1 **COST**

**– BENEFIT ASSESSMENT**  **Environmental Policies and Procedures; Compliance with the National Environmental Policy Act (NEPA)**  **and Related Authorities Proposed Rule**  Summary of Economic Impacts

. This rule is expected to improve the efficiency and transparency

of FSA’s NEPA process. This rule includes new Categorical Exclusions . It clarifies procedures for actions requiring an Environmental Assessment (EA). As a result of this rule, so me actions that currently require an EA would be categoricall y excluded from further NEPA review. By consolidating F arm S ervice A gency NEPA procedures into a single rule and more clearly identifying the process es required for different ty pes of actions , this rule is expected to increase understanding and consistency , while decreasing the time spent addressing NEPA requirements. The new Categorical Exclusions are expected to reduce the number of EAs required , particularl y for farm loan actions that involve little or no ground disturbance

. This rule is expected to result in $345,000 annually in reduced cost s
. The expected cost reduction from fewer EAs is largel y due to reduced FSA workload. The public will likely also see non - quantifiable benefits from th e reduced time required to complete the NEPA process for both farm programs and farm loans actions

. **Date: July 31**  **, 2012 Agency:**  **Farm Service Agency , USDA**  **Contact: Skip Hyberg** 

**Economic and Policy Analysis Staff Washington, Dc 20250**  **Phone: 202** 
**- 720** 
**- 9222** 

I. Title: Environm e ntal Polic ies and Procedure s ; Compliance with the National Environmental Policy Act and Related Authorities

II. Summary2

The Farm Service Agency (FSA) proposes to consolidate and amend its regulations implementing the National Environmental Policy Act of 1969, as amended (NEPA). FSA’s NEPA regulations have not been updated since 1980

. The proposed changes

w ould better align FSA’s NEPA regulation s with the current President’s Council on Environmental Quality (CEQ) NEPA regulations and guidance. In addition to proposed changes to improve the clarity and consistency

of the regulations, th e proposed changes would expand and clarify the list of actio ns that are categorically exclude d from further environmental review because those acti on s ty

pically do not result in individual or cumulative significant environmental effects or impacts . The list of proposed categorical exclusions (CatExs) in this propo sed rule is longer and more specific than in the current FSA NEPA regulations. The expanded list of CatExs would allow FSA to expedite the environmental review process for action s that have ty picall y been shown to not require E nvironmental A ssessments ( EAs ) or Environmental Impact Statements (EI Ss). This proposed rule would also expand and clarify

the list of actions that require an EA. Including longer and more specific lists of CatExs and actions requiring an EA in the regulations is intended to improve transparency and clarity of the FSA NEPA process for FSA program participants and to reduce the costs of the NEPA anal ys is process for some actions

.
III. Need For Action
FSA’s NEPA regulations have not been updated since 1980. Significant changes to the s tructure of FSA and the scope of FSA’s programs since that time require changes in FSA’s NEPA regulations. The proposed changes would better align FSA’s NEPA regulations with the current CEQ NEPA regulations and guidance. Additionally , the proposed chang es will bring greater consistency

to FSA administration of its NEPA responsibilities and c lari f y and make more transparent the FSA NEPA process to FSA program participants.3

NEPA establishes a national environmental policy, sets goals for the protection, m aintenance, and enhancement of the environment and provides a process for carrying out the policy and working toward those policy goals. The NEPA process requires different levels of environmental review and anal ys is of Federal agency actions, depending on the nature of the acti on. As stated in 40 CFR 1508.18 (a) , “ Actions include new and continuing activities, including projects and programs entirel y or partly financed, assisted, conducted, regulated, or approved by federal agencies; new or revised agency rules, regulations, plans, p olicies, or procedures; and legislative proposals. ” Some actions, because of the nature of their potential environmental effects are categorically

excluded from further environmental analy sis and are known as CatExs.
A CatEx is used ty

pically for actions that do not have a significant impact on the quality of the human environment, such as a farm loan consol idation or funding for the maintenance of existing buildings. The general NEPA regulations define the human environment as “ the natural and phy sical environment, and the relationship of people with that environment ” ( 40 CFR 1508.14). Individual actions are not categorically excluded by th e proposed rule; in the future, those actions that fit into a specific category can be categoricall y excluded if there are no extraordinary circumstances for the specific proposed action at hand

.
If an action is not in a categoricall y excluded category , then the next step in the NEPA process is usually an EA. An EA is prepared to anal yz e the potential environmental impact of a Federal agency action and alternatives to the action to determine whether proposed actions can proceed without supplemental environmental review. An EA can result in a proposal not proceeding, a Finding of No Significant Impact (FONSI), or a determination that the environmental impact will be significant and therefore an E IS is required. If the ag ency determines at an earl y stage that there is clearl y the potential for significant environmental impact, FSA can start the EIS process without first doing an EA.4

IV

. Description of Rule Changes Proposed

A. Summary The proposed rule will : 1) align FSA NEPA p olicy to reflect changes in FSA structure, environmental laws, Executive Orders, and CEQ guidance and policy that have occurred since the FSA NEPA regulations were last updated in 1980 ; 2) expand and more explicitly

identify actions that ty

picall y do not have a significant impact on the quality of the human environment and are therefore categorically

excluded from further environmental review (CatEx) ; 3) expand and clarify the list of action s that require an EA, clarify

and specify

the process used to conduct an EA , and explain the actions that will be taken upon completion of the EA, and 4) introduce and describe the use of the new Environmental Screening Worksheet (ESW) to be used by FSA st aff as an initial screening tool to evaluate and document any likely environmental impacts of proposed actions.

1. Consolidat e, Clarify , and Update Regulations Under the proposed rule , FSA would consolidate, clarify , and update FSA NEPA regulations to establish a single set of NEPA regulations for FSA . Since reorganiz ing in 1995, FSA has been operating under two separate sets of NEPA regulation s, one for the programs within the scope of the former Agricultural Stabilization and Conservation Service (AS CS ) and one for programs within the scope of the former Farmers Home Administration ( FmHA )

. This proposed rule reflect s current FSA organizational structure, environmental laws, Executive Orders, and CEQ guidance and policy

. The proposed rule would imple ment a single consolidated set of FSA NEPA regulation s in 7 CFR part 799. As a result, the regulations in 7 CFR part 1940 , subpart G , would no longer appl y to FSA, and would be amended accordingl y . The5 proposed changes are intended to improve clarity in the regulations , allow more efficient program implementation at the field level, provide more openness and transparency during FSA’s environmental decision

- making, and simplify program administration.
In general, FSA has already admini strativel y implemented FSA NEPA procedures to meet current NEPA requirements as specified in Executive Orders and CEQ guidance; those currentl y implemented FSA NEPA procedures are reflected in this rule as proposed changes to the regulation. For example, Programmatic EAs (PEAs) are not in the current regulations, but FSA already does such analyses in compliance with current CEQ regulations and guidance. So, the proposed provisions for PEAs represent a revision to the regulations, which specifically authorize and further explain FSA NEPA procedures.
This proposed rule consolidates and reorganize s the provisions currently in 7 CFR parts 799 and 1940, subpart G, into a revised 7 CFR part 799, and as discussed below adds longer and more specific lists of CatE xs and of actions requiring an EA, and adds new provisions to comply with current CEQ guidance. Many of the proposed changes in this rule are essentially

minor technical and clarifying changes, some changes reorganize the requirements from the current regulations. The following table summarizes how the major provisions in this proposed regulation compare to similar provisions in the existing regulations

.6 Table 1. Changes from current 7 CFR parts 799 and 1940 to proposed 7 CFR part 799 Major Provisi ons Current 7 CFR part 799 Current 7 CFR part 1940 Proposed 7 CFR part 799 Additional Information
Categorical Exclusions (CatEx)

.............. The term categorical

exclusion is not used, although there is a list of actions not normally requiring an EA or EIS. Some specific Farm Loan Programs actions are categorically

excluded under 7 CFR 1940.310(d). Lists all categories of FSA actions and separates them into three categories:

 Actions that are alway s CatExs, with no documentation required

 Actions that are categoric ally excluded with documentation in an ESW to determine whether an extraordinary circumstance exists in which case an EA would be required

 Actions that cannot be CatExs and require the completion of the ESW to determine if an EA or EIS is required Proposed rule also includes

specific process for publishing new CatExs in the future, including public review and comment process.7

Major Provisi ons Current 7 CFR part 799 Current 7 CFR part 1940 Proposed 7 CFR part 799 Additional Information

Environmental Assessments (EAs)

................. Requires NEPA

process to be followed but does not specify which Farm Programs actions requi re an EA. Requires EAs, depending on circumstances, for certain Farm Loan Programs actions. See 7 CFR 1940.311, 312, 318, and 319. Eliminates the Class Iand Class II actions for Farm Loan Programs. Lists all specific FSA actions that require an EA, and those that require an ESW to determine if an EA is required. Some actions that currently require an EA would be categorically

excluded actions.

Environmental Impact Statements (EI S)

.................. Specifies general

categories of FSA Farm Programs actions that are likel y to have a significant impact on the environment, and specific programs that are not. Specifies criteria for determining significant impact, with an emphasis on floodplains and wetlands. See 7 CFR 1940.313, 314, and 320 Specifies the general categories of FSA actions that are likel y to have a significant impact on the environment. Specifies the content of an EI S and the review process. No change in the typ es of actions for which an EI S is required, but more detail on the content and review process o f an EIS.

Environmental Screening Worksheet (ESW)

............... An appendix provides

the now obsolete ASCS

- 929 form. Environmental Evaluation (RD 1940

- 22 (NOTE: RD is a successor agency

to FmHA)) is required to determine if a Class I or Class II EA should be prepared. See 7 CFR 1940.317(c). An ESW would be required for FSA actions that fall into a listed CatEx requiring documentation to determine if an extraordinary circumstance exists and if an EA or EIS should be prepared. The description of how to use the current FSA Environmental Evaluation form (FSA 850) is in the handbooks, not the regulations. The ESW is shorter and has more specific criteria than the current FSA 850.8

Major Provisi ons Current 7 CFR part 799 Current 7 CFR part 1940 Proposed 7 CFR part 799 Additional Information
Programmatic NEPA Process

... Not addressed. Not addressed specificall y, although tiering is in 7 CFR 1940.327. Specified process for conducting programmatic NEPA for FSA programs and actions that have a national scope. This is not a new process for FSA, but the process is currentl y not specified in the FSA regulations.
Integration of other environmental laws and regulations

......... NEPA and CEQ’s

NEPA regulations are the only environmental laws and regulations referenced. Some other environmental law requirements are mentioned, but not in detail and with little guidance on how they apply

. Many environmental laws, Executive Orders, and regulations are added as references. Compliance with other environmental laws such as NHPA is explained in detail and integrated into the ESW. FSA already complies with the Executive Orders, USDA regulations, laws, and CEQ guidance listed in the proposed rule, but most of those references are not in the current regulations.9

2. Expand and Clarify List of Categorical Exclusions ( CatExs ) The expanded list of actions that qualify for CatExs would allow FSA to expedite the environmental review process for actions that have ty pically been shown to not require EAs or EISs. A specific example of an action that would now qualify for CatEx is the installation and maintenance of fencing, which are also actions that are considered CatEx by

other agencies. This propos ed rule includes both new CatEx s that are excluded without further documentation ( for example, an Environmental Screening Worksheet) and CatEx s that requi re additional documentation ( an Environmental Screening Worksheet) to ensure that no extraordinary circumstances that would require further anal ys is exist.

As proposed, 7 CFR part 799, subpart C, specifies the categories of actions that would require the use of the ESW and how the ESW would be used. In general, the ESW would be required for all acti ons except those CatExs listed in § 799.31, which FSA has determined do not require further documentation (beyond that provided in the substantiation for establishing the CatEx and the project file) for specific proposed actions.

The list of actions specified in § 799.32 of th e proposed rule may be categorically excluded depending on the outcome of the review documented in the ESW. Those CatEx actions would require an ESW to determine if extraordinary circumstances exist that require further environmental anal ys is.

In addition to its use for NEPA review, the ESW would also be required for a list of specific actions, specified in § 799.34, that FSA has determined may have the potential to affect historic properties.10 For all actions for which there is no applicable CatEx, the ES W would be used to determine whether an EA or an EIS is the next step in the NEPA process.

USDA agencies and other Federal agencies have similar environmental screening tools (for example, USDA’s Natural Resources Conservation Service (NRCS) and Rural Dev elopment, the Department of Energy , the Department of Defense). FSA reviewed those screening tools and considered these agencies’ approaches during development of the ESW.

The ESW would replace the existing form FSA 850 “Environmental Evaluation Checklis t” document and the RD 1940

- 22, which local FSA staff and County Office Committee reviewers have found to be somewhat lengthy, confusing, and duplicative paperwork. Due to its length and complexity , the existing checklist has been used inconsistently . Th e new, more concise ESW is designed to be applied consistently

. 3. Expand and Clarify

Actions Requiring an EA
The list of actions that typically have the potential to have a s ignificant impact on the human environment , and thus may requir e an EA to determine whether an EI S is required , is clarified . T he rule specifies the procedures to be used based on the result of the EA

. This will improve transparency and clarity

of the FSA NEPA process for FSA program participants. Specificall y, the result of the EA pro cess will be either a FONSI or a determination that an EI S is required.

If after completing the EA, FSA determines that the proposed action will not have a significant effect on the quality of the human environment , FSA will issue a FONSI. The FONSI will include the reasons FSA determined that the proposed action will have no significant environmental impacts.11 If the decision to issue the FONSI is conditioned upon the implementation of

measures (mitigation actions) to ensure that impacts will be hel d to a nonsignificant level , the FONSI must include an enforceable commitment to implement such measures on the part of FSA, and any applicant or other party responsible for implementing the measures will be responsible for the commitments outlined in the FONSI.

FSA will make the FONSIavailable to the public prior to making a decision as specified in 40 CFR 1506.6, including publishing a notice of availability of the final EA and FONSI in the local media or Federal Register as appropriate

.

FSA will make the final EA and FONSI available for public review for at least 15 day s before taking any

final agency

action. FSA will determine whether an EI S is required based in part on the comments received during such review.

The procedures for EIS are clarified slightl y to be consistent with current CEQ requirements, but are not expected to change the number of FSA EI Ss or EAs

. This change will simply

make it easier to determine whether an EA/EI S is necessary

. 4. Environmental Screening Worksheet (ESW)
A new ESW has been developed for FSA staff to use as an initial screening tool to evaluate and document any likel y environmental impacts of proposed actions. The new ESW consolidates the evaluation criteria from multiple forms and checklists currentl y use d by

FSA for environmental evaluation. Having one form will reduce the paperwork for FSA and ensure consistent compliance with NEPA.12

V. Expected Costs and Benefits The rule does not directly reduce FSA outlay s
. The consolidation of two previous rules is expected to provide the indirect benefit of greater clarity in the FSA NEPA process

. The

new ESW will further increase clarity by providing a single straightforward process for identifying and document ing actions and their likely environmental impacts. While increased transparency

and clarity are desirable and beneficial, th e impact of these changes is difficult to quantify

. Another possible non

- quantifiable benefit is that the development of the ESW for a given ty

pe of action will be part of the administrative record that could be used to substantiate future categorical exclusions. Costs were not calculated because the FSA assessment of the modified process does not show an y expectation for any substantial chang e in administrative costs. Further, the modifications proposed are designed to reduce costs to the public while maintaining assurances that appropriate environmental safeguards are in place.

More significant and easier to quantify are the expected benefit s from expanding and listing categorically

excluded actions that have ty pically been shown to have no significant effect on the human environment , either individually or cumulatively

. This rule includes new and clarified CatExs that would be exclud ed from environmental review without further documentation (not requiring an ESW)

. Also , the rule provides a list of specific actions that would qualify

for a CatEx with further documentation using the ESW , provided that the E SW determines that extraordinary circumstances do not exist , requiring further environmental anal ys is. The time and expense saved from conducting unnecessary EAs is expected to provide benefit to taxpayer s from more efficient program administration and to program participants from more expe ditious program delivery

. Current FSA regulations in 7 CFR part 1940 require an EA for man y farm loan actions that would be categoricall y excluded with this rule. Those regulations and FSA procedures refer to Class Iand Class II EAs ; as currently specifi ed by

CEQ , there is no variation in EA requirements. This proposed rule would therefore have onl y one typ e of EA, consistent with13

current CEQ guidance

. It is expected that most of the actions that currently require a Class I EA , the ty

pe currentl y done f

or smaller scale projects with limited potential for environmental impact, would be categoricall y excluded. To estimate the impact of fewer EAs, we assume that current programs continue and that most farm loan actions with limited scale and potential for environmental impact which currentl y require a site

- level EA w ould qualify for either categorical exclusions without documentation (not requiring an ESW) or for categorical exclusions that require the use of the ESW. Using these assumptions, th is proposed rule would have eliminated, on average, the requirement for 31 4 EAs per ye ar between 2002 and 2009 (table 1) , had the rule been in effect at that time . In 2008 (the most recent ye ar for which data is available) , the average cost for these site

- level EAs wa s estimated at $1,100, sug gesting an annual savings of $345 ,000 in FSA expenses for environmental review.

As can be seen in the table below, the number and ty pes of environmental evaluations that take place in an y given year varies , depend ing on the nature of the specific FSA programs in question. For example, the number of environmental evaluations associated with farm loan programs depends on how many loans are for projects on land that has already been disturbed, as opposed to those that involve additional disturbance such as pond or building construction and are not eligible for a categorical exclusion without an ESW

. Table 1: FSA Site Level Environmental Assessments (EAs) 2002 280 2003 300 2004 189 2005 310 2006 341 2007 406 2008 417 2009 267 Annual Average 314 This rule does not change the basic requirements for when an EIS is required, so it is not expected to result in a change in the number of EISs associated with FSA programs.14

Therefore, no costs or benefits, other than increased clarity of procedure, are expected for the EI S process as a result of this rule.

Because the EA is only one part of the program implementation process, this analy sis does not attempt to quant ify

the time the rule might save for program participants. It is expected that the rule will have a positive but minimal effect for participants. . FSA recognizes that the cumulative benefit could be substantial, but individually the benefits will be small and will be on a project by

project basis ; there is no change e xpected in the environmental benefits

. In general, some projects may be quicker to complete due to having less requirements for documentation. We do not currentl y have an y way to practicall y assess the cumulative savings due to the wide variation in envi ronmental compliance requirements from project to project.

Additional benefits to the public might also occur if additional State Acres f or Wildlife Enhancement (SAFE) agreements are developed. Under existing rules , these agreements require project

- level EAs

. This rule would provide categorical exclusions for those projects involving grants that contain practices that are already categorically excluded, reducing the time between project initiation and implementation.