental costs
• Economic development activities, including but not limited to, equipment purchase, inventory financing, interest subsidy, operating expenses and similar costs not associated with construction or expansion of existing operations
• Activities to assist homebuyers to purchase existing dwelling units or dwelling units under construction, including closing costs and down payment assistance, interest buydowns, and similar activities that result in the transfer of title
• Affordable housing pre-development costs including legal, consulting, developer and other costs related to obtaining site options, project financing, administrative costs and fees for loan commitments, zoning approvals, and other related activities which do not have a physical impact
• Approval of supplemental assistance (including insurance or guarantee) to a project previously approved under this part, if the approval is made by the same responsible entity that conducted the environmental review on the original project and re-evaluation of the environmental findings is not required under Sec. 58.47. If your project is categorically excluded not subject to Sec. 58.5 using the above criteria you must complete the following steps and include the documentation in your ERR:
  • Complete “Environmental Determination of Level of Review” form
  • Complete “Requirements listed at 24 CFR 58.6” form

§58.35 (a) Categorical exclusion subject to Sec. 58.5

1. Acquisition, repair, improvement, reconstruction, or rehabilitation of public facilities and improvements (other than buildings) when the facilities and improvements are in place and will be retained in the same use without change in size or capacity of more than 20 percent (e.g., replacement of water or sewer lines, reconstruction of curbs and sidewalks, repaving of streets).
2. Special projects directed to the removal of material and architectural barriers that restrict the mobility of and accessibility to elderly and handicapped persons.
3. Rehabilitation of buildings and improvements when the following conditions are met:
   1. In the case of a building for residential use (with one to four units), the density is not increased beyond four units, the land use is not changed, and the footprint of the building is not increased in a floodplain or in a wetland.
   2. In the case of multifamily residential buildings:
      1. Unit density is not changed more than 20 percent,
      2. The project does not involve changes in land use from residential to nonresidential, and
      3. The estimated cost of rehabilitation is less than 75 percent of the total estimated cost of replacement after rehabilitation.
   3. In the case of non-residential structures, including commercial, industrial, and public buildings:
      1. The facilities and improvements are in place and will not be changed in size or capacity by more than 20 percent, and
      2. The activity does not involve a change in land use, such as from nonresidential to residential, commercial to industrial, or from one industrial use to another.
4. Demolition, New Construction or Both
   1. An individual action on up to four dwelling units where there is a maximum of four units on any one site. The units can be four one-unit buildings or one four-unit building or any combination in between, or
   2. An individual action on a project of five or more housing units developed on scattered sites when the sites are more than 2,000 feet apart and there are not more than four housing units on any one site.
   3. Paragraphs (a)(4)(i) and (ii) of this section do not apply to rehabilitation of a building for residential use (with one to four units) (see paragraph (a)(3)(i) of this section).
5. Acquisition (including leasing) or disposition of, or equity loans on an existing structure, or acquisition (including leasing) of vacant land provided that the structure or land acquired, financed, or disposed of will be retained for the same use.
6. Combinations of the above activities.

If your project is categorically excluded subject to Sec. 58.5 using the above criteria the recipient must complete these steps and include documentation in your ERR:

1. Complete “Environmental Determination of Level of Review” form
2. Prepare a “Statutory Checklist” and include supporting source documentation
   1. Site visit, maps, photographs, screen shots, tables, calculations, letters
3. Complete “Requirements listed at 24 CFR 58.6” form
4. Publish or disseminate “Notice of Intent to Request a Release of Funds”
   1. If any comments are received in writing, the local government must consider the comments, respond in writing, and provide copies of all correspondence to IEDA.
5. Once the local comment period expires, submit a signed “Request for Release of Funds and Certification” form to IEDA.
   1. Through the Request for Release of Funds the recipient accepts the role of responsible federal agency should there be a lawsuit concerning environmental laws and regulations. The CEO assumes responsibility for the jurisdiction when he/she signs the Request for Release of Funds and Certification.
6. IEDA will issue a Release of Funds letter after the state comment period expires, pending resolution of any conditions or concerns by environmental agencies, individuals, and groups.

After IEDA releases funds, the recipient may draw funds after applicable contract conditions have been satisfied. Following is a sample timetable for the RROF process:

• Day 1: RROF notice printed in newspaper (“Notice of Intent to Request a Release of Funds”, aka NOI-RROF)
• Day 2: First day of 7-day Local comment period
• Day 8: Last day of 7-day Local comment period
• Day 9: RROF and Certification sent to IEDA, along with proof of publication of NOIRROF and the Level of Determination
• Day 12: State receives request
• Day 13: First day of State comment period
• Day 27: Last day of 15-day State comment period
• Day 28: State approves RROF and Certification and issues a Release of Funds Letter

Environmental Assessment (24 CFR Part 58.36 & Subpart E)

If the activity is neither exempt nor categorically excluded, the recipient must prepare an Environmental Assessment (EA). The EA examines and recommends feasible ways to eliminate or minimize adverse environmental impacts and examines alternatives to the project itself, if appropriate.

The EA is a “concise public document” (40 CFR 1508.9) which should focus on issues that are truly important rather than “amassing needless detail” (40 CFR 1500.1) and should be “analytic rather than encyclopedic” (40 CFR 1502.2). The EA should include direct effects (same time & place as the project implementation) as well as indirect effects – those that are “reasonably foreseeable” (40 CFR 1508.8).

A link to the Environmental Assessment Worksheet is included in the appendix to this Chapter. When properly completed, this form serves as the EA and complies with the environmental requirements in 24 CFR Part 58.40.

If your project requires an EA you must complete these steps and include documentation in your ERR:

1. Complete “Environmental Determination of Level of Review” form
2. Complete “Environmental Assessment Worksheet” and include supporting source documentation
3. Publish or disseminate combined “Notice of Finding of No Significant Impact and Notice of Intent to Request a Release of Funds” (FONSI/NOI-RROF)
   1. If any comments are received in writing, the local government must consider the comments, respond in writing, and provide copies of all correspondence to IEDA
4. Once the local comment period expires, submit a signed “Request for Release of Funds and Certification” form to IEDA.
   1. Through the Request for Release of Funds the recipient assumes the role of the responsible federal agency should there be a lawsuit concerning environmental laws and regulations. The CEO assumes responsibility for the jurisdiction when he/she signs the Request for Release of Funds and Certification. (24 CFR Part 58.4)
5. IEDA will issue a Release of Funds letter after the state comment period expires, pending resolution of any conditions or concerns by environmental agencies, individuals, and groups.

After IEDA releases funds, the recipient may draw funds after applicable contract conditions have been satisfied.

If the EA indicates an activity may significantly affect the environment and requires an Environmental Impact Statement, contact IEDA Environmental Officer for assistance.

Following is a sample timetable for the FONSI/RROF process: 

• Day 1: FONSI/NOI-RROF notice printed in newspaper
• Day 2: First day of 15-day Local comment period
• Day 16: Last day of 15-day Local comment period
• Day 17: RROF and Certification sent to IEDA, along with proof of publication of FONSI/NOI-RROF and Level of Determination
• Day 20: State receives request
• Day 21: First day of State comment period
• Day 35: Last day of 15-day State comment period
• Day 36: State approves RROF and Certification and issues a Release of Funds Letter

Project Activity Amendments

If an amendment to a project activity is proposed, the recipient must reevaluate its EA findings of no significant impact. An amendment may include new circumstances and/or environmental conditions arising during implementation or if an alternative not considered in the original EA is selected. The reevaluation determines if the FONSI is still valid. If it is, but data or conditions have changed, the recipient must amend the original EA and update the ERR.

If the project site significantly changes, or new or amended activities alter the original EA findings, a new EA must be completed for the new site and or activities.