HOMEfires - Vol. 4 No. 2, June 2002

Q: Must the environmental review process be completed before any HOME funds are committed or actions undertaken? What steps must participating jurisdictions take when dealing with third-party partners?

A: Yes, the environmental review process must be completed by PJs before any funds are committed to a HOME-assisted project. No funds may be committed by participating jurisdictions, state recipients, subrecipients or CHDOs for HOME-assisted projects before the completion of the environmental review process, except as authorized by 24 CFR 58.22(b) (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.22.htm), 58.34(a) (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.34.htm) and 58.35(b) (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.35.htm).

The environmental review process includes the following steps:

1. completing the appropriate level of environmental review as governed by 24 CFR 58.34 (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.34.htm) [exemptions], 58.35 (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.35.htm) [categorical exclusions], and 58.36 (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.36.htm) [environmental assessments],
2. publishing the applicable public notice(s),
3. submitting a Request for Release of Funds and Certification form (HUD-7015.15) to HUD, (or when applicable, the state),
4. receiving a copy of Authority to Use Grant Funds form (HUD-7015.16) or equivalent letter from HUD, (or when applicable, the state).

Activities that are exempt in accordance with 24 CFR 58.34(a)(1-11) (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.34.htm) require no environmental review, public notice, or the submission of a Request for Release of Funds and Certification to HUD (or where applicable the state). The Environmental Review Record must simply document that such activities were determined to be exempt. The same applies to activities that are "categorically excluded not subject to 24 CFR 58.5 (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.5.htm)" in accordance with 24 CFR 58.35(b) (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.35.htm).

Activities that are determined categorical exclusions in accordance with 24 CFR 58.35 (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.35.htm) require a Compliance Determination review. If one or more of the federal laws and authorities listed in 24 CFR 58.5 (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.5.htm) require additional specialized reviews, a Notice of Intent to request Release of Funds must be published and a Request for Release of Funds and Certification form must be submitted to HUD (or the state, where applicable). HUD (or the state, where applicable) completes the process by executing a signed Authority to Use Grant Funds form. If the Compliance Determination review concludes that no additional reviews are required, no public notice is published and no Request for Release of Funds and Certification form is executed.

Activities that require a full Environmental Assessment, in accordance with 24 CFR 58.36 (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.36.htm), need to have a Finding of No Significant Impact Notice and Notice of Intent to Request Release of Funds published. A Request for Release of Funds form must be submitted to HUD (or the state, where applicable). HUD (or the state, where applicable) completes the process by executing a signed Authority to Use Grant Funds form.

Activities that require an Environmental Impact Statement must follow the procedures identified in 24 CFR 58 (http://www.access.gpo.gov/nara/cfr/waisidx_04/24cfr58_04.html), Subparts F and G.

When dealing with third-party partners, participating jurisdictions must take steps to assure that its third party partners refrain from undertaking any activities that would have an adverse environmental impact or limit the choice of reasonable alternatives until HUD (or the state, for HOME grants awarded by the state to state recipients) has issued an Authority to Use Grant Funds form (or equivalent letter) for the project. Prior to issuing an Authority to Use Grant Funds form, HUD (or the state) must accept the responsible entity's environmental certification that all Federal environmental laws have been complied with, and all needed environmental reviews and public notices have been successfully completed.

Projects that are started with non-Federal funds (including permanent financing) before an Authority to Use Grant Funds form is executed by HUD (or the state, where applicable) may receive HOME funds only if the following conditions are met:

1. The contractors, owners and developers started the project without the intention of using Federal assistance (e.g., as evidenced by other anticipated funding, the original project budget, etc),
2. The responsible entity informs the state recipient, subrecipient, contractor, owner or developer that all work on the project must cease and/or the responsible entity itself ceases all work on the project once an application for HOME funds is made. No work or other choice limiting actions may occur after that date. Work may recommence upon receipt of the Authority to Use Grant Funds form from HUD (or the state, where applicable). Responsible entities may not obligate funds to projects unless the participating jurisdiction or state recipient first determines that the results of the environmental review are satisfactory, and HUD (or the state, where applicable) has issued an Authority to Use Grant Funds form.

1. Activities that are exempt under 24 CFR 58.34(a) (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.34.htm), or are listed in �  58.35(b) (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.35.htm) are not subject to the related laws and authorities found at � 58.5 (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.5.htm). No environmental review is conducted; no public notices are published and no Request for Release of Funds is sent to HUD (or the state, where applicable) for approval.
2. The purchase of a real estate option subject to the conditions stated in � 58.22(b) (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr58.22.htm) regarding environmental acceptability and nominal price. It is permissible to purchase a real estate option on a property that is designated for the construction or rehabilitation of a unit with HOME funds prior to the completion of an environmental review, provided the option agreement stipulates that the purchase of the property is subject to a determination by the responsible entity on the desirability of the property for the project as a result of the completion of the environmental review. The cost of the option must also be a nominal portion of the purchase price.
3. Funds for relocation assistance may be committed provided that the assistance is required by 24 CFR Part 42.

Failure to comply with the prohibition against committing funds or taking actions before completion of the environmental review process will result in corrective and remedial actions taken against the participating jurisdiction or state recipient. These actions, found at � 92.551 (http://edocket.access.gpo.gov/cfr_2007/aprqtr/24cfr92.551.htm), include, but are not limited to:

• canceling the HOME-assisted project,
• reimbursing the HOME Investment Trust Fund Account the amount expended,
• suspending disbursement of HOME funds for the affected activity,
• requiring HUD review of environmental reviews before funds may be drawn,
• establishing and following a management plan that assigns responsibilities for carrying out remedial actions.

Noncompliance of environmental review requirements can jeopardize a HOME-assisted project.

For more detailed information on the HOME program environmental review process, consult HUD Notice CPD-01-11, Environmental Review and the HOME Investment Partnerships Program, issued July 17, 2001.