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USDA Categorical Exclusion (CE) Memo

I wanted to touch base with you before heading out tonight. I’ve listed some bullets below on the natural gas issue we had discussed. Take a look at what I’ve put together and let me know if you have any questions moving forward. I’d be happy to put you in contact with our author of the AN, Frank Mancino, working on detail in our Rural Housing Service.

Administrative Notices (AN) provide clarification and guidance on the application of existing regulations and policies. RD is not proposing any new policy in terms of NEPA reviews.

The level of NEPA review known as a Categorical Exclusion (CE) streamlines the NEPA process for those actions that are so routine and harmless in nature that no further documentation or analysis is required.

For a number of years, RHS has provided that home mortgage loans are a CE level of action, subject to the completion of Form 1940-22 which checks for “extraordinary circumstances” related to environmental issues.

A finding that there are extraordinary circumstances for an action under consideration means that a CE NEPA review cannot suffice, and would require a comprehensive environmental document to address a range of environmental impacts, either as an environmental assessment (EA), or an environmental impact statement (EIS). EAs and EIS take considerable time and funds to prepare, much longer than the usual time for closing any home loan mortgage guarantee.

Recent technological developments in the oil and gas industry have expanded operations to areas of the country not previously affected by mineral development for oil and gas production; the overall environmental effects of such development have not been addressed in any NEPA document by any Federal agency.

There is substantial controversy over the extent, range, and issues associated with hydraulic fracturing (fracking) for gas in the NE region of the U.S. Approval of such leases would allow for a number of potential impacts to possibly occur which would need to be analyzed in a NEPA document that would be reviewed by the public for sufficiency. Use of a CE level for such actions places the Agency at risk of NEPA related litigation. The AN clarifies that use of a CE level for those RHS/RBCS would not be appropriate, and the actions would be likely to require a more detailed environmental document.

RD could prepare a programmatic EIS on the environmental issues associated with fracking activities which could be used for subsequent individual decisions for loan guarantees. However, the time and costs for such a PEIS would be substantial and such funds are not in any current budget (emphasis added).

The draft AN is being reviewed by RHS/RBCS programs and is expected to be finalized and issued in April, 2012.

Feel free to contact me any time. Hope this is helpful.


Kevin T. K. Bailey

Office of Congressional Relations

U.S. Department of Agriculture

O: 202.720.0121 | C: 202.650.7746