RD Instruction 1940-G

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PART 1940 - GENERAL

Subpart G - Environmental Program

TABLE OF CONTENTS

[Sec]{.underline}. [Page]{.underline}

1940.301 Purpose. 1

1940.302 Definitions. 3

\(a\) Emergency circumstance. 3

\(b\) Environmental review documents. 3

\(c\) Flood or Flooding. 4

\(d\) Floodplains. 4

\(e\) Indirect impacts. 4

\(f\) Mitigation measure. 5

\(g\) No action alternative. 5

\(h\) Practicable alternative. 5

\(i\) Preparer of environmental review documents. 6

\(j\) Water resource project. 7

1940.303 General Policy. 7

1940.304 Special Policy. 8

\(a\) Land use. 8

\(b\) Endangered species. 10

\(c\) Wild and scenic rivers. 11

\(d\) Historic and cultural properties. 11

\(e\) Coastal barriers. 11

\(f\) Water and energy conservation. 11

\(g\) Intergovernmental initiative on important

land resources. 11

\(h\) Water quality. 12

1940.305 Policy Implementation. 12

\(a\) Environmental impact analysis. 12

\(b\) Natural resource management. 12

\(c\) Intergovernmental initiatives. 13

\(d\) Farmland Protection Policy Act and

Departmental Regulation 9500-3,

Land Use Policy. 13

\(e\) Endangered species. 13

\(f\) Wild and scenic rivers. 13

\(g\) Historic and cultural properties. 13

\(h\) Coastal barriers. 14

\(i\) Water and energy conservation. 15

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RD Instruction 1940-G

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[Sec]{.underline}. [Page]{.underline}

\(j\) Noise abatement. 15

\(k\) Water quality. 15

1940.306 Environmental responsibilities within the

National Office. 15

\(a\) Administrator. 15

\(b\) Deputy Administrator Program Operations. 15

\(c\) Assistant Administrators for Programs. 17

1940-307 Environmental responsibilities within

the State Office. 17

\(a\) State Director. 17

\(b\) State Environmental Coordinator (SEC). 17

Program Chiefs. 19

1940.308 Environmental responsibilities at the District

and County office levels. 19

1940.309 Responsibilities of the prospective applicant. 19

1940.310 Categorical exclusions from National Environmental

Policy Act (NEPA) reviews. 21

\(a\) General guidelines. 21

\(b\) Housing assistance. 22

\(c\) Community and business programs and nonprofit

national corporations program. 23

\(d\) Farm programs. 24

\(e\) General exclusions. 26

1940.311 Environmental assessments for Class I actions. 27

\(a\) Housing assistance. 27

\(b\) Community and business programs and nonprofit

national corporations program. 28

\(c\) Farm programs. 29

\(d\) General. 31

1940.312 Environmental assessments for Class II actions. 31

\(a\) Housing assistance. 31

\(b\) Community and business programs and nonprofit

national corporations program. 32

\(c\) Farm programs. 32

\(d\) General. 33

RD Instruction 1940-G

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[Sec]{.underline}. [Page]{.underline}

1940.313 Actions that normally require the preparation

of an Environmental Impact Statement (EIS). 34

1940.314 Criteria for determining a significant environmental

impact. 34

1940.315 Timing of the environmental review process. 36

1940.316 Responsible officials for the environmental

review process. 37

\(a\) Approving official. 37

\(b\) State Office level. 37

\(c\) District or County Office level. 38

\(d\) Multilevel review. 38

\(e\) Reservation of authority. 38

1940.317 Methods for ensuring proper implementation of

categorical exclusions. 38

1940.318 Completing environmental assessments for

Class II actions. 43

1940.319 Completing environmental assessments for

Class I actions. 48

1940.320 Preparing EIS\'s. 50

\(a\) Responsibility. 50

\(b\) Organizing the EIS process. 51

\(c\) Scoping process. 51

\(d\) Interdisciplinary approach. 53

\(e\) Content and format of EIS. 53

\(f\) Circulation of the EIS. 53

\(g\) Filing of the EIS. 53

\(h\) Public information meetings. 54

\(i\) Response to comments. 54

\(j\) Timing of review. 54

1940.321 Use of completed EIS. 54

1940.322 Record of decision. 54

1940.323 Preparing supplements to EIS\'s. 55

1940.324 Adoption of EIS or environmental assessment

prepared by the other Federal Agency. 56

1940.325 FmHA as a cooperating Agency. 57

1940.326 FmHA as a lead Agency. 58

1940.327 Tiering. 58

1940.328 State Environmental Policy Acts. 59

1940.329 Commenting on other agencies\' EIS\'s. 60

1940.330 Monitoring. 60

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[Sec]{.underline}. [Page]{.underline}

1940.331 Public involvement. 61

\(a\) Objective. 61

\(b\) Public notice requirements. 61

\(c\) Public information meetings. 63

\(d\) Distribution of environmental documents. 63

1940.332 Emergencies. 64

\(a\) Action requiring EIS. 64

\(b\) Action not requiring EIS. 64

1940.333 Applicability to planning assistance. 64

1940.334 Direct participation of State agencies in the

preparation of FmHA EIS\'s. 65

1940.335 Environmental review of FmHA proposals for

legislation. 65

1940.336 Contracting for professional services. 66

1940.337 - 1940.349 \[Reserved\]

1940.350 Office of Management and Budget (OMB) Control number. 66

Exhibits - A Departmental Regulation 9500-3, Land Use Policy.

B Development and Implementation of Natural Resource

Management Guide.

C Implementation Procedures for the Farmland Protection

Policy Act; Executive Order 11988, Floodplain Management;

Executive Order 11990, Protection of Wetlands; and

Departmental Regulation 9500-3, Land Use Policy.

D Implementation Procedures for the Endangered Species Act.

E Implementation Procedures for the Wild and Scenic Rivers

Act.

F Implementation procedures for the Coastal Barrier

Resources Act.

G \[Reserved\]

H Environmental Assessment for Class II Actions.

I Finding of No Significant Environmental Impact.

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J Locations and Telephone Numbers of Federal Emergency

Management Administration\'s Regional Offices.

K Locations and Telephone Numbers of U.S. Fish and Wildlife

Service\'s Wetland Coordinators.

L Exceptions to Restrictions of Coastal Barrier Resources

Act.

M Implementation Procedures for the Conservation of Wetlands

and Highly Erodible Land Affecting Farmer Program Loans

and Loans to Indian Tribes and Tribal Corporations.

Authority: 7 U.S.C. 1989; 42 U.S.C. 1480; 7 CFR 2.23; 7 CFR 2.70

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Part 1940 - General

Subpart G - Environmental Program

§1940.301 [Purpose]{.underline}.

\(a\) This subpart contains the major environmental policies of the
Farmers Home Administration (FmHA). It also provides the procedures and
guidelines for preparing the environmental impact analyses required for
a series of Federal laws, regulations, and Executive orders within one
environmental document. The timing and use of this environmental
document within the FmHA decision-making process is also outlined.

\(b\) This subpart is intended to be consistent with the Council on
Environmental Quality\'s (CEQ) Regulations for Implementing the
Procedural Provisions of the National Environmental Policy Act (NEPA),
40 CFR Parts 1500-1508. CEQ\'s regulations will not be repeated in this
subpart except when essential for clarification of important procedural
or substantive points. Otherwise, citations to applicable sections of
the regulations will be provided. The CEQ regulations will be available
at all FmHA offices.

\(c\) This subpart is designed to integrate the requirements of NEPA
with other planning and environmental review procedures required by law,
or by Agency practice, so that all such procedures run concurrently
rather than consecutively. The environmental document, which results
from the implementation of this Subpart, provides on a project basis a
single reference point for the Agency\'s compliance and/or
implementation of the following requirements and policies:

\(1\) The National Environmental Policy Act, 42 U.S.C. 4321

\(2\) Safe Drinking Water Act - Section 1424(e), 42 U.S.C. 300h

\(3\) Endangered Species Act, 16 U.S.C. 1531

\(4\) Wild and Scenic Rivers Act, 16 U.S.C. 1271

\(5\) The National Historic Preservation Act, 16 U.S.C. 470 (See Subpart
F of Part 1901 of this chapter for more specific implementation
procedures.)

\(6\) Archaeological and Historic Preservation Act, 16 U.S.C. 469 (See
Subpart F of Part 1901 of this chapter for more specific implementation
procedures.)

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DISTRIBUTION: W,S,D,C Loan and Grant Making

General

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\(7\) Coastal Zone Management Act - Section 307(c)(l) and (2), 16 U.S.C.
1456

\(8\) Farmland Protection Policy Act, Subtitle I, Public Law 97-98

\(9\) Coastal Barrier Resources Act, Public Law 97-348

\(10\) Executive Order 11593, Protection and Enhancement of the Cultural
Environment (See Subpart F of Part 1901 of this chapter for more
specific implementation procedures.)

\(11\) Executive Order 11514, Protection and Enhancement of
Environmental Quality

\(12\) Executive Order 11988, Floodplain Management

\(13\) Executive Order 11990, Protection of Wetlands

\(14\) Title 7, Part lb and lc, Code of Federal Regulations, Department
of Agriculture\'s National Environmental Policy Act; Final Policies and
Procedures

\(15\) Title 7, Part 3100, Code of Federal Regulations, Department of
Agriculture\'s Enhancement, Protection, and Management of the Cultural
Environment (See Subpart F of Part 1901 of this chapter for more
specific implementation procedures.)

\(16\) Title 7, Part 658, Code of Federal Regulations, Department of
Agriculture, Soil Conservation Service, Farmland Protection Policy

\(17\) Title 7, Part 12, Code of Federal Regulations, Highly Erodible
Land and Wetland Conservation.

\(18\) Departmental Regulation 9500-3, Land Use Policy (See Exhibit A of
this subpart.)

\(19\) Departmental Regulation 9500-4, Fish and Wildlife Policy

\(d\) The primary objectives of this subpart are for the Agency to make
better decisions by taking into account potential environmental impacts
of proposed projects and by working with FmHA applicants, other Federal
agencies, Indian tribes, State and local governments, and interested
citizens and organizations in order to formulate actions that advance
the program goals in a manner that will protect, enhance, and restore
environmental quality. To accomplish these objectives, the
identification of potentially significant impacts on the human
environment is mandated to occur early in the Agency\'s planning and
decisionmaking processes. Important decision points are identified. The
completion of the environmental review process is coordinated with

these decision points, and this review must be completed prior to the
Agency\'s first major decision on whether or not to participate in the
proposal. This early availability of the results of the environmental
review process is intended to ensure that Agency decisions are based on
an understanding of their environmental consequence, as well as the
consequences of alternative courses of action.

\(e\) Reducing delays, duplication of effort, and superfluous analyses
are provided for in this subpart. FmHA environmental documents are to be
supported by accurate analyses and will concentrate on the issues that
are timely and relevant to the action in question, rather than amassing
needless detail. Such documents and their preparation and review will be
coordinated with other Federal or State agencies jointly participating
in proposed actions or related actions, in order to avoid duplication of
effort, and to achieve a coordinated and timely response.

\(f\) Public involvement is desirable, and to facilitate public
involvement, environmental documents will be available to interested
citizens as early in the decisionmaking process as possible and before
decisions are made. Provisions are included for citizens or interested
parties to express their views and any concerns.

\(g\) The FmHA officials responsible for the environmental review
process are identified.

\(h\) The FmHA actions covered by this subpart include (1) financial
assistance to include grants, loans, and guarantees, (2) subdivision
approvals, (3) the management, leasing and sale of inventory property,
and (4) other major federal actions such as proposals for legislation
and the issuance of regulations.

§1940.302 [Definitions]{.underline}. Following is a list of definitions
that apply to the implementation of this subpart. Please note that
§1940.301(b) of this subpart refers to the Council on Environmental
Quality\'s Regulations for Implementing the Procedural Provisions of the
National Environmental Policy Act, 40 CFR Parts 1500-1508. Consequently,
the definitions contained in Part 1508 of the Council\'s regulations
apply to this subpart, as well as those listed below.

\(a\) [Emergency circumstance]{.underline}. One involving an immediate
or imminent danger to public health or safety.

\(b\) [Environmental review documents]{.underline}. The documents
required by this subpart for the purpose of documenting FmHA\'s
compliance with the environmental laws and regulations applicable to the
FmHA actions covered in this subpart. These documents include (1) Form
RD 194022, \"Environmental Checklist for Categorical Exclusions,\" (2)
Form RD 1940-21, \"Environmental Assessment for Class I Action,\" (3)

Environmental Assessment for Class II Actions (Exhibit H of this
subpart), and (4) Environmental Impact Statements (EIS).

\(c\) [Flood or flooding]{.underline}. A general and temporary condition
of partial or complete inundation of land areas, from the overflow of
inland and/or tidal waters, and/or the rapid accumulation or runoff of
surface waters from any source. Two important classifications of floods
are as follows.

\(1\) A one-percent chance flood or base flood - A flood of a magnitude
that occurs once every 100 years on the average. Within any one-year
period there is one chance in 100 of the occurrence of such a flood.
Most importantly, however, the cumulative risk of flooding increases
with time. Statistically, there is about one chance in five that a flood
of this magnitude will occur within a 20-year period, the length of time
commonly defined as the useful life of a facility. Over a 30-year
period, the life of a typical mortgage, the probability of such a flood
occurring increases to greater than one chance in four.

\(2\) A 0.2-percent chance flood - A flood of a magnitude that occurs
once every 500 years on the average. (Within any one-year period there
is one chance in 500 of the occurrence of such a flood.) As with the
one-percent chance flood, the cumulative risk of this flood occurring
also increases with time.

\(d\) [Floodplains]{.underline}. Lowland and relatively flat areas
adjoining inland and coastal waters, including flood-prone areas of
offshore islands. At a minimum, floodplains consist of those areas
subject to a one percent or greater chance of flooding in any given
year. The term floodplain will be taken to mean the base floodplain,
unless the action involves a critical action, in which case the critical
action floodplain is the minimum floodplain of concern.

\(1\) Base floodplain (or 100-year floodplain) - The area subject to
inundation from a flood of a magnitude that occurs once every 100 years
on the average (the flood having a one-percent chance of being equalled
or exceeded in any given year).

\(2\) Critical action floodplain (or 500-year floodplain) - The area
subject to inundation from a flood of a magnitude that occurs once every
500 years on the average (the flood having 0.2-percent chance of being
equalled or exceeded in any given year).

\(e\) [Indirect impacts]{.underline}. Those reasonably foreseeable
environmental impacts that result from the additional public facility,
residential, commercial, or industrial development or growth that a
federally financed project may cause, induce or accommodate.
Consequently, indirect impacts often occur later in time than the
construction of the Federal project and can be removed in distance from
the construction

site. For example, a water transmission line may be designed to serve
additional residential development. The environmental impacts of that
residential development represent an indirect impact of the federally
funded water line. Those indirect impacts which deserve the greatest
consideration include changes in the patterns of land use, population
density or growth rate, and the corresponding changes to air and water
quality and other natural systems.

\(f\) [Mitigation measure]{.underline}. A measure(s) included in a
project or application for the purpose of avoiding, minimizing, reducing
or rectifying identified, adverse environmental impacts. Examples of
such measures include:

\(1\) the deletion, relocation, redesign or other modifications of the
project\'s elements;

\(2\) the dedication to open space of environmentally sensitive areas of
the project site, which would otherwise be adversely affected by the
action or its indirect impacts;

\(3\) soil erosion and sedimentation plans to control runoff during
land-disturbing activities;

\(4\) the establishment of vegetative buffer zones between project sites
and adjacent land uses;

\(5\) protective measures recommended by environmental and conservation
agencies having jurisdiction or special expertise regarding the
project\'s impacts;

\(6\) storm water management plans to control potential downstream
flooding effects that would result from a project;

\(7\) zoning; and

\(8\) reuse of existing facilities as opposed to new construction.

\(g\) [No-action alternative]{.underline}. The alternative of not
approving an application for financial assistance, a subdivision
feasibility analysis, or an Agency proposal.

\(h\) [Practicable alternative]{.underline}. An alternative that is
capable of attainment within the confines of relevant constraints. The
test of practicability, therefore, depends upon the particulars of the
situation under consideration and those constraints imposed by
environmental, economic, legal, social and technological parameters.
This test, however, is not limited by the temporary unavailability of
sufficient financial resources to implement an alternative. That is,
alternatives cannot be rejected solely on the basis of moderately
increased costs. The range of alternatives that must be analyzed to
determine if a practicable alternative exists includes the following
three categories of alternatives:

\(1\) Alternative project sites or designs,

\(2\) Alternative projects with similar benefits as the proposed action,
and

\(3\) The no-action alternative.

\(i\) [Preparer of Environmental Review Documents]{.underline}. The FmHA
official who is responsible for reviewing the potential environmental
impacts of the proposed action and for completing the appropriate
environmental review document. Under the circumstances indicated, the
following Agency positions and divisions will act as the preparer of the
environmental review documents covered by this subpart.

\(1\) County Office - When the approval official for the action under
review is located at the County Office level, that official will
prepare, as required, Environmental Checklist for Categorical Exclusions
and Class I and Class II assessments.

\(2\) District Office - When the approval official for the action under
review is located at the District Office level, that official will
prepare, as required, Environmental Checklist for Categorical Exclusions
and Class I and Class II assessments or may delegate this responsibility
to either

\(i\) the District Office staff member having primary responsibility for
assembling the associated preapplication, application or other case
materials, analyzing the materials and developing recommendations for
the approval official, or

\(ii\) a County Office staff member having the same responsibilities as
the District Office member, if the action is initiated at the County
Office level.

\(3\) State Office Program Chief - For actions approved within the State
Office, the Chief will prepare, as required, Environmental Checklist for
Categorical Exclusions and Class I and II assessments or may delegate
this responsibility to either

\(i\) the appropriate State Office Loan Specialist, if not the State
Environmental Coordinator (SEC),

\(ii\) an architect or engineer on the Chief\'s staff who is not the
SEC, or

\(iii\) a District or County Office staff member located within the
office in which the action is initiated and having the responsibilities
outlined in paragraph (i)(2)(i) of this section.

\(4\) State Environmental Coordinator - EIS\'s for actions within the
approval authority of County Supervisors, District Directors, and State
Office officials.

\(5\) Assistant Administrators for Programs - Checklists, assessments,
and EIS\'s for all actions initiated within their program office.

\(6\) Program Support Staff - Checklists, assessments, and EIS\'s that
the Deputy Administrator for Program Operations requests be done.

\(j\) [Water resource project]{.underline}. Includes any type of
construction which would result in either impacts on water quality and
the beneficial uses that water quality criteria are designed to protect
or any change in the free-flowing characteristics of a particular river
or stream to include physical, chemical, and biological characteristics
of the waterway. This definition encompasses construction projects
within and along the banks of rivers or streams, as well as projects
involving withdrawals from, and discharges into such rivers or streams.
Projects which require Corps of Engineers dredge and fill permits are
also water resource projects.

§1940.303 [General policy]{.underline}.

\(a\) FmHA will consider environmental quality as equal with economic,
social, and other relevant factors in program development and
decisionmaking processes.

\(b\) In assessing the potential environmental impacts of its actions,
FmHA will consult early with appropriate Federal, State, and local
agencies and other organizations to provide decision-makers with both
the technical and human aspects of environmental planning.

\(c\) When adverse environmental impacts are identified, either direct
or indirect, an examination will be made of alternative courses of
action, including their potential environmental impacts. The objective
of the environmental review will be to develop a feasible alternative
with the least adverse environmental impact. The alternative of not
proceeding with the proposal will also be considered particularly with
respect to the need for the proposal.

\(d\) If no feasible alternative exists, including the no-action
alternative, measures to mitigate the identified adverse environmental
impacts will be included in the proposal.

\(e\) The performance of environmental reviews and the consideration of
alternatives will be initiated as early as possible in the FmHA
application review process so that the Agency will be in the most
flexible and objective position to deal with these considerations.

§1940.304 [Special policy]{.underline}.

\(a\) [Land use]{.underline}.

\(1\) FmHA recognizes that its specific mission of assisting rural
areas, composed of farms and rural towns, goes hand-in-hand with
protecting the environmental resources upon which these systems are
dependent. Basic resources necessary to both farm and rural settlements
include important farmlands and forestlands, prime rangelands, wetlands,
and floodplains. The definitions of these areas are contained in the
Appendix to Departmental Regulation 9500-3, Land Use Policy, which is
included as Exhibit A of this subpart. For assistance in locating and
defining floodplains and wetlands, the locations and telephone numbers
of the Federal Emergency Management Administration\'s regional offices
have been included as Exhibit J of this subpart, and similar information
for the U.S. Fish and Wildlife Service\'s Wetland Coordinators has been
included as Exhibit K of this subpart. Given the importance of these
resources, as emphasized in the Departmental Regulation, Executive Order
11988, \"Floodplain Management,\" and Executive Order 11990,
\"Protection of Wetlands,\" it is FmHA\'s policy not to approve or fund
any proposals that, as a result of their identifiable impacts, direct or
indirect, would lead to or accommodate either the conversion of these
land uses or encroachment upon them. The only exception to this policy
is if the approving official determines that

\(i\) there is no practicable alternative to the proposed action,

\(ii\) the proposal conforms to the planning criteria identified in
paragraph (a)(2) of this section, and

\(iii\) the proposal includes all practicable measures for reducing the
adverse impacts and the amount of conversion/encroachment.

\(A\) For Farmer Program loans and guarantees, and loans to Indian
Tribes and Tribal Corporations, Exhibit M of this subpart imposes
additional and more restrictive requirements regarding wetland and
highly erodible land conservation.

\(B\) Unless otherwise exempted by the provisions of Exhibit M, the
proceeds of any Farmer Program loan or loan to an Indian Tribe or Tribal
Corporation made or guaranteed by FmHA cannot be used

([1]{.underline}) for a purpose that will contribute to excessive
erosion of highly erodible land (as defined in Exhibit M) or

([2]{.underline}) for a purpose that will contribute to conversion of
wetlands (as defined in Exhibit M) to produce an agricultural commodity.

\(2\) It is also recognized that unless carefully reviewed, some
proposals designed to serve the needs of rural communities can adversely
affect the existing economic base and settlement patterns of the
community, as well as create development pressures on land and
environmental resources essential to farm economies. An example of such
a proposal might be the extension of utilities and other types of
infrastructure beyond a community\'s existing settlement pattern and
into important farmlands for the purpose of commercial or residential
expansion, even though there is available space within the existing
settlement pattern for such expansion. Not only may the loss of
important farmlands unnecessarily result, but the community may be faced
with the economic costs of providing public services to outlying areas,
as well as the deterioration of its central business or commercial area;
the latter may not be able to compete with the newer, outlying
commercial establishments. These results are undesirable, and to avoid
their occurrence, projects designed to meet rural community needs (i.e.,
residential, industrial, commercial, and public facilities) will not be
approved unless the following conditions are met.

\(i\) The project is planned and sited in a manner consistent with the
policies of this section, the Farmland Protection Policy Act, and
Departmental Regulation 9500-3 (Exhibit A of this subpart).

\(ii\) The project is not inconsistent with an existing comprehensive
and enforceable plan that guides growth and reflects a realistic
strategy for protecting natural resources, and the project is
compatible, to the extent practicable, with State, unit of local
government, and private programs and policies to protect farmland. (If
no such plan or policies exist, there is no FmHA requirement that they
either be prepared and adopted, as further specified in paragraph (a)(3)
of this section.)

\(iii\) The project will encourage long-term, economically viable public
investment by fostering or promoting development patterns that ensure
compact community development, that is, development that is limited to
serving existing settlement patterns or is located in existing
settlement patterns, e.g., the rehabilitation and renovation of existing
structures, systems and neighborhoods; infilling of development; the
provision of a range of moderate-to-high residential densities
appropriate to local and regional needs. When these development patterns
or types are not practicable, the development must be contiguous with
the existing settlement pattern and provide for a range of
moderate-to-high residential densities appropriate to local and regional
needs. It is recognized that some FmHA Community Programs projects are
designed to serve rural residents, such as rural water and waste
disposal systems and, therefore, cannot be limited in service area to
those areas contiguous with existing settlement patterns. These types of
projects will be designed to primarily serve existing structures and
rural residents in noncontiguous areas. Any additional capacity within
the system will be limited to meet reasonable growth needs, and, to the
extent practicable, be designed to meet such needs within existing
settlements and areas contiguous to them.

\(3\) The conditions specified in paragraph (a)(2) of this section
should not be construed as advocating excessive densities, congestion,
or loss of open space amenities within rural communities. Desirable
living conditions can be obtained under these objectives, along with
economic and social benefits for the community and the surrounding farm
operations. Additionally, these conditions should not be construed as
requiring localities to develop plans which contain the conditions. In
any instance in which these planning conditions or criteria do not exist
within the project area, project reviews will not be postponed until the
criteria are adopted. Rather, projects will be reviewed and funding
decisions made in light of a project\'s consistency with the contents of
this subpart (excluding paragraph (a)(2)(ii) of this section, which
would not be applicable).

\(b\) [Endangered species]{.underline}. FmHA will not authorize, fund,
or carry out any proposal or project that is likely to

\(1\) jeopardize the continued existence of any plant or wildlife
species listed by the Secretary of Interior or Commerce as endangered or
threatened; or

\(2\) destroy or adversely modify the habitats of listed species when
such habitats have been determined critical to the species\' existence
by the Secretary of Interior or Commerce, unless FmHA has been granted
an exemption for such proposal by the Endangered Species Committee
pursuant to paragraph (h) of Section 7 of the Endangered Species Act.

\(c\) [Wild and scenic rivers]{.underline}. FmHA will not provide
financial assistance or plan approval for any water resource project
that would have a direct and adverse effect on the values for which a
river has been either included in the National Wild and Scenic Rivers
System or is designated for potential addition. Additionally, FmHA will
not approve or assist developments (commercial, industrial, residential,
farming or community facilities) located below or above a wild, scenic
or recreational river area, or on any stream tributary thereto which
will invade the area or unreasonably diminish the scenic, recreational,
and fish and wildlife values present in the area.

\(d\) [Historic and cultural properties]{.underline}. As part of the
environmental review process, FmHA will identify any properties that are
listed in, or may be eligible for, listing in the National Register of
Historic Places and are located within the project\'s area of potential
environmental impacts. Consultations will be undertaken with State
Historic Preservation Officers and the Advisory Council on Historic
Preservation, through the implementation of Subpart F of Part 1901 of
this chapter, in order to determine the most appropriate course of
action for protecting such identified properties or mitigating potential
adverse impacts to them.

\(e\) [Coastal barriers]{.underline}. Under the requirements of the
Coastal Barrier Resources Act, FmHA will not provide financial
assistance for any activity to be located within the Coastal Barrier
Resources System unless

\(1\) such activity meets the criteria for an exception, as defined in
Section 6 of the Act, and

\(2\) consultation regarding the activity has been completed with the
Secretary of the Interior.

\(f\) [Water and energy conservation]{.underline}. FmHA will encourage
the conservation of water and energy in the development of its programs
and policies and will encourage applicants to incorporate all
economically feasible water and energy-saving features and designs
within their proposals.

\(g\) [Intergovernmental initiatives on important land
resources]{.underline}. On a broader scale, FmHA will advocate, in
cooperation with other USDA agencies (through the USDA State-level
committee system), the retention of important farmlands and forestlands,
prime rangeland, wetlands and floodplains whenever proposed conversions
to other uses

\(1\) are caused or encouraged by actions or programs of a Federal
Agency, or

\(2\) require licensing or approval by a Federal Agency, unless other
needs clearly override the benefits derived from retention of such
lands.

\(h\) [Water quality]{.underline}. FmHA will not provide financial
assistance to any activity that would either impair a State water
quality standard, including designated and/or existing beneficial uses
that water quality criteria are designed to protect, or that would not
meet antidegradation requirements.

§1940.305 [Policy implementation]{.underline}.

\(a\) [Environmental impact analysis]{.underline}. The implementation of
the environmental impact analysis requirements described in this subpart
serves as the primary mechanism for FmHA as follows:

\(1\) incorporating environmental quality considerations into FmHA
program and decision-making processes,

\(2\) obtaining the views of the public and government agencies on
potential environmental impacts associated with FmHA projects, and

\(3\) using all practicable means to avoid or to minimize any possible
adverse environmental effects of FmHA actions.

\(b\) [Natural resource management]{.underline}. The State Director will
develop a natural resource management guide. This guide will serve as an
essential mechanism for implementing §1940.304 of this subpart; and,
therefore, the guide must be consistent with and reflect the objectives
and policies contained in §1940.304 of this subpart. At the same time,
however, it must be tailored to take into account important State,
regional, and local natural resource management objectives. The guide
will be issued as a State Supplement for prior approval. The basic
content, purposes, and uses of the guide are enumerated in Exhibit B of
this subpart and can be summarized as follows:

\(1\) The guide will serve as a mechanism for assembling an inventory of
the locations within the State of those natural resources, land uses,
and environmental factors that have been specified by Federal, State and
local authorities as deserving some degree of protection or special
consideration;

\(2\) The guide will summarize the various standards or types of
Federal, State, or local protection that apply to the natural resources,
land uses, and environmental factors listed in the inventory; and

\(3\) Applications for individual projects must be reviewed for
consistency with the guide.

\(c\) [Intergovernmental initiatives]{.underline}. When commenting on
proposed Federal actions subject to environmental impact statements,
FmHA commentors will focus on the consistency of these actions with the
appropriate State natural resource management guide. A similar focus or
element will be addressed in FmHA\'s review of the Environmental
Protection Agency\'s 201 Wastewater Management Plans.

\(d\) [Farmland Protection Policy Act and Departmental Regulation
9500-3, Land Use Policy]{.underline}. The natural resource management
guide serves as a tool for implementing the requirements of the Act and
the Departmental Regulation at the broad level of implementing the
Agency\'s programs at the State level. These requirements must also be
followed in the review of applications for financial assistance or
subdivision approval, as well as the disposal of real property. FmHA\'s
implementation procedures for the project review process are contained
in Exhibit C of this subpart.

\(e\) [Endangered Species]{.underline}. FmHA will implement the
consultation procedures required under Section 7 of the Endangered
Species Act as specified in 50 CFR 402. It is important to note that
these consultation procedures apply to the disposal of real property and
all FmHA applications for financial assistance and subdivision approval,
including those applicants which are exempt from environmental
assessments. FmHA\'s implementation procedures are contained in Exhibit
D of this subpart.

\(f\) [Wild and scenic rivers]{.underline}. Each application for
financial assistance or subdivision approval and the proposed disposal
of real property will be reviewed to determine if it will affect a river
or portion of it, which is either included in the National Wild and
Scenic Rivers System, designated for potential addition to the system,
or identified in the Nationwide Inventory prepared by the National Park
Service (NPS) in the Department of the Interior (DOI). FmHA\'s
procedures for completing this review are contained in Exhibit E of this
subpart.

\(g\) [Historic and cultural properties]{.underline}.

\(1\) As part of the environmental review process, FmHA will identify
any properties that are listed in or may be eligible for listing in the
National Register of Historic Places, and located within the area of
potential environmental impact. Identification will consist of
consulting the published lists of the National Register and formally
contacting and seeking the comments of the appropriate State Historic
Preservation Officer (SHPO). Since it is not always possible from the
consultation with the SHPO to determine whether historic and cultural
properties are present within the project\'s area of environmental
impact, it may be necessary for FmHA to consult public records and other
individuals and organizations, such as university archaeologists, local
historical societies, etc. These latter discussions should take place
before initiating a detailed site survey since they may provide reliable
information that obviates the need for a survey. However, whenever
insufficient information exists to document the presence or absence of
potentially eligible National Register properties and where the
potential for previously unidentified properties is recognized by FmHA,
the SHPO, or other interested parties, FmHA will conduct the necessary
investigations to determine if such properties are present within the
area of potential environmental impact. FmHA will involve the SHPO in
the planning and formulation of any historic, cultural, architectural or
archaeological testing, studies or surveys conducted to investigate the
presence of such properties and will utilize persons with appropriate
knowledge and experience.

\(2\) If the information obtained, as a result of the consultation and
investigations conducted by FmHA, indicates the presence of an historic
or cultural property within the area of potential environmental impact
that, in the opinion of the SHPO and FmHA, appear to meet the National
Register Criteria (36 CFR 60.4), the property will be considered
eligible for the National Register of Historic Places. If the SHPO and
FmHA do not agree on the property\'s eligibility for the National
Register or if the Secretary of the Interior or the Advisory Council on
Historic Preservation so requests, FmHA will request a determination of
eligibility from the Keeper of the National Register in accordance with
36 CFR 63. Consultations will be initiated with the SHPO and the
Advisory Council on Historic Preservation in accordance with 36 CFR 800,
through the implementation of Subpart F of Part 1901 of this chapter, to
determine the most appropriate course of action to protect all National
Register and eligible properties within the area of potential
environmental impact.

\(3\) Further instructions detailing the procedures to be followed in
considering and protecting historic and cultural properties and the
responsible Agency officials are contained in Subpart F of Part 1901 of
this Chapter. These procedures will be followed whenever a proposal,
considered by FmHA, has the potential to affect National Register or
eligible properties.

\(h\) [Coastal barriers]{.underline}. In those States having coastal
barriers within the Coastal Barrier Resources System, each application
for financial assistance or subdivision approval, as well as the
proposed disposal of real property, will be reviewed to determine if it
would be located within the system, and, if so, whether the action must
be denied on this basis or meets the Act\'s criteria for an exception.
To accomplish the review, all affected State, District and County
Offices will maintain a current set of maps, as issued by DOI, which
depict those coastal barriers within their jurisdiction that have been
included in the system. FmHA\'s implementation procedures for
accomplishing this review requirement and for consulting as necessary
with DOI are contained in Exhibit F of this subpart. The exceptions to
the restrictions of the Coastal Barrier Resources Act are contained in
Exhibit L of this subpart.

\(i\) [Water and energy conservation]{.underline}. Water and energy
conservation measures will be considered at both the program and project
level in a manner consistent with program regulations.

\(j\) [Noise abatement]{.underline}. For purposes of assessing noise
impacts and for determining the acceptability of housing sites in terms
of their exposure to noise, FmHA has adopted and follows the standards
and procedures developed by the U.S. Department of Housing and Urban
Development (HUD) and contained in 24 CFR 51 of Subpart B entitled,
\"Noise Abatement and Control.\"

\(k\) [Water quality]{.underline}. Each application for financial
assistance or subdivision approval and the proposed disposal of real
property will be reviewed to determine if it would impair a State water
quality standard or meet antidegradation requirements. When necessary,
the proposed activity will be modified to protect water quality
standards, including designated and/or existing beneficial uses that
water quality criteria are designed to protect, and meet antidegradation
requirements.

§1940.306 [Environmental responsibilities within the National
Office]{.underline}.

\(a\) [Administrator]{.underline}. The Administrator of FmHA has the
direct responsibility for Agency compliance with all environmental laws,
Executive orders, and regulations that apply to FmHA\'s program and
administrative actions. As such, the Administrator ensures that this
responsibility is adequately delegated to Agency staff and remains
informed on the general status of Agency compliance, as well as the need
for any necessary improvements. The Administrator is also responsible
for ensuring that the Agency\'s manpower and financial needs for
accomplishing adequate compliance with this subpart are reflected and
documented in budget requests for departmental consideration.

\(b\) [Deputy Administrator Program Operations]{.underline}.

\(1\) The Deputy Administrator for Program Operations has the delegated
overall Agency responsibility for developing and implementing
environmental policies and compliance procedures, monitoring their
effectiveness, and advising the Administrator on the status of
compliance, to include recommendations for any necessary changes in this
subpart. The incumbent is also responsible for developing and
documenting, as part of the Agency\'s budget formulation process, the
manpower and financial needs necessary to implement this subpart.

\(2\) The specific responsibilities of the Deputy Administrator Program
Operations are as follows:

\(i\) Provide for the Agency an interdisciplinary approach to
environmental impact analysis and problem resolution, as required by the
CEQ regulations;

\(ii\) Provide the leadership and technical expertise for the
implementation of the Agency\'s environmental policies with special
emphasis being placed on those policies relating to natural resource
management, energy conservation, and orderly community development;

\(iii\) Coordinate the implementation of this subpart with affected
program offices;

\(iv\) Provide policy direction and advice on the implementation of this
subpart to Agency staff, particularly to SECs and technical support
personnel within State Offices;

\(v\) Consult and coordinate, as needed or upon request, with the
Department\'s interagency committees dealing with environmental, land
use, and historic preservation matters;

\(vi\) Monitor the Agency\'s record in complying with this subpart;

\(vii\) Provide training programs and materials for the Agency staff
assigned the functions identified in this subpart;

\(viii\) Review, as necessary, applications for funding assistance,
proposed policies and regulations, and recommend their approval,
disapproval, or modification after analyzing and considering their
anticipated adverse environmental impacts, their benefits, and their
consistency with the requirements of this subpart;

\(ix\) Develop and direct Agency procedures for complying with
environmental legislation, Executive orders, and regulations, including,
but not limited to, those listed in §1940.301(c) of this subpart;

\(x\) Maintain a position identified as the Senior Environmental
Specialist (hereafter called the Environmental Specialist), who will
serve as the responsible Agency official under the National
Environmental Policy Act and the National Historic Preservation Act,
maintain liaison on environmental matters with interested public groups
and Federal agencies, and serve as the focal point for developing and
coordinating the Agency\'s procedures for the requirements listed in
§1940.301(c) of this subpart; and

\(xi\) Review and evaluate legislative and administrative proposals in
terms of their environmental impact.

\(c\) [Assistant Administrators for Programs]{.underline}. The Assistant
Administrators for Programs will:

\(1\) Ensure, as necessary, that environmental assessments and EISs for
proposed program regulations are prepared by their staff;

\(2\) Ensure that all proposed actions that fall under the requirements
of this subpart, and that are submitted to the National Office for
approval or concurrence, contain adequate analyses and documentation of
their potential environmental impacts (Transfer of program funds from
National Office to State Office control to enable the State Office to
approve an application is not considered to be National Office approval
of or concurrence in an application);

\(3\) Consider and include, in the development of program regulations,
feasible policies and mechanisms that promote program goals in a manner
that either enhances environmental quality or reduces unnecessary
adverse environmental impacts; and

\(4\) Designate one or more staff members to serve as a program
environmental coordinator, having generally the same duties and
responsibilities within the program office as the SEC bas within the
State Office (See §1940.307(b) of this subpart).

§1940.307 [Environmental responsibilities within the State
Office]{.underline}.

\(a\) [State Director]{.underline}. The State Director will:

\(1\) Serve as the responsible FmHA official at the State Office level
for ensuring compliance with the requirements of this Subpart; and

\(2\) Appoint one individual to serve as the SEC. Thereafter, the SEC
will report directly to the State Director on the environmental matters
contained in this Subpart.

\(b\) [State Environmental Coordinator (SEC)]{.underline}. The SEC will:

\(1\) Act as advisor to the State Director on environmental matters and
coordinate the requirements of this subpart;

\(2\) Review those Agency actions which are not categorically excluded
from this subpart (see §1940.311 and §1940.312 of this subpart) and
which require the approval and/or clearance of the State Office and
recommend to the approving official either project approval,
disapproval, or modification after analyzing and considering the

\(i\) anticipated adverse environmental impacts,

\(ii\) the anticipated benefits, and

\(iii\) the action\'s consistency with this subpart\'s requirements;

\(3\) Represent the State Director at conferences and meetings dealing
with environmental matters of a State Office nature;

\(4\) Maintain liaison on State Office environmental matters with
interested public groups and local, State, and other Federal agencies;

\(5\) Serve as the State Director\'s alternate on State-level USDA
committees dealing with environmental, land use and historic
preservation matters;

\(6\) Solicit, whenever necessary, the expert advice and assistance of
other professional staff members within the State Office in order to
adequately implement this subpart;

\(7\) Provide technical assistance as needed on a project-by-project
basis to State, District, and County Office staffs;

\(8\) Develop controls for avoiding or mitigating adverse environmental
impacts and monitor their implementation;

\(9\) Provide assistance in resolving post-approval environmental
matters at the State Office level;

\(10\) Maintain records for those actions required by this subpart;

\(11\) Coordinate for the State Director the development of the State
Office natural resource management guide;

\(12\) Provide direction and training to State, District, and County
Office staffs on the requirements of this subpart; and

\(13\) Coordinate for the State Director the monitoring of the State
Office\'s compliance with this subpart and keep the State Director
advised of the results of the monitoring process.

\(c\) [Program Chiefs]{.underline}. State Office Program Chiefs will:

\(1\) Be responsible for the adequacy of the environmental impact
reviews required by this subpart for all program actions to be approved
at the State Office level or concurred in at that level;

\(2\) Coordinate the above reviews as early as possible with the SEC, so
that the latter can assist in addressing the resolution of any
unresolved or difficult environmental issues in a timely manner; and

\(3\) Incorporate into projects and actions measures to avoid or reduce
potential adverse environmental impacts identified in environmental
reviews.

§1940.308 [Environmental responsibilities at the District and County
Office levels]{.underline}.

\(a\) The District Director will be responsible for carrying out the
actions required by this subpart to be completed at the District Office
level.

\(b\) The County Supervisor will be responsible for carrying out the
actions required by this subpart to be completed at the County Office
level.

\(c\) In discussing FmHA assistance programs with potential applicants,
District Directors and County Supervisors will inform them of the
Agency\'s environmental requirements, as well as the environmental
information needs and responsibilities that FmHA applicants are expected
to address. (See §1940.309 of this subpart.)

§1940.309 [Responsibilities of the prospective applicant]{.underline}.

\(a\) FmHA expects applicants and transferees [(and in the case of the
loan guarantee programs, borrowers and transferees)]{.underline} to
consider the potential environmental impacts of their requests at the
earliest planning stages and to develop proposals that minimize the
potential to adversely impact the environment. Prospective applicants
should contact County Supervisors or District Directors, as appropriate,
to determine FmHA\'s environmental requirements as soon as possible
after they decide to pursue FmHA financial assistance.

\(b\) As specified in paragraph (c) of this section, applicants for FmHA
assistance will be required to provide information necessary to FmHA to
evaluate their proposal\'s potential environmental impacts and
alternatives to them. For example, the applicant will be required to
provide a complete description of the project elements and the proposed

site(s) to include location maps, topographic maps, and photographs when
needed. The applicant will also be required to provide data on any
expected gaseous, liquid and solid wastes to be produced, including
hazardous wastes as defined by the Resource Conservation and Recovery
Act or State law, and all permits and/or correspondence issued by the
appropriate local, State, and Federal agencies which regulate treatment
and disposal practices.

\(c\) Form RD 1940-20, \"Request for Environmental Information,\" will
be used for obtaining environmental information from applicants whose
proposals require an environmental assessment under the requirements of
this subpart. These same applicants must notify the appropriate State
Historic Preservation Officer of the filing of the application and
provide a detailed project description as specified in Item 2 of Form RD
1940-20 and the FMI. If the applicant\'s proposal meets the definition
of a Class II action as defined in §1940.312 of this subpart, all of
Form RD 1940-20 must be completed. If the applicant\'s proposal meets
the definition of a Class I action as defined in §1940.311 of this
subpart, the entire form need not be completed, but just the face of the
form and categories (1), (2), (13), (15), (16), and (17) of Item 1b of
the FMI. As an exception to the foregoing statement, an applicant for an
action that is normally categorically excluded but requires a Class I
assessment for any of the reasons stated in §1940.317(e) of this subpart
is not required to complete Form RD 1940-20. Additionally, for Class I
actions within the Farm Programs, a site visit by the FmHA official
completing the environmental assessment obviates the need for the
applicant to complete any of the form, and the adoption by FmHA of a
Soil Conservation Service (SCS) environmental assessment or evaluation
for the action obviates the need to complete the form for either a Class
I or Class II action.

\(d\) Applicants will ensure that all required materials are current,
sufficiently detailed and complete, and are submitted directly to the
FmHA office processing the application. Incomplete materials or delayed
submittals may seriously jeopardize consideration or postponement of a
proposed action by FmHA.

\(e\) During the period of application review and processing, applicants
will not take any actions with respect to their proposed undertakings
which are the subject of the application and which would have an adverse
impact on the environment or limit the range of alternatives. This
requirement does not preclude development by applicants of preliminary
plans or designs or performance of other work necessary to support an
application for Federal, State, or local permits or assistance. However,
the development of detailed plans and specifications is discouraged when
the costs involved inhibit the realistic consideration of alternative
proposals.

\(f\) Applicants are required to provide public notification and to
fully cooperate in holding public information meetings as described in
§§1940.318(e), 1940.320(c) and (g), and 1940.331(b) and (c) of this
subpart.

\(g\) Any applicant that is directly and adversely affected by an
administrative decision made by FmHA under this subpart may appeal that
decision under the provisions of Subpart B of Part 1900 of this chapter.

§1940.310 [Categorical exclusions from National Environmental Policy Act
(NEPA) reviews]{.underline}.

\(a\) [General guidelines]{.underline}. The following actions have been
determined not to have a significant impact on the quality of the human
environment, either individually or cumulatively. They will not be
subject to environmental assessments or impact statements. It must be
emphasized that even though these actions are excluded from further
environmental reviews under NEPA, they are not excluded from either the
policy considerations contained in §§1940.303 through 1940.305 of this
subpart or from compliance with other applicable local, State, or
Federal environmental laws. Also, the actions preceded by an asterisk
(\*) are not excluded from further review depending upon whether in some
cases they would be located within, or in other cases, potentially
affect

\(1\) a floodplain,

\(2\) a wetland,

\(3\) important farmlands, or prime forestlands or rangelands,

\(4\) a listed species or critical habitat for an endangered species,

\(5\) a property that is listed on or may be eligible for listing on the
National Register of Historic Places,

\(6\) an area within an approved State coastal zone management program,

\(7\) a coastal barrier or a portion of a barrier within the Coastal
Barrier Resources System,

\(8\) a river or portion of a river included in, or designated for,
potential addition to the Wild and Scenic Rivers System,

\(9\) a sole source aquifer recharge area, or

\(10\) a State water quality standard (including designated and/or
existing beneficial uses and antidegradation requirements).

\(i\) Whether location within one of the preceding resource areas is
sufficient to require a further review or a potential impact to one of
them must also be identified to require a review is determined by
FmHA\'s completion of Form RD 1940-22 in accordance with the FMI and
§1940.317 of this subpart.

\(ii\) When the categorical exclusion classification is lost, as
specified in §1940.317 of this subpart, the action must be reviewed
under the requirements of paragraph (g) of that section. This
requirement serves to implement Section 1508.4 of the CEQ regulations
which requires Federal agencies to detect extraordinary circumstances in
which a normally excluded action may have a significant environmental
effect.

\(iii\) Further guidance on the use of these exclusions is contained in
§1940.317 of this subpart.

\(b\) [Housing assistance]{.underline}.

\(c\) [Community and business programs and nonprofit national
corporations loan and grant program]{.underline}.

\(d\) [Farm programs]{.underline}.

\(1\) Financial assistance for the purchase of an existing farm, or an
enlargement to one, provided no shifts in land use are proposed beyond
the limits stated in paragraphs (d)(10) and (11) of this section;

\(2\) Financial assistance for the purchase of livestock and essential
farm equipment, including crop storing and drying equipment, provided
such equipment is not to be used to accommodate shifts in land use
beyond the limits stated in paragraphs (d)(10) and (11) of this section;

\(3\) Financial assistance for

\(i\) the payment of annual operating expenses, which does not cover
activities specifically addressed in this section or §§1940.311 or
1940.312 of this subpart;

\(ii\) family living expenses, and

\(iii\) refinancing debts;

\*(4) Financial assistance for the construction of essential farm
dwellings and service buildings of modest design and cost, as well as
repairs and improvements to them;

\(5\) Financial assistance for onsite water supply facilities to serve a
farm dwelling, farm buildings, and livestock needs;

\(6\) Financial assistance for the installation or enlargement of
irrigation facilities, including storage reservoirs, diversion dams,
wells, pumping plants, canals, pipelines, and sprinklers designed to
irrigate less than 80 acres, provided that neither a State water quality
standard, a property listed or potentially eligible for listing on the
National Register of Historic Places, a river or portion of a river
included in, or designated for, potential addition to the Wild and
Scenic Rivers System, nor a wetland is affected. If a wetland is
affected, the application will fall under Class II as defined in
§1940.312 of this subpart. Potential effects to a water quality
standard, an historic property or the Wild and Scenic Rivers System
require that a review be initiated under a Class I assessment as
specified in §1940.317(g) of this subpart.

\(7\) Financial assistance that solely involves the replacement or
restoration of irrigation facilities, to include those facilities
described in paragraph (d)(6) of this section, with minimal change in
use, size, capacity, or location from the original facility(s) provided
that neither a State water quality standard, a property listed or
potentially eligible for listing on the National Register of Historic
Places, a river or portion of a river included in or designated for
potential addition to the Wild and Scenic Rivers System, nor a wetland
is affected. If a wetland is affected, the application will fall under
Class II as defined in §1940.312 of this subpart. Potential effects to a
water quality standard, an historic property, or the Wild and Scenic
Rivers System require that a Class I assessment be completed as
specified in §1940.317(g) of this subpart. Also, to qualify for this
exclusion, the facilities to be replaced or restored must have been used
for similar irrigation purposes at least two out of the last three
consecutive growing seasons. Otherwise, the action will be viewed as an
installation of irrigation facilities.

\(8\) Financial assistance for the development of farm ponds or lakes of
no more than 5 acres in size, provided that, neither a State water
quality standard, a property listed or potentially eligible for listing
on the National Register of Historic Places, a river or portion of a
river included in or designated for potential addition to the Wild and
Scenic Rivers System, nor a wetland is affected. If a wetland is
affected, the application will fall under Class II as defined in
§1940.312 of this subpart. Potential effects to a water quality
standard, an historic property, or the Wild and Scenic Rivers System
require that a review be initiated under a Class I assessment as
specified in §1940.317(g) of this subpart;

\*(9) Financial assistance for the conversion of

\(i\) land in agricultural production to pastures or forests, or

\(ii\) pastures to forests;

\*(10) Financial assistance for land-clearing operations of no more than
15 acres, provided no wetlands are affected, and financial assistance
for any amount of land involved in tree harvesting conducted on a
sustained yield basis and according to a Federal, State or other
governmental unit approved forestry management and marketing plan; and

\(11\) Financial assistance for the conversion of no more than 160 acres
of pasture to agricultural production, provided that in a conversion to
agricultural production no State water quality standard or wetlands are
affected. If a wetland is affected, the application will fall under
Class II as defined in §1940.312 of this subpart. If a water quality
standard would be impaired or antidegradation requirement not met, a
Class I assessment is required as specified in §1940.317 (g) of this
subpart.

\(e\) [General exclusions]{.underline}.

\(1\) The award of financial assistance for planning purposes,
management and feasibility studies, or environmental impact analyses;

\(2\) For actions other than those covered by Exhibit M of this subpart,
loan-closing and servicing activities, transfers, assumptions,
subordinations, construction management activities and amendments and
revisions to approved projects, including the provision of additional
financial assistance that do not alter the purpose, operation, location,
or design of the project as originally approved;

\(3\) The issuance of regulations and instructions, as well as
amendments to them, describing administrative and financial procedures
for processing, approving, and implementing the Agency\'s financial
assistance programs;

\(4\) Procurement activities for goods and services, routine facility
operations, personnel actions, and other such management activities
related to the operation of the Agency;

\(5\) Reduction in force or employee transfers resulting from workload
adjustments, reduced personnel or funding levels, skill imbalances, or
other similar circumstances; and

\*(6) The lease or disposal of real property by FmHA whenever the
transaction is either not controversial for environmental reasons or
will not result in a change in use of the real property within the
reasonably foreseeable future.

§1940.311 [Environmental assessments for Class I actions]{.underline}.

The Agency\'s proposals and projects that are not identified in
§1940.310 of this subpart as categorical exclusions require the
preparation of an environmental assessment in order to determine if the
proposal will have a significant impact on the environment. For purposes
of implementing NEPA, the actions listed in this section are presumed to
be major Federal actions. If an action has a potential to create a
significant environmental impact, an EIS must be prepared. (In
situations when there is clearly a potential for a significant impact,
the EIS may be initiated directly without the preparation of an
assessment.) It is recognized that many of the applications funded
annually by FmHA involve small-scale projects having limited
environmental impacts. However, because on occasion they have the
potential to create a significant impact, each must be assessed to
determine the degree of impact. The scope and level of detail of an
assessment for a small-scale action, though, need only be sufficient to
determine whether the potential impacts are substantial and further
analysis is necessary. Therefore, for the purpose of implementing NEPA,
FmHA has classified its smaller scale approval actions as Class I
actions. The format which will be used for accomplishing the
environmental assessment of a Class I action is provided in Form RD
1940-21. An important aspect of this classification method is that it
allows FmHA\'s environmental review staff to concentrate most of its
time and efforts on those actions having the potential for more serious
or complex environmental impacts. Additional guidance on the application
of NEPA to Class I actions is provided in §1940.319 of this subpart.

\(a\) Housing assistance.

\(b\) [Community and business programs and nonprofit national
corporations loan and grant program]{.underline}. Class I assessments
will be prepared for the following categories:

\(c\) [Farm Programs]{.underline}. In completing environmental
assessments for the following Class I actions and the Class II actions
listed in §1940.312(d), special attention will be given to avoiding a
duplication of effort with other Department agencies, particularly SCS.
For applications in which the applicant is receiving assistance from
other agencies, technical assistance from SCS, for example, FmHA will
request from that agency a copy of any applicable environmental review
conducted by it and will adopt that review if the requirements of
§1940.324 of this subpart are met. FmHA will work closely with the other
Federal Agencies to supplement previous or ongoing reviews whenever they
cannot be readily adopted.

\(1\) Financial assistance for the installation or enlargement of
irrigation facilities including storage reservoirs, diversion dams,
wells, pumping plants, canals, pipelines, and sprinklers designed to
irrigate at least 80 acres, but no more than 160 acres and provided that
no wetlands are affected, in which case the application will fall under
Class II as defined in §1940.312 of this subpart;

\(2\) Financial assistance for the development of farm ponds or lakes of
more than 5 acres in size, but no more than 10 acres, provided that no
wetlands are affected. If wetlands are affected, the application will
fall under Class II as defined in §1940.312 of this subpart;

\(3\) Financial assistance for land-clearing operations encompassing
over 15 acres, but no more than 35 acres, provided that no wetlands are
affected. If wetlands are affected, the application will fall under
Class II as defined in §1940.312 of this subpart;

\(4\) Financial assistance for the construction of energy producing
facilities designed for on-farm needs such as methane digestors and fuel
alcohol production facilities;

\(5\) Financial assistance for the conversion of more than 160 acres of
pasture to agricultural production, but no more than 320 acres, provided
that in a conversion to agricultural production no wetlands are
affected, in which case the application will fall under Class II as
defined in §1940.312 of this subpart;

\(6\) Financial assistance to grazing associations;

\(7\) Financial assistance for the use of a farm or portion of a farm
for recreational purposes or nonfarm enterprises utilizing no more than
10 acres, provided that no wetlands are affected. If wetlands are
affected, the application will fall under Class II as defined in
§1940.312 of this subpart; and

\(8\) Financial assistance for a livestock-holding facility or feedlot
having a capacity of at least one-half of those listed in
§1940.312(c)(9) of this subpart. (If the facility is located near a
populated area or could potentially violate a State water quality
standard, it will be treated as a Class II action as required by
§1940.312(c)(10) of this subpart.)

\(d\) [General]{.underline}.

\(1\) Any Federal action which is defined in §1940.310 of this subpart
as a categorical exclusion, but which is controversial for environmental
reasons, or which is the subject of an environmental complaint raised by
a government agency, interested group, or citizen;

\(2\) Loan-closing and servicing activities, transfers, assumptions,
subordinations, construction management activities, and amendments and
revisions to all approved actions listed either in this section or
equivalent in size or type to such actions and that alter the purpose,
operation, location or design of the project as originally approved;

\(3\) The lease or disposal of real property by FmHA which meets either
of the following criteria:

\(i\) The lease or disposal 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 to either the Class I actions defined in
this section or the categorical exclusions defined in §1940.310 of this
subpart; or

\(ii\) The lease or disposal is controversial for environmental reasons,
and the real property is equivalent in size or type to either the Class
I actions defined in this section or the categorical exclusions defined
in §1940.310 of this subpart.

§1940.312 [Environmental assessments for Class II actions]{.underline}.

Class II actions are basically those which exceed the thresholds
established for Class I actions and, consequently, have the potential
for resulting in more varied and substantial environmental impacts. A
more detailed environmental assessment is, therefore, required for Class
II actions in order to determine if the action requires an EIS. The
format that will be used for completing this assessment is included as
Exhibit H of this subpart. Further guidance on Class II actions is
contained in §1940.318 of this subpart. Class II actions are presumed to
be major Federal actions and are defined as follows:

\(a\) [Housing assistance]{.underline}.

\(b\) [Community and business programs and nonprofit national
corporations loan and grant program]{.underline}.

\(c\) [Farm programs]{.underline}. In completing environmental
assessments for the following actions, FmHA will first determine if the
applicant has sought technical assistance from the Soil Conservation
Service (SCS). If not, the applicant will be requested to do so.
Subsequently, an approved loan will be structured so as to be consistent
with any conservation plan developed with the applicant by SCS. However,
the FmHA approving official need not include an element of the
conservation plan within the loan agreement if that official determines
that the element is both nonessential to the accomplishment of the
plan\'s objectives and so costly as to prevent the borrower from being
able to repay the loan. The SCS environmental review will be adopted by
FmHA if the requirements of §1940.324 of this subpart are met.

\(1\) Financial assistance for the installation or enlargement of
irrigation facilities including storage reservoirs, diversion dams,
wells, pumping plants, canals, pipelines, and sprinklers either designed
to irrigate more than 160 acres or that would serve any amount of
acreage and affects a wetland;

\(2\) Financial assistance for the development of farm ponds or lakes
either larger than 10 acres in size or for any smaller size that would
affect a wetland;

\(3\) Financial assistance for land-clearing operations either
encompassing more than 35 acres or affecting a wetland, if less than 35
acres is involved;

\(4\) Financial assistance for the construction or enlargement of
aquaculture facilities;

\(5\) Financial assistance for the conversion of more than 320 acres of
pasture to agricultural production or for any smaller conversion of
pasture to agricultural production that affects a wetland;

\(6\) Financial assistance to an individual farmer or an association of
farmers for water control facilities such as dikes, detention
reservoirs, stream channels, and ditches;

\(7\) Financial assistance for the use of a farm or portion of a farm
for recreational purposes or nonfarm enterprises either utilizing more
than 10 acres or affecting a wetland, if less than 10 acres is involved;

\(8\) Financial assistance for alteration of a wetland;

\(9\) Financial assistance for a livestock-holding facility or feedlot
located in a sparsely populated farming area having a capacity as large
or larger than one of the following capacities; 1,000 slaughter steers
and heifers; 700 mature dairy cattle (whether milkers or dry cows);
2,500 swine; 10,000 sheep; 55,000 turkeys; 100,000 laying hens or
broilers when facility has unlimited continuous flow watering systems;
30,000 laying hens or broilers when facility has liquid manure handling
system; 500 horses; and 1,000 animal units from a combination of
slaughter steers and heifers, mature dairy cattle, swine, and sheep;
(The term \"animal unit\" means a unit of measurement for any animal
feeding operation calculated by adding the following numbers: the number
of slaughter and feeder cattle multiplied by 1.0, plus the number of
mature dairy cattle multiplied by 1.4, plus the number of swine weighing
over 25 kilograms (approximately 55 pounds) multiplied by 0.4, plus the
number of sheep multiplied by 0.1, plus the number of horses multiplied
by 2.0) and

\(10\) Financial assistance for a livestock-holding facility or feedlot
which either could potentially violate a State water quality standard or
is located near a town or collection of rural homes which could be
impacted by the facility, particularly with respect to noise, odor,
visual, or transportation impacts and having a capacity of at least
one-half of those listed in paragraph (9) of this section.

\(d\) [General]{.underline}.

\(1\) Any action which meets the numerical criteria or other restriction
for a Class I action contained in §1940.311 of this subpart, but is
controversial for environmental reasons. If the action is the subject of
isolated environmental complaints or any

questions or concerns that focus on a single impact, air quality, for
example, the analysis of such a complaint or questions can be handled
under the assessment format for a Class I action, Form RD 1940-21, as
explained in §1940.319 of this subpart. When several potential impacts
are questioned, however, the assessment format (Exhibit H of this
subpart) for a Class II action must be used to address these questions;

\(2\) Loan-closing and servicing activities, transfers, assumptions,
subordinations, construction management activities and amendments and
revisions to all approved actions listed either in this section or
equivalent in size or type to such actions and that alter the purpose,
operation, location, or design of the project as originally approved;

\(3\)

\(4\) Proposals for legislation as defined in CEQ\'s regulations,
Section 1508.17;

\(5\) The issuance of regulations and instructions, as well as
amendments to these, that describe either the entities, proposals and
activities eligible for FmHA financial assistance, or the manner in
which such proposals and activities must be located, constructed, or
implemented; and

\(6\) The lease or disposal of any real property by FmHA which either
does not meet the criteria for a categorical exclusion as stated in
§1940.310(e)(6) of this subpart or a Class I action as stated in
§1940.311(d)(3) of this subpart.

§1940.313 [Actions that normally require the preparation of an
Environmental Impact Statement (EIS)]{.underline}.

The environmental assessment process will be used, as defined in this
subpart, to identify on a case-by-case basis those actions for which the
preparation of an EIS is necessary. Given the variability of the types
and locations of actions taken by FmHA, no groups or set of actions can
be identified which in almost every case would require the preparation
of an EIS.

§1940.314 [Criteria for determining a significant environmental
impact]{.underline}.

\(a\) EISs will be done for those Class I and Class II actions that are
determined to have a significant impact on the quality of the human

environment. The criteria for determining significant impacts are
contained in Section 1508.27 of the CEQ regulations.

\(b\) In utilizing the criteria for a significant impact, the cumulative
impacts of other FmHA actions planned or recently approved in the
proposal\'s area of environmental impact, other related or similarly
located Federal actions, and non-federal related actions must be given
consideration. This is particularly relevant for frequently recurring
FmHA actions that on an individual basis may have relatively few
environmental impacts but create a potential for significant impacts on
a cumulative basis. Housing assistance is one such example.
Consequently, in reviewing proposals for subdivisions and multi-family
housing sites, consideration must be given to the cumulative impacts of
other federally assisted housing in the area, including FmHA\'s. The
boundaries of the area to be considered should be based upon such
factors as common utility or public service districts, common
watersheds, and common commuting patterns to central employment or
commercial areas. Additionally, the criteria for significant impacts
utilized by the other involved housing agency(s) (VA and HUD, for
example) must be reviewed when there is a potential for cumulative
impacts. FmHA will consult with HUD for determining a significant impact
whenever the total of HUD and FmHA housing units being planned within a
common area of environmental impact exceeds the HUD thresholds listed in
its NEPA regulations. (See 24 CFR Part 50).

\(c\) Because the environmental values and functions of floodplains and
wetlands are of critical importance to man, and because these areas are
often extremely sensitive to man-induced disturbances, actions which
affect wetlands and floodplains will be considered to have a significant
environmental impact whenever one or more of the following criteria are
met:

\(1\) The public health and safety are identifiably affected, that is,
whenever the proposed action may affect any standards promulgated under
the Safe Drinking Water Act (42 U.S.C. 300f et seq.), the Clean Water
Act (33 U.S.C. 1251 et seq.) or similar State authorities.

\(2\) The preservation of natural systems is identifiably affected, that
is, whenever the proposed action or related activities may potentially
create or induce changes in the existing habitat that may affect species
diversity and stability (both flora and fauna and over the short and
long term) or affect ecosystem productivity over the long term.

\(3\) The proposal, if located or carried out within a floodplain, poses
a greater than normal risk for flood-caused loss of life or property.
Examples of such actions include facilities which produce, use, or store
highly volatile, toxic, or water-reactive

materials or facilities which contain occupants who may not be
sufficiently mobile to avoid the loss of life or injury during flood and
storm events, (i.e., hospitals, nursing homes, schools).

§1940.315 [Timing of the environmental review process]{.underline}.

\(a\) The FmHA office to which a potential applicant would go to seek
program information and request application materials will notify the
applicant of the major environmental requirements applicable to the type
of assistance being sought. Emphasis should be placed on describing
FmHA\'s natural resource management policies, the nature and purpose of
the environmental impact assessment process, and the permissible actions
of the applicant during this process.

\(b\) When a preapplication is either filed by the applicant or required
by FmHA for a project not categorically excluded, the prospective
applicant will be requested to complete Form RD 1940-20 at the time of
the issuance of Form AD-622, \"Notice of Preapplication Review Action,\"
or other notice inviting an application. Form AD-622 will clearly inform
the applicant that during the period of application review, the
applicant is to take no actions or incur any obligations which would
either limit the range of alternatives to be considered or which would
have an adverse effect on the environment, and that satisfactory
completion of the environmental review process must occur prior to the
issuance of the letter of conditions for Community Programs and prior to
loan approval for all other programs where a preapplication is used.
FmHA must make its environmental reviews simultaneously with other loan
processing actions so that they are an integral part of the loan
process. Whenever the potential for a major adverse environmental impact
is recognized, such as issues pertaining to floodplains, wetlands,
endangered species, or the need for an EIS, priority consideration will
be given to resolving this issue by appropriate FmHA staff. Loan
processing need not cease during this resolution period, but loan
processing actions will not be taken that might limit alternatives to be
considered or whose outcome may be affected by the environmental review.
The environmental impact review (whether a categorical exclusion,
environmental assessment or EIS) must be completed prior to the issuance
of the letter of conditions for Community Programs, prior to issuance of
a conditional commitment for the Business and Industry and Farmer
Program Guaranteed Loan Programs, and either prior to loan approval or
obligation of funds, whichever occurs first, for all other programs
where a preapplication is used. As an exception, however, whenever an
application must be submitted to the National Office for concurrence or
approval, the environmental review must be completed prior to and
included in the submission to the National Office. The environmental
impact review is not completed by FmHA until all applicable public
notices and associated review periods have been completed and FmHA has
taken any necessary action(s) to

address comments received. The exception to the provisions of this
paragraph is contained in §1940.332 of this subpart.

\(c\) When a preapplication is not filed, the prospective applicant will
be required to complete Form RD 1940-20 at the earliest possible time
after FmHA is contacted for assistance but no later than when the
application is filed with the appropriate FmHA office. (For the
exception to this statement as regards Farm Programs\' Class I actions,
see §1940.309(c) of this subpart.) FmHA will not consider the
application to be complete, until FmHA staff have completed the
environmental impact review, whether an assessment or EIS.

\(d\) For those applications that meet the requirements of a categorical
exclusion, Form RD 1940-22 will be completed by FmHA as early as
possible after receipt of the application. The application will not be
considered complete until either the checklist is successfully completed
or the need for any further environmental review is identified and
completed.

§1940.316 [Responsible officials for the environmental review
process]{.underline}.

\(a\) [Approving official]{.underline}. With the exception of paragraph
(b)(2) of this section, the FmHA official responsible for executing the
environmental impact determination and environmental findings for a
Class I or Class II action will be the official having approval
authority for the action as specified in Subpart A of Part 1901 of this
chapter (available in any FmHA office).

\(b\) [State Office level]{.underline}.

\(1\) When the approval official is at the State Office level, the
responsible Program Chief will have the responsibility for preparing the
appropriate environmental review document. Whenever the Chief delegates
this responsibility in accordance with §1940.302(i) of this subpart, the
Chief is responsible for reviewing the environmental document to ensure
that it is adequate, that any deficiencies are corrected, and that it is
signed by the preparer. When the document is satisfactory to the Chief,
the Chief will sign it as the concurring official. When no delegation
occurs, the Chief will sign as the preparer. If the environmental review
document is either a Class I or Class II assessment, it must be provided
to the SEC for review prior to being submitted to the approval official
for final determinations. The SEC will review the assessment and provide
recommendations to the approval official.

\(2\) Whenever the preparer and the SEC do not concur on either the
adequacy of the assessment or the recommendations reached, the State
Director, whether or not the approving official, will make

the final decision on the matter or matters in disagreement. The State
Director will also make the final decision whenever a State Office
approving official disagrees with the joint recommendations of the
preparer and the SEC. In either case, should the State Director desire,
the matter will be forwarded to the National Office for resolution. The
Program Support Staff will coordinate its resolution with the
appropriate Assistant Administrator. Failure of these parties to resolve
the matter will require a final decision by the Administrator. The State
Director should also request the assistance of the National Office on
actions that are too difficult to analyze at the State Office level.

\(c\) [District or County Office level]{.underline}. The approval
official for the action under review will be responsible for preparing
the appropriate environmental review document and completing the
environmental findings and impact determinations for Class I and Class
II assessments, except in the circumstances outlined in paragraph (d) of
this section. Whenever the approval official delegates the preparation
of the environmental review in accordance with §1940.302(i) of this
subpart, the approval official must, after exercising the same
responsibilities assigned to the Program Chief as indicated in paragraph
(b)(l) of this section, sign the environmental review document as the
concurring official. Both District Directors and County Supervisors will
contact, as needed, the SEC for technical assistance in preparing
specific environmental review documents.

\(d\) [Multi-level review]{.underline}. When the approval official is at
the County Office or District Office level but the action must be
forwarded to the State Office for concurrence, the responsible Program
Chief will perform the responsibilities of the concurring official with
respect to the environmental review document and the SEC will review it,
if a Class I or Class II assessment, in a similar manner as indicated in
paragraph (b) of this section. Responsibilities similar to those of the
Program Chief will exist for the District Director when the County
Supervisor forwards an action to the District Office for concurrence.

\(e\) [Reservation of authority]{.underline}. The Administrator reserves
the right to request a State Director to forward to the National Office
for review and approval any action which is highly controversial for
environmental reasons, involves the potential for unique or extremely
complex environmental impacts or is of national, regional, or great
local significance. State Directors have a similar right with respect to
District and County Offices.

§1940.317 [Methods for ensuring proper implementation of categorical
exclusions]{.underline}.

\(a\) The use of categorical exclusions exempts properly defined actions
or proposals from the review requirements of NEPA. It does not exempt

proposals from the requirements of other environmental laws, regulations
or Executive orders. Each proposal must be reviewed to determine the
applicability of other environmental requirements. Extraordinary
circumstances may cause an application to lose its categorical exclusion
and require a Class I environmental assessment, as further specified in
paragraph (e) of this section. Section 1508.4 of CEQ\'s regulations
state that \"any procedures under this section will provide for
extraordinary circumstances in which a normally excluded action may have
a significant environmental effect.\" For example, an application for
approval of a subdivision of four lots is normally excluded from a NEPA
review (see §1940.310 (b)(5)of this subpart) but is not exempt from the
requirements of Executive Order 11990, \"Protection of Wetlands.\" In
the processing of this application, FmHA must determine if a wetland is
to be impacted. Assuming that the development of the proposed
subdivision site necessitates the filling of 2 acres of wetland, such a
potential wetland impact, under the requirements of §1940.310(a) of this
subpart, represents an extraordinary circumstance that causes the
application to lose its categorical exclusion. An environmental
assessment for a Class I action must then be initiated. This assessment
serves the purposes of providing for the extraordinary circumstance by
analyzing the degree of potential impact and the need for further study
as well as completing and documenting FmHA\'s compliance with the
Executive order. In this particular example, unless an alternative site
could not be readily located and the approving official wanted to
further pursue consideration of the application, the environmental
assessment would determine that there was a significant impact and an
EIS would be required. (See §1940.314 of this subpart.)

\(b\) The approving official for an action will be responsible for
ensuring that no action which requires an environmental assessment is
processed as a categorical exclusion. In order to fulfill this
responsibility, Form RD 1940-22 will be completed for those actions that
would normally be categorically excluded and as further defined in
paragraph (c) of this section. When Form RD 1940-22 must be prepared and
the approving official delegates its preparation in accordance with
§1940.302(i) of this subpart, the approving official must sign the form
as the concurring official. If that approving official must, prior to
approval, forward the action to a District or State Office for review, a
second concurrence must be executed by the Program Chief or District
Director, as determined by the level of review being conducted. The
checklist is filed with the application and serves as FmHA\'s
documentation of compliance with the environmental laws, regulations and
Executive Orders listed on the checklist. Whenever the preparer is
within the State Office or is in the National Office, the FmHA office
where the processing of the application was initiated is responsible for
providing sufficient site and project information in order to complete
the checklist.

\(c\) Form RD 1940-22 need not be completed for all categorical
exclusions as defined in §1940.310 of this subpart but only for those
listed below. This list identifies the exclusions by their subject
heading and paragraph number within §1940.310 of this subpart.
Additionally, for the housing assistance exclusion identified in
§1940.310(b)(8), for farm programs exclusions listed in §1940.310(d)(2)
and (3), and for community and business programs exclusions processed
under §1940.310(e)(2) of this subpart, a notation must be made in the
docket materials or running record for the action by the processing
official that the specific criteria of the applicable exclusion have
been met for the action under review.

\(1\) Housing assistance - (b)(1),(2),(3),(5),(7), and (9)

\(2\) Community and Business Programs - (c)(l) and (2)

\(3\) Farm Programs - (d)(l) through (11)

\(4\) General exclusions - (e)(2), if action covered by Exhibit M of the
subpart, and (6)

\(d\) In applying the definition of a categorical exclusion to a project
activity, the preparer must consider the following two elements in
addition to the specific project elements for which approval is
requested.

\(1\) If the application represents one of several phases of a larger
proposal, the application will undergo the environmental review required
for the elements or the size of the total proposal. For example, if
approval of a four-lot subdivision is requested and the application
evidences or the reviewer knows that additional phases are planned and
will culminate in a 16-lot subdivision, the categorical exclusion does
not apply and an environmental assessment for a Class I action must be
initiated and must address the impact of developing 16 lots. Should the
applicant subsequently apply for approval of any of these additional
phases, no further environmental assessment will be required as long as
the original assessment still accurately reflects the environmental
conditions found at the project site and the surrounding areas.

\(2\) If the application represents one segment of a larger project
being funded by private parties or other government agencies, the size
and elements of the entire project are used in determining the proper
level of environmental assessment to be conducted by FmHA. If an
environmental assessment is required, it will address the environmental
impacts of the entire project.

\(e\) Under any one of the following circumstances, an action that is
normally categorically excluded loses its classification as an exclusion
and must be reviewed in the manner described in paragraph (g) of this
section. The following listing corresponds to the list of land uses and
environmental resources contained in part 2 of Form RD 194022.

\(1\) Wetlands - the proposed action

\(i\) would be located adjacent to a wetland or a wetland is within the
project site and

\(ii\) the action would affect the values and functions of the wetland
by such means as converting, filling, draining, or directly discharging
into it;

\(2\) Floodplains - the proposed action

\(i\) includes or involves an existing structure(s) located within a
100-year floodplain (500-year floodplain if critical action), or

\(ii\) would be located within a 100-year floodplain (500-year
floodplain if critical action) and would affect the values and functions
of the floodplain by such means as converting, dredging, or filling or
clearing the natural vegetation;

\(3\) Wilderness (designated or proposed) - the proposed action

\(i\) would be located in a wilderness area or

\(ii\) would affect a wilderness area such as by being visible from the
wilderness area;

\(4\) Wild or Scenic River (proposed or designated or identified in the
Department of the Interior\'s nationwide Inventory) - the proposed
action

\(i\) would be located within one-quarter mile of the banks of the river

\(ii\) involves withdrawing water from the river or discharging water to
the river via a point source, or

\(iii\) would be visible from the river;

\(5\) Historical and Archaeological Sites (listed on the National
Register of Historic Places or which may be eligible for listing) - the
proposed action

\(i\) contains a historical or archaeological site within the
construction site or

\(ii\) would affect a historical or archaeological site;

\(6\) Critical Habitat or Endangered/Threatened Species (listed or
proposed) - the proposed action

\(i\) contains a critical habitat within the project site,

\(ii\) is adjacent to a critical habitat, or

\(iii\) would affect a critical habitat or endangered/threatened
species;

\(7\) Coastal Barrier Included in Coastal Barrier Resources System - the
proposed action would be located within the Coastal Barrier Resources
System;

\(8\) Natural Landmark (listed on National Registry of Natural
Landmarks) - the proposed action either

\(i\) contains a natural landmark within the project site or

\(ii\) would affect a natural landmark;

\(9\) Important Farmlands - the proposed action would convert important
farmland to a nonagricultural use(s) except when the conversion would
result from the construction of on-farm structures necessary for farm
operations;

\(10\) Prime Forest Lands - the proposed action would convert prime
forest land to another use(s), except when the conversion would result
from the construction of on-farm structures necessary for farm
operations;

\(11\) Prime Rangelands - the proposed action would convert prime
rangeland to another use(s) except when the conversion would result from
the construction of on-farm structures necessary for farm operations;

\(12\) Approved Coastal Zone Management Area - the proposed action would
be located within such area and no agreement exists with the responsible
State agency obviating the need for a consistency determination for the
type of action under consideration;

\(13\) Sole Source Aquifer Recharge Area - the proposed action would be
located within such area and no agreement exists with the

Environmental Protection Agency (EPA) obviating the need for EPA\'s
review of the type of action under consideration; and

\(14\) State Water Quality Standard - the proposed action would impair a
water quality standard, including designated and/or existing beneficial
uses, or would not meet applicable antidegradation requirements for
point or nonpoint sources.

\(f\) From the above paragraph (e), it should be noted that the location
within the project site of any of the land uses and environmental
resources identified in paragraphs (e) (1), (2), (9), (10), (11), (12),
and (13) of this section is not sufficient for an action to lose its
categorical exclusion. Rather, the land use or resource must be affected
in the case of paragraphs (e) (1), (2), (9), (10), and (11) of this
section. For paragraphs (e) (12), (13) and (14) of this section, further
review and consultation can be avoided by written agreement with the
responsible agency detailing the types of actions not requiring
interagency review.

\(g\) Whenever a categorical exclusion loses its status as an exclusion
for any of the reasons stated in paragraph (e) of this section, the
environmental impacts of the action must be reviewed through the
preparation of a Class I assessment, Form RD 1940-21. Not all of the
procedural requirements for a Class I assessment apply in this limited
case, however. The following exemptions exist:

\(1\) No public notice provisions of this subpart apply.

\(2\) The applicant does not complete Form RD 1940-20.

\(3\) The action does not require a Class II assessment should more than
one important land resource be affected.

§1940.318 [Completing environmental assessments for Class II
actions]{.underline}.

\(a\) The first step for the preparer (as defined in §§1940.302(i) and
1940.316 of this subpart) is to examine Form RD 1940-20 submitted by the
applicant to determine if it is complete, consistent, fully responsive
to the items, signed, and dated. If not, it will be returned to the
applicant with a request for necessary clarifications or additional
data.

\(b\) Once adequate data has been obtained, the assessment will be
initiated in the format and manner described in Exhibit H of this
subpart. In completing the assessment, appropriate experts from State
and Federal agencies, universities, local and private groups will be
contacted as necessary for their views. In so doing, the preparer should
communicate with these agencies or parties in the most appropriate and
expeditious manner possible, depending upon the

seriousness of the potential impacts and the need for formal
documentation. Appropriate experts must be contacted whenever required
by a specific provision of this subpart or whenever the preparer does
not have sufficient data or expertise available within FmHA to
adequately assess the degree of a potential impact or the need for
avoidance or mitigation. Comments from an expert must be obtained in
writing whenever required by a specific provision of this subpart or the
potential environmental impact is either controversial, complex, major,
or apparently major. When correspondence is exchanged, it will be
appended to the assessment. Oral discussions should be documented in the
manner indicated in Exhibit H of this subpart. On the other hand, there
is no need for the preparer to seek expert views outside of the Agency
when there is no specific requirement to do so and the preparer has
sufficient expertise available within FmHA to assess the degree of the
potential impact and the need for avoidance or mitigation.

\(c\) At the earliest possible stage in the assessment process, the
preparer will identify the Federal, State, and local parties which are
carrying out related activities, either planned or under way.
Discussions with the applicant and FmHA staff familiar with the project
area should assist in this identification effort. If there is a
potential for cumulative impacts, the preparer will consult with the
involved agencies to determine the nature, timing and results of their
environmental analysis. These consultations will be documented in the
assessment and considered or adopted when making the environmental
impact determination. (See §1940.324 of this subpart concerning adoption
of assessments.) If it is determined that the cumulative impacts are
significant, the preparer will further contact the involved Federal
agencies and attempt to determine the lead Federal Agency as discussed
in §§1940.320(b) and 1940.326 of this subpart.

\(d\) Consultations similar to those discussed in paragraph (c) of this
section will also be undertaken with those Federal and State agencies
which are directly involved in the FmHA action, either through the
provision of financial assistance or the review and approval of a
necessary plan or permit. For example, a construction permit from the
U.S. Army Corps of Engineers may be required for a project. In such an
instance, the environmental assessment cannot be completed until the
preparer has either reviewed the other Agency\'s completed environmental
analysis or consulted with the other Agency and is reasonably sure of
the scope, content, and expected environmental impact determination of
the forthcoming analysis and has so documented for the FmHA assessment
this understanding. If the other Agency believes that the project will
have a significant impact, a joint or lead impact statement will be
prepared. If the other Agency does not believe a significant impact will
occur, the preparer will consider this finding and its supporting
analysis in completing the FmHA environmental impact determination.

Guidance in adopting an environmental assessment prepared by another
Federal Agency is provided in §1940.324 of this subpart.

\(e\) For actions having a variety of complex or interrelated impacts
that are difficult for the preparer to assess, consideration should be
given to holding a public meeting in the manner described in
§1940.331(c) of this subpart. Such meetings should not be assumed as
being limited to projects for which EISs are being prepared. Such a
meeting can serve a useful purpose in better defining and identifying
complex impacts, as well as locating expertise with respect to them. The
results of a public meeting and the follow-up from it can also serve as
a valuable tool in reaching an early understanding on the potential need
for an EIS. When identified impacts are difficult to quantify (such as
odor and visual and community impacts) or controversial, a public
information meeting should be held near the project site in order to
reach a better understanding of the magnitude of the impact and the
local area\'s concern about it. Whenever held, it should be announced
and organized in the manner described in Section 1940.331(c). However, a
transcript of the meeting need not be prepared, but the preparer will
make detailed notes for incorporation in the assessment. (See
§1940.331(c) of this subpart.)

\(f\) Throughout this assessment process, the preparer will keep in mind
the criteria for determining a significant environmental impact. If at
any time in this process it is determined that a significant impact
would result, the preparer will so notify the approving official. Those
actions specified in §1940.320 of this subpart will then be initiated,
unless the approving official disagrees with the preparer\'s recommended
determination, in which case further review of the determination may be
required as explained in §1940.316 (b),(d) and (e) of this subpart. As
soon as possible after the need for an EIS is determined, the applicant
will also be advised of this in writing, as well as reinformed of the
limitations on its actions during the period that the EIS is being
completed. (See §1940.309(e) of this subpart.) The applicant\'s failure
to comply with these limitations will be considered as grounds for
postponement of further consideration of the application until such
problem is alleviated.

\(g\) Similarly, throughout the assessment process, consideration will
be given to incorporating mechanisms into the proposed action for
reducing, mitigating, or avoiding adverse impacts. Examples of such
mechanisms which are commonly referred to as mitigation measures include
the deletion, relocation, redesign or other modifications of the project
elements; the dedication of environmentally sensitive areas which would
otherwise be adversely affected by the action or its indirect impacts;
soil erosion and sedimentation plans to control runoff during
land-disturbing activities; the establishment of vegetative buffer zones
between project sites and adjacent land uses; protective measures
recommended by environmental and conservation agencies, including but
not limited to interstate, international, Federal, State, area-wide, and
local agencies having jurisdiction or special expertise regarding the
action\'s impacts; and zoning. Mitigation measures must be tailored to
fit the specific needs of the action, and they must also be practical
and enforceable. Mitigation measures which will be taken must be
documented in the assessment (Item XIX of Exhibit H of this subpart),
and include an analysis of their environmental impacts and potential
effectiveness and placed in the offer of financial assistance as special
conditions or in the implementation requirements when the action does
not involve financial assistance. These measures will be consistent with
the basic goal of the proposed action and developed in consultation with
the appropriate program office.

\(h\) As part of the assessment process, the preparer will initiate the
consultation and compliance requirements for the environmental laws,
regulations, and Executive orders specified in the assessment format.
The assessment cannot be completed until compliance with these laws and
regulations is appropriately documented. The project\'s failure to meet
the requirements specified in Item 10b of Form RD 1940-21 for a Class I
action and Item XXIb of Exhibit H of this subpart for a Class II action
will result in postponement of further consideration of the application
until such problem is alleviated.

\(i\) When the preparer has completed the assessment, the related
materials and correspondence utilized will be attached. The preparer
will then either recommend to the approving official that the action has
the potential for significantly affecting the quality of the human
environment or will recommend that the action does not have this
potential and, therefore, the preparation of an EIS is not necessary.
(Item 10a of Form RD 1940-21 for Class I action and item XXla of Exhibit
H of this subpart for a Class II action.) The recommended environmental
findings will also be completed. (Item 10b of Form RD 1940-21 for a
Class I action and Item XXIb of Exhibit H of this subpart for a Class II
action.) In those instances specified in §1940.316, the assessment will
then be forwarded to the concurring official and, as required, to the
SEC for review. The concurring official will coordinate, as necessary,
with the preparer any questions, concerns or clarifications and complete
and document the review prior to the assessment being submitted to the
approving official or the SEC. The SEC will coordinate with the
concurring official in a similar fashion whenever the latter\'s review
is required.

\(j\) The approving official will review the environmental file and
recommendations. The official will then execute the environmental impact
determination and findings. If the conclusions reached are that there is
no significant impact and there is compliance with the listed
requirements, the format contained in Exhibit I of this subpart will be
used. If a significant impact is determined, the steps specified in

§1940.320 of this subpart will be initiated for the preparation of the
EIS. If a determination is made that the proposed action does not comply
with the environmental requirements that are explained in this subpart
and listed in Item 10b of Form RD 1940-21 for a Class I action or Item
XXlb of Exhibit H of this subpart for a Class II action and there are no
feasible alternatives (practicable alternatives when required by
specific provisions of this subpart), modifications, or mitigation
measures which could comply, the action will be denied or disapproved.
If the approving official\'s determination or findings differ from the
recommendations of the preparer, concurring official or the SEC, this
difference will be addressed in the manner specified in §1940.316 of
this subpart.

\(k\) When there is no need for further review as discussed in paragraph
(j) of this section and findings of compliance and a determination of no
significant impact are reached, the assessment process is conditionally
concluded. To conclude the assessment, the applicant will then be
requested to provide public notification of these results as indicated
in §1940.331(b)(3) of this subpart. The approving official will not
approve the pending application for at least 15 days from the date the
notification is last published. If comments are received as a result of
the notification, they will be included in the environmental assessment
and considered. Any necessary changes resulting from this consideration
will be made in the assessment, impact determinations, and findings. If
the changes require further implementation steps, such as the
preparation of an EIS, they will be undertaken. If there are no changes
in the findings and determinations, the approving official may continue
to process the application. The environmental documents, i.e., the
assessment, related correspondence, Form RD 1940-20, and the finding of
no significant impact will be included with the approval documents which
are assembled for review and clearance within the approving office.

\(l\) Whenever changes are made to an action or comments or new or
changed information relating to the action\'s potential environmental
effects is received after the assessment is completed but prior to the
action\'s approval, such change, comment, or information will be
evaluated by the approving official to determine the impact on the
completed assessment. Whenever the contents or findings of that
assessment are affected, the assessment process for that action will be
revised and any other related requirement of this subpart met. Changes
to an action in terms of its location(s), design, purpose, or operation
will normally require, at a minimum, modification of the original
assessment to reflect such change(s) and the associated environmental
impacts.

\(m\) When comments are received after the action has been approved, the
approving official will consider the environmental importance of the
comments and the necessity and ability to amend both the action, with

respect to the issue raised and the action\'s stage of implementation.
The National Office may be consulted to assist in determining whether
there are any remaining environmental requirements which need to be met
under the specific circumstances. A similar procedure will be followed
when new or changed information is received after project approval.
Amendments and revisions to actions will be handled as specified in
§§1940.310 through 1940.313 of this subpart.

§1940.319 [Completing environmental assessments for Class I
actions]{.underline}.

\(a\) As stated in this subpart, a main purpose of Form RD 1940-21, is
to provide a mechanism for reviewing actions with normally minimal
impacts and for documenting a finding of no significant impact, as well
as compliance determinations for other applicable environmental laws,
regulations and policies. The second major purpose is to serve as a
screening tool for identifying those Class I actions which have more
than minimal impacts and which, therefore, require a more detailed
environmental review.

\(b\) The approach to reviewing a Class I action under the assessment
format of Form RD 1940-21 is exactly the same as for a Class II action.
The preparer (as defined in §§1940.302(i) and 1940.316 of this subpart)
must become familiar with the elements of the action, the nature of the
environment to be affected, the relationship to any other Federal
actions or related nonfederal actions, and the applicable environmental
laws and regulations.

\(c\) The data submission requirements placed on the applicant for a
Class I action are not as extensive as for a Class II action. The
requirements are limited to completing the face of Form RD 1940-20, as
well as categories (1), (2), (13), (15), (16), and (17) of Item 1b of
the FMI, whenever a previously completed environmental analysis covering
these categories is not available. Should it later be determined that
the magnitude of the Class I action\'s impact warrants a more detailed
assessment, the applicant will be required to submit the remaining items
of the data request. Additionally, the circumstances under which FmHA
does not require the submission of Form RD 1940-20 by an applicant whose
proposed action requires a Class I assessment are specified in
§1940.317(f) of this subpart.

\(d\) The preparer must ensure that the data received from the applicant
is complete, consistent, signed and dated before initiating the
assessment. If it is not, the applicant will be required to make the
necessary changes and clarifications. The reviewer must also ensure that
the application properly meets the definition of a Class I action.
Phased or segmented projects, as discussed in §1940.317(d) of this
subpart, will be identified and the elements and the size of the entire
project used to classify the action.

\(e\) An important element of this assessment is to determine if the
action affects an environmental resource which is the subject of a
special Federal consultation or coordination requirement. Such resources
are listed in the assessment format, Form RD 1940-21, and include
wetlands, floodplains, and historic properties, for example. If one of
the listed resources is to be affected, the preparer must demonstrate
the required compliance by accomplishing the review and coordination
requirements for that resource. Documentation of the steps taken and
coordination achieved will be attached. However, if more than one listed
resource is to be affected, this will be viewed as the action having
more than minimal impacts and the environmental assessment format for a
Class II action will be initiated except if the action under review is
an application for a Housing Preservation Grant.

\(f\) Similarly in completing item 3, General Impacts of Form RD
1940-21, the assessment format for a Class II action must be initiated
if more than one category of impacts cannot be checked as minimal. If
there is a single category which needs analysis, this can be
accomplished by attaching an appropriate exhibit addressing the
questions and issues for that impact, as specified in the environmental
assessment format for a Class II action. See §1940.311(b)(l) of this
subpart for when an attached discussion of water quality impacts is
mandatory.

\(g\) The comments of State, regional, and local agencies obtained
through applicable permit reviews or the implementation of Executive
Order 12372, Intergovernmental Review of Federal Programs, will be
incorporated into the assessment, if this review applies to the action.
The receipt of negative comments of an environmental nature will warrant
the initiation of a more detailed assessment under the format for a
Class II action (Exhibit H of this subpart). Also, the issue of
controversy must be addressed, and if the action is controversial for
environmental reasons, the environmental assessment format for a Class
II action (Exhibit H of this subpart) will be completed. However, if the
action is the subject of isolated environmental complaints or any
questions or concerns that focus on a single impact, air quality, for
example, the analysis of such complaints or questions can be handled
under the assessment format for a Class I action. This analysis will
then be provided by the approving official to the party or parties which
raised the matter with FmHA. When several potential impacts are
questioned, however, the more detailed assessment format will be
accomplished to address these questions.

\(h\) The potential cumulative impacts of this action, particularly as
it relates to other FmHA actions recently approved in the area or
planned, will be analyzed. If the cumulative impact is not minimal and,
for example, cumulatively exceeds the criteria and thresholds discussed
in paragraphs (e), (f) and (g) of this section, the environmental
assessment format for a Class II action will be completed. The actions
of other Federal agencies and related nonfederal actions must also be
assessed on this basis. When there is a Federal action involved, the
environmental review conducted by that Agency will be requested and, if
it sufficiently addresses the cumulative impact, can be utilized by the
preparer as the FmHA assessment, assuming the impacts are not
significant. (See §1940.324 of this subpart.) If the other Agency is
doing or planning an EIS, the preparer will inform that Agency of our
action and request to be a cooperating agency.

\(i\) The preparer will have the responsibility of initiating the
assessment format for a Class II action (Exhibit H of this subpart)
whenever the need is identified. This should be done as early as
possible in the review process. The preparer should not complete the
assessment for a Class I action when it is obvious that the assessment
format for a Class II action will be needed. The preparer will simply
start the more detailed assessment and inform the applicant of the
additional data requirements.

\(j\) Exhibit I will be completed by the approval official in the same
instances for a Class I assessment as for a Class II assessment.
However, public notification of FmHA\'s finding of no significant
environmental impact will not be required for a Class I assessment.
Also, special provisions for completing a Class I assessment for an
action that is normally categorically excluded but loses its
classification as an exclusion are contained in §1940.317(g) of this
subpart. With the exception of the two preceding sentences, all other
procedural requirements of the assessment process, such as the timing of
the assessment and the limitations on the applicant\'s actions, apply to
a Class I assessment.

§1940.320 [Preparing EISs]{.underline}.

\(a\) [Responsibility]{.underline}. Whenever the District Director or
County Supervisor determines there is a need to prepare an EIS, the
State Director will be notified. The EIS will be prepared at the State
Office and the State Director will assume the responsibility for
preparing it. The State will in turn notify the Administrator of these
EISs, as well as those needed EISs identified by a State Office review.
EISs will be prepared according to this section. The State Director will
be responsible for actions initiated within the State. However, in so
doing, the State Director will consult with the National Office to
determine that the document meets the requirements of NEPA. State
Directors will be responsible for issuing such EISs. However, unless
delegated authority by the Administrator, based upon a demonstrated
capability and experience in preparing EISs, the State Director will not
issue the EIS until reviewed and approved by the Administrator.

\(b\) [Organizing the EIS process]{.underline}. Prior to initiating the
scoping process outlined below, the preparer of the EIS will take
several organizational steps to ensure that the EIS is properly
coordinated and completed as efficiently as possible. To accomplish
this, the below-listed parties need to be identified in advance; the
list should be expanded as familiarity with the project increases. Those
parties falling within the first four groups should be formally
requested to serve as cooperating agencies. If any of these agencies
appear to be a more appropriate lead agency than FmHA (using the
criteria contained in section 1501.5(c) of the CEQ regulations),
consultations should be initiated with that agency to determine the lead
agency. If difficulties arise in completing this determination, the
National Office will be consulted for assistance. All of the parties
identified below will be sent a copy of the notice of intent to prepare
the EIS and an invitation to the scoping meeting, as discussed in
paragraph (c) of this section.

\(1\) All Federal and State agencies that are being requested to provide
financial assistance for the project or related projects;

\(2\) All Federal agencies that must provide a permit for the project
should it be approved;

\(3\) All Federal agencies that have a specific environmental expertise
in major environmental issues identified to date;

\(4\) The Agency responsible for the implementation of the State\'s
environmental impact analysis requirement, if one has been enacted or
promulgated by the State;

\(5\) All Federal, State, and local agencies that will be requested to
comment on the draft EIS;

\(6\) All individuals and organizations that have expressed an interest
in the project; and

\(7\) National, regional, or local environmental organizations whose
particular area of interest corresponds to the major impacts identified
to date.

\(c\) [Scoping process]{.underline}. As soon as possible after a
decision has been made to prepare an EIS, the following process will be
initiated by the preparer for identifying the major issues to be
addressed in the EIS and for developing a coordinated government
approach to the preparation and review of the EIS.

\(1\) The first step in this process will be the publication of a notice
of intent to prepare the EIS. The notice will indicate that an EIS will
be prepared and will briefly describe the proposed action and possible
alternatives; state the name, address, and phone number of the preparer,
indicating that this person can answer questions about the proposed
action and the EIS; list any cooperating agencies, and include the date
and time of the scoping meeting. If the latter information is not known
at the time the notice of intent is prepared, it will be incorporated
into a special notice, when available, and published and distributed in
the same manner as the notice of intent. It will be the responsibility
of the preparer of the EIS to inform the National Office of the need to
publish a notice of intent which will coordinate the publication of the
notice in the Federal Register. For requirements relating to the timing
and publication of the notice of intent within the project area, as well
as the applicant\'s responsibilities for the notice, see §1940.331(b) of
this subpart.

\(2\) A scoping meeting will be held. To the extent possible, the
scoping meeting should be integrated with any other early planning
meetings of the Agency or other involved agencies. The scoping meeting
will be chaired by the preparer of the EIS and will be organized to
accomplish the following major purposes (as well as other purposes
listed in Part 1501.7 of the CEQ regulations).

\(i\) Invite the participation of affected Federal, State, and local
agencies, any affected Indian Tribe, the proponent of the action, and
any interested parties including those who may disagree with the action
for environmental reasons;

\(ii\) Determine the scope and the significant issues to be analyzed in
depth in the EIS;

\(iii\) Identify and eliminate, from detailed study, the issues which
are not significant or which have been covered by prior environmental
review, narrowing the discussion of these issues in the statement to a
brief presentation of why they will not have a significant effect on the
human environment or providing a reference to their coverage elsewhere;

\(iv\) Allocate assignments for preparation of the EIS among the lead
and cooperating agencies, with the lead Agency retaining responsibility
for the statement;

\(v\) Indicate any public environmental assessments and other EISs which
are being or will be prepared that are related to, but are not part of,
the scope of the impact statement under consideration;

\(vi\) Identify other environmental review and consultation requirements
so the lead and cooperating agencies may prepare

other required analyses and studies concurrently with, and integrated
with, the environmental impact statement; and

\(vii\) Indicate the relationship between the timing of the preparation
of environmental analyses and the Agency\'s tentative planning and
decisionmaking schedule;

\(3\) Minutes of the scoping meeting, including the major points
discussed and decisions made, will be prepared and retained by the
preparer of the EIS as part of the environmental file. The preparer will
offer, during the scoping meeting, to send copies of the minutes to any
interested party upon written request.

\(d\) [Interdisciplinary approach]{.underline}. The EIS will be prepared
using an interdisciplinary approach that will ensure the integrated use
of the natural and social sciences and the environmental design arts.
The disciplines of the preparers will be appropriate to address the
potential environmental impact associated with the project. This can be
accomplished both in the information collection stage and the analysis
stage by communication and coordination with environmental experts at
local, State and Federal agencies (particularly cooperating agencies)
and universities near the project site. When needed information or
expertise is not readily available, these needs should be met through
procurement contracts with qualified consulting firms. Consulting firms
can be utilized to prepare the entire EIS or portions of it as specified
in §1940.336 of this subpart.

\(e\) [Content and format of EIS]{.underline}. The EIS will be prepared
in the format and manner described in Part 1502 of the CEQ regulations.
There is a great deal of specific guidance in that Part which will not
be repeated here.

\(f\) [Circulation of the EIS]{.underline}. FmHA will circulate for
review and comment the draft and final EIS as broadly as possible.
Therefore, it will be necessary for the preparer to have sufficient
copies printed or reproduced for this purpose. In identifying the
parties to receive a draft EIS, the same process should be utilized as
is employed for inviting participants to the scoping meeting. (See
paragraph (b) of this section.) Special emphasis should be given to
transmitting the draft to those agencies with jurisdiction or expertise
on the proposed action\'s major impacts, as well as those parties who
have expressed an interest in the action. The final EIS will be provided
to all parties that commented on the draft EIS.

\(g\) [Filing of the EIS]{.underline}. The Deputy Administrator for
Program Operations or any State Director that has been delegated the
authority to prepare an EIS must file the EIS with EPA in accordance
with Part 1506.9 of the CEQ regulations. The official filing date for an
EIS is the day that it is received by EPA\'s Office of Federal
Activities.

Filing of the EIS cannot occur until copies of the EIS have been
transmitted to commenting agencies and made available to the public.
Transmittal of the EIS must, therefore, occur either prior to its being
filed with EPA (received by EPA) or no later than close of business of
the same day that it is filed.

\(h\) [Public information meetings]{.underline}. A public information
meeting, as specified in §1940.331(c)(l) of this subpart, will be held
near the project site to discuss and receive comments on the draft EIS.

\(i\) [Response to comments]{.underline}. The preparer of the EIS will
respond to comments on the draft EIS as required by part 1503.4 of the
CEQ regulations. The major and most frequently raised issues during the
public information meeting will also be identified and addressed.

\(j\) [Timing of review]{.underline}. The preparer of the EIS will be
responsible for ensuring that the timing requirements for FmHA actions
and the review periods for draft and final EISs are fully met (Part
1506.10 of CEQ regulations). Prescribed review periods are calculated
from the date that EPA\'s Office of Federal activities publishes in the
Federal Register a notice of availability for the EIS. Any request to
reduce a prescribed review period will be made to EPA in accordance with
Part 1506.10(d) of the CEQ regulations.

§1940.321 [Use of completed EIS]{.underline}.

\(a\) The final EIS will be a major factor in the Agency\'s final
decision. Agency staff making recommendations on the action and the
approving official will be familiar with the contents of the EIS and its
conclusions and will consider these in formulating their respective
positions with respect to the action. The final EIS and all comments
received on the draft will accompany the proposal through the FmHA final
clearance process. The alternatives considered by the approving official
will be those addressed in the final EIS.

\(b\) As part of this review process, the preparer of the EIS will
complete the recommendations listed in Item XXIb and c of Exhibit H of
this subpart and provide them to the approving official prior to a final
decision.

§1940.322 [Record of decision]{.underline}.

Upon completion of the EIS and its review within FmHA and before any
action is taken on the decision reached on the proposal, the approving
official will prepare, in consultation with the preparer of the EIS, a
concise record of the decision which will be available for public
review. The record will:

\(a\) State the decision reached;

\(b\) Certify that the timing requirements for the EIS process have been
fully met;

\(c\) Identify all alternatives considered in reaching the decision
specifying the alternative or alternatives that were considered to be
environmentally preferable and discuss the relevant factors
(environmental, economic, technical, statutory mission and, if
applicable, national policy) that were considered in the decision;

\(d\) State whether all practicable means to avoid or minimize
environmental harm from the alternative selected have been adopted, and
if not, why not; and

\(e\) If any mitigation measures have been adopted, specify the
monitoring and enforcement program that will be utilized.

§1940.323 [Preparing supplements to EIS\'s]{.underline}.

\(a\) Either the State Office or the National Office, as appropriate,
will prepare supplements to either draft or final EIS\'s if:

\(1\) A substantial change or changes occur in the proposed action and
such changes are relevant to the environmental impacts previously
presented; and

\(2\) Significant new circumstances or information arise which are
relevant to environmental concerns and bear on the proposed action or
its impacts.

\(b\) If the preparer of the draft or final EIS determines that the
changes or new circumstances referenced in paragraph (a) of this section
do not require the preparation of a supplemental EIS, the preparer will
complete an environmental assessment for a Class II action which will
document the reasons for this determination.

\(c\) The preparer will be responsible for advising the approving
official of the need for a supplement. The latter will make the
Agency\'s formal determination in a manner consistent with §1940.316 of
this subpart.

\(d\) All of the requirements of this subpart that apply to the
completion of an initial EIS apply to the completion of a supplement
with the exception of the scoping process, which is optional.
Additionally, if the approving official believes that there is a need
for expedited or special procedures in the completion of a supplement,
the approval of CEQ must first be obtained by the Administrator for any
alternative procedures. The final supplement will be included in the
project file or docket and used in the Agency\'s decisionmaking process

in the same manner as a final EIS. (See §1940.321 of this subpart and in
particular subparagraphs (f), (g), and (j) of that Section as well as
Part 1502.9(c)(4) of the CEQ regulations for associated circulation,
filing, and timing requirements.)

§1940.324 [Adopting of EIS or environmental assessment prepared by other
Federal Agency]{.underline}.

\(a\) FmHA may adopt an EIS or portion thereof prepared by another
Federal Agency after completion if:

\(1\) An independent review of the document is conducted by the preparer
of the FmHA environmental review and it is concluded that the document
meets the requirements of this subpart; and

\(2\) If the actions covered in the EIS are substantially the same as
those proposed by FmHA and the environmental conditions in the project
area have not substantially changed since its publication, FmHA will
recalculate the EIS as a \"final\" and so notify the public as specified
in Section 1940.331(b) of this subpart. The final EIS will contain an
appropriate explanation of the FmHA involvement and will be sent to all
parties who would typically receive a draft EIS published by FmHA. If
there are differences between the actions or the environmental
conditions as discussed in the original EIS, that EIS will be updated to
cover these differences and recalculated as a draft EIS with the public
so notified. From that point, it will be reviewed and processed in the
same manner as any other FmHA EIS. For circulation, filing, and timing
requirements, see subparagraphs (f), (g), and (j) of Section 1940.320 of
this subpart as well as Parts 1506.3(c), 1506.9, and 1506.10 of the CEQ
regulations.

\(b\) If the adopted EIS is not final within the agency that prepared
it, or if the action it assesses is the subject of a referral under Part
1504 of the CEQ regulations, or if the statement\'s adequacy is the
subject of a judicial action which is not final, FmHA must so specify
and provide an explanation in the recalculated EIS.

\(c\) After recalculation (whether as a draft or final), the EIS will be
reviewed and processed in the same manner as any other FmHA EIS.

> \(d\) FmHA may also adopt all or part of environmental assessments or
> environmental reviews prepared by other Federal agencies. In this
> case, only paragraph (a)(l) of this section applies. If the
> requirements of that paragraph can be met except for the fact that the
> Federal agency whose assessment is to be adopted has no preliminary
> public notice requirements similar to FmHA\'s (See §1940.331(b)(4) of
> this subpart), the assessment can be adopted without FmHA publishing a
> preliminary public notice. Additionally, when all of another
> Federalagency\'s assessment is adopted, without supplementation, for a
> Class II action and a finding of no significant environmental impact
> (Exhibit I of this subpart) is reached by the proper FmHA official, no
> public notification of FmHA\'s finding of no significant environmental
> impact is required if:

\(1\) The other Federal agency or its designee published a similar
finding in a newspaper of general circulation in the vicinity of the
proposed action;

\(2\) The other Federal agency\'s or its designee\'s public notice
clearly described the action subject to the FmHA environmental review;
and

\(3\) The other Federal agency\'s or its designee\'s public notice was
published less than eighteen months from the date FmHA adopted the
assessment.

§1940.325 [FmHA as a cooperating Agency]{.underline}.

\(a\) FmHA will serve as a cooperating Agency when requested to do so by
the lead Agency for an action in which FmHA is directly involved or for
an action which is directly related to a proposed FmHA action. An
example of the latter would be a request from EPA to participate in an
EIS covering its sewage treatment plans for a community, as well as the
community\'s water system plans pending before FmHA. A memorandum of
understanding or other written correspondence will be developed with the
lead agency in order to define FmHA\'s role as the cooperating agency.
The State Director will coordinate FmHA\'s participation as a
cooperating Agency for an action at the State Office level. The
Administrator will have the same responsibility at the National Office
level.

\(b\) When requested to be a cooperating Agency on a basis other than
that discussed above, the State Director will consider the expertise
which FmHA could add to the particular EIS process in question and
existing workload commitments. If a decision is made on either of these
two bases not to participate as a cooperating Agency, a copy of the
letter signed by the State Director or Administrator and so informing
the lead Agency will be sent to CEQ.

\(c\) As a cooperating Agency, FmHA will participate in the development
and implementation of the scoping process. If requested by the lead
Agency, provide the lead Agency with staff support and descriptive
materials with respect to the analyses of the FmHA portion of the
action(s) to be covered, review and comment on all preliminary draft
materials prior to their circulation for public review and comment, and
attend and participate in public meetings called by the lead Agency
concerning the EIS.

\(d\) The State Director will request the lead Agency to fully identify
the Agency\'s involvement in all public documents and notifications.

\(e\) FmHA will use the EIS as its own as long as FmHA\'s comments and
concerns are adequately addressed by the lead Agency and the final EIS
is considered to meet the requirements of this subpart. It will be the
responsibility of the preparer of the FmHA environmental review document
to formally advise the approving official on these two points. The
failure of the lead Agency\'s EIS to meet either of these stipulations
will require FmHA to follow the steps outlined in §1940.324 of this
subpart prior to the approving official\'s decision on the FmHA action.

§1940.326 [FmHA as a lead Agency]{.underline}.

\(a\) When other Federal agencies are involved in an FmHA action or
related actions that require the preparation of an EIS, the preparer
will consult with these agencies to determine a lead Agency for
preparing the EIS. The criteria for making this determination will be
those contained in Part 1505.5 of the CEQ regulations. If there is a
failure to reach a determination within a reasonably short time after
consultation is initiated, the National Office will be contacted. The
assistance of CEQ will then be requested by the Administrator in order
to conclude the determination of a lead Agency.

\(b\) When acting as lead Agency, the FmHA preparer will request other
Federal and State agencies to serve as cooperating agencies on the basis
of the guidance provided in §1940.320(b) of this subpart. A memorandum
of understanding or other written correspondence should be developed
with a cooperating agency in order to define that agency\'s role in the
preparation of the EIS.

§1940.327 [Tiering]{.underline}.

To the extent possible, FmHA may consider the concept of tiering in the
preparation of environmental assessments and EISs. Tiering refers to the
coverage of general matters in broader environmental impact statements,
such as one done for a national program or regulation, with subsequent
narrower statements or environmental analyses incorporating by reference
the broader matters and concentrating on the issues specific to the
action under consideration. Tiering can be used when the sequence of
analysis is from the program level to site-specific actions taken under
that program or from an initial EIS to a supplement which discusses the
issues requiring supplementation.

§1940.328 [State Environmental Policy Acts]{.underline}.

\(a\) Numerous States have enacted environmental policy acts or
regulations similar to NEPA, hereafter referred to as State NEPA\'s. It
is important that FmHA staff have an understanding of which States have
such requirements and how they apply to applicant\'s proposals. It will
be the responsibility of each State Director to determine the applicable
State requirements and to establish a working relationship with the
State personnel responsible for their implementation.

\(b\) In processing projects located within States having State NEPA\'s,
the preparer of the FmHA assessment will determine as early as possible
in the assessment process whether the project falls under the
requirements of the State NEPA. If it does, one of the following cases
will exist and the appropriate actions specified will be taken.

\(1\) The applicant has complied with the State\'s NEPA, and it was
determined under the State\'s requirements that the proposed project
would not result in sufficient potential impacts to warrant the
preparation of an impact statement or other detailed environmental
report required by the State NEPA. This finding or conclusion by the
State will be considered in the FmHA\'s review, and any supporting
information used by the State will be requested. However, the State\'s
finding can never be the total basis for FmHA\'s environmental impact
determination. An independent and thorough review in accordance with the
requirements of this subpart must be conducted by the preparer.

\(2\) The applicant has complied with the State NEPA, and it was
determined under its implementing guidelines that a significant impact
will result. This fact will be given great weight in the Agency\'s
environmental determination. However, the State\'s definition of
significant environmental impact may encompass a much lower threshold of
impacts compared to FmHA\'s. In such a case, if the preparer does not
believe that a significant impact will result under Agency guidelines
for determining significant impacts, the environmental assessment will
be prepared and include a detailed discussion with supporting
information as to why the environmental reviewer\'s recommendation
differs from that of the State\'s. However, the assessment cannot be
completed until the State\'s impact statement requirements have been
fulfilled by the applicant and the resulting impact statement has been
reviewed by the preparer. An environmental impact determination will
then be executed based upon the assessment and the statement.

\(c\) It should be emphasized that at no time does the completion of an
impact statement under the requirements of a State NEPA obviate the
requirement for FmHA to prepare an impact statement. Consequently, as
soon as it is clear to the preparer that the Agency will have to prepare
a statement, every attempt should be made to accomplish the statement
simultaneously with the State\'s. Coordination with State personnel is
necessary so that data and expertise can be shared. In this manner,
duplication of effort and the review periods for the separate statements
can be minimized. This process clearly requires a close working
relationship with the appropriate State personnel.

§1940.329 [Commenting on other Agencies\' EIS\'s]{.underline}.

\(a\) State Directors are authorized to comment directly on EIS\'s
prepared by other Federal agencies. In so doing, comments should be as
specific as possible. Any recommendations for the development of
additional information or analyses should indicate why there is a need
for the material.

\(b\) Comments should concentrate on those matters of primary importance
to FmHA and on areas of Agency expertise, such as rural planning and
development. Any potential conflicts with FmHA programs, plans, or
actions should be clearly identified. Special attention should be given
to the relationship of the alternatives under study to the State
Office\'s natural resource management guide and the objectives of the
Department\'s land use regulation (Exhibit A of this subpart). Copies of
comments addressing land use questions will be provided to the
appropriate chairman of the USDA State-level committee dealing with land
use matters.

\(c\) Whenever a State Director has serious concerns over the
acceptability of the anticipated environmental impacts, the State
Director will notify the Administrator.

§1940.330 [Monitoring]{.underline}.

\(a\) FmHA staff who normally have responsibility for the post approval
inspection and monitoring of approved projects will ensure that those
measures which were identified in the preapproval stage and required to
be undertaken in order to reduce adverse environmental impacts are
effectively implemented.

\(b\) This staff, as identified in paragraph (a) of this section, will
review the action\'s approval documents and consult with the preparer of
the action\'s environmental review document prior to making site visits
or requesting project status reports in order to determine if there are
environmental requirements to be monitored.

\(c\) The preparer will directly monitor actions containing difficult or
complex environmental special conditions.

\(d\) Before certifying that conditions contained within offers of
financial assistance have been fully met, the responsible monitoring
staff will obtain the position of the preparer for those conditions
developed as a result of the environmental review.

\(e\) Whenever noncompliance with an environmental special condition is
detected by FmHA staff, the preparer and the SEC will be immediately
informed. The approving official will then take appropriate steps, in
consultation with the responsible program office, the SEC and preparer,
to bring the action into compliance.

§1940.331 [Public involvement]{.underline}.

\(a\) [Objective]{.underline}. The basic objective of FmHA\'s public
involvement process is threefold. It is to ensure that interested
citizens can readily obtain knowledge of the environmental review status
of FmHA\'s funding applications, have the opportunity to input into this
review process before decisions are made, and have access to the
environmental documents supporting FmHA decisions.

\(b\) [Public notice requirements]{.underline}.

\(1\) For projects that undergo the preparation of an environmental
impact statement, the first element of formal public participation in
the EIS process involves the publication of the notice of intent to
prepare an EIS. The content of the notice of intent and its publication
by FmHA in the Federal Register are explained in §1940.320 of this
subpart. With respect to notification within the project area, the
applicant will be requested to publish a copy of the notice of intent
and the date of the scoping meeting in the newspaper of general
circulation in the vicinity of the proposed action and in any local or
community-oriented newspapers within the proposed action\'s area of
environmental impact. The notice will be published in easily readable
type in the nonlegal section of the newspaper(s). It will also be
bilingual if the affected area is largely non-English speaking or
bilingual. Individual copies of the notice will be sent by the applicant
to the appropriate regional EPA office, any State and regional review
agencies established under Executive Order 12372; the State Historic
Preservation Officer; local radio stations and other news media; any
State or Federal agencies planning to provide financial assistance to
this or related actions or required to review permit applications for
this action, any potentially affected Indian Tribe; any individuals,
groups, local, State, and Federal agencies known to be interested in the
project; affected property owners; and to any other parties that FmHA
has identified to be so notified. It will also be posted at a readable
location on the project site. The applicant will provide FmHA with a
copy of the notice as it appeared in the newspaper(s), the date(s)
published, and a list of all parties receiving an individual notice.

Publication and individual transmittal of the notice for the scoping
meeting will be accomplished at least 14 days prior to the date of the
meeting.

\(2\) Coincident with the distribution of either a draft or final EIS, a
notice of the statement\'s availability will be published within the
project area in the same manner as a notice of intent to prepare an EIS.
FmHA will request EPA to publish in the Federal Register a notice of the
statement\'s availability in accordance with EPA\'s requirements and
pursuant to Part 1506.10 of the CEQ regulations.

\(3\) For Class II actions that are determined not to have a significant
environmental impact, the Agency will require the applicant to publish a
notification of this determination. This notice will be published in the
same manner as a notice of intent to prepare an EIS but will appear for
at least 3 consecutive days if published in a daily newspaper or
otherwise in two consecutive publications. Individual copies will be
sent to the same parties that are required to be sent a notice of
intent, as specified in paragraph (b)(1) of this section, with the
exception of local radio stations and other news media. Also, there is
no requirement to post this notice on the project site. The applicant
will provide FmHA with a copy of this notice, the dates the notice was
published, and a list of all parties receiving an individual notice.
This notification procedure does not apply to actions reviewed solely on
the basis of a Class I assessment.

\(4\) The public notice procedures for actions that will affect
floodplains, wetlands, important farmlands, prime rangelands or prime
forest lands are contained in Exhibit C of this subpart. These
procedures apply to actions that require either an EIS, Class II
assessment or Class I assessment. However, whenever an action normally
classified as a categorical exclusion requires a Class I assessment
because of a potential impact to one of these important land resources,
no public notice procedures apply in the course of completing the Class
I assessment. When applicable to an action, as specified in Exhibit C of
this subpart, these public notice procedures can apply at two distinct
stages. The first stage, a preliminary notice, applies to any of the
five important land resources. The second stage, a final notice, is
followed by a fifteen-day public review period and applies only to
actions that will impact floodplains or wetlands. For Class II actions,
this final notice procedure must be combined with any applicable finding
of no significant environmental impact, which is described in paragraph
(b)(3) of this section. Individual copies of the preliminary and final
notices will be sent to the same parties that are required to be sent a
notice of a finding of no significant impact, as specified in paragraph
(b)(3) of this section, with the following exception. Whenever property
owners affected by proposed mitigation measures, such as proposed
hook-up restrictions on portions of water or sewer lines that will
traverse floodplains, are advised of these proposed measures in a
preliminary notice, these property owners need not be sent copies of the
final notice as long as the mitigation measures in the final notice are
unchanged from the preliminary notice and no property owners raised
objections or concerns over the mitigation measures.

\(5\) The public notice requirements associated with holding a public
information meeting are specified in paragraph (c) of this section.

\(c\) [Public information meetings]{.underline}.

\(1\) Public information meetings will be held for an action undergoing
an EIS as specified in §1940.320 of this subpart. As part of the EIS
process, a public information meeting will be held near the project site
to discuss and receive comments on the draft EIS. It will be scheduled
no sooner than 15 days after the release of the draft EIS. It will be
announced in the same manner as the scoping meeting, and the list of
parties receiving an individual notification will also be developed in
the same manner. The meeting will be chaired by the State Director or a
designee and will be fully recorded so that a transcript can be
produced. The applicant will be requested to assist in obtaining a
facility for holding the meeting. To the extent possible, this meeting
will be combined with public meetings required by other involved
agencies.

\(2\) Whenever a public information meeting is held as part of the
completion of an environmental assessment, it will be scheduled,
announced, and held in generally the same manner as a public information
meeting for an EIS. However, a minimum of 7 days advance notice of the
meeting is sufficient, and a transcript of the meeting will not be
required. Rather a summary of the meeting to include the major issues
raised will be prepared by the FmHA official who chaired the meeting.

\(d\) [Distribution of environmental documents]{.underline}. FmHA
officials will promptly provide to interested parties, upon request,
copies of environmental documents, including environmental assessments,
draft and final environmental impact statements, and records of
decision. Interested parties can request these materials from the
appropriate State Director or approval official for project activities
and from the Administrator on other activities subject to environmental
review.

§1940.332 [Emergencies]{.underline}.

\(a\) [Action Requiring EIS]{.underline}. When an emergency circumstance
makes it necessary to take an action with significant environmental
impact without observing the provisions of this subpart or the CEQ
regulations, the Administrator will consult with CEQ about alternative
arrangements before the proposed action is taken. It must be recognized
that CEQ\'s regulations limit such arrangements to actions necessary to
control the immediate impacts of the emergency. Other actions remain
subject to NEPA review. For purposes of this subpart, an emergency
circumstance is defined as one involving an immediate or imminent danger
to public health or safety.

\(b\) [Action Not Requiring EIS]{.underline}. When an emergency
circumstance makes it necessary to take an action with apparent
non-significant environmental impact without observing the provisions of
this subpart or the CEQ regulations, the Administrator will be so
notified. The Administrator reserves the authority to waive or amend all
procedural aspects of this subpart relating to the preparation of
environmental assessments including but not limited to the applicant\'s
submission of Form RD 1940-20, public notice requirements and/or their
associated comment periods, the timing of the assessment process, and
the content of environmental review documents. Alternative arrangements
will be established on a case by case basis taking into account the
nature of the emergency and the time reasonably available to respond to
it. These alternative arrangements will, to the extent possible, attempt
to achieve the substantive requirements of this subpart such as avoiding
impacts to important land resources, when practicable, and minimizing
potential adverse environmental impacts. In all cases, the environmental
findings and determinations required for Class I and Class II
assessments must be executed by the appropriate FmHA officials prior to
approval of the action and be based upon the best information available
under the circumstances and the prescribed alternative arrangements.
(Refer to paragraph (a) of this section should the approval official for
the action determine that an EIS is necessary.) Additionally, all
applicable consultation and coordination procedures required by law or
regulation will be initiated with the appropriate Federal or State
agency(s). Such procedures will be accomplished in the most expeditious
manner possible and modified to the extent necessary and mutually
agreeable between FmHA and the affected agency(s). The provisions of
this paragraph are limited to the same emergency circumstances and scope
of action as specified in paragraph (a) of this section.

§1940.333 [Applicability to planning assistance]{.underline}.

The award of FmHA funds for the purpose of providing technical
assistance or planning assistance will not be subject to any
environmental

review. However, applicants will be expected to consider in the
development of their plans and to generally document within their plans:

\(a\) The existing environmental quality and the important environmental
factors within the planning area, and

\(b\) The potential environmental impacts on the planning area of the
plan as well as the alternative planning strategies that were reviewed.

§1940.334 [Direct participation of State Agencies in the preparation of
FmHA EISs]{.underline}.

FmHA may be assisted by a State Agency in the preparation of an EIS
subject to the conditions indicated below. At no time, however, is FmHA
relieved of its responsibilities for the scope, objectivity, and content
of the entire statement or any other responsibility under NEPA.

\(a\) The FmHA applicant for financial assistance is a State Agency
having statewide jurisdiction and responsibility for the proposed
action;

\(b\) FmHA furnishes guidance to the State Agency as to the scope and
content of the impact statement and participates in the preparation;

\(c\) FmHA independently evaluates the statement and rectifies any major
deficiencies prior to its circulation by the Agency as an EIS;

\(d\) FmHA provides, early in the planning stages of the project,
notification to and solicits the views of any land management entity
(State or Federal Agency responsible for the management or control of
public lands) concerning any portion of the project and its alternatives
which may have significant impacts upon such land management entities;
and

\(e\) If there is any disagreement on the impacts addressed by the
review process outlined in paragraph (d) of this section, FmHA prepares
a written assessment of these impacts and the views of the land
management entities for incorporation into the draft impact statement.

§1940.335 [Environmental review of FmHA proposals for
legislation]{.underline}.

\(a\) As stated in §1940.312(d)(4) of this subpart, all FmHA proposals
for legislation will receive an environmental assessment. The definition
of such a proposal is contained in Section 1508.17 of the CEQ
regulations.

\(b\) The environmental assessment and, when necessary, the EIS will be
prepared by the responsible Agency staff that is developing the
legislation.

\(c\) If an EIS is required, it will be prepared according to the
requirements of Section 1506.8 of the CEQ Regulations.

§1940.336 [Contracting for professional services]{.underline}.

\(a\) Assistance from outside experts and professionals can be secured
for the purpose of completing EISs, assessments, or portions of them.
Such assistance will be secured according to the Federal and Agriculture
Procurement Regulations contained in Chapters 1 and 4 of Title 48 of the
Code of Federal Regulations.

\(b\) The contractor will be selected by FmHA in consultation with any
cooperating agencies. In order to avoid any conflict of interest,
contractors competing for the work will be required to execute a
disclosure statement specifying that they have no financial or other
interest in the outcome of the project.

\(c\) The Administrator will provide the State Director with a proposed
scope of work for use in securing such professional services.

\(d\) Applicants will not be required to pay the costs of these
professional services.

§1940.337 - §1940.349 \[Reserved\]

§1940.350 [Office of Management and Budget (OMB) control
number]{.underline}.

The collection of information requirements in this regulation has been
approved by the Office of Management and Budget and has been assigned
OMB control number 0575-0094.

Attachments: Exhibits A, B, C, D, E, F, G (Reserved), H, I, J, K, L,\
and M

oOo

66

RD Instruction 1940-G

Exhibit B

## Development and Implementation of

## Natural Resource Management Guide

1\. The State Director shall complete the natural resource management
guide within 12 months from the effective date of this Subpart and issue
the guide as a State supplement after prior approval by the
Administrator. A summary of the basic content, purposes, and uses of the
guide is contained in §1940.305 of this Subpart. The guide shall be
prepared in draft form and be provided for review and comment to USDA
agencies, appropriate Federal and State agencies, State and regional
review agencies assigned the consultation requirements of Executive
Order 12372, as well as interested localities, groups, and citizens.
Also at least one public information meeting shall be held on the draft
which shall be followed by a 30-day period for the submission of public
comments. Public notification of this meeting shall be made in the same
manner as the notification process for a scoping meeting. (See
§1940.320(c) of this Subpart). Additionally, the public shall be
informed that copies of the draft guide will be made available from the
State Office upon request. After completion of this public review, the
draft will be revised as necessary in light of the comments received and
provided as a final draft State Supplement to the Administrator for
review and approval. Any concerns and comments of the Administrator will
be addressed by the State Director and the guide completed. Upon the
Administrator\'s approval and the fulfillment of the requirements of
paragraph 4. of this Exhibit, the natural resource management guide
shall then become part of any program investment strategies developed by
the State Director for the purpose of addressing the rural needs of the
state. Although a 12-month period has been established for the
completion of a natural resource management guide, this deadline is not
to be construed as curtailing or postponing the implementation of
existing environmental laws, regulations, Executive orders or the
Departmental Regulation 9500-3, Land Use Policy, with respect to
individual project reviews, nor giving anyone any rights or claims with
respect to the completion or content of the guide.

2\. The natural resource management guide needs to be developed in full
recognition of its role as an internal Agency planning tool and with
sensitivity to the Agency\'s mission.

3\. After the Administrator approves the natural resource management
guide, it will become effective 4 months from that date. This interim
period shall be used to inform local, State, and Federal agencies,
localities, organizations, and interested citizens of the content of the
guide. In this manner, those parties intending to seek FmHA assistance
or to coordinate FmHA assistance programs with their own programs will
be able to gain for their planning needs an understanding of our guide.

4\. Completed natural resource management guides shall be reviewed every
2 years and updated by the State Director to reflect newly identified
geographical areas of concern or policy revisions at the national,
State, regional or local level. They will also be revised, as necessary,
through appropriate guidance from the Administrator. Revisions shall be
transmitted to the Administrator for postapproval and shall be
considered approved if either no comments are raised by the
administrator within 30 days of receipt of the State Director\'s
transmittal letter or the Administrator specifically approves them
before the 30 days expire. Public review of a revision will not be
required. However, if in the opinion of the State Director the proposed
revision will substantially change the previously adopted natural
resource management guide, a public review shall be conducted of the
revision in the same manner as that described in paragraph 1 of this
Exhibit for the development of the original guide. Such review shall
occur prior to the transmittal of the revision to the Administrator. If
the State Director believes that at the expiration of any 2-year review
period there is need to update the guide, a statement to this effect
shall be filed with the Administrator.

5\. The foundation for the natural resource management guide is the
identification of the types of land uses or environmental factors
deserving attention and their geographical location within the State. An
inventory or listing shall be developed, therefore, of the important
land uses within the State. This inventory will be accomplished by
assembling existing data and information compiled by those Federal,
State, and local agencies that have jurisdiction or expertise regarding
the land uses or environmental factors. At a minimum, the inventory
shall consist of available documents, listings, maps, or graphic
materials describing the location of the following:

a\. National Register of Historic Places to include monthly supplements
as designated by the Department of the Interior (DOI), and the State
Historic Preservation Plans. This list is issued as a State Supplement
to Subpart F or Part 1901 of this Chapter.

b\. Rivers designated as part of the Wild and Scenic Rivers System and
rivers under study for inclusion in the system, as published by DOI;

c\. Important farmlands;

d\. Prime rangelands;

e\. Prime forestlands;

f\. Wetland inventory;

g\. Floodplain inventory as issued by the Federal Emergency Management
Administration;

h\. Endangered Species and Critical Habitats as listed or proposed for
listing by the Department of Commerce (DOC) and DOI;

i\. Sole source aquifer recharge areas as designated by the
Environmental Protection Agency (EPA);

j\. Air Quality Control Regions as designated by EPA;

k\. National Registry of Natural Landmarks at published by DOI;

l\. Coastal Barrier Resources System;

m\. State inventories or planning documents identifying important land
uses, particularly those not covered by the above items, such as
wildlife refuges, important habitats, and areas of high water quality,
or scenic or recreational value;

n\. Agricultural districts or other similar zoning classifications for
agricultural land protection; and

o\. Coastal Zone Management Areas.

6\. The Administrator shall be responsible for assisting State Directors
in obtaining listings and inventories of resources protected by Federal
statutes and regulations. The State Director has the responsibility for
assembling documents on important environmental resources or areas
identified in State and substate laws, regulations, plans, and policies.

7\. Development of the inventory by the State Director will require
consultation and assistance from a variety of agencies and experts. This
consultation should begin with Department agencies and be accomplished
through appropriate, State-level USDA committees. The objective should
be to determine the land classification data that has been compiled and
that which is in the process of being compiled either by USDA agencies
or their counterparts at the state level. The Memorandum of
Understanding executed in May 1979 between the Soil Conservation Service
(SCS) and FmHA should be utilized as the basis for seeking SCS\'s
assistance in this data collection effort. (See RD Instruction 2000-D,
Exhibit A, which is available in any FmHA Office.) Direct contacts
should then be made with State agencies, in. particular with the
appropriate office of State planning, to determine the availability of
State inventories and State land use policies and priorities. Similar
discussions should be held with substate regional planning agencies and
clearinghouses with assistance being provided in this effort by District
Directors. County Supervisors shall contact local officials and shall be
responsible for being familiar with and for assembling similar
inventories, land use policies, or protective requirements developed by
the local government agencies within the supervisor\'s territorial
jurisdiction.

8\. Another important element of the natural resource management guide
shall be the examination of any major environmental impacts on the State
or a substate area resulting from the cumulative effects of
FmHA-assisted projects over the last several years. In this examination,
particular emphasis should be given to the cumulative impacts of water
resource projects such as irrigation systems. This should be done in
consultation with experts within the appropriate State agencies and the
U.S. Geological Survey. The housing programs should also be given a
particular emphasis with respect to their cumulative impacts. More
detailed guidance on the accomplishment of this cumulative impact
section of the natural resource management guide, as well as the overall
content of the guide, shall be provided by the Administrator. In
preparing the State\'s natural resource management guide and in
assembling inventories of critical resources, Agency staff should not
lose sight of the basic purposes of this effort. The development of
lengthy and complex guides and the amassing of huge inventories is not
our goal. In the end, the material must be useable and serve as a tool
for better decisionmaking. The basic purposes of this guide and
inventory, then, are to provide a basis for developing comprehensive,
statewide, rural development investment strategies that (i) do not
conflict with Federal, State, and local mandates to preserve and protect
important land and environmental resources, (ii) that do not create
short- or long-term development pressures which would lead to the
unnecessary conversion of these resources, and (iii) which effectively
support and enhance Federal, State, and local plans to preserve these
resources.

## oOo 

RD Instruction 1940-G

Exhibit C

Implementation Procedures for the Farmland

Protection Policy Act; Executive Order 11988,

Floodplain Management; Executive Order 11990, Protection

of Wetlands; and Departmental Regulation 9500-3,

Land Use Policy

1\. [Background]{.underline}. The Subtitle I of the Agriculture and Food
Act of 1981, Public Law 97-98, created the Farmland Protection Policy
Act. The Act requires the consideration of alternatives when an
applicant\'s proposal would result in the conversion of important
farmland to nonagricultural uses. The Act also requires that Federal
programs, to the extent practicable, be compatible with State, local
government, and private programs and policies to protect farmland. The
Soil Conservation Service (SCS), as required by the Act, has promulgated
implementation procedures for the Act at 7 CFR Part 658 which are
hereafter referred to as the SCS rule. This rule applies to all federal
agencies. The Departmental Regulation 9500-3, Land Use Policy (the
Departmental Regulation), also requires the consideration of
alternatives but is much broader than the Act in that it addresses the
conversion of land resources other than farmland. The Departmental
Regulation is included as Exhibit A to this subpart and affects only
USDA agencies. For additional requirements that apply to some Farmer
Program loans and guarantees and loans to an Indian Tribe or Tribal
Corporation and that cover the conservation of wetlands and highly
erodible land, see Exhibit M of this subpart.

2\. [Implementation]{.underline}. Each proposed lease or disposal of
real property by FmHA and application for financial assistance or
subdivision approval will be reviewed to determine if it would result in
the conversion of a land resource addressed in the Act, Executive
Orders, or Departmental Regulation and as further specified below. Those
actions that are determined to result in the lease, disposal or
financing of an existing farm, residential, commercial or industrial
property with no reasonably foreseeable change in land use and those
actions that solely involve the renovation of existing structures or
facilities would require no further review.\* Since these actions have
no potential to convert land uses, this finding would simply be made by
the preparer in completing the environmental assessment for the action.
Also, actions that convert important farmland through the construction
of on-farm structures necessary for farm operations are exempt from the
farmland protection provisions of this Exhibit. For other actions, the
following implementation steps must be taken:

\*See special procedures in item 3. of this Exhibit if the existing
structure or real property is located in a floodplain or wetland.

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Exhibit C

Page 2

2 (Cont.)

a\. Determine whether important land resources are involved. The Act
comes into play whenever there is a potential to affect important
farmland. The Departmental Regulation covers important farmland as well
as the following land resources: prime forest land, prime rangeland,
wetlands and floodplains. Hereafter, these land resources are referred
to collectively as important land resources. Definitions for these land
resources are contained in the Appendix to the Departmental Regulation.
The SCS rule also defines important farmland for purposes of the Act.
Since the SCS\'s definition of prime farmland differs from the
Departmental Regulation\'s definition, both definitions must be used and
if either or both apply, the provisions of this Exhibit must be
implemented. It is important to note the definition of important
farmland in both the SCS rule and the Departmental Regulation because it
includes not only prime and unique farmland but additional farmland that
has been designated by a unit of State or local government to be of
statewide or local importance and such designation has been concurred in
by the Secretary acting through SCS. In completing the environmental
assessment or Form RD 1940-22, \"Environmental Checklist For Categorical
Exclusions,\" the preparer must determine if the project is either
located in or will affect one or more of the land resources covered by
the SCS rule or the Departmental Regulation. Methods for determining the
location of important land resources on a project-by-project basis are
discussed immediately below. As reflected several times in this
discussion, scs personnel can be of great assistance in making
agricultural land and natural resource evaluation, particularly when
there is no readily available documentation of important land resources
within the project\'s area of environmental impact. It should be
remembered that FmHA and SCS have executed a Memorandum of Understanding
in order to facilitate site review assistance. (See RD Instruction
2000-D, Exhibit A, available in any FmHA office.)

\(1\) [Important Farmland, Prime Forest Land, Prime
Rangeland]{.underline} - The preparer of the environmental review
document will review available SCS important farmland maps to determine
if the general area within which the project is located contains
important farmland. Because of the large scale of the important farmland
maps, the maps should be used for general review purposes only and not
to determine if sites of 40 acres or less contain important farmland. If
the general area contains important farmland

RD Instruction 1940-G

Exhibit C

Page 3

2a (1) (Cont.)

or if no important farmland map exists for the project area, the
preparer of the environmental review will request SCS\'s opinion on the
presence of important farmland by completing Form AD-1006, \"Farmland
Conversion Impact Rating,\" according to its instructions, and
transmitting it to the SCS local field office having jurisdiction over
the project area. This request will also indicate that SCS\'s opinion is
needed regarding the application to the project site of both definitions
of prime farmland, the one contained within its rule and the one
contained within the Departmental Regulation. SCS\'s opinion is
controlling with respect to the former definition and advisory with
respect to the latter. No request need be sent to SCS for an action
meeting one of the exemptions contained in item number 2 of this
exhibit.

\(2\) [Floodplain]{.underline} - Review the most current Flood Insurance
Rate Map or Flood Insurance Study issued for the project area by the
Federal Emergency Management Administration (FEMA). Information on the
most current map available or how to obtain a map free of charge is
available by calling FEMA\'s toll free number 800-6386620. When more
specific information is needed on the location of a floodplain, for
example, the project site may be near the boundary of a floodplain; or
for assistance in analyzing floodplain impacts, it is often helpful to
contact FEMA\'s regional office staff. Exhibit J of this subpart
contains a listing of these regional offices and the appropriate
telephone numbers.

If a FEMA floodplain map has not been prepared for a project area,
detailed assistance is normally available from the following agencies:
The U.S. Fish and Wildlife Service (FWS), SCS, Corps of Engineers, U.S.
Geological Survey (USGS), or appropriate regional or State agencies
established for flood prevention purposes.

\(3\) [Wetlands]{.underline} - FWS is presently preparing wetland maps
for the nation. Each FWS regional office has a staff member called a
Wetland Coordinator. These individuals can provide updated information
concerning the status of wetland mapping by FWS and information on State
and local wetland surveys. Exhibit K of this subpart contains a listing
of Wetland Coordinators arranged by FWS regional office and geographical
area of jurisdiction. If the proposed project area has not been
inventoried, information can be obtained by using topographic and soils
maps or aerial

(10-19-88) SPECIAL PN

Instruction 1940-G

Exhibit C

Page 4

2 a (3) (Cont.)

photographs. State-specific lists of wetland soils and wetland
vegetation are also available from the FWS Regional Wetland
coordinators. A site visit can disclose evidence of vegetation typically
associated with wetland areas. Also, the assistance of FWS field staff
in reviewing the site can often be the most effective means. Because of
the unique wetland definition used in Exhibit M of this subpart, SCS
wetland determinations are required for implementing the wetland
conservation requirements of that Exhibit.

b\. Findings

\(1\) Scope - Although information on the location and the
classification of important land resources should be gathered from
appropriate expert sources, as well as their views on possible ways to
avoid or reduce the adverse effects of a proposed conversion, it must be
remembered that it is FmHA\'s responsibility to weigh and judge the
feasibility of alternatives and to determine whether any proposed land
use change is in accordance with the implementation requirements of the
Act and the Departmental Regulation. Consequently, after reviewing as
necessary, the project site, applicable land classification data, or the
results of consultations with appropriate expert agencies, the FmHA
preparer must determine, as the second implementation step, whether the
applicant\'s proposal:

\(a\) Is compatible with State, unit or local government, and private
programs and policies to protect farmland; and

\(b\) Either will have no effect on important land resources; or

\(c\) If there will be a direct or indirect conversion of such a
resource, (i) whether practicable alternatives exist to avoid the
conversion; and

\(d\) If there are no alternatives, whether there are practicable
measures to reduce the amount of the conversion.

RD Instruction 1940-G

Exhibit C

Page 5

2 b (Cont.)

\(2\) [Determination of No Effect]{.underline} - If the preparer
determines that there is no potential for conversion and that the
proposal is compatible, this determination must be so documented in the
environmental assessment for a Class II action or the appropriate
compliance blocks checked in the Class I assessment or Checklist for
Categorical Exclusions based on whichever document is applicable to the
action being reviewed.

\(3\) [Determination of Effect or Incompatibility]{.underline} -
Whenever the preparer determines that an applicant\'s proposal may
result in the direct or indirect conversion of an important land
resource or may be incompatible with State, unit of local government, or
private programs and policies to protect farmland, the following further
steps must be taken.

\(a\) [Search for Practicable Alternatives]{.underline}\* - In
consultation with the applicant and the interested public, the preparer
will carefully analyze the availability of practicable alternatives that
avoid the conversion or incompatibility. Possible alternatives include:

\(i\) The selection of an alternative site;

\(ii\) The selection of an alternative means to meet the applicant\'s
objectives; or

\(iii\) The denial of the application, i.e., the\
no-action alternative.

When the resource that may be converted is important farmland, the
preparer will follow the Land Evaluation and Site Assessment (LESA)
point system contained within the SCS rule in order to evaluate the
feasibility of alternatives. When the proposed site receives a total
score of less than 160 points, no additional sites need to be evaluated.

\*When the action involves the disposal of real property determined not
suitable for disposition to persons eligible for FmHA\'s financial
assistance programs, the consideration of alternatives is limited to
those that would result in the best price.

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Exhibit C

Page 6

2 b (3) (a)

Rather than use the SCS LESA point system, the State Director has the
authority to use State or local LESA systems that have been approved by
the governing body of such jurisdiction and the SCS state
conservationist. After this authority is exercised, it must be used for
all applicable FmHA actions within the jurisdiction of that approved
LESA system.

\(b\) [Inform the Public]{.underline} - The Departmental Regulation
requires us in Section 6, Responsibilities, to notify the affected
landholders at the earliest time practicable of the proposed action and
to provide them an opportunity to review the elements of the action and
to comment on the action\'s feasibility and alternatives to it. This
notification requirement only applies to Class I and Class II actions
and not to categorical exclusions that lose their status as an exclusion
for any of the reasons stated in §1940.317(e) of this subpart. The
notification will be published and documented in the manner specified in
§1940.331 of this subpart and will contain the following information:

\(i\) A brief description of the application or proposal and its
location;

\(ii\) The type(s) and amount of important land resources to be
affected;

\(iii\) A statement that the application or proposal is available for
review at an FmHA field office (specify the one having jurisdiction over
the project area); and

\(iv\) A statement that any person interested in commenting on the
application or proposal\'s feasibility and alternatives to it may do so
by providing such comments to FmHA within 30 days following the date of
publication. (Specify the FmHA office processing the application or
proposal for receipt of comments.)

RD Instruction 1940-G

Exhibit C

Page 7

2 b (3) (b) (Cont.)

Further consideration of the application or proposal must be delayed
until expiration of the public comment period. Consequently, publication
of the notice as early as possible in the review process is both in the
public\'s and the applicant\'s interest. Any comments received must be
considered and addressed in the subsequent Agency analysis of
alternatives and mitigation measures. It should be understood that
scheduling a public information meeting is not required but may be
helpful based on the number of comments received and types of issues
raised.

\(c\) [Determine Whether Practicable Alternative Exists]{.underline}

\(i\) Alternative exists - If the preparer concludes that a practicable
alternative exists, the preparer will complete step 2 b (3) (e) (ii) of
this exhibit and transmit the assessment for the approving official\'s
review in the manner specified in §1940.316 of this subpart. If the
findings of this review are similar to the preparer\'s recommendation,
FmHA will inform the applicant of such findings and processing of the
application will be discontinued. Should the applicant still desire to
pursue the proposal, the applicant is certainly free to do so but not
with the further assistance of FmHA. Should the applicant be interested
in amending the application to reflect the results of the alternative
analysis, the preparer will work closely with the applicant to this end.
Upon receipt of the amended application, the preparer must reinstitute
this implementation process at that point which avoids the duplication
of analysis and data collection undertaken in the original review
process.

If the results of the approving official(s) review differs from the
preparer\'s recommendations, the former will ensure that the findings
are appropriately documented in step 2 b (3) (e) (ii) of this exhibit
and any remaining consideration given to mitigation measures, step 2 b
(3) (d) of this exhibit.

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RD Instruction 1940-G

Exhibit C

Page 8

2 b (3) (c) (Cont.)

\(ii\) No Practicable Alternative Exists - On the other hand, if the
preparer concludes that there is no practicable alternative to the
conversion, the preparer must then continue with step 2 b (3) (d) of
this exhibit, immediately below.

\(d\) [Search for Mitigation Measures]{.underline} - Once the preparer
determines that there is no practicable alternative to avoiding the
conversion or incompatibility, including the no-action alternative, all
practicable measures for reducing the direct and indirect amount of the
conversion must be included in the application. Some examples of
mitigation measures would include reducing the size of the project which
thereby reduces the amount of the important land resource to be
converted. This is a particularly effective mitigation measure when the
resource is present in a small area, as is often the case with wetlands
or floodplains. A corresponding method of mitigation would be to
maintain the project size or number of units but decrease the amount of
land affected by increasing the density of use. Finally, mitigation can
go as far as the selection of an alternative site. For example, in a
housing market area composed almost entirely of important farmland, any
new proposed subdivision site would result in conversion. However, a
proposed site within or contiguous to an existing community has much
less conversion potential, especially indirect potential, than a site a
mile or two from the community. The LESA system can also be used to
identify mitigation measures when the conversion of important farmland
cannot be avoided.

\(e\) [Document Findings]{.underline} - Upon completion of the above
steps, a written summary of the steps taken and the reasons for the
recommendations reached shall be included in the environmental
assessment along with either one of the following recommendations as
applicable. The following example assumes that important farmland is the
affected resource and that the inappropriate phrase within the brackets
would be deleted.

RD Instruction 1940-G

Exhibit C

Page 9

2 (b) (3) (e) (Cont.)

\(i\) The application would result in the direct or indirect conversion
of important farmland and (is/is not) compatible with State, unit of
local government, or private programs and policies to protect farmland.
It is recommended that FmHA determine, based upon the attached analysis,
that there is no practicable alternative to this and that the
application contains all practicable measures for reducing the amount of
conversion (or limiting the extent of any identified incompatibility.)

\(ii\) The application would result in direct or indirect conversion of
important farmland and (is/is not) incompatible with State, unit of
local government, or private programs and policies to protect farmland.
It is recommended that FmHA determine, based upon the attached analysis,
that there is a practicable alternative to this action, and that
processing of this application be discontinued.

\(f\) [Implement findings]{.underline} - The completed environmental
assessment and the Agency\'s determination of compliance with the Act,
the Departmental Regulation and Executive orders will be processed and
made according to §1940.316 of this subpart. Whenever this determination
is as stated in step 2 b (3) (e) (i) above, the action will be so
structured as to ensure that any recommended mitigation measures are
accomplished. See §1940.318(g) of this subpart. Whenever the
determination is as stated in step 2 b (3) (e) (ii) above, the applicant
shall be so informed and processing of the application discontinued. Any
further FmHA involvement will be as specified in Item 2 b (3) (c) (i) of
this exhibit.

3\. [Special Procedures and Considerations When a Floodplain or Wetland
Is The Affected Resource Under Executive Order 11988 and
11990]{.underline}.

a\. [Scope]{.underline}.

\(1\) Geographical Area - The geographical area that must be considered
when a floodplain is affected varies with

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Exhibit C Page 10

3 a (1) (Cont.)

the type of action under consideration. Normally the implementation
procedures beginning in Item 2a of this Exhibit are required when the
action will impact, directly or indirectly, the 100-year floodplain.
However, when the action is determined by the preparer to be a critical
action, the minimum floodplain of concern is the 500-year floodplain. A
critical action is an action which, if located or carried out within a
floodplain, poses a greater than normal risk for flood-caused loss of
life or property. Critical actions include but are not limited to
actions which create or extend the useful life of the following
facilities:

\(a\) Those facilities which produce, use, or store highly volatile,
flammable, explosive, toxic or water-reactive materials;

\(b\) Schools, hospitals, and nursing homes which are likely to contain
occupants who may not be sufficiently mobile to avoid the loss of life
or injury during flood and storm events;

\(c\) Emergency operation centers or data storage centers which contain
records or services that may become lost or inoperative during flood and
storm events; and

\(d\) Multi-family housing facilities designed primarily (over 50
percent) for handicapped individuals.

\(2\) Threshold of Impact - The Executive orders differ from the Act and
the Departmental Regulation in that the Executive orders\' requirements
apply not only to the conversion of floodplains or wetlands but to any
impacts upon them. Impacts are defined as changes in the natural values
and functions of a wetland or floodplain. Therefore, there would be an
impact to a floodplain whenever either (a) the action or its related
activities would be located within a floodplain, or (b) the action
through its indirect impacts has the potential to result in development
within a floodplain. The only exception to this statement is when the
preparer determines that the locational impact is minor to the extent
that the floodplain\'s or wetland\'s natural values and functions are
not affected.

RD Instruction 1940-G

Exhibit C

Page 11

3 (Cont.)

b\. [Treatment of Existing Structures]{.underline}.

\(1\) Non-FmHA-Owned Properties - The Executive orders can apply to
actions that are already located in floodplains or wetlands; that is,
where the conversion has already occurred. The implementation procedures
beginning in item 2a of this exhibit must be accomplished for any action
located in a floodplain or wetland and involving either (a) the purchase
of an existing structure or facility or (b) the rehabilitation,
renovation, or adaptive reuse of an existing structure or facility when
the work to be done amounts to a substantial improvement. A substantial
improvement means any repair, reconstruction, or improvement of a
structure the cost of which equals or exceeds 50 percent of the market
value of the structure either (a) before the improvement or repair is
started, or (b) if the structure has been damaged, and is being
restored, before the damage occurred. The term does not include (a) any
project for improvement of a structure to comply with existing State or
local health sanitary or safety code specifications which are solely
necessary to assure safe living conditions or (b) any alteration of a
structure listed on the National Register of Historic Places or a State
Inventory of Historic Places.

\(2\) FmHA-Owned Real Property - The requirement in paragraph 3 b (1)
immediately above also applies to any substantial improvements made to
FmHA-owned real property with the exception of the public notice
requirements of this exhibit. Irrespective of any improvements, whenever
FmHA real property located in a floodplain or wetland is proposed for
lease or sale, the official responsible for the conveyance must
determine if the property can be safely used. If not, the property
should not be sold or leased. Otherwise, the conveyance must specify
those uses that are restricted under identified Federal, State, and
local floodplains or wetlands regulations as well as other appropriate
restrictions, as determined by the FmHA official responsible for the
conveyance, to the uses of the property by the leasee or purchaser and
any successors, except where prohibited by law. Appropriate restrictions
will be developed in consultation with the U.S. Fish and Wildlife
Service (FWS) as specified in the Memorandum of Understanding with FWS
contained in Subpart LL of Part 2000 of this chapter. Applicable
restrictions will be incorporated into quitclaim deeds with the consent
and approval of the Regional

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Exhibit C

Page 12

3 b (2) (Cont.)

Attorney, Office of the General Counsel. Upon application by the owner
of any property so affected and upon determination by the appropriate
FmHA official that the condition for which a deed restriction was
imposed no longer exists, the restriction clause may be released. A
listing of any restrictions shall be included in any notices announcing
the proposed sale or lease of the property. At the time of first
inquiry, prospective purchasers must be informed of the property\'s
location in a floodplain or wetland and the use restrictions that will
apply. A written notification to this effect must be provided to the
prospective purchaser who must acknowledge the receipt of the notice.
See Item 3 d of this exhibit and Subpart C of Part 1955 of this Chapter
for guidance on the proper formats to be used with respect to notices
and deed restrictions. The steps and analysis conducted to comply with
the requirements of this paragraph must be documented in the
environmental review document for the proposed lease or sale.

c\. [Mitigation measures]{.underline}.

\(1\) Alternative Sites - As with the Act and the Departmental
Regulation, the main focus of the review process must be to locate an
alternative that avoids the impact to a floodplain or wetland. When this
is not practicable, mitigation measures must be developed to reduce the
impact which in the case of a floodplain or wetland can include finding
another site, i.e., a safer site. The latter would be a site at a higher
elevation within the floodplain and/or exposed to lower velocity
floodflows.

\(2\) Nonstructural Mitigation Measures - Mitigation measures under the
Executive orders are intended to serve the following three purposes:
reduce the risks to human safety, reduce the possible damage to
structures, and reduce the disruption to the natural values and
functions of floodplains and wetlands. More traditional structural
measures, such as filling in the floodplain, cannot accomplish these
three purposes and, in fact, conflict with the third purpose.
Nonstructural flood protection methods, consequently, must be given
priority consideration. These methods are intended to preserve, restore,
or imitate

RD Instruction 1940-G

Exhibit C

Page 13

3 c (2) (Cont.)

natural hydrologic conditions and, thereby, eliminate or reduce the need
for structural alteration of water bodies or their associated
floodplains and wetlands. Such methods may be either physical or
managerial in character. Nonstructural flood protection methods are
measures which:

\(a\) Control the uses and occupancy of floodplains and wetlands, e.g.,
floodplain zoning and subdivision regulation;

\(b\) Preserve floodplain and wetland values and functions through
public ownership, e.g., fee title, easements and development rights;

\(c\) Delay or reduce the amount of runoff from paved surfaces and
roofed structures discharged into a floodway, e.g., construction of
detention basins and use of flow restricting barriers on roofs;

\(d\) Maintain natural rates of infiltration in developed or developing
areas, e.g., construction of seepage or recharge basins and minimization
of paved areas;

\(e\) Protect streambanks and shorelines with vegetative and other
natural cover, e.g., use of aquatic and water-loving woody plants;

\(f\) Restore and preserve floodplain and wetland values and functions
and protect life and property through regulation, e.g., flood-proofing
building codes which require all structures and installations to be
elevated on stilts above the level of the base flood; and

\(g\) Control soil erosion and sedimentation, e.g., construction of
sediment basins, stabilization of exposed soils with sod and
minimization of exposed soil.

\(3\) Avoid Filling in Floodplains - As indicated above, the Executive
orders place a major emphasis on not filling in floodplains in order to
protect their natural values and functions. Executive Order 11988 states
\"agencies

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Exhibit C

Page 14

3 c (3) (Cont.)

shall, wherever practicable, elevate structures above the base flood
level rather than filling in land.\"

d\. [Additional Notification Requirement]{.underline}.

\(1\) Final Notice - Where it is not possible to avoid an impact to a
floodplain or wetland and after all practicable mitigation measures have
been identified and agreed to by the prospective applicant, a final
notice of the proposed action must be published. This notice will either
be part of the notice required for the completion of a Class II
assessment or a separate notice if a Class I assessment or an EIS has
been completed for the action. The notice will be published and
distributed in the manner specified in §1940.331 of this subpart and
contain the following information.

\(a\) A description of the proposed action, its location, and the
surrounding area;

\(b\) A description of the floodplain or wetland impacts and the
mechanisms to be used to mitigate them;

\(c\) A statement of why the proposed action must be located in a
floodplain or a wetland;

\(d\) A description of all significant facts considered in making this
determination;

\(e\) A statement indicating whether the actions conform to applicable
State or local floodplain protection standards; and

\(f\) A statement listing other involved agencies and individuals.

\(2\) Private Party Notification - For all actions to be located in
floodplains or wetlands in which a private party is participating as an
applicant, purchaser, or financier, it shall be the responsibility of
the approving official to inform in writing all such parties of the
hazards associated with such locations.

RD Instruction 1940-G

Exhibit C

Page 15

4\. [The Relationship of the Executive Orders to the National Flood
Insurance Program]{.underline}.

The National Flood Insurance Program establishes the floodplain
management criteria for participating communities as well as the
performance standards for building in floodplains so that the structure
is protected against flood risks. As such, flood insurance should be
viewed only as a financial mitigation measure that must be utilized only
after FmHA determines that there is no practicable alternative for
avoiding construction in the floodplain and that all practicable
mitigation measures have been included in the proposal. That is, for a
proposal to be located in the floodplain, it is not sufficient simply to
require insurance. The Agency\'s flood insurance requirements are
explained in Subpart B of Part 1806 of this chapter (RD Instruction
426.2). It should be understood that an applicant proposing to build in
the floodplain is not even eligible for FmHA financial assistance unless
the project area is participating in the National Flood Insurance
Program.

oOo

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Exhibit D

Implementation Procedures For the

Endangered Species Act

1\. FmHA shall implement the consultation procedures required under
Section 7 of the Endangered Species Act as specified in 50 CFR 402. It
is important to note that these consultation procedures apply to the
disposal of real property by FmHA and to all FmHA applications for
financial assistance and subdivision approval, including those
applications which are exempt from environmental assessments. (See
Section 1940.310.) Unless repeated in this paragraph, the definitions
for the terms utilized are found in 50 CFR 402.02.

2\. State Directors shall ensure that State, District, and County
Offices maintain current publications of listed and proposed species as
well as critical habitats found in their respective jurisdictions.

3\. When an application to FmHA involves financial assistance or permit
approval from another Federal agency(s), the FmHA reviewer shall work
with the other Agency to determine a lead Agency for the consultation
process. When FmHA is not the lead Agency, the reviewer shall ensure
that the lead Agency informs the appropriate Area Manager, U.S. Fish and
Wildlife Service (FWS), or Regional Director, National Marine Fisheries
Service (NMFS), of FmHA\'s involvement.

4\. Each disposal action, application for financial assistance or
subdivision approval shall be reviewed by the FmHA official responsible
for completing environmental assessments in order to determine if the
proposal either may affect a listed species or critical habitat or is
likely to jeopardize the continued existence of a proposed species or
result in the destruction or adverse modification of a proposed critical
habitat.

a\. For applications subject to environmental assessments, this review
shall be accomplished as part of the assessment.

b\. For those applications that are excluded from an environmental
assessment, this review shall be documented as part of Form RD 1940-22,
\"Environmental Checklist For Categorical Exclusions,\" and shall be
accomplished as early as possible after receipt of the application and
prior to approval of the application.

c\. For applications subject to an environmental impact statement, FmHA
shall request from the Area Manager, FWS, and the Regional Director,
NMFS, a list of the proposed and listed species that may be in the area
of the proposal. Within 30 days, the FWS and NMFS will respond to FmHA
with this list. FmHA shall then conduct, as part of the process of
preparing the draft environmental impact statement, a biological
assessment of these species to determine which species are in the area
of the proposal and how they may be affected. This biological assessment
should be completed within 180 days or a time mutually agreed upon
between FmHA and FWS or NMFS. Upon completion of the biological
assessment, if FmHA determines either that

(1-30-84) SPECIAL PN

RD Instruction 1940-G

Exhibit D

Page 2

4 c (Cont.)

the proposal may affect a listed species or critical habitat or is
likely to jeopardize the continued existence of proposed species or
result in the destruction or adverse modification of proposed critical
habitat, the formal consultation procedures shall be initiated as
specified in paragraph 7b below. To the extent practical, these
procedures shall be concluded and their results reflected in the draft
EIS. For all draft EISs in which FmHA determines there will be no affect
upon a listed or proposed species or critical habitat and FWS or NMFS
indicated the presence of such species upon the initial inquiry, a copy
of the draft shall be provided to that agency for review and comment.

5\. As indicated in paragraph 4 above, the focus of this review process
is to determine if the proposal will affect a listed species or critical
habitat or is likely to jeopardize the continued existence of a proposed
species or result in the destruction or adverse modification of a
proposed critical habitat. Because this impact terminology is specific
to the Act, it is important to understand its meaning.

a\. To jeopardize the continued existence of a species means to engage
in a project which reasonably would be expected to reduce the
reproduction, numbers, or distribution of a listed species to such an
extent as to appreciably reduce the likelihood of the survival and
recovery of that species in the wild. The level of reduction necessary
to constitute jeopardy would be expected to vary among listed species.

b\. The destruction or adverse modification of a critical habitat means
a direct or indirect alteration of critical habitat which appreciably
diminishes the value of that habitat for survival and recovery of a
listed species. Such alterations include but are not limited to those
diminishing the following requirements for:

\(i\) Space for individual and population growth and for normal
behavior;

\(ii\) Food, water, air, light, minerals, or other nutritional or
physiological requirements;

\(iii\) Cover or shelter;

\(iv\) Sites for breeding, reproduction, or rearing of offspring; and

\(v\) Habitats that are protected from disturbances or are
representative of the geographical distribution of listed species.

RD Instruction 1940-G

Exhibit D

Page 3

6\. It is also important to note that the consultation procedures differ
when the subject of the consultation is a listed species or critical
habitat as opposed to a proposed species or critical habitat. The latter
are defined as those that the Secretary of Interior or Commerce are
considering for listing and have so proposed through notification in the
Federal Register. When listed species or critical habitats are involved,
FmHA shall initiate formal consultation procedures whenever it
determines that a proposed project may affect them, either beneficially
or adversely. For proposed species or critical habitats, FmHA shall
first determine if the proposed project is likely to jeopardize the
continued existence of proposed species or result in the destruction or
adverse modification of proposed critical habitat. Whenever this
determination is made, FmHA shall confer with the appropriate agency
identified in paragraph 7 of this Exhibit and, in so doing, shall focus
on (i) determining the status of the listing process, and (ii)
attempting to cooperatively develop alternatives or measures for
inclusion in the project that avoid or mitigate the identified adverse
impacts. The results of this process shall be documented in the
environmental review being done for the proposed project and, if this
review is an environmental assessment, shall be an important factor in
determining the need for an environmental impact statement. No action
shall be taken by the approving official on the application until the
requirement to confer on proposed species or critical habitat has been
completed. Paragraphs 7 through 9 of this Exhibit outline the formal
consultation procedure for listed species or critical habitats.

7\. In initiating the review process for a project, the list of species
and critical habitats, including proposed, shall be examined to
determine the potential for impacts. Projects planned within established
communities are less likely to affect listed or proposed species or
their critical habitat. Projects to be located in remote areas, heavily
forested areas and/or previously undisturbed areas are more likely to
affect these species. For projects located in such areas, the reviewer
shall, at a minimum, discuss the project\'s potential impact on listed
or proposed species with officials of the appropriate State wildlife
protection agency or the Area Manager, FWS, or the Regional Director,
NMFS, as appropriate. The latter organization generally has
responsibility for marine species. The specific list of species under
NMFS\'s jurisdiction can be found at 50 CFR 222.23(a) and 227.4. Such
discussions shall be considered as informal consultations and are not a
substitute for the required consultation process outlined below.

a\. Whenever the reviewer, after reviewing the list and contacting
appropriate experts, formally determines that the proposal will have no
affect on a listed or proposed species or its critical habitat, these
review procedures are completed, unless new information comes to light
as discussed in paragraph 9 of this Exhibit, or consultation is
requested by the appropriate Area Manager, FWS, or Regional Director,
NMFS.

(1-30-84) SPECIAL PN

RD Instruction 1940-G

Exhibit D

Page 4

b\. If the reviewer determines there may be an effect on a listed
species or a critical habitat or is unable to make a clear
determination, the reviewer shall so inform the SEC (assuming the
reviewer is not the SEC). The latter shall either (i) convey a written
request for consultation, along with available information to the
appropriate Area Manager, FWS or Regional Director, NMFS, for the
Federal region where the proposal will be carried out, or (ii) request
Program Support Staff (PSS) to perform such consultation. FmHA shall
initiate this formal consultation process and not the applicant. See
paragraph 4.c. of this Exhibit for initiating consultation where an
environmental impact statement is being done for the application. Until
the consultation process is completed, as outlined in 50 CFR 402.04,
FmHA shall not approve the application. Should the need for consultation
be identified after application approval, FmHA shall refrain from making
any irreversible or irretrievable commitment of resources which would
foreclose the consideration of modifications or alternatives to the
identified activity or program.

8\. Several possible responses may result from initiation of the formal
consultation process with each requiring further specific actions.

a\. Whenever the Area Manager, FWS, or Regional Director, NMFS, informs
FmHA that insufficient information exists to conclude the consultation
process, the SEC with assistance as feasible from the FWS or NMFS and
State sources of expertise shall then obtain additional information and
conduct, as needed, biological surveys or studies to determine how the
proposal may affect listed species or their critical habitat. The cost
and performance of such studies shall be handled in the same manner as
in the preparation of an Environmental Impact Statement. (See §1940.336
of this Subpart.)

b\. Whenever the Area Manager, FWS, or Regional Director, NMFS, responds
that the proposal will either promote the conservation of a listed
species or is not likely to jeopardize the continued existence of a
listed or proposed species or result in the destruction or adverse
modification of its critical habitat, the FmHA reviewer shall formally
make a similar determination, attaching the response as documentation.
This concludes the formal consultation process unless new information
comes to light as discussed in paragraph 9 of this Exhibit.

c\. Whenever the results of the consultation process include
recommendations by the Area Manager, FWS, or Regional Director, NMFS,
for modifications to the project which would enhance the conservation
and protection of a listed species or its critical habitat, the State
Director shall review these recommendations and require that they be
incorporated into the project as either design

RD Instruction 1940-G

Exhibit D

Page 5 (Revision 1)

8 c (Cont.)

changes or special conditions to the offer of assistance. If the State
Director does not believe the recommendations can be so adopted, the
Administrator shall be requested to review the recommendations and to
assist in the further resolution of the matter.

d\. Whenever the appropriate Area Manager, FWS, or Regional Director,
NMFS, determines that the proposal is likely to jeopardize the continued
existence of a listed species or result in the destruction or adverse
modification of its critical habitat, the FmHA applicant shall be so
informed and the project denied on this basis. However, if the State
Director believes that funding or approval of the application is (i) of
national, regional, or great local significance, and (ii) that there are
no reasonable and prudent alternatives to avoiding the listed species
impact, the State Director can request the Administrator, through PSS,
to review the proposal and the results of the consultation process.
Based upon this review, the Administrator shall either inform the State
Director that a request for an exemption from Section 7 of the
Endangered Species Act is not warranted and the application shall be
denied or, if the Administrator believes it is warranted, shall request
an exemption from the Endangered Species Committee established by
Section 7(e) of the Act. No action shall be taken by the State Director
on the application until the Administrator informs the State Director of
the results of the exemption request.

9\. Once completed, the consultation process shall be reinitiated by
FmHA or upon request of the appropriate Area Manager, FWS, or Regional
Director, NMFS, if:

a\. New information or modification of the proposal reveals impacts that
may affect listed or proposed species or their habitats; or

b\. A new species is listed that may be affected by the proposal.

10\. In completing the above compliance procedures, particularly when
consulting with the referenced agencies, formally or informally, the
preparer of the environmental review document will request information
on whether any Category I or Category II species may be present within
the project area. These are candidate species; they are presently under
consideration for listing under Section 4 of the Endangered Species Act.
Category I species are those for which FWS currently has substantial
data on hand to support the biological appropriateness of proposing to
list the species as endangered or threatened. Currently data are being
gathered concerning essential habitat needs and, for some species, data
concerning the precise boundaries of critical habitat designations.
Development and publication of proposed rules on such species is
anticipated. Category II comprises species for which information now in
the possession of the FWS indicates that proposing to list the species
as endangered or threatened is possibly appropriate but for which
conclusive data on biological vulnerability and threat(s) are not
currently available to presently

(1-30-84) SPECIAL PN

RD Instruction 1940-G

Exhibit D

Page 6 (Added to 10-19-88, Special PN)

10 (Cont.)

support proposed rules. Whenever a Category I or II species may be
affected, the preparer of the environmental review document will
determine if the proposed project is likely to jeopardize the continued
existence of the species. Whenever this determination is made, the same
compliance procedures specified in paragraph 6 of this exhibit for a
proposed species will be followed. The purpose of the requirements of
this paragraph is to comply with the National Environmental Policy Act
as well as Departmental Regulation 9500-4, Fish and Wildlife Policy,
which specifies that USDA agencies will avoid actions which may cause a
species to become threatened or endangered. (Added 10-19-88, Special PN)

oOo

RD Instruction 1940-G

Exhibit E

Implementation Procedures For The

Wild and Scenic Rivers Act

1\. Each application for financial assistance or subdivision approval as
well as the proposed disposal of real property by FmHA shall be reviewed
to determine if it will affect a river or portion of it which is either
included in the National Wild and Scenic Rivers System, designated for
potential addition to the system, or identified in the Nationwide
Inventory prepared by the National Park Service (NPS) in the Department
of the Interior. The Nationwide Inventory identifies those river
segments that, after preliminary review, appear to qualify for inclusion
in the system. (For purposes of this Subpart, river segments in the
Nationwide Inventory shall be treated the same as segments within the
system with the exception of paragraph 8.) For applications subject to
environmental assessments, the review shall be accomplished as part of
the assessment. For applications that are excluded from an environmental
assessment, this review shall be documented as part of Form RD 1940-22,
\"Environmental Checklist For Categorical Exclusions,\" within the
reviewing office and shall be accomplished as early as possible after
receipt of the application and prior to approval of the application. The
FmHA official responsible for completing the environmental assessment
shall accomplish this review. (See §1940.316 of this Subpart.)

2\. In order to effectively implement this review, State Directors shall
ensure that State, District and County Offices maintain current listings
of rivers within their respective States that are included in or
designated for potential addition to the system as well as those
identified in the Nationwide Inventory prepared by NPS.

3\. For applications for water resources projects, as defined in
§1940.302(i) of this Subpart, the purpose of this review shall be to
determine whether the proposal would have a direct and adverse effect on
the values which served as the basis for the river\'s inclusion in the
system or designation for potential addition. For other applications,
the purpose of the review shall be to determine if the proposal would
invade the river area or unreasonably diminish the scenic, recreational,
and fish and wildlife values present in the area. To make these
determinations, the reviewer shall consult with the appropriate regional
office of NPS if the proposal (i) would be located within one-quarter
mile of the banks of the river, (ii) involves withdrawing water from the
river or discharging water to the river via a point source, or (iii)
would be visible from the river. The appropriate regional office of the
Forest Service (FS) shall be contacted under similar circumstances when
the effected river is on FS lands. Consultation shall be initiated by a
written request for comments on the potential impacts accompanied by a
description of the project and its location. The reviewer shall consult
in other instances when the likelihood of an impact on a river in the
system is identified as part of the environmental review. When the
reviewer determines there is no potential impact on such a river, the
documentation of this determination

(1-30-84) SPECIAL PN

RD Instruction 1940-G

Exhibit E

Page 2

3 (Cont.)

concludes the review process, unless reinitiation is required under
paragraph 10 of this Exhibit. In all other cases, the review is
completed as specified below in paragraphs 4 through 9 of this Exhibit.

4\. If the review is at the County or District Office level, the
reviewer can request the State Director (see §1940.307 of this subpart)
to perform the above consultation. The State Director can in turn make a
similar request of the National Office. If not requested to perform the
consultation for applications approvable at the County and District
Office levels, the SEC shall be informed whenever NPS or FS advises that
there is a potential for an adverse impact on a river within the system
or that protective measures need to be included or designed into the
proposal. In all cases, consultation shall be initiated by FmHA and not
the applicant. Until consultation is complete, FmHA shall not approve
the application. Should the need for consultation be identified after
application approval, FmHA shall, if still within its power at the time
of identification, refrain from making any irreversible or irretrievable
commitments of resources which would foreclose the consideration of
modifications or alternatives to the project.

5\. If NPS or FS advises there is no potential for an adverse effect as
described in paragraph 3 of this Exhibit, this review process is
concluded, unless the need to reinitiate arises. (See paragraph 10 of
this Exhibit.)

6\. Whenever the results of the consultation process include
recommendations by NPS or FS to modify the proposal in order to avoid an
adverse effect, as described in paragraph 3 above, the State Director
shall review these recommendations and require that they be incorporated
into the project as either design changes or special conditions to the
offer of assistance. If the State Director does not believe that the
Regional Director\'s recommendations can be so adopted, the
Administrator shall be requested to review the recommendations and to
assist in the further resolution of the matter.

7\. If NPS or FS advises that the proposal will have an unavoidable
adverse effect, as described in paragraph 3 of this Exhibit, on a river
segment which is either included in the National Wild and Scenic Rivers
System or designated for potential addition to the system, the FmHA
applicant will be informed by the reviewing office and the application
denied on this basis. However, if the State Director disagrees with this
determination, the State Director can request the Administrator to
review the proposal and attempt to further resolve the matter. The
specific reasons for disagreement along with supporting documentation
must be included in such a request. Based upon a review of this request,
the Administrator shall either inform the State Director that no further
consultation is

RD Instruction 1940-G

Exhibit E

Page 3

7 (Con.)

warranted and the application shall be denied or shall request the
headquarters staff of NPS or FS to further review the matter. No action
shall be taken by the State Director on the application until the
Administrator informs the State Director of the results of this further
review and consultation.

8\. If NPS or FS advises that the proposal will have an adverse effect,
as described in paragraph 3 of this Exhibit, on a river segment
identified in the Nationwide Inventory, the reviewer shall further
consult with NPS or FS in order to formulate adequate measures or
modifications to avoid or mitigate the potential adverse effect. The
purposes of such measures or modification is to ensure that the proposal
does not effectively foreclose the designation of a wild, scenic, or
recreational river segment. Once concurrence is reached and documented
with NPS or FS regarding modifications, the State Director shall require
that they be incorporated into the proposal as either design changes or
special conditions to the offer of assistance. If the State Director is
not able to reach an agreement with NPS or FS on appropriate
modifications, the Administrator shall be requested to assist in the
further resolution of the matter.

9\. If an application involves financial assistance or persist approval
from another Federal Agency, the FmHA reviewer shall work with the other
agency(s) to determine a lead Agency for the consultation process. When
FmHA is not the lead Agency, the reviewer shall ensure that the lead
Agency informs NPS or FS of FmHA\'s involvement.

10\. Once completed, the consultation process shall be reinitiated by
FmHA if new information or modification of the proposal reveals impacts
to a river within the System or Nationwide Inventory.

## oOo

(1-30-84) SPECIAL PN

RD Instruction 1940-G

Exhibit F

Implementation Procedures for the Coastal Barrier Resources Act

1\. The Act applies to barrier islands that Congress has designated for
inclusion in the Coastal Barrier Resources System. Since coastal
barriers are only found in East and Gulf Coast States, no other State
Offices fall under the requirements of the Act and, therefore, need be
concerned with these implementation procedures.

2\. On coastal barriers that are included in the system, the Act
prohibits any new expenditures or new financial assistance by the
Federal Government. There are some limited exceptions that are contained
in Section 6 of the Act and listed in Exhibit L of this Subpart.
Consequently, all of the following actions must be reviewed by the
environmental reviewer to determine if they would be located within the
System: any application for financial assistance, any proposed direct
expenditure of FmHA funds for construction or maintenance purposes, any
request for subdivision approval, and any proposed disposal of real
property that includes any form of financial assistance or subsidy to
the purchaser. The boundaries of the system can be determined by
reviewing a series of maps passed with the legislation and distributed
by the Department of the Interior. Each State Director is responsible
for ensuring that those field offices having components of the system
within their jurisdictions are aware of the system\'s boundaries
therein.

3\. Exhibit L lists the six categories of exceptions, that is, those
actions that may be taken within the system. No exception may be
implemented, however, without first consulting with the Secretary of the
Interior. It should also be noted that the sixth category is more
limited than the first five. Besides meeting the consultation
requirement for this sixth category, the sponsoring Agency must also
determine whether the proposed exception is consistent with the purposes
of the Act.

4\. For those actions that are reviewed and determined not to be within
the System, the environmental reviewer must document this result by
checking the appropriate compliance blocks on either Form RD 1940-22,
\"Environmental Checklist for Categorical Exclusions,\" or Form RD
1940-21, \"Environmental Assessment for Class I actions,\" or by so
stating this result in the environmental assessment for Class II Actions
(Exhibit H), depending upon whichever format is applicable to the action
under, review.

5\. For those actions that would be located within the system, one of
the following two steps must be taken:

(1-30-84) SPECIAL PN

RD Instruction 1940-G

Exhibit F

Page 2

a\. If the environmental reviewer concludes that the action does not
meet the criteria for an exception, as listed in Exhibit L, the reviewer
shall so inform the approving official and a final determination made in
the manner indicated in §1940.316 of this Subpart. If this determination
is consistent with the environmental reviewer\'s conclusion, the action
must be denied by the approving official and the affected applicant or
party informed of the reason for denial. If it is determined that the
action may qualify for an exception, the steps identified in Item b
immediately below must be implemented prior to a decision on this
question.

b\. If the environmental reviewer concludes that the proposed action may
meet the exception criteria, the approving official must be so informed.
Whenever the approving official agrees or makes a similar determination
as a result of the review conducted in Item a immediately above,
consultation shall be initiated with the Secretary of the Interior by
either the State Director or the Administrator for a National Office
activity. FmHA shall request the Secretary\'s views as to whether the
exception criteria are met and shall provide the Secretary with the
following information:

\(1\) A detailed description of the action and its location;

\(2\) A description of the affected environment within the System and
the impacts of the proposed action;

\(3\) The applicable exception criteria and FmHA\'s reasons for
believing they apply to this action; and

\(4\) If a Section 6(a)(6) exception is claimed, FmHA\'s reasons for
believing the action to be consistent with the purposes of the Act.

Should the Secretary concur in the exception criteria being met, that
portion of the environmental assessment relating to compliance with the
Act shall be completed and the corresponding documentation attached.
Should the Secretary not concur, a final decision on the approval or
denial of the action must be made by the Administrator.

## oOo 

RD Instruction 1940-G

Exhibit H

Environmental Assessment for Class II Actions

In completing this assessment, it is important to understand the
comprehensive nature of the impacts which must be analyzed.
Consideration must be given to all potential impacts associated with the
construction of the project, its operation and maintenance, the
operation of all identified primary beneficiaries, and the attainment of
the project\'s major objectives, whether they be an increased housing
stock, community improvement, economic development, or greater
agricultural productivity. This last category, the attainment of the
project\'s major objectives, often induces or supports changes in
population densities, land uses, community services, transportation
systems and resource consumption. The scope of the assessment is
broadened even further when there are related activities involved. The
impacts of these activities must also be assessed.

The preparer will consult as indicated in §1940.318(b) of this Subpart
with appropriate experts from Federal, State, and local agencies,
universities, and other organizations or groups whose views could be
helpful in the assessment of potential impacts. In so doing, each
discussion which is utilized in reaching a conclusion with respect to
the degree of an impact will be summarized in the assessment as
accurately as possible and include the name, title, phone number, and
organization of the individual contacted, plus the date of contact.
Related correspondence should be attached to the assessment.

The FmHA environmental assessment shall be prepared in the following
format. It shall address the listed items and questions and contain as
attachments the indicated descriptive materials, as well as the
environmental information submitted by the applicant, Form RD 1940- 20,
\"Request for Environmental Information.\"

The assessment has been designed to cover the wide variety of projects
and environments with which the Agency deals. Consequently, not every
issue or potential impact raised in the assessment may be relevant to
each project. The purpose of the format is to give the preparer an
understanding of a standard range of impacts, environmental factors, and
issues which may be encountered. In preparing an assessment, each topic
heading identified by a Roman numeral and each environmental factor
listed under topic heading IV, such as air quality, for example, must be
addressed.

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Exhibit H

Page 2

The amount of analysis and material that must be provided will depend
upon the type and size of the project, the environment in which it is
located, and the range and complexity of the potential impacts. The
amount of analysis and detail provided, therefore, must be commensurate
with the magnitude of the expected impact. The analysis of each
environmental factor (i.e., water quality) must be taken to the point
that a conclusion can be reached and supported concerning the degree of
the expected impact with respect to that factor.

For example, a small community center may not require detailed
information on air emissions or solid waste management, but an
industrial facility would. Similarly, an irrigation project for a
farming operation would concentrate on such factors as water quality and
fish and wildlife, rather than land use changes. The extension of a
water or sewer system or the approval of a subdivision, on the other
hand, would have to give close attention to all factors, with potential
land use changes being a particularly important one.

I. Project Description and Need

Identify the name, project number, location, and specific elements of
the project along with their sizes, and, when applicable, their design
capacities. Indicate the purpose of the project, FmHA\'s position
regarding the need for it, and the extent or area of land to be
considered as the project site.

II\. Primary Beneficiaries and Related Activities

Identify any existing businesses or major developments that will benefit
from the project and those which will expand or locate in the area
because of the project. Specify by name, product, service, and
operations involved.

Identify any related activities which are defined as interdependent
parts of a FmHA action. Such undertakings are considered interdependent
parts whenever they either make possible or support the FmHA action or
are themselves induced or supported by the FmHA action or another
related activity. These activities may have been completed in the very
recent past and are now operational, or they may reasonably be expected
to be accomplished in the near future. Related activities may or may not
be federally permitted or assisted. When they are, identify the involved
Federal Agency(s).

RD Instruction 1940-G

Exhibit H

Page 3

II\. (Cont.)

In completing the remainder of the assessment, it must be remembered
that the impacts to be addressed are those which stem from the project,
the primary beneficiaries, and the related activities.

III\. Description of Project Area

Describe the project site and its present use. Describe the surrounding
land uses; indicate the directions and distances involved. The extent of
the surrounding land to be considered depends on the extent of the
impacts of the project, its related activities, and the primary
beneficiaries. Unique or sensitive areas must be pointed out. These
include residential, schools, hospitals, recreational, historical sites,
beaches, lakes, rivers, parks, floodplains, wetlands, dunes, estuaries,
barrier islands, natural landmarks, unstable soils, steep slopes,
aquifer recharge areas, important farmlands and forestlands, prime
rangelands, endangered species habitats, or other delicate or rare
ecosystems.

Attach adequate location maps of the project area, as well as (1) a U.S.
Geological Survey \"15 minute\" (\"7 1/2 minute,\" if available,)
topographic map which clearly delineates the area and the location of
the project elements, (2) the Department of Housing and Urban
Development\'s floodplain map(s) for the project area, (3) site photos,
(4) if completed, a standard soil survey for the project, and (5) if
available, an aerial photograph of the site. When necessary for
descriptive purposes or environmental analysis, include land use maps or
other graphic information. All graphic materials shall be of high
quality resolution.

IV\. Environmental Impact

1\. Air Quality - Discuss, in terms of the amounts and types of
emissions to be produced, all aspects of the project including
beneficiaries\' operations and known indirect effects (such as increased
motor vehicle traffic) which will affect air quality. Indicate the
existing air quality in the area. Indicate if topographical or
meteorological conditions hinder or affect the dispersal of air
emissions. Evaluate the impact on air quality given the types and
amounts of projected emissions, the existing air quality, and
topographical and meteorological conditions. Discuss the project\'s
consistency with the State\'s air quality implementation plan for the
area, the classification of the air quality control region within which
the project is located, and the status of compliance with air quality
standards within that region. Cite any contacts with appropriate experts
and agencies which must issue necessary permits.

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Exhibit H

Page 4

IV 1. (Cont.)

Indicate whether silvicultural, agricultural or other operations will
employ open burning. If so, discuss whether local or State requirements
exist for permitting such burning and generally discuss their content.
If no permit requirements exist, discuss the type and quantity of
burning to be undertaken and the methods to reduce smoke and to mitigate
its adverse impacts.

2\. Water Quality - Discuss, in terms of amounts and types of effluents,
all aspects of the project including primary beneficiaries\' operations
and known indirect effects which will affect water quality. Indicate the
existing water quality of surface and/or underground water to be
affected. Evaluate the impacts of the project on this existing water
quality. Indicate if an aquifer recharge area is to be adversely
affected. If the project lies within or will affect a sole source
aquifer recharge area as designated by EPA, contact the appropriate EPA
regional office to determine if its review is necessary. If it is,
attach the results of its review.

Indicate the source and available supply of raw water and the extent to
which the additional demand will affect the raw water supply. Describe
the wastewater treatment system(s) to be used and indicate their
capacity and their adequacy in terms of the degree of treatment
provided. Discuss the characteristics and uses of the receiving waters
for any sources of discharge. If the treatment system(s) are or will be
inadequate or overloaded, describe the steps being taken for necessary
improvements and their completion dates. Compare such dates to the
completion date of the FmHA project. Analyze the impacts on the
receiving water during any estimated period of inadequate treatment.

Discuss the project\'s consistency with the water quality planning for
the area, such as EPA\'s Section 208 areawide waste treatment management
plan. Discuss the project\'s consistency with applicable State water
quality standards to include a discussion of whether or not the project
would either impair any such standard or fail to meet antidegradation
requirements for point or nonpoint sources. Describe how surface runoff
is to be handled and the effect of erosion on streams.

Evaluate the extent to which the project may create shortages for or
otherwise adversely affect the withdrawal capabilities of other present
users of the raw water supply, particularly in terms of possible human
health, safety, or welfare problems.

RD Instruction 1940-G

Exhibit H

Page 5

IV 2. (Cont.)

For projects utilizing a groundwater supply, evaluate the potential for
the project to exceed the safe pumping rate for the aquifer to the
extent that it would (1) adversely affect the pumping capability of
present users, (2) increase the likelihood of brackish or saltwater
intrusion, thereby decreasing water quality, or (3) substantially
increase surface subsidence risks. For projects utilizing a surface
water supply, evaluate the potential for the project to (1) reduce flows
below the minimum required for the protection of fish and wildlife or
(2) reduce water quality standards below those established for the
stream classification at the point of withdrawal or the adjacent
downstream section.

Cite contacts with appropriate experts and agencies that must issue
necessary permits.

[3. Solid Waste Management - Indicate all aspects of the project
including primary beneficiaries\' operations, and known indirect effects
which will necessitate the disposal of solid wastes. Indicate the kinds
and expected quantities of solid wastes involved and the disposal
techniques to be used. Evaluate the adequacy of these techniques
especially in relationship to air and water quality. Indicate if
recycling or resource recovery programs are or will be used. Cite any
contacts with appropriate experts and agencies that must issue necessary
permits.]{.mark}

4\. Land Use - Given the description of land uses as previously
indicated, evaluate (a) the effect of changing the land use of the
project site and (b) how this change in land use will affect the
surrounding land uses and those within the project\'s area of
environmental impact. Particularly address the potential impacts to
those unique or sensitive areas discussed under Section III, Description
of Project Area, which are not covered by the specific analyses required
in Sections V-XI. Describe the existing land use plan and zoning
restrictions for the project area. Evaluate the consistency of the
project and its impacts with these plans. For all actions subject to the
requirements of Exhibit M of this subpart indicate (a) whether or not
highly erodible land, wetland or converted wetland is present, (b) if
any exemption(s) applies to the requirements of Exhibit M, (c) the
status of the applicant\'s eligibility for an FmHA loan under Exhibit M
and (d) any steps the applicant must take prior to loan approval to
retain or regain its eligibility. Attach a completed copy of Form
SCS-CPA-26, \"Highly

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Exhibit H

Page 6

IV\. 4 (Cont.)

Erodible Land and Wetland Conservation Determination,\" for the action.

5\. Transportation - Describe available facilities such as highways and
rail. Discuss whether the project will result in an increase in motor
vehicle traffic and the existing road\'s ability to safely accommodate
this increase. Indicate if additional traffic control devices are to be
installed. Describe new traffic patterns which will arise because of the
project. Discuss how these new traffic patterns will affect the land
uses described above, especially residential, hospitals, schools, and
recreational. Describe the consistency of the project\'s transportation
impacts with the transportation plans for the area and any air quality
control plans. Cite any contact with appropriate experts.

6\. Natural Environment - Indicate all aspects of the project including
construction, beneficiaries\' operations, and known indirect effects
which will affect the natural environment including wildlife, their
habitats, and unique natural features. Cite contacts with appropriate
experts. If an area listed on the National Registry of Natural Landmarks
may be affected, consult with the Department of Interior and document
these consultations and any agreements reached regarding avoidance or
mitigation of potential adverse impacts.

7\. Human Population - Indicate the number of people to be relocated and
arrangements being made for this relocation. Discuss how impacts
resulting from the project such as changes in land use, transportation
changes, air emissions, noise, odor, etc. will affect nearby residents
and users of the project area and surrounding areas. Discuss whether the
proposal will accommodate any population increases and, if so, describe
the potential impacts of these increases on the area\'s public and
community services such as schools, health care, social services, and
fire protection. Cite contacts with appropriate experts.

8\. Construction - Indicate the potential effects of construction of the
project on air quality, water quality, noise levels, solid waste
disposal, soil erosion and siltation. Describe the measures that will be
employed to limit adverse effects. Give particular consideration to
erosion, stream siltation, and clearing operations.

9\. Energy Impacts - Indicate the project\'s and its primary
beneficiaries\' effects on the area\'s existing energy supplies. This
discussion should address not only the direct energy utilization, but
any major indirect

RD Instruction 1940-G

Exhibit H

Page 7

IV 9. (Cont.)

utilization resulting from the siting of the project. Describe the
availability of these supplies to the project site. Discuss whether the
project will utilize a large share of the remaining capacity of an
energy supply or will create a shortage of such supply. Discuss any
steps to be taken to conserve energy.

10\. Discuss any of the following areas which may be relevant: noise,
vibrations, safety, seismic conditions, fire-prone locations, radiation,
and aesthetic considerations. Cite any discussion with appropriate
experts.

V. Coastal Zone Management Act \*

Indicate if the project is within or will impact a coastal area defined
as such by the State\'s approved Coastal Zone Management Program. If so,
consult with the State agency responsible for the Program to determine
the project\'s consistency with it. The results of this coordination
shall be included in the assessment and considered in completing the
environmental impact determination and environmental findings (Item XXI
below).

\* Complete only if coastal or Great Lakes State.

VI\. Compliance with Advisory Council on Historic Preservation\'s
Regulations

In this Section, the preparer shall detail the steps taken to comply
with the above regulations as specified in Subpart F of Part 1901 of
this Chapter. First, indicate that the National Register of Historic
Places, including its monthly supplements, has been reviewed and whether
there are any listed properties located within the area to be affected
by the project. Second, indicate the steps taken such as
historical/archaeological surveys to determine if there are any
properties eligible for listing located within the affected area.
Summarize the results of the consultation with the State Historic
Preservation Officer (SHPO) and attach appropriate documentation of the
SHPO\'s views. Discuss the views of any other experts contacted. Based
upon the above review process and the views of the SHPO, state whether
or not an eligible or listed property will be affected.

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Exhibit H

Page 8

VI\. (Cont.)

If there will be an effect, discuss all of the steps and protective
measures taken to complete the Advisory Council\'s regulations. Describe
the affected property and the nature of the effect. Attach to the
assessment the results of the coordination process with the Advisory
Council on Historic Preservation.

VII\. Compliance with the Wild and Scenic Rivers Act

Indicate whether the project will affect a river or portion of it which
is either included in the National Wild and Scenic Rivers System or
designated for potential addition to the system. This analysis shall be
conducted through discussions with the appropriate regional office of
the National Park Service or the Forest Service when its lands are
involved, as well as the appropriate State agencies having
implementation authorities. See Exhibit E for specific implementation
instructions for this Act. A summary of discussions held or any required
formal coordination shall be included in the assessment and considered
in completing the environmental impact determination and environmental
findings (Item XXI below).

VIII\. Compliance with the Endangered Species Act

Indicate whether the project will either (1) affect a listed endangered
or threatened species or critical habitat or (2) adversely affect a
proposed critical habitat for an endangered or threatened species or
jeopardize the continued existence of a proposed endangered or
threatened species. This analysis will be conducted in consultation with
the Fish and Wildlife Service and the National Marine Fisheries Service,
when appropriate. Any formal or informal consultations conducted with
these agencies as well as any State wildlife protection agency will also
address impacts to Category I and Category II species. See Exhibit D of
this subpart for specific implementation instructions.

The results of any required coordination shall be included in the
assessment along with any completed biological opinion and mitigation
measures to be required for the project. These factors shall be
considered in completing the environmental impact determination.

IX\. Compliance with Farmland Protection Policy Act, SCS\'s
Implementation Rule, and Departmental Regulation 9500-3, Land Use
Policy.

RD Instruction 1940-G

Exhibit H

Page 9

IX\. (Cont.)

Indicate whether the project will either directly or indirectly convert
an important land resource(s) identified in the Act or Departmental
Regulation, other than floodplains or wetlands which should be addressed
below in Item X of this exhibit. If a conversion may result, determine
if there is a practicable alternative to avoiding it. If there is no
such alternative, determine whether all practicable mitigation measures
are included in the project. Document as an attachment these
determinations and the steps taken to inform the public, locate
alternatives, and mitigate potential adverse impacts. See Exhibit C of
this subpart for specific implementation guidance.

X. Compliance with Executive Order 11988, Floodplain Management, and
Executive Order 11990, Protection of Wetlands

Indicate whether the project is either located within a 100-year
floodplain (500-year floodplain for a critical action) or a wetland or
will impact a floodplain or wetland. If so, determine if there is a
practicable alternative project or location. If there is no such
alternative, determine whether all practicable mitigation measures are
included in the project and document as an attachment these
determinations and the steps taken to inform the public, locate
alternatives, and mitigate potential adverse impacts. See the U.S. Water
Resource Council\'s Floodplain Management Guidelines for more specific
guidance as well as Exhibit C of this Subpart.

XI\. Compliance with Coastal Barrier Resources Act

Indicate whether the project is located within the Coastal Barrier
Resources System. If so, indicate whether or not the project meets an
exception criteria under the Act and the results of any consultation
with the Secretary of the Interior regarding its qualification as an
exception. See Exhibit F of this Subpart for specific implementation
instructions as well as Exhibit G for a listing of the exception
criteria. (Those States not having any components of the system within
their jurisdiction need not reference this item in their assessments.)

XII\. State Environmental Policy Act

Indicate if the proposed project is subject to a State environmental
policy act or similar regulation. Summarize the results of compliance
with these requirements and attach available documentation. (See
§1940.328 of this Subpart for further guidance.)

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Exhibit H

Page 10

XIII\. Consultation Requirements of Executive Order 12372,

Intergovernmental Review of Federal Programs

Attach the comments of State, regional, or local agencies (if this
review process is required for the project) and respond to all comments
that deal with the subject matters discussed in this assessment format
or are otherwise of an environmental nature.

XIV\. Environmental Analysis of Participating Federal Agency

Indicate if another Federal Agency is participating in the project
either through the provision of additional funds, a companion project,
or a permit review authority. Summarize the results of the involved
Agency\'s environmental impact analysis and attach available
documentation. (See §1940.318(d) of this Subpart for further guidance.)

XV\. Reaction to Project

Discuss any negative comments or public views raised about the project
and the consideration given to these comments. Indicate whether a public
hearing or public information meeting has been held either by the
applicant or FmHA to include a summary of the results and any objections
raised. Indicate any other examples of the community\'s awareness of the
project, such as newspaper articles or Public notifications.

XVI\. Cumulative Impacts

Summarize the cumulative impacts of this project and the related
activities. Give particular attention to land use changes and air and
water quality impacts. Summarize the results of the environmental impact
analysis done for any of these related activities and/or your discussion
with the sponsoring agencies. Attach available documentation of the
analysis.

XVII\. Adverse Impact

Summarize the potential adverse impacts of the proposal as pointed out
in the above analysis.

XVIII\. Alternatives

Discuss the feasibility of alternatives to the project and their
environmental impacts. These alternatives should include (a) FmHA

RD Instruction 1940-G

Exhibit H

Page 11

XVIII\. (Cont.)

alternative locations, (b) alternative designs, (c) alternative projects
having similar benefits, and (d) no project. If alternatives have been
fully discussed above in any of Items VI through X, simply reference
that discussion.

XIX\. Mitigation Measures

Describe any measures which will be taken or required by FmHA to avoid
or mitigate the identified adverse impacts. Analyze the environmental
impacts and potential effectiveness of the mitigation measures. Such
measures shall be included as special requirements or provisions to the
offer of financial assistance or other appropriate approval document if
the action does not involve financial assistance.

XX\. Consistency with FmHA Environmental Policies

Discuss the project\'s consistencies and inconsistencies with the
Agency\'s environmental policies and the State Office\'s Natural
Resource Management Guide. See §1940.304 and §1940.305 for a discussion
of these policies and Exhibit B for a discussion of the guide.

XXI\. Environmental Determinations

The following recommendations shall be completed:

a\. Based on an examination and review of the foregoing information and
such supplemental information attached hereto, I recommend that the
approving official determine that this project will have ( ) a
significant effect on the quality of the human environment and an
Environmental Impact Statement must be prepared. Will not have ( ) a
significant effect on the quality of the human environment.

b\. I recommend that the approving official make the following
compliance determinations for the below-listed environmental
requirements.

Not In In

In Compliance Compliance

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_ Clean Air Act

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_ Federal Water Pollution
Control Act

(10-19-88) SPECIAL PN

RD Instruction 1940-G

Exhibit H

Page 12

XXI\. (Cont.)

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Safe Drinking Water
Act - Section 1424(e)

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Endangered Species Act

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Coastal Barrier
Resources Act

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Coastal Zone Management
Act -

Section 307(c)(l) and (2)

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Wild and Scenic Rivers
Act

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ National Historic
Preservation Act

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Archaeological and
Historic Preservation Act

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Subtitle B, Highly
Erodible Land

Conservation, and Subtitle C, Wetland

Conservation, of the Food Security Act

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Executive Order 11988,
Floodplain

Management

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Executive Order 11990,
Protection of

Wetlands

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Farmland Protection
Policy Act

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Departmental Regulation
9500-3, Land Use

Policy

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ State Office Natural
Resource Management

Guide

c\. I have reviewed and considered the types and degrees of adverse
environmental impacts identified by this assessment. I have also
analyzed the proposal for its consistency with FmHA environmental
policies, particularly those related to important farmland protection,
and have considered the potential benefits of the proposal. Based upon a
consideration and balancing of these factors, I recommend from an
environmental standpoint

RD Instruction 1940-G

Exhibit H

Page 13

XXI c. (Cont.)

that the project

\_\_\_\_\_\_\_\_\_\_\_ be approved

\_\_\_\_\_\_\_\_\_\_\_ not be approved because of the attached reasons.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature of Preparer\* Date

Title\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

\* See §1940.302 of this Subpart for listing of officials responsible
for preparing assessment.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature of Concurring Official Date

(When required by §1940.316 of

this Subpart)

Title\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

State Environmental Coordinator\'s Review

(When required by §1940.316 of this Subpart)

I have reviewed this environmental assessment and supporting
documentation. Following are my positions regarding its adequacy and the
recommendations reached by the preparer. For any matter in which I do
not concur, my reasons are attached as Exhibit\_\_\_\_\_\_\_.

Do Not Concur Concur

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Adequate Assessment

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Environmental Impact
Determination

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Compliance
Determinations

\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_\_\_\_ Project Recommendation

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Signature of State Environmental Coordinator Date

RD Instruction 1940-G

Exhibit I

SUBJECT: Finding of No Significant Environmental Impact and

Necessary Environmental Findings for (insert name,

location, and any identification number of project)

TO: Project File

The attached environmental assessment for the subject proposal has been
prepared and reviewed by the appropriate FmHA official(s). After
reviewing the assessment and the supporting materials attached to it, I
find that the subject proposal will not significantly affect the quality
of the human environment. Therefore, the preparation of an environmental
impact statement is not necessary.

I also find that the assessment properly documents the proposal\'s
status of compliance with the environmental laws and requirements listed
therein.

Insert signature and \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

title of approving official Date

as specified in

§1940.316 of this Subpart.

## oOo

RD Instruction 1940-G

Exhibit J

Locations and Telephone Numbers of Federal Emergency Management

Administration\'s Regional Offices

[Federal Region]{.underline} [Location]{.underline} [FTS
Number]{.underline}\* [Commercial Number]{.underline}

I Boston, MA 223-4741 (617) 223-4741

II New York, NY 264-8980 (212) 264-8980

III Philadelphia, PA 597-9416 (215) 597-9416

IV Atlanta, GA 257-2400 (404) 881-2400

V Chicago, IL 353-1500 (312) 353-1500

VI Dallas, TX 749-9201 (817) 387-5811

VII Kansas City, MO 758-5912 (816) 374-5912

VIII Denver, CO 234-2553 (303) 234-2553

IX San Francisco, CA 556-8794 (415) 556-8794

X Seattle, WA 396-0284 (206) 481-8800

\*This is the main number for the regional office. For floodplain

information, ask for the Natural and Technological Hazards Division.

## oOo

(1-30-84) SPECIAL PN

RD Instruction 1940-G

Exhibit K

Locations and Telephone Numbers of U.S. Fish and

Wildlife Service\'s Wetland Coordinators

The U.S. Fish and Wildlife Service (FWS) is presently preparing the
National Wetlands Inventory. Each regional office of the FWS has named a
staff member as a Wetland Coordinator. These individuals can provide
updated information concerning existing State and local wetland surveys
and Federal inventories. Listed below are the FWS regional offices and
their areas of responsibility.

[Region I]{.underline}

Portland, OR FTS 429-6154

Commercial (503) 231-6154

Areas Covered: California Hawaii

Idaho Nevada

Oregon Washington

U.S. Pacific Trust, Territories and Possessions

[Region II]{.underline}

Albuquerque, NM FTS 474-3152

Commercial (505) 766-2914

Areas Covered: Arizona New Mexico

Oklahoma Texas

[Region III]{.underline}

Twin Cities, MN FTS 725-3593

Commercial (612) 725-3593

Areas Covered: Illinois Minnesota

Indiana Ohio

Michigan Wisconsin

(1-30-84) SPECIAL PN

RD Instruction 1940-G

Exhibit K

Page 2

[Region IV]{.underline}

Atlanta, GA FTS 242-6343

Commercial (404) 221-6343

Areas Covered: Alabama Mississippi

Arkansas North Carolina

Florida Panama Canal Zone

Georgia Puerto Rico

Kentucky South Carolina

Louisiana Tennessee

Virgin Islands

[Region V]{.underline}

Newton Corner, MA FTS 829-9379

Commercial (617) 965-5100

Ext. 379

Areas Covered: Connecticut New Jersey

Delaware New York

District of Columbia Pennsylvania

Maine Rhode Island

Maryland Vermont

Massachusetts Virginia

New Hampshire West Virginia

[Region VI]{.underline}

Denver, CO FTS 234-5586

Commercial (303) 234-5586

Areas Covered: Colorado Nebraska

Iowa North Dakota

Kansas South Dakota

Missouri Utah

Montana Wyoming

[Alaska Area Office]{.underline}

Anchorage, AK Commercial (907) 263-3403

[National Office]{.underline}

St. Petersburg, FL FTS 826-3624

Commercial (813) 893-3624

oOo

RD Instruction 1940-G

Exhibit L

Exceptions to Restrictions of Coastal Barrier Resources Act

Section 6 Exceptions\*

\(a\) Notwithstanding Section 5, the appropriate Federal officer, after
consultation with the Secretary, may make Federal expenditures or
financial assistance available within the Coastal Barrier Resources
System for-

\(1\) Any use or facility necessary for the exploration, extraction, or
transportation of energy resources which can be carried out only on, in,
or adjacent to coastal water areas because the use or facility requires
access to the coastal water body;

\(2\) The maintenance of existing channel improvements and related
structures, such as jetties, and including the disposal of dredge
materials related to such improvements;

\(3\) The maintenance, replacement, reconstruction, or repair, but not
the expansion, of publicly owned or publicly operated roads, structures,
or facilities that are essential links in a larger network or system;

\(4\) Military activities essential to national security;

\(5\) The construction, operation, maintenance, and rehabilitation of
Coast Guard facilities and access thereto; and

\(6\) Any of the following actions or projects, but only if the making
available of expenditures or assistance therefore is consistent with the
purposes of this Act:

\(A\) Projects for the study, management, protection and enhancement of
fish and wildlife resources and habitats, including, but not limited to,
acquisition of fish and wildlife habitats and related lands,
stabilization projects for fish and wildlife habitats, and recreational
projects.

\(B\) The establishment, operation, and maintenance of air and water
navigation aids and devices, and for access thereto.

\(C\) Projects under the Land and Water Conservation Fund Act of 1965
(16 U.S.C. 4601-4 through 11) and the Coastal Zone Management Act of
1972 (16 U.S.C. 1452 et seq.).

\(D\) Scientific research, including but not limited to aeronautical,
atmospheric, space, geologic, marine, fish and wildlife and other
research, development and applications.

\*Quoted from Section 6 of the Act, P.L. 97-348.

(1-30-84) SPECIAL PN

RD Instruction 1940-G

Exhibit L

Page 2

\(E\) Assistance for emergency actions essential to the saving of lives
and the protection of property and the public health and safety, if such
actions are performed pursuant to Sections 305 and 306 of the Disaster
Relief Act of 1974 (42 U.S.C. 5145 and 5146) and Section 1362 of the
National Flood Insurance Act of 1968 (42 U.S.C. 4103) and are limited to
actions that are necessary to alleviate the emergency.

\(F\) The maintenance, replacement, reconstruction, or repair, but not
the expansion, of publicly owned or publicly operated roads, structures,
or facilities.

\(G\) Nonstructural projects for shoreline stabilization that are
designed to mimic, enhance, or restore natural stabilization systems.

\(b\) For purposes of Subsection (a)(2), a channel improvement or a
related structure shall be treated as an existing improvement or an
existing related structure only if all, or a portion, of the moneys for
such improvement or structure was appropriated before the date of the
enactment of this Act.

## oOo 

RD Instruction 1940-G

Exhibit M

Page 1

Implementation Procedures for the Conservation of Wetlands

and Highly Erodible Land Affecting Farmer Program Loans and

Loans to Indian Tribes and Tribal Corporations

1\. [Background]{.underline}. This exhibit implements the requirements
of Subtitle B, Highly Erodible Land Conservation, and Subtitle C,
Wetland Conservation, of Title XII of the Food Security Act of 1985,
Public Law 99-198. The purposes of these Subtitles are to: reduce soil
loss due to wind and water erosion; protect the Nation\'s long term
capability to produce food and fiber; reduce sedimentation; improve
water quality; assist in preserving the Nation\'s wetlands; create
better habitat for fish and wildlife through improved food and cover;
and curb production of surplus commodities by removing certain
incentives for persons to produce agricultural commodities on highly
erodible land or converted wetland.

2\. [Applicability]{.underline}. The provisions of this exhibit apply to
insured and guaranteed Farmer Program loans and loans to Indian Tribes
and Tribal Corporations, subordinations, transfers and assumptions of
such loans and leases and credit sales of inventory property. For the
purpose of this exhibit, \"Farmer Program loans\" means Farm Operating
Loans, Farm Ownership Loans, Emergency Loans, and Soil and Water Loans.
As used in this exhibit, the word loan is meant to include guarantee as
well. Applicant means an applicant for either an insured or guaranteed
loan and borrower means a recipient of either an insured or guaranteed
loan.

3\. [FmHA prohibited activities]{.underline}. Unless otherwise exempted
by the provisions of this exhibit, the proceeds of any Farmer Program
loan or loan to an Indian Tribe or Tribal Corporation made or guaranteed
by FmHA will not be used either (a) for a purpose that will contribute
to excessive erosion of highly erodible land, or (b) for a purpose that
will contribute to conversion of wetlands to produce an agricultural
commodity. (See §12.2(a)(l) of Subpart A of Part 12 of Subtitle A of
Title 7, which is Attachment 1 of this exhibit and is available in any
FmHA office, for the definition of an agricultural commodity.)
Consequently, any applicant proposing to use loan proceeds for an
activity contributing to either such purpose, will not be eligible for
the requested loan. Any borrower that uses loan proceeds in a manner
that contributes to either such purpose will be in default on the loan.

a\. [U.S. Department of Agriculture (USDA) definitions]{.underline}.

In implementing this exhibit, FmHA will use the USDA\'s definitions of
the terms found at §12.2 of Subpart A of Part 12 of Subtitle A of Title
7 (Attachment 1 of this exhibit which is available in any FmHA office).

(3-4-88) SPECIAL PN

RD Instruction 1940-G

Exhibit M

Page 2

b\. [Highly erodible land conservation]{.underline}.

FmHA will conclude that excessive erosion of highly erodible land
results or would result whenever (1) a field on which highly erodible
land is predominant, as determined by the Soil Conservation Service
(SCS), is or would be used to produce an agricultural commodity without
conformance to a conservation system approved either by SCS or the
appropriate conservation district, as evidenced by a statement from SCS,
and (2) such field is not exempt from the provisions of this exhibit.

c\. [Wetland conservation]{.underline}.

FmHA will conclude that a conversion of wetlands to produce an
agricultural commodity has occurred or will occur whenever, as
determined by SCS, (1) a wetland has or will be drained, dredged,
filled, leveled, or otherwise manipulated (including any activity that
results in impairing or reducing the flow, circulation, or reach of
water) that makes possible the production of an agricultural commodity
without further application of the manipulations described herein if (a)
such production would not have been possible but for such action and (b)
before such action such land was wetland and was neither highly erodible
land nor highly erodible cropland; and (2) neither the affected wetland
nor the activity affecting the wetland is exempt from the provisions of
this exhibit.

d\. [Use of loan proceeds]{.underline}.

To use loan proceeds for a purpose that contributes to either the
excessive erosion of highly erodible land or the conversion of wetlands
to produce an agricultural commodity means that loan proceeds will or
have been used in a way that contributes to either excessive erosion of
highly erodible land or the conversion of wetlands to produce an
agricultural commodity by paying the costs of any of the following:

\(1\) The purchase of the affected land;

\(2\) Necessary planning, feasibility, or design studies;

\(3\) Obtaining any necessary permits;

RD Instruction 1940-G

Exhibit M

Page 3

\(4\) The purchase, contract, lease or renting of any equipment or
materials necessary to carry out the land modification or conversion to
include all associated operational costs such as fuel and equipment
maintenance costs;

\(5\) Any labor costs;

\(6\) The planting, cultivating, harvesting, or marketing of any
agricultural commodity produced on nonexempt highly erodible land to
include any associated operational or material costs such as fuel, seed,
fertilizer, and pesticide costs;

\(7\) Within the crop year in which the wetland conversion was completed
plus the next ten crop years thereafter, the planting, cultivating,
harvesting, or marketing of any agricultural commodity produced on the
affected land to include any associated operational or materials costs
such as fuel, seed, fertilizer and pesticide costs; or

\(8\) For the same time period as in subparagraph 3 d (7) above, any
costs associated with using for on-farm purposes an agricultural
commodity grown on the affected land.

\(9\) Additionally, if loan proceeds will be or have been substituted to
pay other costs at anytime during the life of the loan so that non-loan
funds can be used to pay any of the above costs, it is deemed that loan
proceeds will be or have been used for a purpose that contributes to the
prohibited activities described in this paragraph.

4\. [Prohibited activities under other USDA financial assistance
programs]{.underline}. Unless otherwise exempted, a person becomes
ineligible for a variety of USDA financial assistance programs if that
person produces in any crop year an agricultural commodity on either a
field on which highly erodible land is predominant or a converted
wetland. This ineligibility extends to any commodity produced during the
crop year that the prohibited action occurs. The programs for which the
person would be ineligible include price support payments, farm storage
facility loans, disaster payments, crop insurance, payments made for the
storage of an agricultural commodity, and payments received under a
Conservation Reserve Program Contract. Farmer Program applicants and
borrowers and applicants for, and borrowers of, loans to Indian Tribes
and Tribal Corporations, therefore, can be affected not only by the FmHA
prohibited activities but also by the broad USDA sweep of the Subtitle B
and C restrictions. Should such an applicant rely or plan

(3-4-88) SPECIAL PN

RD Instruction 1940-G

Exhibit M

Page 4

4 (Cont.)

to rely on any of these other USDA financial assistance programs as a
source of funds to repay its FmHA loan(s) and then fail to meet the
other program(s)\' eligibility criteria related to wetland or highly
erodible land conservation, repayment ability to FmHA or the lender of
an FmHA guaranteed loan may be jeopardized. Consequently, those
applicants who are applying for a loan and those borrowers who receive a
loan after the effective date of Subtitles B and C, as designated in
Part 12 of Subtitle A of Title 7, and who include in their projected
sources of repayment, potential funds from any USDA program subject to
some form of Subtitle B or C restrictions will have to demonstrate as
part of their applications, and for borrowers, as part of their farm
plan of operation, their ability to meet the other program(s)\'
eligibility criteria. Failure to meet the criteria will require the
applicant or borrower either to document an alternative, equivalent
source of revenues or, if possible, agree to undertake any steps
necessary to gain eligibility for the other program(s). See paragraph 6
of this exhibit for a discussion of such steps.

5\. [Applicant\'s responsibilities]{.underline}.

a\. [Required information]{.underline}. Every applicant for a Farmer
Program loan or a loan to an Indian Tribe or Tribal Corporation will be
required to provide the following information and, as applicable,
certification as part of the application for financial assistance. An
application will not be considered to be complete until this information
and certification are provided to FmHA. Once an applicant has provided
FmHA with information from SCS on the presence of any highly erodible
land, wetland, or converted wetland this information need not be
provided again for a subsequent loan unless there is either a change in
the property upon which FmHA loan proceeds will be applied or a change
in the previous information, such as a change in the status of an
exemption. There is a continuing responsibility on FmHA borrowers using
other USDA financial assistance programs for repayment purposes to
provide the County Supervisor with an executed copy of any similar
certification required by the other USDA agency at the time of each
required certification.

\(1\) A statement from the SCS indicating whether or not the
applicant\'s farm property or properties contain either highly erodible
land, wetland, or converted wetland and, if so, whether or not the
applicant qualifies for a particular exemption to the provisions of this
exhibit and as further detailed in paragraph 11 below. The property or
properties will be listed and described in accordance with the

RD Instruction 1940-G

Exhibit M

Page 5

5 a (1) (Cont.)

Agriculture Stabilization and Conservation Service\'s (ASCS) farm
records system. SCS\'s execution of Form SCS-CPA-26, \"Highly Erodible
Land and Wetland Conservation Determination,\" is necessary to meet this
information requirement.

\(2\) If either highly erodible land, wetland, or converted wetland is
present, the applicant\'s properly executed original or carbon copy of
Form AD-1026, \"Highly Erodible Land and Wetland Conservation
Certification.\"

b\. [Required actions]{.underline}.

If at any time during the application review process any of the
information or basis for an applicant\'s certification changes, the
applicant (or the lender in the case of a guaranteed loan) must
immediately notify FmHA. If an applicant intends to produce an
agricultural commodity on a nonexempt field on which highly erodible
land is predominant, the applicant must develop a conservation system
approved by SCS or the appropriate conservation district, demonstrate
that it is or will be in compliance with the system at the time the
field is to be used, and provide SCS\'s concurrence with this position.

6\. [FmHA\'s application review]{.underline}. The FmHA County Supervisor
will review the information provided by the applicant from SCS regarding
the presence of any highly erodible land, wetland, or converted wetland
and any possible exemptions and take the actions warranted by the
presence of one or more of the circumstances described below. In
carrying out these actions, FmHA will consider the technical decisions
rendered by the SCS and the ASCS, as assigned to these agencies by
Subparts A, B, and C of Part 12 of Subtitle A of Title 7 and further
explained in this exhibit, to be final and controlling in the remaining
FmHA decisionmaking process for this exhibit. It must also be understood
that the definition of a wetland used by SCS in implementing this
exhibit applies only to this exhibit and not to other wetland protection
provisions of Subpart G of Part 1940.

a\. [No highly erodible land, wetland, or converted wetland
present]{.underline}.

The requested loan can be approved under the provisions of this exhibit
and, except for documenting this result in accordance with paragraph 8
of this exhibit, no further action is required.

(3-4-88) SPECIAL PN

RD Instruction 1940-G

Exhibit M

Page 6

b\. [Converted wetland present]{.underline}.

The County Supervisor will consult with the applicant (and lender, in
the case of a guaranteed loan) and the appropriate local office of the
ASCS in order to determine if the converted wetland qualifies for the
exemption specified in subparagraph c (1) of paragraph 11 of this
exhibit. If so, no further action is necessary with respect to the
converted wetland except for documenting the result. If the converted
wetland does not qualify for an exemption, the County Supervisor will
complete one or both of the following steps as the identified
circumstances dictate.

\(1\) Step one. Review both the date that the wetland was converted and
the proposed use of loan proceeds in order to determine if loan proceeds
will be used for a prohibited activity as defined in subparagraph d of
paragraph 3 of this exhibit. If not, the County Supervisor will so
document this as specified in paragraph 8 of this exhibit; complete step
two immediately below; and, if an insured loan will be approved, notify
the applicant in writing, coincident with the transmittal of Form RD
1940-1, \"Request For Obligation of Funds\" and by using Form Letter
1940-G-1, \"Notification of The Requirements of Exhibit M of RD
Instruction 1940-G,\" that the loan approval instruments will contain
compliance requirements affecting the applicant\'s converted wetland. If
loan proceeds will be used for a prohibited activity, the applicant (and
lender, in the case of a guaranteed loan) will be advised of the
applicant\'s ineligibility for the FmHA loan being requested. The
applicant (and lender, in the case of a guaranteed loan) will be advised
of any modifications to the application that could cure the
ineligibility. Not growing an agricultural commodity on the converted
wetland would cure the ineligibility, but the substitution of non-FmHA
funds to grow an agricultural commodity on the converted wetland would
not.

\(2\) Step two. The County Supervisor will review the applicant\'s
sources of loan repayment to determine if they include funds from a USDA
financial assistance program(s) subject to wetland conservation
restrictions. If so, the County Supervisor will implement the actions in
subparagraph e of this paragraph.

c\. [Highly erodible land or wetland present]{.underline}.

The County Supervisor will discuss with the applicant (and lender, in
the case of a guaranteed loan) and review the intended uses of

the FmHA loan proceeds as evidenced in any relevant application
materials.

\(1\) [Proceeds to be used for prohibited activity]{.underline}. If
proceeds would be used for a prohibited activity, the applicant (and
lender, in the case of a guaranteed loan) will be advised of its
ineligibility for the FmHA loan. The applicant (and lender, in the case
of a guaranteed loan) will be informed of any modifications to its
application that could cure the ineligibility, including financially
feasible eligible loan purposes that could be helpful in implementing a
conservation plan or installing a conservation system, should either be
an appropriate cure. Substitution of non-FmHA monies to accomplish the
prohibited activity would not cure the ineligibility, but actual
elimination of the activity from the applicant\'s farm plan of operation
would.

\(2\) [Proceeds not to be used for a prohibited activity]{.underline}.
If loan proceeds are not planned to be used for a prohibited activity,
the County Supervisor will perform the following tasks:

\(a\) Document the above determination in the applicant\'s file as
specified in paragraph 8 of this exhibit.

\(b\) If an insured loan will be approved and the requirements of
subparagraph c (2)(c) of this paragraph do not apply, notify the
applicant in writing, coincident with the transmittal of Form RD 1940-1,
\"Request For Obligation of Funds,\" and by using Form Letter 1940-G-1,
\"Notification of The Requirements of Exhibit M of RD Instruction
1940-G,\" that the loan approval instruments will contain compliance
requirements affecting the applicant\'s highly erodible land and/or
wetland.

\(c\) Review the term of the proposed loan and take the following
actions, as applicable.

> \(i\) [Loan term exceeds January 1, 1990, but not January 1,
> 1995]{.underline}. If the term of the proposed loan expires within
> this period and the applicant intends to produce an agricultural
> commodity on highly erodible land that is exempt from the restrictions
> of this exhibit until either 1990 or two years after the SCS has
> completed a soil survey for theborrower\'s land, whichever is later,
> the County Supervisor will determine if it is financially feasible for
> the applicant, prior to loss of the exemption, to actively apply a
> conservation plan approved by SCS or the appropriate conservation
> district. See §12.23 of Subpart A of Part 12 of Subtitle A of Title 7,
> which is Attachment 1 of this exhibit and is available in any FmHA
> office, for a definition of actively applying a conservation plan.
> Prior to loan approval, the applicant, the lender, (if a guaranteed
> loan is involved), FmHA and SCS will resolve any doubts as to what
> extent production would be able to continue under application of a
> conservation plan and as to the financial implications on loan
> repayment ability from both the potential costs of actively applying
> the conservation plan and the potential loss of revenues from any
> reduced acreage production base. The loan approval official will
> determine the financial implications of actively applying a
> conservation plan to the applicant\'s highly erodible land by
> developing a projected farm plan of operation or other farm financial
> projections that reflect adequate repayment on the full scheduled
> installments for all debt obligations at the time the conservation
> plan is being actively applied. If in making this determination, loan
> repayment ability cannot be demonstrated, FmHA will deny the loan
> application. If loan repayment ability can be demonstrated and an
> insured loan will be approved, the applicant will be advised in
> writing, coincident with the transmittal of Form RD 1940-1, \"Request
> For Obligation of Funds,\" and using Form Letter 1940-G-1,
> \"Notification of The Requirements of Exhibit M of RD Instruction
> 1940-G,\" that the loan approval instruments will contain compliance
> requirements affecting the applicant\'s highly erodible land. The
> applicant will also be advised that a statement from the SCS issued
> prior to either January 1, 1990, or two years after the SCS has
> completed a soil survey of the applicant\'s land (whichever is later)
> and stating that the applicant is actively applying an approved
> conservation plan will be considered adequate demonstration of
> compliance on the highly erodible land affected by the 1990 deadline.

.

\(d\) Implement the actions in subparagraph e of this paragraph if the
applicant plans to repay a portion of the loan with funds from a USDA
financial assistance program subject to wetland or highly erodible land
conservation restrictions.

d\. [Highly erodible land present that was or is planted in
alfalfa]{.underline}.

If the applicant plans to cultivate highly erodible land for the purpose
of producing an agricultural commodity and that highly erodible land
during each of the 1981 to 1985 crop years was planted in alfalfa in a
crop rotation determined by SCS to be adequate for the protection of
highly erodible land, the applicant is exempt until June 1, 1988, from
the requirement to fully implement an approved conservation system on
the highly erodible land. The County Supervisor, following procedures
similar to those indicated in subparagraph c (2)(c)(i) of this
paragraph, will determine if it is financially feasible for the
applicant to apply a conservation system to the highly erodible land
prior to the loss of the exemption on June 1, 1988. If loan repayment
ability cannot be demonstrated, the application will be denied. If loan
repayment ability can be demonstrated and an insured loan will be
approved, the applicant will be advised in writing that the loan
approval instruments will contain compliance requirements affecting the
applicant\'s highly erodible land. The applicant will also be advised
that a statement from SCS issued prior to June 1, 1988 and stating that
the applicant is in compliance with an approved conservation system will
be considered adequate demonstration of compliance with this
requirement.

e\. [Highly erodible land, wetland, or converted wetland present
and]{.underline}

[applicant intends to use other USDA financial assistance]{.underline}

[programs(s), including crop insurance, to repay FmHA loan]{.underline}.

The County Supervisor will consult with the applicant (and lender, in
the case of a guaranteed loan) and the other USDA agency(s) to determine
if the applicant is eligible for the latter\'s financial assistance. If
not eligible, the applicant will have to demonstrate that an alternative
source(s) of repayment will be available in order for further processing
of the application to proceed.

7\. [Required provisions in loan approval documents]{.underline}.

a\. [Insured loan]{.underline}

> \(1\) [Promissory Notes]{.underline}. For all loans to which this
> exhibit applies, all promissory notes must contain the provision
> indicatedbelow: (Form RD 1940-17, \"Promissory Note,\" has been
> revised so that the language will no longer be inserted as an
> addendum, but the following provision must be inserted as an addendum
> to Form RD 440-22, \"Promissory Note (Association or Organization),\"
> if the loan is being made to an Indian Tribe or a Tribal Corporation.)

\"Addendum for Highly Erodible Land and Wetland Conservation\"

Addendum to promissory note dated \_\_\_\_\_\_\_\_\_\_\_ in the amount
of \$ \_\_\_\_\_\_\_ at an annual interest rate of \_\_\_\_\_ percent.
This agreement supplements and attaches to the above note.

Borrower recognizes that the loan described in this note will be in
default should any loan proceeds be used for a purpose that will
contribute to excessive erosion of highly erodible land or to the
conversion of wetlands to produce an agricultural commodity, as further
explained in 7 CFR Part 1940, Subpart G, Exhibit M. If (1) the term of
the loan exceeds January 1, 1990, but not January 1, 1995, and (2)
Borrower intends to produce an agricultural commodity on highly erodible
land that is exempt from the restrictions of Exhibit M until either
January 1, 1990 or two years after the U.S. Soil Conservation Service
(SCS) has completed a soil survey for the Borrower\'s land, whichever is
later, the Borrower further agrees that, prior to the loss of the
exemption from the highly erodible land conservation restrictions found
in 7 CFR Part 12, Borrower must demonstrate that Borrower is actively
applying on that land which has been determined to be highly erodible a
conservation plan approved by the SCS or the appropriate conservation
district in accordance with SCS\'s requirements. Furthermore, if the
term of the loan exceeds January 1, 1995, Borrower further agrees that
Borrower must demonstrate prior to January 1, 1995, that any production
after that date of an agricultural commodity on highly erodible land
will be done in compliance with a conservation system approved by SCS or
the appropriate conservation district in accordance with SCS\'s
requirements.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Name of Borrower) (Signature of Executive Official)

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

(Signature of Attesting Official)

\(2\) Mortgages, deeds of trust and security agreements.

State Directors will consult with the Office of General Counsel and
ensure that for all loans to which this exhibit applies a covenant is
included in all mortgages, deeds of trust, and security agreements which
reads as indicated below. Form RD 440-15, \"Security Agreement (Insured
Loans to Individuals),\" and Form RD 440-4, \"Security Agreement
(Chattels and Crops),\" have been revised accordingly. Equivalent forms
required in State supplements must be similarly revised.

\[For mortgages or deeds of trust:\]

\"Borrower further agrees that the loan(s) secured by this instrument
will be in default should any loan proceeds be used for a purpose that
will contribute to excessive erosion of highly erodible land or to the
conversion of wetlands to produce an agricultural commodity, as further
explained in 7 CFR Part 1940, Subpart G, Exhibit M.\"

\[For security agreements:\]

\"Default shall also exist if any loan proceeds are used for a purpose
that will contribute to excessive erosion of highly erodible land or to
the conversion of wetlands to produce an agricultural commodity, as
further explained in 7 CFR Part 1940, Subpart G, Exhibit M.\"

b\. [Guaranteed loans]{.underline}.

\(1\) [Form RD 449-14, \"Conditional Commitment for Guarantee,\" and
Form RD 1980-15, \"Conditional Commitment for Contract of Guarantee
(Line of Credit).\"]{.underline} These forms must contain a condition
that includes the following provisions:

\(a\) Informs the lender that FmHA\'s commitment is conditioned upon
loan proceeds not being used for a purpose that will contribute to
excessive erosion of highly erodible land or to the conversion of
wetlands to produce an agricultural commodity, as explained in this
exhibit;

\(b\) Informs the lender of the lender\'s monitoring responsibilities
under paragraph 10 of this exhibit; and;

> \(c\) Requires the lender, for all borrowers having highly erodible
> land, wetland, or converted on their farm properties, to include
> provisions in its loaninstruments similar to those contained in
> subparagraphs a (1) and (2) of this paragraph.

\(2\) Lender\'s loan and security instruments. These instruments must be
modified as specified in subparagraph b (l)(c) of this paragraph.

8\. [Required FmHA documentation]{.underline}. The actions taken and
determinations made by FmHA to comply with the provisions of this
exhibit will be documented as part of the environmental review of the
application. All actions subject to this exhibit will undergo at a
minimum the completion of Form RD 1940-22, \"Environmental Checklist for
Categorical Exclusions.\" On the reverse of this form, the preparer will
document as applicable (a) whether or not highly erodible land, wetland,
or converted wetland is present, (b) if any exemption(s) applies, (c)
the status of the applicant\'s eligibility for an FmHA loan under this
exhibit, and (d) any steps the applicant must take prior to loan
approval to retain or regain its eligibility. If the application under
review meets the definition of a Class I action as defined in §1940.311
of this subpart, the above documentation will be included as an exhibit
to Form RD 1940-21, \"Environmental Assessment for Class I Action.\" If
the application meets the definition of a Class II action as defined in
§1940.312 of this subpart, the required documentation will be included
within the Class II assessment under the discussion of land use impacts.
See paragraph IV. 4. of Exhibit H of this subpart. Once an applicant\'s
farm property has undergone an environmental review covering the
provisions of this exhibit, the County Supervisor reviewing a subsequent
loan request need not require the applicant to obtain further site
information from SCS as long as there is no change in the farm property
to be affected or any applicable exemptions.

9\. [Borrowers\' responsibilities]{.underline}. In addition to complying
with any loan requirements resulting from FmHA\'s implementation of this
exhibit, a borrower must within ten days of receipt inform, in writing,
the lender of a guaranteed loan and the County Supervisor for an insured
loan of any ineligibility determinations received from other USDA
agencies for violations of wetland or highly erodible land conservation
restrictions. A borrower also has the responsibility to consult with the
lender or County Supervisor, as applicable, if at any time the borrower
is uncertain as to the borrower\'s duties and responsibilities under the
loan provisions.

10\. [FmHA and lender monitoring]{.underline}. As an element of insured
loan servicing, to include development of a farm plan of operation for
an upcoming crop year, scheduled farm visits, or other contacts with
borrowers, FmHA staff will review and analyze the borrower\'s compliance
with the provisions of this exhibit and any related loan requirements.
If at anytime FmHA becomes aware of the borrower\'s violation of these
provisions or related loan requirements, the borrower will be informed
that the affected loan(s) is in default. In addition to directly
monitoring borrowers, the County Supervisor will receive and review the
monitoring results of other USDA agencies having restrictions on wetland
and highly erodible land conservation. Whenever these results indicate
that a borrower may have violated the loan conditions, the County
Supervisor will further analyze the matter and respond, as indicated in
this paragraph, should a violation be determined. Lenders of FmHA
guaranteed loans must also monitor compliance as part of their servicing
responsibilities.

11\. [Exemptions and determining their applicability]{.underline}.
Following is a list of exemptions from the provisions of this exhibit as
well as a description of how FmHA will apply the exemptions to a
proposed loan or activity under a loan. This list is intended to provide
guidance on implementing the exemptions contained in Subparts A, B, and
C of Part 12 of Subtitle A of Title 7 (Attachment 1 of this exhibit
which is available in any FmHA office) and does not modify or limit any
of those exemptions.

a\. [Exemption from wetland and highly erodible land
conservation]{.underline}.

Any loan which was closed prior to December 23, 1985, or any loan for
which either Form RD 1940-1, \"Request for Obligation of Funds,\" Form
RD 449-14, \"Conditional Commitment for Guarantee,\" or Form RD 1980-15,
\"Conditional Commitment for Contract of Guarantee (Line of Credit),\"
was executed prior to December 23, 1985, is exempt from the provisions
of this exhibit.

b\. [Exemptions from highly erodible land conservation]{.underline}. The
following exemptions exist from the restrictions on highly erodible land
conservation. Whenever the County Supervisor is required to consult with
another USDA agency in applying these exemptions, the County
Supervisor\'s review of a properly completed Form SCS-CPA-26 will be
considered adequate consultation if the needed information is presented
on the form and no questions are raised by the FmHA review.

\(1\) Any land upon which an agricultural commodity was planted before
December 23, 1985, is exempt for that particular planting. The County
Supervisor will consult with the appropriate local ASCS office in
applying this exemption and the ASCS determination is controlling for
purposes of this exhibit.

\(2\) Any land planted with an agricultural commodity during a crop year
beginning before December 23, 1985, is exempt for that particular
planting. FmHA will consult with the ASCS State Executive Director and
the latter\'s position will be controlling in determining the date that
the crop year began.

\(3\) Any land that during any one of the crop years of 1981 through
1985 was either (a) cultivated to produce an agricultural commodity, or
(b) set aside, diverted or otherwise not cropped under a program
administered by USDA to reduce production of an agricultural commodity,
is exempt until the later of January 1, 1990, or the date that is two
years after the date that the SCS has completed a soil survey of the
land. To apply this exemption, the County Supervisor will consult with
ASCS to determine from the latter\'s records whether or not the land was
cultivated or set aside during the required period. The ASCS
determination will be controlling. However, the date of completion for
any SCS soil survey will be determined by SCS and used by the County
Supervisor.

\(4\) Beginning on January 1, 1990, or two years after SCS has completed
a soil survey for the land, whichever is later, and extending to January
1, 1995, any land that qualified for the exemption in subparagraph b (3)
of this paragraph is further exempt if a person is actively applying to
it a conservation plan that is based on the local SCS technical guide
and properly approved by the appropriate SCS conservation district or
the SCS. To apply this exemption as well as the exemptions specified in
subparagraphs b (5), (6), (7), and (8) of this paragraph, the County
Supervisor will consult with the appropriate local SCS office and the
SCS position will be controlling.

\(5\) Highly erodible land within a conservation district and under a
conservation system that has been approved by a conservation district
after the district has determined that the conservation system is in
conformity with technical standards set forth in the SCS technical guide
for such district is exempt.

\(6\) Highly erodible land not within a conservation district but under
a conservation system determined by SCS to be adequate

for the production of a specific agricultural commodity or commodities
on any highly erodible land is exempt for the production of that
commodity or commodities.

\(7\) Highly erodible land that is planted in reliance on a SCS
determination that such land was not highly erodible is exempt. The
exemption is lost, however, for any agricultural commodity planted after
SCS determines that such land is highly erodible land.

\(8\) Highly erodible land planted or to be planted in an agricultural
commodity that was planted in alfalfa during each of the 1981 to 1985
crop years in a crop rotation determined by SCS to be adequate for the
protection of highly erodible land is exempt until June 1, 1988, from
the requirement that the highly erodible land be planted in compliance
with an approved conservation system.

c\. [Exemptions from wetland conservation]{.underline}. The following
exemptions

exist from the restrictions on wetland conservation. Whenever the County
Supervisor is required to consult with another USDA agency in applying
these exemptions, the County Supervisor\'s review of a properly
completed Form SCS-CPA-26 will be considered adequate consultation if
the needed information is presented on the form and no questions are
raised by the FmHA review.

\(1\) A converted wetland is exempt if the conversion of such wetland
was completed or commenced before December 23, 1985. The County
Supervisor will consult with ASCS whose determination as to when
conversion of a wetland commenced will be final for FmHA purposes.
Additionally, the County Supervisor will request evidence of ASCS\'s
consultation with the U.S. Fish and Wildlife Service on each commenced
determination reached for an FmHA applicant or borrower. SCS will
determine if a wetland is a converted wetland using the criteria
contained in §12.32 of Subpart C of Part 12 of Subtitle A of Title 7
(Attachment 1 of this exhibit which is available in any FmHA office).
Under these criteria, however, a converted wetland determined to be
exempt may not always remain exempt. The criteria include the provision
that if crop production is abandoned on a converted wetland and the land
again meets the wetland criteria, that land has reverted to a wetland
and is no longer exempt. For purposes of FmHA inventory farm properties,
crop production will be considered to have been abandoned on a converted
wetland either at the earlier of the time the former owner so abandoned
crop production or at the time FmHA caused crop production to be
abandoned after the property came into FmHA\'s inventory. While in its
inventory FmHA will not lease the converted wetland for the purpose of
producing an agricultural commodity. Whether or not the wetland criteria
are met on the abandoned land will be determined by SCS immediately
before FmHA\'s lease or sale of the property.

\(2\) The following are not considered to be a wetland under the
provisions of this exhibit: (a) an artificial lake, pond, or wetland
created by excavating or diking non-wetland to collect and retain water
for purposes such as water for livestock, fish production, irrigation
(including subsurface irrigation), a settling basin, cooling, rice
production, or flood control; (b) a wet area created by a water delivery
system, irrigation, irrigation system, or application of water for
irrigation and (c) lands in Alaska identified by SCS as having a
predominance of permafrost soils. The County Supervisor will consult
with SCS regarding the application of this exemption as well as the
remaining exemptions in this paragraph and the SCS position will be
controlling.

\(3\) A wetland is exempt if the production of an agricultural commodity
is possible (a) as a result of a natural condition, such as drought, and
(b) without action by the producer that destroys a natural wetland
characteristic. This exemption is lost whenever condition (a) or (b) no
longer exists.

\(4\) Production of an agricultural commodity on a converted wetland is
exempt if SCS determines that the effect of such action, individually
and in connection with all other similar actions authorized in the area
by USDA agencies, on the hydrological and biological aspect of wetland
is minimal.

12\. [Appeals]{.underline}. Any applicant or borrower that is directly
and adversely affected by an administrative decision made by FmHA under
this exhibit may appeal that decision under the provisions of Subpart B
of Part 1900 of this chapter (see especially §1900.55).

13\. [Working with other USDA agencies]{.underline}.

a\. [Coordination]{.underline}. FmHA State Directors will consult with
SCS State Conservationists and ASCS State Executive Directors to assess
and coordinate loan processing workloads in order to minimize delays in
responding to FmHA requests for site information or for the application
of the exemptions contained in paragraph 11 of this exhibit. State
Directors will ensure that

(3-4-88) SPECIAL PN

RD Instruction 1940-G

FmHA field staff understand and can use the ASCS farm records system and
will request ASCS training as needed. Also, management systems for
sharing the information discussed in subparagraph b of this paragraph
will be established.

b\. [Information exchange]{.underline}. FmHA State Directors will
develop with ASCS State Executive Directors a system for FmHA to
routinely receive notification whenever a violation has occurred under
ASCS\'s wetland and highly erodible land conservation restrictions. FmHA
State Directors will in turn provide to any interested USDA agency the
following information.

\(1\) Upon request, copies of site information or exemption decisions
made by SCS for FmHA application reviews;

\(2\) Upon request, copies of exemption decisions made by FmHA; and

\(3\) Notice of any violations of the provisions of this exhibit
identified by FmHA as a result of the monitoring activities identified
in paragraph 10 of this exhibit.

14\. [Relationship of the requirements of this exhibit to the wetland
protection requirements of Exhibit C of this subpart]{.underline}. The
provisions of this exhibit determine (a) whether or not an applicant for
a Farmer Program insured or guaranteed loan or a loan to an Indian Tribe
or Tribal Corporation is eligible to be considered for such a loan, and
(b) whether or not a recipient of such a loan is properly using the loan
proceeds with respect to the requirements of this exhibit. On the other
hand, the requirements in Exhibit C of this subpart regarding wetland
protection cover all FmHA loan and grant programs and address not
questions of eligibility but the potential environmental impacts of a
proposed action on a wetland and alternatives to the action.
Consequently, those applications covered by this exhibit and which may
be approved under this exhibit must also meet the requirements of
Exhibit C of this subpart. For example, an application covered by this
exhibit (M) that proposed to convert a wetland into a tree farm would be
exempt from this exhibit (M) because trees are not an agricultural
commodity, i.e., there is no conversion in order to produce an
agricultural commodity. However, before FmHA could make the loan, the
requirements of Exhibit C of this subpart would have to be met to
include an FmHA finding that no practicable alternative exists to the
conversion of the wetland. In summary, any proposed wetland conversion
that is not prohibited by this exhibit (M) must next meet the
requirements of Exhibit C of this subpart before FmHA approval of the
requested financial assistance could be provided.Exhibit M, Attachment 1
not automated see manual