[Federal Register Volume 76, Number 238 (Monday, December 12, 2011)]
[Proposed Rules]
[Pages 77162-77175]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31629]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 50, 55, and 58

[Docket No. FR-5423-P-01]
RIN 2501-AD51


Floodplain Management and Protection of Wetlands

AGENCY: Office of the Secretary, HUD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update and modify HUD's regulations 
governing the protection of wetlands and floodplains. With respect to 
wetlands, the proposed rule would codify existing procedures for 
Executive Order 11990 (E.O. 11990), Protection of Wetlands. HUD's 
current policy is to require the use of E.O. 11990's 8 Step Process for 
floodplains for actions performed by the Department or actions 
performed with HUD financial assistance. This rule will codify this 
policy and thereby improve consistency and increase transparency by 
placing the E.O. requirements in regulation. In certain instances, the 
new wetlands procedures will allow recipients of HUD assistance to use 
permits issued under section 404 of the Clean Water Act in lieu of five 
steps of the E.O. 11990's 8 Step Process, thereby streamlining the 
wetlands decision-making processes. With respect to floodplains, the 
proposed rule would prohibit HUD funding (e.g., Community Development 
Block Grants, HOME Investment Partnerships Program, Choice 
Neighborhoods, etc.) or Federal Housing Administration (FHA) mortgage 
insurance for the construction of new structures in Coastal High Hazard 
Areas. The current regulations allow for such new construction so long 
as the construction, is in accordance with certain standards. This 
change is anticipated to have minimal effect, since HUD receives few 
requests to fund or insure mortgages for new construction in these 
areas.
    The proposal would also make several other changes to HUD's 
floodplain and wetland regulations; the changes are designed to 
streamline floodplain and wetland environmental procedures and avoid 
unnecessary delays in processing. The procedures proposed by this rule 
would apply to HUD and to state, tribal, and local governments when 
they are responsible for environmental reviews under HUD programs.

DATES: Comment Due Date: February 10, 2012.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Regulations Division, Office of General 
Counsel, Department of Housing and Urban Development, 451 7th Street 
SW., Room 10276, Washington, DC 20410-0500. Communications must refer 
to the above docket number and title. There are two methods for 
submitting public comments. All submissions must refer to the above 
docket number and title.
    1. Submission of Comments by Mail. Comments may be submitted by 
mail to the Regulations Division, Office of General Counsel, Department 
of Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410-0500.
    2. Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
http://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a comment, 
ensures timely receipt by HUD, and enables HUD to make them immediately 
available to the public. Comments submitted electronically through the 
http://www.regulations.gov Web site can be viewed by other commenters 
and interested members of the public. Commenters should follow the 
instructions provided on that site to submit comments electronically.

    Note: To receive consideration as public comments, comments must 
be submitted through one of the two methods specified above. Again, 
all submissions must refer to the docket number and title of the 
rule.

    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    Public Inspection of Public Comments. All properly submitted 
comments and communications submitted to HUD will be available for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an appointment to review the public comments must be 
scheduled in advance by calling the Regulations Division at (202) 708-
3055 (this is not a toll-free number). Individuals with speech or 
hearing impairments may access this number via TTY by calling the 
Federal Relay Service at (800) 877-8339. Copies of all comments 
submitted are available for inspection and downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Charles Bien, Acting Director Office 
of Environment and Energy, Office of Community Planning and 
Development,

[[Page 77163]]

Department of Housing and Urban Development, 451 7th Street SW., Room 
7250, Washington, DC 20410-8000. For inquiry by phone or email, contact 
Jerimiah Sanders, Environmental Review Division, Office of Environment 
and Energy, Office of Community Planning and Development, at (202) 402-
4571 (this is not a toll-free number), or via email at 
Jerimiah.J.Sanders@hud.gov. Persons with hearing or speech impairments 
may access this number through TTY by calling the toll-free Federal 
Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    Federal departments and agencies (agencies) are charged by 
executive orders with incorporating floodplain management goals and 
wetland protection considerations in their respective agency's 
planning, regulatory, and decision-making processes. A floodplain 
refers to the lowland and relatively flat areas adjoining inland and 
coastal waters including flood-prone areas of offshore islands that, at 
a minimum, are subject to a one percent or greater chance of flooding 
in any given year (often referred to as the ``100-year'' flood). 
Wetlands refer to those areas that are inundated by surface or ground 
water with a frequency sufficient to support and under normal 
circumstances does or would support a prevalence of vegetative or 
aquatic life that requires saturated or seasonally saturated soil 
conditions for growth and reproduction. Wetlands generally include 
swamps, marshes, bogs, and similar areas such as sloughs, potholes, wet 
meadows, river overflows, mud flats, and natural ponds.
    Executive Order 11988 (E.O. 11988) entitled ``Floodplain 
Management,'' dated May 24, 1977 (42 FR 26951), requires each Federal 
agency to identify and evaluate practicable alternatives to locating in 
the floodplain. If it is not practicable to avoid the floodplain, then 
each Federal agency must identify and evaluate the potential effects of 
any actions it may take in or affecting a floodplain. The goals of the 
Executive Order are: to avoid adversely impacting the natural functions 
of floodplains wherever possible; to ensure that the agency's planning 
programs and budget requests reflect consideration of flood hazards and 
floodplain management, including the restoration and preservation of 
such land areas as natural undeveloped floodplains; and to prescribe 
procedures to implement the policies and procedures of this Executive 
Order.
    Executive Order 11990 (E.O. 11990), entitled ``Protection of 
Wetlands,'' dated May 24, 1977, (42 FR 26961) directs each agency to 
provide leadership and take action to minimize the destruction, loss, 
or degradation of wetlands. E.O. 11990 also directs each agency to 
preserve and enhance the natural and beneficial values of wetlands in 
carrying out the agency's responsibilities for: (1) Acquiring, 
managing, and disposing of Federal lands and facilities; (2) providing 
federally undertaken, financed, or assisted construction or 
improvements; and (3) conducting Federal activities and programs 
affecting land use.
    Although HUD has regulations on floodplain management at 24 CFR 
part 55, these regulations do not codify procedures for implementing 
E.O. 11990. Consistent with the intent of the executive orders, as 
noted above, HUD has relied to date on existing procedures established 
for floodplain management under 24 CFR part 55 to guide wetland 
protection considerations in planning, regulatory, and decision making 
processes. This rule proposes to codify in 24 CFR part 55 the 
procedures applicable to wetlands and authorized by E.O. 11990. 
Additionally, the hurricanes of 2005, particularly Hurricane Katrina, 
emphasized the need to review existing procedures on the protection of 
wetlands to determine how such procedures may be made more effective.

II. This Proposed Rule

Proposed Changes--Basis for Proposed Changes

    First, this rule proposes to codify procedures authorized by E.O. 
11990. As noted in the preceding section of this preamble, HUD has not 
promulgated regulations to reflect E.O. 11990. E.O. 11990 was issued in 
furtherance of the National Environmental Policy Act of 1969 (NEPA) as 
amended (42 U.S.C. 4321 et seq.). Through this rule, HUD proposes to 
adopt in regulation the procedures of E.O. 11990, in order to aid in 
the consistent application of policy and to increase compliance with 
it, by making the policy readily available in HUD's environmental 
regulations.
    The wetland procedures authorized by E.O. 11990 require the 
completion of an eight-step process, referred to below as the ``8 Step 
Process.'' The 8 Step Process is administered by HUD, state 
governments, or units of local or tribal governments. Step 1 requires a 
determination of whether or not the proposed project to be developed 
with HUD financial assistance will be in a wetland. If so, Step 2 
requires that a public notice be issued to inform interested parties 
that a proposal to consider an action in a wetland has been made. 
Following this notice, Step 3 requires the identification and 
evaluation of practicable alternatives to avoid locating the project in 
a wetland. Such an evaluation of alternatives shall include, for 
example, alternative locations outside the floodplain, feasible 
technological alternatives, and social values such as aesthetics, 
historic and cultural values, and land use patterns. Step 4 requires 
the identification and evaluation of the potential direct and indirect 
impacts associated with the occupancy or modification of wetlands. Step 
4 also requires the identification of the potential direct and indirect 
support of floodplain and wetlands development that could result from 
the proposed action. Direct support consists of projects located in the 
floodplain such as housing, public service structures, or office 
buildings that require additional investment such as food service or 
parking. Indirect support for floodplain or wetland development can be 
caused by infrastructure that can induce further development due to 
proximity to the floodplain or wetland. Examples of indirect support 
include water and waste water systems, power supplies, roads, airports, 
and mass transit systems. Step 5 requires an analysis of practicable 
modifications and changes to the proposal to minimize adverse impacts 
to the wetlands and to the project as a result of its proposed location 
in wetlands. Under Step 6, the alternatives and the proposed wetland 
site are then reevaluated. If it is determined that there is no 
practicable alternative to the proposed wetland development, Step 7 
requires a second notice to be issued to the public stating that the 
decision has been made and providing details associated with the 
decision. After this second notice, Step 8 implements the action, 
including any mitigating measures that were established during the 
decision-making process. This evaluation process requires the same 
eight steps as E.O. 11988, Floodplain Management, which is currently 
being implemented by HUD and other Federal agencies.
    The rule also proposes to require appropriate and practicable 
compensatory mitigation for adverse impacts to more than one acre of 
wetlands. Compensatory mitigation resulting from other Federal, state, 
or local governmental requirements can be used to fulfill this 
requirement. Compensatory mitigation approaches include permittee-
responsible mitigation, mitigation banking, in-lieu

[[Page 77164]]

fee mitigation, the use of preservation easements or protective 
covenants, and any form promoted and approved by the authority of the 
state governments or the Federal Government. In certain situations, 
compensatory mitigation may not be practicable or appropriate due to 
the cost of compensatory mitigation in a state or watershed, a lack of 
funds within the project, or other reasons that make compensatory 
mitigation impossible. One example would be an Alaska Native village 
that is mainly in a wetland and is surrounded by Federal and state 
land. The cost in this situation could make compensatory mitigation 
inappropriate or impracticable.
    Second, this rule proposes to allow HUD and HUD's recipients of 
assistance to use permits issued under section 404 of the Clean Water 
Act (33 U.S.C. 1344) (Section 404) in lieu of performing the first five 
steps of the 8 Step Process. This streamlined option will reduce costs 
and the processing time for complying with parts of the 8 Step Process 
for which adhering to the standard process affords minimal substantive 
benefit. The Clean Water Act establishes the basic structure for 
regulating discharges of pollutants into the waters of the United 
States and regulating water quality standards for surface waters.\1\ 
Section 404 of the Clean Water Act requires a landowner to obtain a 
permit from the U.S. Army Corps of Engineers (USACE) prior to beginning 
any nonexempt activity involving the placement of dredged or fill 
material in waters of the United States, including wetlands.
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    \1\ The Federal Water Pollution Control Act enacted in 1948 was 
significantly reorganized and expanded in 1972. ``Clean Water Act'' 
became the Act's common name with amendments in 1977.
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    If the applicant has obtained an individual USACE Section 404 
permit and submits the permit with its application for a HUD program, 
then HUD or the responsible entity will be required to complete only 
the last three steps of the 8 Step Process, and thus will be able to 
skip Sec.  55.20(a) through (e). The last three steps include the 
publication of a single public notice, which will fulfill the early 
notice requirement of E.O. 11990 and thereby avoid the requirement 
under the usual 8 Step Process for the publication of two notices. If 
HUD or the responsible entity determines that a reevaluation or repeat 
of any of the steps is necessary to comply with E.O. 11990, HUD or the 
responsible entity will reevaluate and complete the necessary steps of 
the 8 Step Process. None of the 8 steps or any provisions of this rule 
should be interpreted as being requirements of the USACE's regulatory 
program. USACE has its own regulations, policies, and procedures, none 
of which are impacted by this proposed rulemaking.
    Although Section 1(b) of E.O. 11990 excludes the issuance of 
permits for activities in nonfederal wetlands from coverage under the 
Executive Order, reliance on the Section 404 permitting process 
fulfills the Executive Order's intent. The exclusion for permits 
reflects the use of similar procedures and criteria for approval of a 
permitting action, including an initial public notice, consideration of 
practicable alternatives, and minimization of harm.
    The issuance of a Section 404 permit may not substitute for 
processing under the 8 Step Process and compliance with E.O. 11988 
where the property is also located in a floodplain. Section 404 of the 
Clean Water Act also allows states to administer an individual and 
general permit program in lieu of the USACE permit program. Section 404 
permits issued by state agencies may be used in lieu of the first five 
steps of the E.O. 11990 process under this regulation.
    All wetlands subject to Section 404 of the Clean Water Act are 
wetlands for the purposes of E.O. 11990. However, the combined process 
proposed by this rule will not apply in all instances, because wetlands 
not considered waters of the United States under Section 404 of the 
Clean Water Act are typically wetlands for the purposes of E.O. 11990. 
Wetlands not subject to Section 404 of the Clean Water Act must be 
processed under the proposed 8 Step Process.
    Third, the proposed rule would broaden the use of the current 5 
Step Process for repairs, rehabilitations, and improvements. The 5 Step 
Process is an abbreviated 8 Step Process that omits Steps 2, 3, and 7. 
Steps 2, 3, and 7 require the publication of two notices and the 
consideration of alternative sites. The 5 Step Process is currently 
used for a variety of activities specified in 24 CFR 55.12(a), such as 
disposition of HUD-owned properties and mortgage insurance for the 
purchase, refinancing, or rehabilitation of existing multifamily 
structures, which are not subject to certain additional conditions. An 
8 Step Process is currently required for financial assistance, other 
than mortgage insurance, for rehabilitation of nonresidential or 
residential structures with more than four housing units located in 
floodplains. Rehabilitations subject to the 5 Step Process are any 
repair, reconstruction, modernization, or improvement of a structure 
that does not result in a 20 percent increase in the number of dwelling 
units or in the average peak number of customers and employees. The 
proposed rule will allow these rehabilitations of residential 
properties and nonresidential properties, including weatherization, to 
forego Steps 2, 3, and 7 of the 8 Step Process. As outlined above, 
Steps 2, 3, and 7 are the consideration of alternatives at Step 3 and 
the publication of the preliminary and final notice at Steps 2 and 7, 
respectively. This change will streamline project approvals and allow 
more resources to be devoted toward projects with greater impacts on 
floodplains and wetlands.
    Fourth, the proposed rule would update a provision in HUD's 
regulations to require the use of preliminary flood maps and advisory 
base flood elevations in post-disaster situations where the Federal 
Emergency Management Agency (FEMA) has determined that existing Flood 
Insurance Rate Maps (FIRMs) may not be the ``best available 
information'' for floodplain management purposes. Currently, HUD's 
regulations at 24 CFR 55.2(b)(1) indicate that FIRMs are the only 
source of data for compliance with the 8 Step Process. In the wake of 
Hurricane Katrina, FEMA determined that the existing FIRMs may not 
reflect actual flood risk and issued Advisory Base Flood Elevations and 
Preliminary FIRMs. This change in map usage requirements will bring 
HUD's regulations into alignment with the requirement that agencies are 
to use the ``best available information'' located at Section 2(a)(1) of 
E.O. 11988. In addition, this change will provide greater consistency 
with floodplain management activities across HUD and FEMA programs.
    Fifth, the proposed rule would exempt certain activities from the 8 
Step Process for floodplain management compliance. Exempted activities 
include leasing structures insured with the National Flood Insurance 
Program (NFIP) \2\ and not located in a floodway or Coastal High Hazard 
Area. The exemption for leased structures also

[[Page 77165]]

requires that: (1) The leased structure is an existing structure; and 
(2) the structure is insured for its total value or up to the NFIP 
maximum as of the commencement of the lease term. If HUD or the grantee 
does not want to obtain flood insurance for the leased structure, the 
project can proceed by performing the 8 Step Process. Critical actions 
(e.g., hospitals, nursing homes, and emergency services) in a 100- or 
500-year floodplain are not covered by this exemption. Other exempt 
activities include special projects to increase access for those with 
special needs, activities involving ships or water-borne vessels, and 
activities that restore and preserve natural and beneficial functions 
of floodplains and wetlands. These changes will reduce unnecessary 
delays.
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    \2\ Congress established the National Flood Insurance Program 
with the passage of the National Flood Insurance Act of 1968. The 
NFIP is a Federal program enabling property owners in participating 
communities to purchase insurance as a protection against flood 
losses in exchange for state and community floodplain management 
regulations that reduce future flood damages. Participation in the 
NFIP is based on an agreement between communities and the Federal 
Government. If a community adopts and enforces a floodplain 
management ordinance to reduce future flood risk to new construction 
in floodplains, the Federal Government will make flood insurance 
available within the community as a financial protection against 
flood losses. This insurance is designed to provide an insurance 
alternative to disaster assistance to reduce the escalating costs of 
repairing damage to buildings and their contents caused by floods. 
See http://www.fema.gov/library/viewRecord.do?id=1480.
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    Sixth, the proposed rule would prohibit HUD funding or FHA mortgage 
insurance for the construction of new structures in Coastal High Hazard 
Areas. This change would not affect existing structures. Existing 
structures would be eligible to receive funding, and disaster 
assistance would continue to be available for reconstruction of 
structures destroyed by a disaster. FHA mortgage insurance would 
continue to be available as long as the mortgage insurance is not used 
to finance new construction. HUD's current regulations allow new 
construction in Coastal High Hazard Areas, if new structures are 
constructed to FEMA's standards at 44 CFR 60.3(e) and are not critical 
actions. (``Critical action'' refers to any activity for which even a 
slight chance of flooding would be too great, because such flooding 
might result in loss of life, injury to persons, or damage to property. 
See 24 CFR 55.2.) This change will prevent new development in Coastal 
High Hazard Areas, which will result in less development in areas of 
higher risk to lives and property. However, as discussed later in this 
preamble, HUD currently receives few requests to fund new construction 
or provide FHA mortgage insurance for new construction in Coastal High 
Hazard Areas. The change will also further align HUD's development 
standards with those of FEMA grant programs.
    Seventh, 24 CFR 55.26 would be amended to make clear that under the 
executive orders, HUD or a responsible entity may adopt previous review 
processes that were performed by another responsible entity or HUD. 
This change will prevent duplicative processing in cases where a 
project may have multiple recipients contributing funding or has 
funding that may not allow the responsible entity to perform the 
review. Nothing in the proposed rule or part is binding or applicable 
to the USACE or USACE processes. USACE has its own regulations, 
policies, and procedures, which are not impacted by this part.
    Finally, the proposed rule will amend 24 CFR 58.35(a)(3)(i) by 
modifying the categorical exclusion from environmental review under the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321) for minor 
rehabilitation of one- to four-unit residential properties, by removing 
the qualification that the footprint of the structure may not be 
increased in a floodplain or wetland. Currently, four units can be 
constructed in a floodplain or wetland as an individual action under 
the categorical exclusion in Sec.  58.35(a)(4)(i), but rehabilitated 
structures in a floodplain or wetland require a full environmental 
assessment. It is logically inconsistent to require a greater review 
for minor rehabilitations than for new construction. The proposed rule 
resolves this inconsistency but will still require part 55 processing 
for construction in floodplains and wetlands. HUD believes that this 
change will eliminate needless assessments without contributing to 
environmental degradation. HUD is basing its conclusion on a recent 
survey of its environmental experts.

Solicitation of Specific Comment

    In addition to these proposed changes, HUD is also specifically 
soliciting public comment regarding a potential change to Sec.  
55.20(e). The change would require that all new construction of 
``critical actions'' in the 100- or 500-year floodplain be elevated to 
the 500-year base flood elevation. A ``critical action'' is ``any 
activity for which even a slight chance of flooding would be too great, 
because such flooding might result in loss of life, injury to persons, 
or damage to property.'' Examples of critical actions include 
hospitals, nursing homes, emergency response centers, and flammable or 
explosive materials storage facilities. This potential change would 
make HUD's regulations in 24 CFR part 55 more consistent with guidance 
documents issued by the Water Resources Council and consistent with 
FEMA's E.O. 11988 regulations at 44 CFR 9.11(d)(3). This change would 
increase the current elevation standard for critical actions from the 
100-year base flood level to the 500-year level.

Specific Regulations Proposed for Amendment

    The specific regulatory revisions proposed to be made to HUD's 
regulations are as follows:

Protection and Enhancement of Environmental Quality (Part 50)

    Section 50.4 of HUD's regulations in 24 CFR part 50, which address 
related Federal laws and authorities, would be amended to have Sec.  
50.4(b), which addresses flood insurance, floodplain management, and 
wetlands protection, reflect the change in the title of 24 CFR part 55 
to include ``Protection of Wetlands'' and reflect implementation of 
E.O. 11990 in 24 CFR part 55.

Floodplain Management (Part 55)

A. Purpose and Basic Responsibility
    Section 55.1, which addresses the purpose and basic 
responsibilities of floodplain management, would be updated to better 
describe how to evaluate impacts on floodplains and wetlands and to 
provide that part 50 now explicitly address procedures on wetland 
protection. The mandatory purchase of flood insurance under the Flood 
Disaster Protection Act of 1973 (42 U.S.C. 4001-4128) is currently 
required for federally funded construction and acquisition in FEMA's 
identified special flood hazard areas. The requirements of section 582 
of the National Flood Insurance Reform Act of 1994 (42 U.S.C. 5154a), 
currently stated in HUD's regulations at 24 CFR 58.6, would be added to 
24 CFR part 55 to support compliance with the mandatory purchase of 
flood insurance. Finally, the prohibition on floodway activities would 
be edited to allow for activities that support beneficial floodplain 
functions.
B. Terminology
    Section 55.2, which defines terms used in floodplain management, 
would be amended to update existing terms in this section and add new 
terminology. To the extent that the names of these terms as designated 
by FEMA's regulations need to be updated, the proposed amendments would 
do so without any change to the basic meaning of these terms. With 
respect to new terms, the term ``Compensatory mitigation'' would be 
added consistent with the definition of the term promulgated by the 
Environmental Protection Agency and the United States Army Corps of 
Engineers (USACE) in 2008 (See Compensatory Mitigation for Losses of 
Aquatic Resources, 73 FR 19594). The terms ``Wetlands'' and ``New 
Construction'' would be added

[[Page 77166]]

consistent with those defined by E.O. 11990. The definition of wetlands 
also includes a process for identifying wetlands and utilizing 
appropriate wetlands professionals. These are the only new terms added 
under the proposed rule.
C. Assignment of Responsibilities
    Section 55.3, which delineates floodplain management 
responsibilities, would be amended to reflect the existence of 
``responsible entities'' under 24 CFR part 58 (Environmental Review 
Procedures for Entities Assuming HUD Environmental Responsibilities) 
and the addition of E.O. 11990 wetland procedures.
D. Environmental Review Procedures
    Section 55.10, which addresses the environmental review procedures 
under 24 CFR parts 50 and 58, would be amended to explicitly add 
wetland protection and reflect implementation of E.O. 11990 in part 55 
as an element of the environmental review process.
    Section 55.11, which addresses the applicability of floodplain 
management decision making as provided in 24 CFR part 55, subpart C, 
would be amended to incorporate the purpose of floodplain management, 
as provided in E.O. 11988, and the purpose of wetlands protection, as 
provided in E.O. 11990. The proposed rule also amends this section to 
adopt the previously explained 8 Step Process for wetlands. This 
process will provide a standardized and efficient method for addressing 
E.O. 11990. The proposed rule also would address adverse effects to 
floodplains and wetlands.
E. Inapplicability
    Section 55.12, which addresses the inapplicability of floodplain 
management to certain categories of proposed actions, would be amended 
to remove HUD programs that no longer exist and add exemptions from the 
full process. Financial assistance for weatherizations and 
rehabilitations of multifamily structures would be granted the use of a 
shortened 5 Step Process that currently applies to mortgage insurance 
actions for rehabilitation and improvements. Floodplain and wetland 
restoration activities, including demolition, would be exempt from 
Sec.  55.20 processing. Leasing of an existing structure would also be 
granted an exemption from the 8 Step Process, so long as the structure 
is not in a floodway or Coastal High Hazard Area, and the structure is 
insured with the National Flood Insurance Program. Additionally, the 
leasing exemption does not apply to critical actions in the 100- or 
500-year floodplain. An exemption also would be added for special 
projects directed to the removal of material and architectural barriers 
that restrict the mobility of and accessibility to elderly and persons 
with disabilities. Financial assistance for ships and water-borne 
vessels would also be exempt from Sec.  55.20 processing. These changes 
would reduce unnecessary processing and result in a decreased amount of 
analysis for projects that have no or little adverse impact or have 
beneficial effects.
F. Decision Making Process
    Section 55.20, which currently addresses the decision making 
process for floodplain management, would be amended to include the 
decision making process for wetlands protection. Step 3 of the 8 Step 
Process, which requires the consideration of practicable alternatives, 
would also be amended to require that mitigation costs be considered.
G. Conveyance Restrictions
    Section 55.22, which addresses conveyance restrictions for the 
disposition of multifamily real property, would be amended by adding 
the word ``wetland'' in each place where the term floodplains is 
addressed by the section.
H. Documentation
    Section 55.27, which addresses documentation required in floodplain 
management, would add ``wetlands'' and remove a reference to 24 CFR 
570.3 to allow for a general definition of ``unit of general local 
government.''
I. Responsible Entities
    Sections 55.21, 55.25, 55.26, and 55.27, which address notification 
of floodplain hazard, areawide compliance, adoption of another agency's 
review under the executive orders, and documentation, respectively, 
would change the terms ``grant recipient'' to ``responsible entity.'' 
This would add specificity and consistency to 24 CFR part 55. Section 
55.26 will also be edited to make it clear that HUD can adopt a review 
performed by a responsible entity, and that a responsible entity may 
adopt a review performed by HUD or another responsible entity.
J. Use of Individual Permits Under Section 404 of the Clean Water Act 
for EO 11990 Processing
    A new Sec.  55.28 would be added to allow for HUD to process 
wetlands impacts and for recipients of HUD assistance to use permits 
issued under section 404 of the Clean Water Act in lieu of five steps 
of the E.O. 11990's eight-step process. Processing under this section 
will reduce the time devoted to environmental processes, by allowing an 
existing individual Section 404 permit to substitute for the first five 
steps of the 8 Step Process for wetlands located outside the 
floodplain.
K. Environmental Review Procedures for Entities Assuming HUD 
Environmental Responsibilities (Part 58)
    Section 58.5 of HUD's regulations, which address related Federal 
laws and authorities, would be amended to have Sec.  58.5(b), which 
addresses flood insurance, floodplain management, and wetlands 
protection, reflect the change in the title of 24 CFR part 55 to 
include ``Protection of Wetlands'' and reflect implementation of E.O. 
11990 in 24 CFR part 55. This proposed rule would also amend Sec.  
58.6, which addresses other requirements, by adding a new paragraph 
(a)(4) that would state that flood insurance requirements cannot be 
fulfilled by self-insurance except as authorized by law for assistance 
to state-owned projects within states approved by the FEMA 
Administrator consistent with 44 CFR 75.11. Additionally, HUD also 
proposes to amend Sec.  58.35, which addresses Categorical Exclusions, 
by revising the categorical exclusion from environmental assessment 
under NEPA for minor rehabilitation of one- to four-unit residential 
properties by removing in Sec.  58.35(a)(3)(i) the qualification that 
the footprint of the structure may not be increased in a floodplain or 
wetland.

III. Findings and Certifications

E.O. 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) reviewed this proposed 
rule under E.O. 12866 (entitled ``Regulatory Planning and Review''). 
The proposed rule has been determined to be a ``significant regulatory 
action,'' as defined in section 3(f) of the Order, but not economically 
significant, as provided in section 3(f)(1) of the Order.
    The majority of the regulatory changes proposed by this rule will 
have minor economic effects. The primary purpose of this rule is to 
streamline the existing procedures pertaining to floodplain management 
and protection of wetlands that are already in place. However, two 
changes proposed by HUD are anticipated to have some economic effect. 
These two changes are: (1) HUD's proposal to streamline the approval 
process for rehabilitations, repairs, and improvements of HUD-funded 
properties in floodplains and wetlands; and (2) HUD's proposal to 
prohibit new

[[Page 77167]]

construction that would either be funded by HUD or have mortgages 
insured by FHA in Coastal High Hazard Areas. The proposed streamlined 
process for rehabilitations will lower costs for projects, which could 
induce more improvement activities. The proposal to prohibit new 
construction in Coastal High Hazard Areas could affect the siting of 
properties, but these projects are rarely proposed or approved even in 
the absence of a prohibition.
    Streamlined Procedures for Rehabilitations, Repairs, and 
Improvements of Multifamily Properties in Floodplains. HUD or 
responsible entities reviewing proposals for rehabilitations, repairs, 
and improvements to multifamily properties located in floodplains are 
required to follow the 8 Step Process to minimize the impact to 
floodplains. The proposed change would abbreviate the process for these 
proposals, because the process no longer requires public notices or the 
consideration of alternatives for floodplain executive order 
compliance. The benefits of this proposed change arise from the reduced 
compliance costs associated with the eliminated steps. Total labor 
compliance costs for the entire 8 Step Process have been estimated at 
$320 per project. A more detailed step-by-step cost estimate is not 
available. However, if eliminating the three steps saves 10 to 15 
percent of the total labor cost of compliance, then each rehabilitation 
project would save between $32 and $48. Costs to publish the notices 
would be added to this amount for the overall cost of compliance. The 
precise number of proposed rehabilitation, repair, and improvement 
projects is not available, although the overall number is estimated to 
be less than 100 annually. Although the reduced compliance costs could, 
on the margin, induce an increase in the requests for funding, that 
increase is unlikely considering that the cost of these projects 
generally range from thousands to millions of dollars. For this 
analysis, HUD estimates an annual total of 100 projects, including the 
induced projects. One hundred such projects would produce benefits 
ranging from $3,200 and $4,800 plus minimal costs of publication. Since 
these assessments rarely lead to a different outcome for 
rehabilitation, repair, and improvement projects, the lost benefits of 
not conducting a full floodplain assessment--the cost of this 
provision--are negligible.
    Prohibition on New Construction in Coastal High Hazard Areas. 
Prohibiting new construction in Coastal High Hazard Areas would force 
developers to locate HUD-funded or FHA-insured properties out of hazard 
areas subject to high velocity waters. This prohibition would not 
affect developments that are destroyed by floods and that need to be 
rebuilt. Existing property owners interested in developing in Coastal 
High Hazard Areas would either incur transaction costs from selling the 
existing property and purchasing an alternative site, or obtain a more 
expensive source of funding/assistance. However, based on HUD's 
records, it is extremely rare for HUD to fund, or provide mortgage 
insurance for, a new construction proposal in these coastal areas. HUD 
found only one project that that been completed in a Coastal High 
Hazard Area, and one additional project is currently under review. 
These projects were approximately 6 years apart. Thus, HUD believes 
that this provision will not have a significant impact.
    Accordingly, this proposed rule is expected to create an annual 
economic impact ranging from $3,200 to $4,800, which are avoided costs 
resulting from a streamlined approval process for rehabilitations of 
properties located in floodplains. Thus, the implementation of this 
rule will not create an impact exceeding the $100 million threshold 
established by E.O. 12866.
    The docket file is available for public inspection in the 
Regulations Division, Office of General Counsel, Department of Housing 
and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 
20410-0500. Due to security measures at the HUD Headquarters building, 
please schedule an appointment to review the docket file by calling the 
Regulations Division at (202) 402-3055 (this is not a toll-free 
number). Individuals with speech or hearing impairments may access this 
number via TTY by calling the Federal Relay Service at (800) 877-8339.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule would not have 
a significant economic impact on a substantial number of small 
entities.
    The proposed rule would codify HUD's policies and procedures 
implementing E.O. 11990, Protection of Wetlands. The goal of the 
Executive Order is to prevent adverse impacts associated with the 
destruction or modification of wetlands. E.O. 11990 establishes a 
uniform set of requirements designed to meet this goal and that are 
applicable to both large and small entities. The proposed rule would 
also broaden the use of the abbreviated 8 Step Process also known as 
the 5 Step Process, used by HUD and responsible entities when 
considering the impact on floodplains in connection with the repair of 
existing structures. Specifically, the rule proposes to authorize the 
use of the abbreviated process for all of HUD's rehabilitation 
programs. The current regulations limit the use of the abbreviated 
process to repairs financed under HUD's mortgage insurance programs.
    The proposed rule clarifies existing requirements, streamlines 
processes, and increases access to expedited approval procedures in 
certain circumstances. These changes would decrease burdens on small 
entities. Therefore, the undersigned has determined that the proposed 
rule will not have a significant economic impact on a substantial 
number of small entities. Notwithstanding HUD's determination that this 
rule will not have a significant effect on a substantial number of 
small entities, HUD specifically invites comments regarding any less 
burdensome alternatives to this rule that will meet HUD's objectives as 
described in the preamble to this rule.

Environmental Impact

    A Finding of No Significant Impact (FONSI) with respect to 
environment has been made in accordance with HUD regulations at 24 CFR 
part 50, which implement section 102(2)(C) of NEPA (42 U.S.C. 
4332(2)(C)). The Finding of No Significant Impact is available for 
public inspection between the hours of 8 a.m. and 5 p.m. weekdays in 
the Regulations Division, Office of General Counsel, Department of 
Housing and Urban Development, 451 7th Street SW., Room 10276, 
Washington, DC 20410. Due to security measures at the HUD Headquarters 
building, please schedule an appointment to review the FONSI by calling 
the Regulations Division at (202) 708-3055 (this is not a toll-free 
number). Individuals with speech or hearing impairments may access this 
number via TTY by calling the toll-free Federal Relay Service at (800) 
877-8339.

E.O. 13132 Federalism

    E.O. 13132 (entitled ``Federalism'') prohibits an agency from 
publishing any rule that has federalism implications if the rule either 
imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or preempts state law, 
unless the agency meets the consultation and funding requirements of 
section 6 of the Order. This rule does not have federalism implications 
and would not

[[Page 77168]]

impose substantial direct compliance costs on state and local 
governments nor preempt state law within the meaning of the Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for Federal agencies to 
assess the effects of their regulatory actions on state, local, and 
tribal governments, and on the private sector. This rule does not 
impose any Federal mandates on any state, local, or tribal governments, 
or on the private sector, within the meaning of UMRA.

Paperwork Reduction Act

    The information collection requirements contained in this proposed 
rule have been submitted to the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). In 
accordance with the Paperwork Reduction Act, an agency may not conduct 
or sponsor, and a person is not required to respond to, a collection of 
information, unless the collection displays a currently valid OMB 
control number.
    The burden of the information collections in this proposed rule is 
estimated as follows:

                                       Reporting and Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
                                                                                  Estimated
                                              Number of         Number of     average time for  Estimated annual
            Section reference                respondents      responses per      requirement       burden  (in
                                                               respondent        (in hours)          hours)
----------------------------------------------------------------------------------------------------------------
Sec.   55.20 Decisionmaking process.....               275                 1                 8             2,200
Sec.   55.21 Notification of floodplain                300                 1                 1               300
 hazard.................................
                                         -----------------------------------------------------------------------
    Totals..............................               575                 2                 9             2,500
----------------------------------------------------------------------------------------------------------------

     In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments 
from members of the public and affected agencies concerning this 
collection of information to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden of 
the proposed collection of information;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated 
collection techniques or other forms of information technology; e.g., 
permitting electronic submission of responses.
    Interested persons are invited to submit comments regarding the 
information collection requirements in this rule. Comments must refer 
to the proposal by name and docket number (FR-5423-P-01) and be sent 
to:

HUD Desk Officer, Office of Management and Budget, New Executive Office 
Building, Washington, DC 20503, Fax number: (202) 395-6947, and
Reports Liaison Officer, Office of Community Planning and Development, 
Department of Housing and Urban Development, 451 Seventh Street SW., 
Washington, DC 20410-8000.

    Interested persons may submit comments regarding the information 
collection requirements electronically through the Federal eRulemaking 
Portal at http://www.regulations.gov. HUD strongly encourages 
commenters to submit comments electronically. Electronic submission of 
comments allows the commenter maximum time to prepare and submit 
comments, ensures timely receipt by HUD, and enables HUD to make them 
immediately available to the public. Comments submitted electronically 
through the http://www.regulations.gov Web site can be viewed by other 
commenters and interested members of the public. Commenters should 
follow the instructions provided on that site to submit comments 
electronically.

List of Subjects

 24 CFR Part 50

    Environmental impact statements.

24 CFR Part 55

    Environmental impact statements, Floodplains, Wetlands.

24 CFR Part 58

    Community development block grants, Environmental impact 
statements, Grant programs--housing and community development, 
Reporting and recordkeeping requirements.
    Accordingly, for the reasons stated in the preamble above, HUD 
proposes to amend 24 CFR parts 50, 55, and 58 as follows:

PART 50--PROTECTION AND ENHANCEMENT OF ENVIRONMENTAL QUALITY

    1. The authority citation for part 50 is revised to read as 
follows:

    Authority: 42 U.S.C. 3535(d) and 4332; and Executive Order 
11991, 3 CFR, 1977 Comp., p. 123.

    2. Revise Sec.  50.4(b)(2) and (b)(3) to read as follows:


Sec.  50.4  Related federal laws and authorities.

* * * * *
    (b) * * *
    (2) HUD procedure for the implementation of E.O. 11988 (Floodplain 
Management), (3 CFR, 1977 Comp., p. 117)--24 CFR part 55, Floodplain 
Management and Protection of Wetlands.
    (3) HUD procedure for the implementation of E.O. 11990 (Protection 
of Wetlands), (3 CFR, 1977 Comp., p. 121)--24 CFR part 55, Floodplain 
Management and Protection of Wetlands.
* * * * *
    3. Revise the part heading for part 55 to read as set forth below.

PART 55--FLOODPLAIN MANAGEMENT AND PROTECTION OF WETLANDS

    4. The authority citation for part 55 is revised to read as 
follows:

    Authority: 42 U.S.C. 3535(d), 4001-4128 and 5154a; E.O. 11988, 
42 FR 26951, 3 CFR, 1977 Comp., p. 117; E.O. 11990, 42 FR 26961, 3 
CFR, 1977 Comp., p. 121.

    5. Amend Sec.  55.1 as follows:
    a. Revise paragraph (a);
    b. Redesignate paragraph (b) as paragraph (b)(1);
    c. Add a new paragraph (b)(2);
    d. Revise paragraphs (c)(1);
    e. Revise paragraphs of (c)(3) and (c)(3)(i), to read as follows:

[[Page 77169]]

Sec.  55.1  Purpose and basic responsibility.

    (a)(1) The purpose of Executive Order 11988--Floodplain Management 
is ``to avoid to the extent possible the long and short-term adverse 
impacts associated with the occupancy and modification of floodplains 
and to avoid direct or indirect support of floodplain development 
wherever there is a practicable alternative.''
    (2) The purpose of Executive Order 11990--Protection of Wetlands is 
``to avoid to the extent possible the long and short-term adverse 
impacts associated with the destruction or modification of wetlands and 
to avoid direct or indirect support of new construction in wetlands 
wherever there is a practicable alternative.''
    (3) This part implements the requirements of Executive Order 11988, 
Floodplain Management, and Executive Order 11990, Protection of 
Wetlands, and employs the principles of the Unified National Program 
for Floodplain Management. These regulations apply to all HUD (or 
responsible entity) actions that are subject to potential harm by 
location in floodplains or wetlands. Covered actions include the 
proposed acquisition, construction, demolition, improvement, 
disposition, financing, and use of properties located in a floodplain 
or wetlands for which approval is required either from HUD under any 
applicable HUD program or from a responsible entity authorized by 24 
CFR part 58.
    (4) This part does not prohibit approval of such actions (except 
for certain actions in high hazard areas), but provides a consistent 
means for implementing the Department's interpretation of the Executive 
Orders in the project approval decision making processes of HUD and of 
responsible entities subject to 24 CFR part 58. The implementation of 
Executive Orders 11988 and 11990 under this part shall be conducted by 
HUD for Department-administered programs subject to environmental 
review under 24 CFR part 50 and by authorized responsible entities that 
are responsible for environmental review under 24 CFR part 58.
    (5) Non-structural alternatives to floodplain development and the 
destruction of wetlands are both favored and encouraged to reduce the 
loss of life and property caused by floods, and to restore the natural 
resource and functions of floodplains and wetlands. Nonstructural 
alternatives should be discussed in the decision making where 
practicable.
    (b) * * *
    (2) Under section 582 of the National Flood Insurance Reform Act of 
1994 (42 U.S.C. 5154a), HUD disaster assistance that is made available 
in a special flood hazard area may not be used to make a payment 
(including any loan assistance payment) to a person for repair, 
replacement, or restoration of damage to any personal, residential, or 
commercial property if:
    (i) The person had previously received Federal flood disaster 
assistance conditioned on obtaining and maintaining flood insurance; 
and
    (ii) The person failed to obtain and maintain the flood insurance.
    (c) * * *
    (1) Any action other than a functionally dependent use or 
floodplain function restoration activity, located in a floodway;
    (2) * * *
    (3) Any non-critical action located in a Coastal High Hazard Area, 
unless the action is a functionally dependent use, an improvement of an 
existing structure, or reconstruction of a structure destroyed by a 
disaster. If the action is not a functionally dependent use, the action 
must be designed for location in a Coastal High Hazard Area. An action 
will be considered designed for a Coastal High Hazard Area if:
    (i) In the case of reconstruction or substantial improvement, the 
work meets the current standards for V zones in FEMA regulations (44 
CFR 60.3(e)) and, if applicable, the Minimum Property Standards for 
such construction in 24 CFR 200.926d(c)(4)(iii); or
* * * * *
    6. Amend Sec.  55.2 to:
    a. Revise paragraph (a);
    b. Revise paragraphs (b) and (b)(1);
    c. Redesignate existing paragraphs (b)(2), (b)(3), (b)(4), (b)(5), 
(b)(6), (b)(7), and (b)(8) as paragraphs (b)(3), (b)(4), (b)(5), 
(b)(6), (b)(7), (b)(9), and (b)(10), respectively;
    d. Add new paragraphs (b)(2) and (b)(8);
    e. Revise newly designated paragraph (b)(9); and
    f. Add new paragraph (b)(11) to read as follows:


Sec.  55.2  Terminology.

    (a) With the exception of those terms defined in paragraph (b) of 
this section, the terms used in this part shall follow the definitions 
contained in section 6 of E.O. 11988, section 7 of E.O. 11990, and the 
Floodplain Management Guidelines for Implementing Executive Order 11988 
(43 FR 6030, February 10, 1978), issued by the Water Resources Council; 
the terms ``special flood hazard area,'' ``criteria,'' and ``Regular 
Program'' shall follow the definitions contained in FEMA regulations at 
44 CFR 59.1; and the terms ``Letter of Map Revision'' and ``Letter of 
Map Amendment'' shall refer to letters issued by FEMA as provided in 44 
CFR part 65 and 44 CFR part 70, respectively.
    (b) For purposes of this part, the following definitions apply:
    (1) Coastal high hazard area means the area subject to high 
velocity waters, including but not limited to hurricane wave wash or 
tsunamis. The area is designated on a Flood Insurance Rate Map (FIRM) 
under FEMA regulations. FIRMs are also relied upon for the designation 
of ``100-year floodplains'' (Sec.  55.2(b)(9)), ``500-year 
floodplains'' (Sec.  55.2(b)(4)), and ``floodways'' (Sec.  55.2(b)(5)). 
Where FIRMs are declared by FEMA not to be the ``best available 
information'', the latest interim FEMA information, such as an Advisory 
Base Flood Elevation (ABFE), shall be used as the source of these 
designations. If FEMA information is unavailable or insufficiently 
detailed, other Federal, state, or local data may be used as ``best 
available information'' in accordance with E.O. 11988. However, a base 
flood elevation from an interim or preliminary or non-FEMA source 
cannot be used if it is lower than the current FIRM.
    (2) Compensatory mitigation means the restoration (re-establishment 
or rehabilitation), establishment (creation), enhancement, and/or in 
certain circumstances preservation of aquatic resources for the 
purposes of offsetting unavoidable adverse impacts that remain after 
all appropriate and practicable avoidance and minimization has been 
achieved.
    Examples include, but are not limited to:
    (i) Permittee-Responsible Mitigation: On-site or off-site 
mitigation undertaken by the holder of a wetlands permit under Section 
404 of the Clean Water Act (or an authorized agent or contractor), for 
which the permittee retains full responsibility;
    (ii) Mitigation Banking: A permittee's purchase of credits from a 
wetlands mitigation bank, comprising wetlands that have been set aside 
to compensate for conversions of other wetlands; the mitigation 
obligation is transferred to the sponsor of the mitigation bank; and
    (iii) In-Lieu Fee Mitigation: A permittee's provision of funds to 
an in-lieu fee sponsor (public agency or nonprofit organization) that 
builds and maintains a mitigation site, often after the permitted 
adverse wetland impacts have occurred; the mitigation obligation is 
transferred to the in-lieu fee sponsor.
* * * * *

[[Page 77170]]

    (8) New construction includes draining, dredging, channelizing, 
filling, diking, impounding, and related activities and any structures 
or facilities begun after the effective date of E.O. 11990. (See 
Section 7(b) of E.O. 11990.)
    (9) 100-year floodplain means the floodplain of concern for this 
part and is the area subject to inundation from a flood having a one 
percent or greater chance of flooding in any given year. (See Sec.  
55.2(b)(1) for appropriate data sources.)
* * * * *
    (11) Wetlands means those areas that are inundated by surface or 
ground water with a frequency sufficient to support, and under normal 
circumstances does or would support, a prevalence of vegetative or 
aquatic life that requires saturated or seasonally saturated soil 
conditions for growth and reproduction. Wetlands generally include 
swamps, marshes, bogs, and similar areas such as sloughs, potholes, wet 
meadows, river overflows, mud flats, and natural ponds. This definition 
includes those wetlands areas separated from their natural supply of 
water as a result of activities such as the construction of structural 
flood protection methods or solid-fill road beds and activities such as 
mineral extraction and navigation improvements. This definition 
includes both wetlands subject to and those not subject to section 404 
of the Clean Water Act. The following process shall be followed in 
making the wetlands determination:
    (i) HUD or, for programs subject to 24 CFR part 58, the responsible 
entity, shall make a determination whether the action is new 
construction that is located in a wetland. These actions are subject to 
processing under the Sec.  55.20 decision-making process for the 
protection of wetlands.
    (ii) As primary screening, HUD or the responsible entity shall 
verify whether the project area is located in proximity to wetlands 
identified on the National Wetlands Inventory (NWI). If so, HUD or the 
responsible entity should make a reasonable attempt to consult with the 
Department of the Interior, Fish and Wildlife Service (FWS) for 
information concerning the location, boundaries, scale, and 
classification of wetlands within the area. If an NWI map indicates the 
presence of wetlands, FWS staff, if available, must find that no 
wetland is present in order for the action to proceed without further 
processing. Where FWS staff is unavailable to resolve any NWI map 
ambiguity or controversy, an appropriate wetlands professional must 
find that no wetland is present in order for the action to proceed 
without Sec.  55.20 processing.
    (iii) As secondary screening used in conjunction with NWI maps, HUD 
or the responsible entity is encouraged to use the Department of 
Agriculture, Natural Resources Conservation Service (NRCS) National 
Soil Survey (NSS) and any state and local information concerning the 
location, boundaries, scale, and classification of wetlands within the 
action area.
    (iv) Any challenges from the public or other interested parties to 
the wetlands determinations made under this part must be made in 
writing to HUD (or the responsible entity authorized under 24 CFR part 
58) during the commenting period and must be substantiated with 
verifiable scientific information. Commenters may request a reasonable 
extension of the time for the commenting period for the purpose of 
substantiating any objections with verifiable scientific information. 
HUD or the responsible entity shall consult FWS staff, if available, on 
the validity of the challenger's scientific information prior to making 
a final wetlands determination.
    7. In Sec.  55.3, revise paragraphs (a)(1), (b)(1), (b)(2), and 
(c); and add new paragraph (d), to read as follows:


Sec.  55.3  Assignment of responsibilities.

    (a)(1) The Assistant Secretary for Community Planning and 
Development (CPD) shall oversee:
    (i) The Department's implementation of Executive Orders 11988 and 
11990 and this part in all HUD programs; and
    (ii) The implementation activities of HUD program managers and, for 
HUD financial assistance subject to 24 CFR part 58, of grant recipients 
and responsible entities.
* * * * *
    (b) Other HUD Assistant Secretaries, the General Counsel, and the 
President of the Government National Mortgage Association (Ginnie Mae) 
shall:
    (1) Ensure compliance with this part for all actions under their 
jurisdiction that are proposed to be conducted, supported, or permitted 
in a floodplain or wetland;
    (2) Ensure that actions approved by HUD or responsible entities are 
monitored and that any prescribed mitigation is implemented;
* * * * *
    (c) Responsible Entity Certifying Officer. Certifying Officers of 
responsible entities administering or reviewing activities subject to 
24 CFR part 58 shall comply with part 55 in carrying out HUD-assisted 
programs. Certifying Officers of responsible entities subject to 24 CFR 
part 58 shall monitor approved actions and ensure that any prescribed 
mitigation is implemented.
    (d) Recipient. Recipients subject to 24 CFR part 58 shall monitor 
approved actions and ensure that any prescribed mitigation is 
implemented. Recipients shall:
    (1) Supply HUD (or the responsible entity authorized by 24 CFR part 
58) with all available, relevant information necessary for HUD (or the 
responsible entity) to perform the compliance required by this part; 
and
    (2) Implement mitigating measures required by HUD (or the 
responsible entity authorized by 24 CFR part 58) under this part or 
select alternate eligible property.
    8. The heading for subpart B is revised to read as follows:

Subpart B--Application of Executive Orders on Floodplain Management 
and Protection of Wetlands

    9. Revise Sec.  55.10 to read as follows:


Sec.  55.10  Environmental review procedures under 24 CFR parts 50 and 
58.

    (a) Where an environmental review is required under the National 
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321), and 24 CFR 
part 50 or part 58, compliance with this part shall be completed before 
the completion of an environmental assessment (EA), including a finding 
of no significant impact (FONSI), or an environmental impact statement 
(EIS), in accordance with the decision points listed in 24 CFR 
50.17(a)-(h), or before the preparation of an EA under 24 CFR 58.40 or 
an EIS under 24 CFR 58.37. For types of proposed actions that are 
categorically excluded from NEPA requirements under 24 CFR part 50 (or 
part 58), compliance with this part shall be completed before the 
Department's initial approval (or approval by a responsible entity 
authorized by 24 CFR part 58) of proposed actions in a floodplain or 
wetland.
    (b) The categorical exclusion of certain proposed actions from 
environmental review requirements under NEPA and 24 CFR parts 50 and 58 
(see 24 CFR 50.20 and 58.35(a)) does not exclude those actions from 
compliance with this part.
    10. Revise Sec.  55.11 to read as follows:


Sec.  55.11  Applicability of Subpart C decision making process.

    (a) Before reaching the decision points described in Sec.  
55.10(a), HUD (for Department-administered programs) or the responsible 
entity (for HUD financial assistance subject to 24 CFR

[[Page 77171]]

part 58) shall determine whether E.O. 11988, E.O. 11990, and this part 
apply to the proposed action.
    (b) If E.O. 11988 or 11990 and this part apply, the approval of a 
proposed action or initial commitment shall be made in accordance with 
this part. The primary purpose of E.O. 11988 is ``to avoid to the 
extent possible the long and short term adverse impacts associated with 
the occupancy and modification of floodplains and to avoid direct or 
indirect support of floodplain development wherever there is a 
practicable alternative.'' The primary purpose of E.O. 11990 is ``to 
avoid to the extent possible the long and short-term adverse impacts 
associated with the destruction or modification of wetlands and to 
avoid direct or indirect support of new construction in wetlands 
wherever there is a practicable alternative.''
    (c) The following table indicates the applicability, by location 
and type of action, of the decision making process for implementing 
E.O. 11988 and E.O. 11990 under subpart C of this part.

                                                     Table 1
----------------------------------------------------------------------------------------------------------------
                                                              Type of proposed action
                                 -------------------------------------------------------------------------------
  Type of proposed action (new                                             Wetlands or 100-    Non-wetlands area
     reviewable action or an                                                year floodplain   outside of the 100-
         amendment) \1\                Floodways         Coastal high       outside coastal     year and within
                                                         hazard areas      high hazard area      the 500-year
                                                                             and floodways        floodplain
----------------------------------------------------------------------------------------------------------------
Critical actions as defined in    Critical actions    Critical actions    Allowed if the      Allowed if the
 Sec.   55.12(b)(2).               not allowed.        not allowed.        proposed critical   proposed critical
                                                                           action is           action is
                                                                           processed under     processed under
                                                                           Sec.   55.20 \2\.   Sec.   55.20 \2\.
Non-critical actions not          Allowed only if     Allowed if          Any non-critical
 excluded under Sec.   55.12(b)    the proposed non-   proposed non-       action is allowed
 or (c).                           critical action     critical action     without
                                   is a functionally   is processed        processing under
                                   dependent use and   under Sec.          this part..
                                   processed under     55.20 \2\.
                                   Sec.   55.20 \2\.
                                  Allowed only if
                                   the proposed non-
                                   critical action:.
                                  (A)(1) Is either..
                                  (a) reconstruction
                                   of a structure
                                   destroyed by a
                                   disaster, or.
                                  (b) an improvement
                                   of an existing
                                   structure;.
                                  (2) is designed
                                   for a Coastal
                                   High Hazard Area
                                   under Sec.
                                   55.1(c)(3); and.
                                  (3) is processed
                                   under Sec.
                                   55.20; \2\ or.
                                  (B) Is a
                                   functionally
                                   dependent use
                                   processed under
                                   Sec.   55.20.
----------------------------------------------------------------------------------------------------------------
\1\ Under E.O. 11990, the decision making process in Sec.   55.20 only applies to Federal assistance for new
  construction in wetlands locations.
\2\ Or those paragraphs of Sec.   55.20 that are applicable to an action listed in Sec.   55.12(a).

    11. Revise 55.12 to read as follows:


Sec.  55.12  Inapplicability of 24 CFR part 55 to certain categories of 
proposed actions.

    (a) The decision making steps in Sec.  55.20(b), (c), and (g) 
(steps 2, 3, and 7) do not apply to the following categories of 
proposed actions:
    (1) HUD's or the recipient's actions involving the disposition of 
acquired multifamily housing projects or ``bulk sales'' of HUD-acquired 
(or under part 58 of recipients') one- to four-family properties in 
communities that are in the Regular Program of the National Flood 
Insurance Program and in good standing (i.e., not suspended from 
program eligibility or placed on probation under 44 CFR 59.24). For 
programs subject to part 58, this subsection applies only to 
recipients' disposition activities that are subject to review under 24 
CFR part 58.
    (2) HUD's actions under the National Housing Act (12 U.S.C. 1701) 
for the purchase or refinancing of existing multifamily housing 
projects, hospitals, nursing homes, assisted living facilities, board 
and care facilities, and intermediate care facilities, in communities 
that are in good standing under the NFIP.
    (3) HUD's or the recipient's actions under any HUD program 
involving the repair, rehabilitation, modernization, weatherization, or 
improvement of existing multifamily housing projects, hospitals, 
nursing homes, assisted living facilities, board and care facilities, 
intermediate care facilities, and one- to four-family properties, in 
communities that are in the Regular Program of the National Flood 
Insurance Program (NFIP) and are in good standing, provided that the 
number of units is not increased more than 20 percent, the action does 
not involve a conversion from nonresidential to residential land use, 
and the footprint of the structure and paved areas is not significantly 
increased.
    (4) HUD's (or the recipient's) actions under any HUD program 
involving the repair, rehabilitation, modernization, weatherization, or 
improvement of existing nonresidential buildings and structures, in 
communities that are in the Regular Program of the NFIP and are in good 
standing, and provided that the footprint of the structure and paved 
areas are not significantly increased.

[[Page 77172]]

    (b) The decision making process in Sec.  55.20 shall not apply to 
the following categories of proposed actions:
    (1) HUD's mortgage insurance actions and other financial assistance 
for the purchasing, mortgaging or refinancing of existing one- to four-
family properties in communities that are in the Regular Program of the 
NFIP and in good standing (i.e., not suspended from program eligibility 
or placed on probation under 44 CFR 59.24), where the action is not a 
critical action and the property is not located in a floodway or 
Coastal High Hazard Area;
    (2) Financial assistance for minor repairs or improvements on one- 
to four-family properties that do not meet the thresholds for 
``substantial improvement'' under Sec.  55.2(b)(10);
    (3) HUD or a recipient's actions involving the disposition of 
individual HUD-acquired, one- to four-family properties; and
    (4) HUD guarantees under the Loan Guarantee Recovery Fund Program 
(24 CFR part 573) of loans that refinance existing loans and mortgages, 
where any new construction or rehabilitation financed by the existing 
loan or mortgage has been completed prior to the filing of an 
application under the program, and the refinancing will not allow 
further construction or rehabilitation, nor result in any physical 
impacts or changes except for routine maintenance.
    (5) The approval of financial assistance to lease an existing 
structure located within the floodplain, but only if--
    (i) The structure is located outside the floodway or Coastal High 
Hazard Area, and is in a community that is in the Regular Program of 
the NFIP and in good standing (i.e., not suspended from program 
eligibility or placed on probation under 44 CFR 59.24);
    (ii) The project is not a critical action; and
    (iii) The entire structure is or will be fully insured or insured 
to the maximum under the NFIP for at least the term of the lease.
    (c) This part shall not apply to the following categories of 
proposed HUD actions:
    (1) HUD-assisted activities described in 24 CFR 58.34 and 58.35(b);
    (2) HUD-assisted activities described in 24 CFR 50.19, except as 
otherwise indicated in Sec.  50.19;
    (3) HUD's implementation of the full disclosure and other 
registration requirements of the Interstate Land Sales Disclosure Act 
(15 U.S.C. 1701-1720);
    (4) An action involving a repossession, receivership, foreclosure, 
or similar acquisition of property to protect or enforce HUD's 
financial interests under previously approved loans, grants, mortgage 
insurance, or other HUD assistance;
    (5) Policy-level actions described at 24 CFR 50.16 that do not 
involve site-based decisions;
    (6) A minor amendment to a previously approved action with no 
additional adverse impact on or from a floodplain or wetland;
    (7) HUD's or the responsible entity's approval of a project site, 
an incidental portion of which is situated in an adjacent floodplain, 
including the floodway or Coastal High Hazard Area, or wetland, but 
only if:
    (i) The proposed construction and landscaping activities (except 
for minor grubbing, clearing of debris, pruning, sodding, seeding, or 
other similar activities) do not occupy or modify the 100-year 
floodplain (or the 500-year floodplain for critical actions) or the 
wetland;
    (ii) Appropriate provision is made for site drainage, that would 
not have an adverse effect on a wetland; and
    (iii) A permanent covenant or comparable restriction is placed on 
the property's continued use to preserve the floodplain or wetland;
    (8) HUD's or the responsible entity's approval of financial 
assistance for a project on any nonwetland site in a floodplain for 
which the Federal Emergency Management Agency (FEMA) has issued:
    (i) A final Letter of Map Amendment (LOMA), final Letter of Map 
Revision (LOMR), or final Letter of Map Revision Based on Fill (LOMR-F) 
that removed the property from a FEMA-designated floodplain location; 
or
    (ii) A conditional LOMA, conditional LOMR, or conditional LOMR-F if 
HUD or the responsible entity's approval is subject to the requirements 
and conditions of the conditional LOMA or conditional LOMR;
    (9) Issuance or use of Housing Vouchers, Certificates under the 
Section 8 Existing Housing Program, or other forms of rental subsidy 
where HUD, the awarding community, or the public housing agency that 
administers the contract awards rental subsidies that are not project-
based (i.e., do not involve site-specific subsidies);
    (10) Special projects directed to the removal of material and 
architectural barriers that restrict the mobility of and accessibility 
to the elderly and persons with disabilities;
    (11) The approval of financial assistance for acquisition, leasing, 
construction, rehabilitation, repair, maintenance, or operation of 
ships and other water-borne vessels that will be used for 
transportation or cruises and will not be permanently moored; and
    (12) The approval of financial assistance for restoring and 
preserving the natural and beneficial functions and values of 
floodplains and wetlands, including through acquisition of such 
floodplain and wetlands property, but only if:
    (i) The property is cleared of all existing structures and related 
improvements;
    (ii) The property is dedicated for permanent use for flood control, 
wetlands protection, park land, or open space; and
    (iii) A permanent covenant or comparable restriction is placed on 
the property's continued use to preserve the floodplain or wetlands 
from future development.
    12. The heading for subpart C is revised to read as follows:

Subpart C--Procedures for Making Determinations on Floodplain 
Management and Protection of Wetlands

    13. Amend Sec.  55.20 as follows:
    a. Revise the introductory paragraph;
    b. Revise paragraph (a);
    c. Revise paragraphs (b) and (b)(3);
    d. Revise paragraphs (c), (d), and (e);
    e. Revise paragraphs (f), (g)(1), and (h) to read as follows:


Sec.  55.20  Decision making process.

    Except for actions covered by Sec.  55.12(a), the decision making 
process for compliance with this part contains eight steps, including 
public notices and an examination of practicable alternatives when 
addressing floodplains and wetlands. The steps to be followed in the 
decision making process are as follows:
    (a) Step 1. Determine whether the proposed action is located in 
wetlands or the 100-year floodplain (500-year floodplain for critical 
actions). If the action does not occur in a floodplain or wetland, then 
no further compliance with this part is required. The following process 
shall be followed by HUD (or the responsible entity) in making wetlands 
determinations.
    (1) Refer to Sec.  55.28(a) where an applicant has submitted with 
its application to HUD (or to the recipient under programs subject to 
24 CFR part 58) an individual Section 404 permit (including approval 
conditions and related environmental review).
    (2) Refer to Sec.  55.2(b)(11) for making wetlands determinations 
under this part.
    (3) For proposed actions occurring in both wetlands and a 
floodplain,

[[Page 77173]]

completion of the decision making process under Sec.  55.20 is required 
regardless of the issuance of a Section 404 permit. In such a case, the 
wetlands will be considered among the primary natural and beneficial 
functions and values of the floodplain.
    (b) Step 2. Notify the public and agencies responsible for 
floodplain management or wetlands protection at the earliest possible 
time of a proposal to consider an action in a 100-year floodplain (or a 
500-year floodplain for a critical action) or wetlands and involve the 
affected and interested public and agencies in the decision making 
process.
* * * * *
    (3) A notice under this paragraph shall state: The name, proposed 
location, and description of the activity; the total number of acres of 
floodplain or wetlands involved; the related natural and beneficial 
functions and values of the floodplain or wetlands that may be 
adversely affected by the proposed activity; the HUD approving official 
(or the Certifying Officer of the responsible entity authorized by 24 
CFR part 58); and phone number to contact for information. The notice 
shall indicate the hours and the HUD or responsible entity's office, 
and any Web site at which a full description of the proposed action may 
be reviewed.
    (c) Step 3. Identify and evaluate practicable alternatives to 
locating the proposed action in a 100-year floodplain (or a 500-year 
floodplain for a critical action) or wetland.
    (1) Except as provided in paragraph (c)(2) of this section, HUD's 
or the responsible entity's consideration of practicable alternatives 
to the proposed site selected for a project should include:
    (i) Locations outside and not affecting the 100-year floodplain (or 
the 500-year floodplain for a critical action) or wetland;
    (ii) Alternative methods to serve the identical project objective, 
including feasible technological alternatives; and
    (iii) A determination not to approve any action proposing the 
occupancy or modification of floodplains or wetland.
    (2) Practicability of alternative sites should be addressed in 
light of the following:
    (i) Natural values such as topography, habitat, and hazards;
    (ii) Social values such as aesthetics, historic and cultural 
values, land use patterns, and environmental justice; and
    (iii) Economic values such as the cost of space, construction, 
services, and relocation.
    (3) For multifamily projects involving HUD mortgage insurance that 
are initiated by third parties, HUD's consideration of practicable 
alternatives should include a determination not to approve the request.
    (d) Step 4. Identify and evaluate the potential direct and indirect 
impacts associated with the occupancy or modification of the 100-year 
floodplain (or the 500-year floodplain for a critical action) or the 
wetlands and the potential direct and indirect support of floodplain 
and wetlands development that could result from the proposed action.
    (1) Floodplain evaluation: The focus of the floodplain evaluation 
should be on adverse impacts to lives and property, and on natural and 
beneficial floodplain values. Natural and beneficial values include:
    (i) Water resources such as natural moderation of floods, water 
quality maintenance, and groundwater recharge;
    (ii) Living resources such as flora and fauna;
    (iii) Cultural resources such as archaeological, historic, and 
recreational aspects; and
    (iv) Agricultural, aquacultural, and forestry resources.
    (2) Wetlands evaluation: In accordance with Section 5 of E.O. 
11990, the decision maker shall consider factors relevant to a 
proposal's effect on the survival and quality of the wetlands. Among 
these factors that should be evaluated are:
    (i) Public health, safety, and welfare, including water supply, 
quality, recharge, and discharge; pollution; flood and storm hazards 
and hazard protection; and sediment and erosion;
    (ii) Maintenance of natural systems, including conservation and 
long-term productivity of existing flora and fauna; species and habitat 
diversity and stability; natural hydrologic function; wetland type; 
fish; wildlife; timber; and food and fiber resources;
    (iii) Cost increases attributed to wetland-required new 
construction and mitigation measures to minimize harm to wetlands that 
may result from such use; and
    (iv) Other uses of wetlands in the public interest, including 
recreational, scientific, and cultural uses.
    (e) Step 5. Where practicable, design or modify the proposed action 
to minimize the potential adverse impacts to and from the 100-year 
floodplain (or the 500-year floodplain for a Critical Action) or the 
wetlands and to restore and preserve its natural and beneficial 
functions and values.
    (1) Minimization techniques for floodplain and wetlands purposes 
include, but are not limited to: the use of permeable surfaces, natural 
landscape enhancements that maintain or restore natural hydrology 
through infiltration, native plant species, bioswales, 
evapotranspiration, stormwater capture and reuse, green or vegetative 
roofs with drainage provisions, and Natural Resource Conservation 
Service conservation easements. Floodproofing and elevating structures, 
including freeboarding above the required base flood elevations, are 
also minimization techniques for floodplain purposes.
    (2) Appropriate and practicable compensatory mitigation is 
recommended for unavoidable adverse impacts to more than one acre of 
wetlands. Compensatory mitigation includes, but is not limited to: 
permitee-responsible mitigation, mitigation banking, in-lieu fee 
mitigation, the use of preservation easements or protective covenants, 
and any form of mitigation promoted by state or Federal agencies. The 
use of compensatory mitigation may not substitute for the requirement 
to avoid and minimize impacts to the maximum extent practicable.
    (3) Actions covered by Sec.  55.12(a) must be rejected if the 
proposed minimization is financially or physically unworkable. All 
critical actions in the 500-year floodplain shall be designed and built 
at or above the 100-year floodplain (in the case of new construction) 
and modified to include:
    (i) Preparation of and participation in an early warning system;
    (ii) An emergency evacuation and relocation plan;
    (iii) Identification of evacuation route(s) out of the 500-year 
floodplain; and
    (iv) Identification marks of past or estimated flood levels on all 
structures.
    (f) Step 6. Reevaluate the proposed action to determine:
    (1) Whether the action is still practicable in light of exposure to 
flood hazards in the floodplain or wetland, possible adverse impacts on 
the floodplain or wetland, the extent to which it will aggravate the 
current hazards to other floodplains or wetlands, and the potential to 
disrupt the natural and beneficial functions and values of floodplains 
or wetlands; and
    (2) Whether alternatives preliminarily rejected at Step 3 
(paragraph (c)) of this section are practicable in light of information 
gained in Steps 4 and 5 (paragraphs (d) and (e)) of this section.
    (i) The reevaluation of alternatives shall include the potential 
impacts avoided or caused inside and outside the floodplain or wetlands 
area. The impacts should include the protection of human life, real 
property, and the natural and beneficial functions and

[[Page 77174]]

values served by the floodplain or wetland.
    (ii) A reevaluation of alternatives under this step should include 
a discussion of economic costs. For floodplains, the cost estimates 
should include savings or the costs of flood insurance, where 
applicable, flood proofing, and elevation to at least the base flood 
elevation for sites located in floodplains, as appropriate. For 
wetlands, the cost estimates should include the cost of filling the 
wetlands and mitigation.
    (g) Step 7. (1) If the reevaluation results in a determination that 
there is no practicable alternative to locating the proposal in the 
100-year floodplain (or the 500-year floodplain for a Critical Action) 
or the wetland, publish a final notice that includes:
    (i) The reasons why the proposal must be located in the floodplain 
or wetland;
    (ii) A list of the alternatives considered in accordance with Sec.  
55.20(c)(1) and (2); and
    (iii) All mitigation measures to be taken to minimize adverse 
impacts and to restore and preserve natural and beneficial functions 
and values.
* * * * *
    (h) Step 8. Upon completion of the decision making process in Steps 
1 through 7, implement the proposed action. There is a continuing 
responsibility on HUD (or on the responsible entity authorized by 24 
CFR part 58) and the recipient (if other than the responsible entity) 
to ensure that the mitigating measures identified in Step 7 are 
implemented.


Sec.  55.21  [Amended]

    14. Amend Sec.  55.21 by removing the term ``grant recipient'' and 
adding in its place the term ``responsible entity.''
    15. Revise Sec.  55.24 to read as follows:


Sec.  55.24  Aggregation.

    Where two or more actions have been proposed, require compliance 
with subpart C of this part, affect the same floodplain or wetland, and 
are currently under review by HUD (or by a responsible entity 
authorized by 24 CFR part 58), individual or aggregated approvals may 
be issued. A single compliance review and approval under this section 
is subject to compliance with the decision making process in Sec.  
55.20.


Sec.  55.25  [Amended]

    16. Revise Sec.  55.25 as follows:
    a. Remove, in paragraph (c), the term ``grant recipient'' and add 
in its place the term ``responsible entity''; and
    b. Remove in paragraph (d)(2) the term ``grant recipients'' and add 
in its place the term ``responsible entities.''
    17. In Sec.  55.26, revise the introductory paragraph and paragraph 
(a), to read as follows:


Sec.  55.26  Adoption of another agency's review under the Executive 
Orders.

    If a proposed action covered under this part is already covered in 
a prior review performed under either or both of the executive orders 
by another agency, including HUD or a different responsible entity, 
that review may be adopted by HUD or by a responsible entity authorized 
under 24 CFR part 58, provided that:
    (a) There is no pending litigation relating to the other agency's 
review for floodplain management or wetlands protection;
* * * * *
    18. Amend Sec.  55.27 as follows:
    a. Revise paragraph (a);
    b. Remove, in paragraph (b), the term ``grant recipient'' and add, 
in its place, the words ``responsible entity'' and;
    c. Remove, in paragraph (c), the term ``grant recipients'' and add, 
in its place, the words ``responsible entities'', to read as follows:


Sec.  55.27  Documentation.

    (a) For purposes of compliance with Sec.  55.20, the responsible 
HUD official who would approve the proposed action (or Certifying 
Officer for a responsible entity authorized by 24 CFR part 58) shall 
require that the following actions be documented:
    (1) When required by Sec.  55.20(c), practicable alternative sites 
have been considered outside the floodplain or wetland, but within the 
local housing market area, the local public utility service area, or 
the jurisdictional boundaries of a recipient unit of general local 
government, whichever geographic area is most appropriate to the 
proposed action. Actual sites under review must be identified and the 
reasons for the nonselection of those sites as practicable alternatives 
must be described; and
    (2) Under Sec.  55.20(e)(2), measures to minimize the potential 
adverse impacts of the proposed action on the affected floodplain or 
wetland as identified in Sec.  55.20(d) have been applied to the design 
for the proposed action.
* * * * *
    19. Add new Sec.  55.28 to read as follows:


Sec.  55.28  Use of individual permits under section 404 of the Clean 
Water Act for HUD 11990 processing where all wetlands are covered by 
the permit.

    (a) Processing requirements. HUD (or the responsible entity subject 
to 24 CFR part 58) shall not be required to perform the steps at Sec.  
55.20(a), (b), (c), (d), and (e) upon adoption by HUD (or the 
responsible entity) of the terms and conditions of a Section 404 permit 
so long as:
    (1) The project involves new construction on a property located 
outside of the 100-year floodplain (or the 500-year floodplain for 
critical actions);
    (2) The applicant has submitted, with its application to HUD (or to 
the recipient under programs subject to 24 CFR part 58), an individual 
Section 404 permit (including approval conditions) issued by the Army 
Corps of Engineers (USACE) for the proposed project; and
    (3) All wetlands adversely affected by the action are covered by 
the permit.
    (b) Unless a project is excluded under Sec.  55.12, processing 
under all of Sec.  55.20 is required for new construction in wetlands 
that are not subject to USACE jurisdiction and for new construction for 
which the USACE issues a general permit under Section 404.

PART 58--ENVIRONMENTAL REVIEW PROCEDURES FOR ENTITIES ASSUMING HUD 
ENVIRONMENTAL RESPONSIBILITIES

    20. The authority citation for part 58 continues to read as 
follows:

    Authority: 12 U.S.C. 1707 note; 42 U.S.C. 1437o(i)(1) and (2), 
1437x, 3535(d), 3547, 4332, 4852, 5304(g), 11402, and 12838; E.O. 
11514, 3 CFR, 1966-1970, Comp., p. 902, as amended by E.O. 11991, 3 
CFR, 1977 Comp., p. 123.

    21. Revise Sec.  58.5(b)(2) to read as follows:


Sec.  58.5  Related federal laws and authorities.

* * * * *
    (b) * * *
    (2) E.O. 11990, Protection of Wetlands, May 24, 1977 (42 FR 26961), 
3 CFR, 1977 Comp., p. 121, as interpreted in HUD regulations at 24 CFR 
part 55, particularly sections 2 and 5 of the order.
* * * * *
    22. Add Sec.  58.6(a)(4).


Sec.  58.6  Other requirements.

* * * * *
    (a) * * *
    (4) Flood insurance requirements cannot be fulfilled by self-
insurance except as authorized by law for assistance to state-owned 
projects within states approved by the FEMA Administrator consistent 
with 44 CFR 75.11.
* * * * *
    23. Revise Sec.  58.35(a)(3)(i) to read as follows:


Sec.  58.35  Categorical exclusions.

* * * * *

[[Page 77175]]

    (a) * * *
    (3) * * *
    (i) In the case of a building for residential use (with one to four 
units), the density is not increased beyond four units, and the land 
use is not changed;
* * * * *

    Dated: November 14, 2011.
Mercedes M. M[aacute]rquez,
Assistant Secretary for Community Planning and Development.
[FR Doc. 2011-31629 Filed 12-9-11; 8:45 am]
BILLING CODE 4210-67-P