Drinking Water Revolving Fund Purpose: Environmental Review

Introduction and background

The purpose of an environmental review is to ensure that projects do not create unwarranted, negative environmental impacts. This is accomplished through a process of assessment, public notification, and documentation. In addition, an environmental review helps ensure projects do not violate federal or state environmental laws. The drinking water revolving fund environmental review procedures were designed to be as simple as possible, while still meeting federal and state requirements.

The U.S. Environmental Protection Agency requires an environmental review be completed before any project receives a drinking water revolving fund loan. The review process must be in compliance with the National Environmental Policy Act of 1969, as amended (Pub.L. 91-190, 42 U.S.C.4321 et seq.).

There are also State of Minnesota environmental review requirements. They are found in the Environmental Quality Board Rules, Chapter 4410. Although these rules will rarely if ever directly apply to a drinking water revolving fund environmental review process, the process cannot conflict with them.

The community or entity responsible for the water supply project will be responsible for gathering information, providing public notification, and assembling an environmental review record. A consultant can be hired to do the work, but this is not necessary. The Minnesota Department of Health (MDH) will examine the environmental review record and reach a conclusion about a project's environmental impact, which in turn will determine if the project can be funded.

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General information for all projects

Federal requirements demand that the environmental review cover all parts of a project, even those parts not being financed by the revolving fund or other federally connected funding. For example, a project might involve installing a new well and treatment plant and then connecting it to a community's distribution system via a transmission water main that passes through an environmentally sensitive area. The community would not be able to avoid doing an environmental review for the environmentally sensitive area by limiting revolving fund financing to only the well and treatment plant and using local funding for the transmission water main. The entire project, including the transmission line would be subject to environmental review. 

Environmental review requirements differ among funding agencies. Be sure to check each agency's expectations if more than one agency will be providing grants or loans for a project. For example, one agency may provide a partial grant while another agency covers the remaining costs with a loan. Another example would be where Agency 1 provides a loan for sewer lines, and Agency 2 provides a loan for waterlines in a combined project. Use an environmental review process that satisfies all agencies.

There are two key points to consider when conducting an environmental review: timing and total scope. An environmental review takes several months to complete, so start early enough to avoid delaying project funding. Additionally, environmental review conclusions remain valid for five years, meaning that current and potential future projects can be included in one environmental review.

A word of caution: If an environmental review is completed early and project’s scope, design, or location changes significantly, the environmental review might have to be redone.

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Project categories

There are five environmental review categories for public water system projects, and each category will determine what steps must be followed. It is possible, though unlikely, that a project be moved from one category to another during the environmental review process.

The instructions only pertain to the first three categories (listed below), with a primary focus on category 3, where most projects will fall. It is highly unlikely a drinking water project will be in category 4 or 5. However, if that occurs, contact the Environmental Review Engineer at dwrf.er.MDH@state.mn.us.

The five environmental review categories are:

1. Projects subject to another agency's environmental review.

2. Exempt projects.

Activities in exempt projects are limited to:

• Environmental studies Planning and design.
• Emergency or disaster relief and protection.
• Equipment installation.
• Water main installation in road right-of-way.

3. Projects requiring an Environmental Analysis.

These activities are likely to have little or no environmental impact and require a summary of findings from MDH.

4. Projects that require an Environmental Assessment. Determining factors are:

• If mandated by Minnesota Environmental Quality Board Rules, 4410.1000 and 4410.4300 (A project would rarely be mandated).
• If MDH determines an Environmental Summary process does not provide sufficient analysis.
• If 25 or more people petition the Minnesota Environmental Quality Board.

5. Projects that require an Environmental Impact Statement. Determining factors are:

• If mandated by Minnesota Environmental Quality Board Rules, 4410.2000 and 4410.4400 (rarely mandated).
• If MDH determines an Environmental Assessment process does not provide sufficient analysis.